Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | File Nos.                    |
|                                  | * |                              |
| TCI of Pennsylvania, Inc.        | ) | CSB-A-0181 & CSB-A-0304      |
|                                  | * |                              |
| Appeals of Local Rate Orders of  | * |                              |
| the City of Pittsburgh,          |   |                              |
| Pennsylvania (CUID No. PA1855)   | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
+----------------------------------+---+------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted: April 11, 2003 Released: April 16, 2003**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1\. TCI of Pennsylvania, Inc. ("TCI"), the franchised cable operator
serving the City of Pittsburgh, Pennsylvania, has appealed two local
rate orders adopted by the City of Pittsburgh ("City") on March 21,
1995,[^1] that rejected TCI's proposed basic service tier ("BST") rates
as unreasonable because TCI failed to properly notify its customers of a
proposed raise increase. We consolidate these appeals because the legal
arguments presented by the parties are identical and the interests of
administrative efficiency will be advanced thereby. The City opposes the
appeal. Based upon our review of the record, we grant in part and deny
in part TCI's appeal.

# II. background

2\. The Communications Act provides that, where effective competition is
absent, cable rates for the BST are subject to regulation by franchising
authorities.[^2] 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.[^3]

3\. Rate orders issued by franchising authorities may be appealed to the
Commission pursuant to Commission rules.[^4] 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.[^5] 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.

4\. An operator that wants to increase its BST rate has the burden of
demonstrating that the increase is in conformance with the Commission's
rules.[^6] In determining whether the operator's rates conform with our
rules, a franchising authority may direct the operator to provide
supporting information.[^7] After reviewing an operator's rate forms and
any other additional information submitted, the franchising authority
may approve the operator's rate increases or issue a written decision
explaining why the operator's rates are not reasonable.[^8] If the
franchising authority determines that the operator's proposed rates
exceed the maximum permitted rate ("MPR") as determined by the
Commission's rules, it may prescribe a rate different from the proposed
rate or order refunds, provided that it explains why the operator's rate
or rates are unreasonable and the prescribed rate is reasonable.[^9]

5\. On February 23, 1995, TCI filed with the City its FCC Forms 1205 and
1210. The Form 1205 proposed an increase in the rates for installation
and equipment rates. The Form 1210 proposed an increase in the BST rates
for programming services.

6\. The City Council, which is authorized to review and approve rates
for the BST, voted on March 21, 1995 to deny the proposed rate
increases. The Council rejected the Form 1205 proposed rate increase for
installation and equipment because it failed to "comply with the
standards set forth" by the Commission.[^10] Specifically, the Council
concluded that the notice TCI sent to its subscribers about increasing
rates failed to provide the public with sufficient notice and the
Council was therefore "unable to conduct a proper review of the Form."
The Council also rejected the Form 1210 proposed rate increase for the
BST because the form failed to provide sufficient information for it to
determine the reasonableness of the request and it further concluded
that the form was not in compliance with Commission regulations.[^11]
The Mayor signed the orders on March 24, 1995, and the recording of
Resolutions 215 and 216 in the Council's Resolution Book occurred on
March 30, 1995. TCI is challenging the City's rejection of the proposed
Form 1205 and 1210 rate increases.

**III. DISCUSSION**

7\. TCI has raised three issues on appeal. TCI initially argues that the
orders should be rejected because of procedural defects. TCI also argues
that the City wrongly denied the rate increases because the City
misinterpreted the notice requirement under section 76.932 of the
Commission's rules. Finally, TCI argues that the City's orders rejecting
the increases should be reversed because the Council did not explain the
alleged filing deficiencies.

8\. TCI alleges that the City's orders are procedurally defective
because they were released late -- more than 30 days after the rate
forms were filed on February 23, 1995. According to TCI, the City's
orders denying the rate increase requests were not official until they
were recorded in the City Council's Resolution Book and released. TCI
alleges that the Resolutions were not recorded and released until March
30, 1995. In addition, TCI alleges that it did not receive a copy of the
Resolutions until April 3, 1995. As a result of this late notice, TCI
argues that its rates became effective on March 25, 1995. TCI argues
that the 30-day deadline[^12] was established by the Commission to
provide cable operators with some degree of certainty. In support of
this proposition, TCI cites *TCI of Greensburg,*[^13] which held that a
local franchising authority lost its refund authority because it failed
to timely adopt an accounting order. Therefore, TCI asserts that the
City's orders should be reversed.

