Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | File Nos.                    |
|                                  | * |                              |
| King Videocable Company,         | ) | CSB-A-0348                   |
|                                  | * |                              |
| Petitioner,                      | * |                              |
|                                  |   |                              |
| v\.                              | * |                              |
|                                  | * |                              |
| City of Hudson and Village of    | ) |                              |
| North Hudson, State of           | * |                              |
| Wisconsin,                       | * |                              |
|                                  |   |                              |
| Respondent.                      | * |                              |
|                                  | * |                              |
| Appeal of Local Rate Orders.     | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
+----------------------------------+---+------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted: November 3, 2003 Released: November 5, 2003**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1\. King Videocable Company ("King"), a subsidiary of Continental
Cablevision, the franchised cable operator serving the City of Hudson
and Village of North Hudson ("Cities"), Wisconsin has appealed local
rate orders adopted by the City of Hudson on August 5, 1996 and the
Village of North Hudson on August 6, 1996, respectively, approving
King's current basic service tier ("BST") rate but requiring King to
issue refunds to customers for the period July 14, 1994 to August 14,
1995.[^1] The Cities operate under the terms of a joint powers agreement
and adopted identical rulings.[^2] The Cities filed an opposition to
which King replied. King also requested a stay of the Cities' orders,
which are rendered moot by this order and are dismissed. Based upon our
review of the record, we grant in part and deny in part King's appeal of
the Cities' local rate orders.

# II. background {#ii.-background .unnumbered}

2\. The Communications Act provides that, where effective competition is
absent, cable rates for the BST are subject to regulation by franchising
authorities.[^3] Rates for the BST should not exceed rates that would be
charged by systems facing effective competition, as determined in
accordance with Commission regulations for setting rates.[^4]

3\. Rate orders issued by franchising authorities may be appealed to the
Commission pursuant to Commission rules.[^5] In ruling on appeals of
local rate orders, the Commission will not conduct a *de novo* review,
but instead will sustain the franchising authority\'s decision as long
as a reasonable basis for that decision exists.[^6] The Commission will
reverse a franchising authority\'s rate decision only if it determines
that the franchising authority acted unreasonably in applying the
Commission\'s rules. If the Commission reverses a franchising
authority\'s decision, it will not substitute its own decision but
instead will remand the issue to the franchising authority with
instructions to resolve the case consistent with the Commission\'s
decision on appeal.

# III. discussion {#iii.-discussion .unnumbered}

4\. On June 22, 1995, the Cities notified King of the effectiveness of
their Form 328 certifications and adoption of local rate ordinances.[^7]
On August 3, 1995, the Cities received King's FCC Forms 1200, 1205,
1210, and 1215.[^8] On August 15, 1995, King reduced its BST rate from
\$8.17 to \$7.96.[^9] The Cities subsequently issued accounting orders
on November 26, 1995.[^10] On August 5, 1996, the Cities approved
Resolutions Nos. 15-96 and 96-6, which approved King's rates and
equipment charges but ordered a refund to subscribers for the period
July 14, 1994 to August 14, 1995.[^11]

5\. King filed its local appeal on September 4, 1996. King argues that
the Cities' orders are inconsistent with sections 76.942(b) and (c)[^12]
of the Commission's rules. King asserts that section 76.942(b) limits
refunds back one year from implementation of a refund order.[^13] King
also asserts that a local franchising authority must provide 60 days
after the date of a local refund order for an operator to comply with a
refund order."[^14] King argues that since the refund order was not
issued until August 5, 1996, the earliest implementation date would be
October 4, 1996 \-- 60 days after the date of the refund order --
reaching back to October 4, 1995, which would mean no refund is due
since King's rates were in compliance during that time.

6\. King also argues that section 76.942(c)(2) applies because the
Cities issued an accounting order. According to King, the refund period
would run from November 26, 1995[^15] to October 4, 1996 then back in
time to October 4, 1995. King argues that during this period, no
excessive rates were charged and therefore no refunds may be ordered
under Commission rules. King asserts that when the Commission approved
the rules, it made clear that "the rate reduction" period for
calculating a refund under 76.942(c)(1) is that ordered by a franchising
authority. However, in this instance, the Cities approved the rates and
did not issue prospective rate reduction orders. King argues that it
should not be penalized for making a good faith attempt to comply with
the rules in a timely manner and the refund order would constitute a
penalty that could only act as a disincentive to voluntary compliance.

7\. The Cities agree that section 76.942(b) limits the refund period to
one year, but disagree with King over the computation of the one year
period. The Cities computed the period under section 76.942(c)(1). The
Cities deemed King's voluntary rate reduction equivalent to
implementation of a "prospective rate reduction" under the rules, which
fixed the refund liability period at August 14, 1994 to August 14, 1995.
The Cities argue that King's voluntary compliance should not remove
liability for past overcharges. The Cities acknowledge that this is a
rather unusual case since King submitted and unilaterally implemented a
rate decrease that brought it into compliance with the Commission's
regulations. Moreover, King did not wait for 30 days or for the 120-day
tolling period to implement these rates, but implemented the rate
reduction by notifying subscribers on their bills. The Cities argue that
this process is not contemplated by the Commission's regulations.

8\. The Cities also argue that King cannot rely on section 76.942(c)(2),
which is based on "the date a prospective rate reduction is issued,"
because no rate reduction order was ever issued. Consequently, the
section 76.942(c)(1) calculation must be used because it relies on the
date the operator implements a prospective rate reduction. In the
present case, King unilaterally and voluntarily implemented a rate
reduction on August 15, 1995 to comply with the Commission's rules.
Therefore, the refund period calculation under section 76.942(c)(1) must
be used and would be August 14, 1995 back one year to August 14, 1994.

9\. The facts are not disputed by the parties, but the parties dispute
the application of the Commission's refund rules. On the one hand, King
argues that the earliest refund period would be October 4, 1996 back to
October 4, 1995 based on section 76.942(c)(2). In contrast, the Cities
argue that the refund period should run from August 14, 1995 back to
August 14, 1994 based on section 76.942(c)(1).

10\. Section 76.942(b) limits a cable operator's liability for refunds
to a year. Section 76.942(c) specifies that the refund period shall run,
not from the date of the local order, but either

\(1\) From the date the operator implements a prospective rate reduction
back in time to September 1, 1993, or, one year, whichever is shorter.

\(2\) From the date a franchising authority issues an accounting order
pursuant to § 76.933(c), to the date a prospective rate reduction is
issued, then back in time from the date of the accounting order to the
effective date of the rules; however the total refund period shall not
exceed one year from the date of the accounting order.

King implemented a unilateral rate reduction on August 15, 1995. The
Cities issued accounting orders on November 26, 1995. The Cities
subsequently issued refund orders on August 5, 1996, but no prospective
rate reduction was ordered because King had reduced rates in August of
1995. The applicable section is section 76.942(c)(2) for three reasons.
First, section 76.942(c)(1) keys the beginning of the refund period to
the date of the "prospective" rate reduction. In this case, there was no
prospective rate reduction, since King voluntarily reduced its rates
less than two weeks after filing its rate forms with the Cities and more
than three months prior to the Cities' issuance of the accounting
orders. Second, section 76.942(c)(2) specifically addresses refunds
where accounting orders are involved, such as in this case. And third,
calculation of the refund period based on section 76.942(c)(1) would
unduly penalize King for voluntarily lowering its rates, which would be
contrary to our policy of encouraging voluntary compliance by cable
operators.

11\. The proper calculation of the refund period under section
76.942(c)(2) in this case does not go forward in time to the date of a
prospective rate reduction because there was none. The entire one-year
period of liability runs back in time from the date the accounting
orders were issued. Accordingly, the refund period runs from November
26, 1995 back to November 27, 1994. King voluntarily reduced its rates
on August 15, 1995, so the practical period of refund liability is
August 15, 1995 to November 27, 1994.

12\. Finally, King argued that a local franchising authority must
provide a cable operator 60 days \-- after the date of a local refund
order \-- to comply with a refund order, citing *Times Mirror Cable
Television of Orange Co.*[^16] and *Times Mirror Cable Television of
Springfield, Inc.*[^17] Those cases do not apply to local franchising
authorities issuing rate orders. In those cases, the Commission stated
that a 60-day requirement for issuing orders only applied to rate
reduction or refund orders issued by the Commission. The Commission
directed the franchising authorities to specify effective dates that
consider the amount of time necessary to prepare and send out notices
and bills reflecting a rate change and the impact of cycle billing.
There is no requirement that cable operators be given 60 days to comply
with refund order, although they are entitled to a reasonable amount of
time to comply.[^18]

#  IV. ordering clauses {#iv.-ordering-clauses .unnumbered}

13\. Accordingly, **IT IS ORDERED** that the Appeal of Local Rate Orders
filed by King Videocable Company, a subsidiary of Continental
Cablevision **ARE GRANTED IN PART AND DENIED IN PART** and **ARE**
**REMANDED** for further consideration consistent with this Memorandum
Opinion and Order.

14\. **IT IS FURTHER ORDERED** that the Stay Requests of Local Rate
Orders filed by King Videocable Company, a subsidiary of Continental
Cablevision, **ARE DISMISSED.**

15\. This action is taken pursuant to authority delegated by § 0.283 of
the Commission's rules. 47 C.F.R. § 0.283.

FEDERAL COMMUNICATIONS COMMISSION

John B. Norton

Deputy Chief, Policy Division

Media Bureau

[^1]: Identified locally as Resolutions Nos. 23-96 and 96-14,
    respectively.

[^2]: Appeal at 1.

[^3]: 47 U.S.C. § 543(a)(2).

[^4]: 47 U.S.C. § 543(b)(1); 47 C.F.R. § 76.922.

[^5]: ^?^ 47 U.S.C. § 543(b)(5)(B); 47 C.F.R. § 76.944.

[^6]: ^?^ *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation*, *Report
    and Order and Further Notice of Proposed Rulemaking*, 8 FCC Rcd
    5631, 5731-32 (1993); *Third Order on Reconsideration*, 9 FCC Rcd
    4316, 4346 (1994).

[^7]: Appeal at 1.

[^8]: Appeal Exhibit C at 2.

[^9]: *Id.*at 8*.*

[^10]: *Id.* at 1 -- 2.

[^11]: *Id*. at 2.

[^12]: 47 C.F.R. § 76.942(b) and (c).

[^13]: Appeal at 3.

[^14]: *Id*.

[^15]: Although King identified the date as November 20, 1995 at one
    point, an earlier reference, as well as the date cited by the
    Cities, identifies November 26, 1995 as the date the accounting
    order was issued.

[^16]: 10 FCC Rcd 4011 (1995).

[^17]: 10 FCC Rcd 2340 (1995).

[^18]: *See* *In the Matter of TCI Cablevision of Ohio, Inc.*, 13 FCC
    Rcd 17303 (1998); *In the Matter of Times Mirror Cable Television of
    Springfield, Inc.*, 10 FCC Rcd 2340 (1995).