9\. In opposition, the City asserts that it timely reviewed TCI's Forms
1205 and 1210 and therefore satisfied the 30-day requirement under
section 76.932 of the Commission's regulations. The City states that the
City Council voted on March 21, 1995 \-- twenty-six days after TCI's
February 23, 1995 filing \-- to deny the proposed rate increase, and the
text of the Council's decision was telecast live and replayed that
evening on a municipal channel of TCI's system. The City further alleges
that it provided TCI actual notice by telephone of the Council's action
that day and a copy of the full text of the Resolutions was faxed to TCI
immediately after the meeting. The Mayor signed the orders on March 24,
1995 -- twenty-nine days after the February 23, 1995 filing. The City
alleges that the recording of the Resolutions in the Council's
Resolution Book occurred on March 30, 1995, but in any event, is a
purely ministerial act. A certified copy of the Resolution was delivered
to TCI on April 3, 1995. Finally, the City argues that even if one
assumes the City's orders were late, the City only loses the opportunity
to order refunds but still retains the authority to regulate rates on a
prospective basis. Therefore, the City could only lose its authority to
order retroactive refunds under section 76.933.

10\. In reply, TCI alleges that the City does not dispute that it missed
the 30-day deadline because the official recording and delivery of the
Resolutions did not occur until after the deadline. TCI asserts that the
orders are untimely.

11\. Pursuant to the Commission's rules, a cable operator's proposed
rates go into effect 30 days after their submission to the franchising
authority unless the franchising authority disapproves the rates or the
review period is tolled by the franchising authority in writing.[^14] A
franchising authority must issue a written order whenever it rejects a
rate for the BST in whole or part.[^15] A rate decision may be issued by
resolution, ordinance, letter, or other suitable form.[^16] Public
notice must be given of any decision rejecting a rate increase.[^17] The
Commission's rules leave the method of giving public notice to local
authorities.[^18] In this instance, TCI makes no claim that local laws
or regulations were not followed in the City's release of its orders.
The Council, which is delegated the authority to determine BST rates,
adopted the text of the Resolutions on March 21, which were faxed to TCI
immediately following the meeting. TCI was also notified of the
Council's actions by telephone that same day. The Resolutions carry an
enactment date of March 21. We therefore find the orders were timely
issued.

12\. TCI also challenges the City's rejection of Forms 1205 and 1210
based upon the subscriber notice requirements of section 76.932 as
follows:

a cable operator shall provide written notice to a subscriber of any
increase in the price to be charged for the basic service tier or
associated equipment at least 30 days before any proposed increase is
effective. The notice should include the name and address of the local
franchising authority.[^19]

13\. TCI alleges it sent a notice to subscribers advising them of an
impending cable programming service tier ("CPST") increase and also to
"disclose at the same time that additional rate changes were being
considered regarding BST service and equipment" rates. TCI states that
the main purpose of its notice was to provide CPST subscribers with
notice, pursuant to section 76.964 of the Commission's rules, that their
rates would be increased.[^20] TCI states that the inclusion of
information regarding the BST rate increase was made voluntarily to keep
subscribers informed of the BST rate request proceeding rather than
serving as the mandatory disclosure notice under section 76.932 of the
Commission's rules.[^21] TCI further alleges that it planned to send a
second subscriber notice specifically to BST subscribers before
implementing a rate increase. TCI argues that there is no requirement
that cable operators file the notice at the time the Forms 1205 and 1210
are filed. Finally, TCI argues that such a notice would be of little or
no benefit to subscribers because the franchising authority can reduce
the amount or approve a substantially lesser amount than is requested.
Therefore, TCI claims, it planned to file another notice 30 days before
any new BST rates were to become effective which would have been
consistent with the requirements of section 76.932.

14\. In opposition, the City alleges that TCI's notice did not comply
with the notice requirement in section 76.932. The City cites the *Rate
Order* to support its position, alleging that the purpose of section
76.932 is to insure that "interested parties have an adequate
opportunity to comment" and to protect subscribers' due process rights
to review and comment on the proposed rate increase prior to its being
approved.[^22] The City therefore argues that providing notice after the
rates are approved provides no benefit to the subscribers. The City
states that TCI's notice was deficient because it lacked details on the
increase. Finally, the City argues that it relied upon the notice TCI is
required to provide directly to each customer because the notice
provided by City regulations by newspaper may not reach all subscribers
and is not a sufficient substitute. Therefore, the City states that it
was unable to review the merits of the proposed increase until TCI
complied with the notice requirements.

15\. In reply, TCI alleges that the notice it sent regarding CPST rate
increases included language alerting subscribers that the company had
submitted proposed BST rate increase requests, but was not meant to
serve as notice of an effective increase in the BST as required under
section 76.932. TCI argues that the rules do not require it to provide
precise details of an increase in BST rates more than 30 days before the
increase is implemented. TCI also argues that the City's reliance on the
Report and Order is misplaced because the City relies on report language
rather than the rule.

16\. TCI gave subscribers notice that it had filed forms requesting a
rate increase for the BST. TCI was not required to do so. A cable
operator "may" give notice to subscribers of a proposed BST rate change
request at the time it is filed with the franchising authority, but
"must" provide notice of any increase in the BST at least 30 days before
any proposed increase is effective.[^23] Although our regulations do not
specify that a cable operator must provide notice to subscribers of a
rate increase at the same time it files forms with the local franchising
authority, our regulations do require that the local franchising
authority have procedural laws and regulations that "provide a
reasonable opportunity for consideration of the views of interested
parties.[^24] The purpose of the Commission's notice requirement is to
provide subscribers with ample time to react and, if they so elect, to
cancel any service they no longer wish to receive due to the rate
change.[^25] The notice that TCI provided was not sufficient to permit
TCI to effectuate the rate increase, but TCI states that the notice
provided BST subscribers was not intended to satisfy the Commission's
30-day notice requirement. TCI intended to provide that notice at a
subsequent date. TCI was not in violation of our 30-day notice rule. The
City cannot rely on the issue of notice in this case in refusing to
review TCI's rate forms.

17\. TCI also argues that the City's order rejecting Forms 1205 and 1210
should be reversed because the Council did not explain the alleged
filing deficiencies. According to TCI, franchising authorities are
required to give a reasonable explanation for their decisions but in
this instance, the City did not explain the nature of the alleged
deficiencies in either the Form 1205 or 1210. Moreover, TCI argues that
the Form 1210 rate increase only concerned an inflation adjustment.
Therefore, TCI argues that the City improperly rejected FCC Forms 1205
and 1210.

18\. In rejecting FCC Form 1205, the City's Resolution 215 concluded
that "without sufficient public notices provided by TCI, the City is
unable to conduct a proper review of the Form 1205."[^26] In rejecting
FCC Form 1210, the City's Resolution 216 concluded that the Form 1210
contained insufficient support to determine the reasonableness of the
request, the Form 1210 was not in compliance with the applicable FCC
regulations, the notice was insufficient, and "the proposed increase in
rates for the Basic Service in TCI's Form 1210 is denied, and TCI of
Pennsylvania, Inc. is ordered not to place the rates into effect."[^27]

19\. The City alleges that it was unable to conduct a substantive review
on the merits of the proposed BST rate increase requests, which would
have included the receipt and evaluation of public comments, until TCI
had provided the correct notice.

20\. As we stated in *Falcon Cable Media*, if a franchising authority
does not dispute the bases for the figures presented in a cable
operator's rate forms and has not discovered any mathematical errors in
the forms, the franchising authority should approve the operator's rate
as derived from those forms.[^28] The City's position that TCI's notice
was insufficient does not justify the City's rejection of TCI's proposed
BST rate increases. If a local franchising authority denies an
operator's proposed rate increase, it must issue a written decision
affirmatively demonstrating why the rates are unreasonable.[^29] The
requirement of a written order protects the cable operator's right to
due process by having the local franchising authority explain why it is
rejecting the rate and also provides the cable operator with a basis to
refile its rate or appeal the local franchising authority's decision to
the Commission.[^30] As evidenced by previous Commission rulings, local
rate orders that summarily or vaguely reject a cable operators proposed
rate increase cannot be sustained and will be remanded.[^31] We find the
City's denial of TCI's rate increase without an adequate explanation
does not meet the standards for a written decision under the
Commission's rules.[^32]

21\. Finally, TCI also alleges that the City failed to conduct a
separate public proceeding on the underlying rate request pursuant to
section 76.935 of the Commission's regulations to allow for the
participation of interested parties rather than a summary rejection at
the Council meeting.[^33] TCI further alleges that the City has an
obligation to provide the public an opportunity to participate in its
cable rate proceedings. The City argues that the opportunity for public
participation was dependent upon a "meaningful and widely distributed
public notice," which the City relied on TCI to provide directly to each
of its subscribers. However, it is the City's regulations which must
provide interested parties with an opportunity to express their
views.[^34] The record before us is insufficient to determine whether
the City complied with its own procedural requirements and whether TCI
and the public had an opportunity to comment on TCI's filings or the
City's reaction to them.[^35] Because we are ruling in favor of TCI on
the inadequacy of the City's Resolutions, we need not make a
determination regarding the City's possible procedural shortcomings.

# IV. ordering clauses

22\. Accordingly, **IT IS ORDERED** that the Appeals of Local Rate
Orders filed by TCI of Pennsylvania on April 20, 1995 **ARE GRANTED IN
PART AND DENIED IN PART** and the local rate orders of the City of
Pittsburgh, Pennsylvania **ARE REMANDED** for further consideration
consistent with this Memorandum Opinion and Order.

23\. This action is taken pursuant to authority delegated by § 0.283 of
the Commission's rules.[^36]

FEDERAL COMMUNICATIONS COMMISSION

John B. Norton

Deputy Chief, Policy Division

Media Bureau

[^1]: Resolution Nos. 215 and 216.

[^2]: 47 U.S.C. § 543(a)(2).

[^3]: 47 U.S.C. § 543(b)(1); 47 C.F.R. § 76.922.

[^4]: ^?^ 47 U.S.C. § 543(b)(5)(B); 47 C.F.R. § 76.944.

[^5]: ^?^ *Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act, Report and Order and Further Notice
    of Proposed Rulemaking*, 8 FCC Rcd 5631 (1993) ("Rate Order");
    *Third Reconsideration Order*, 9 FCC Rcd 4316, 4346 (1994).

[^6]: 47 C.F.R. § 76.937(a).

[^7]: Rate Order at 5718.

[^8]: 47 C.F.R. § 76.936; *see* *Ultracom of Marple Inc.*, 10 FCC Rcd
    6640, 6641-42 (1995).

[^9]: *See Century Cable of Southern California*, 11 FCC Rcd 501 (1995);
    *TCI of Iowa, Inc.*, 13 FCC Rcd 12020 (1998).

[^10]: Resolution 215.

[^11]: Resolution 216.

[^12]: 47 C.F.R. § 76.933.

[^13]: 10 FCC Rcd 6638 (1995).

[^14]: 47 C.F.R. § 76.933(a).

[^15]: 47 C.F.R. § 76.936(a).

[^16]: *Chillicothe Cablevision, Inc.*, 10 FCC Rcd 6055, 6056 (1995).

[^17]: 47 C.F.R. § 76.936(b).

[^18]: *See Falcon Classic Cable v. McCreary City, KY*, 15 FCC Rcd
    57171, 57178 (2000) (public notice under section 76.936(b) should be
    given in a manner consistent with applicable local law or
    regulations governing a franchising authority's rate review).

[^19]: 47 C.F.R. § 76.932 (1996). The current notice requirement is in
    47 C.F.R. § 76.1603.

[^20]: 47 C.F.R. § 76.964 (1996). Section 76.964 provided a similar
    notice requirement as section 76.932. The current notice requirement
    is in 47 C.F.R. § 76.1603.

[^21]: 47 C.F.R. § 76.932 (1996). The current notice requirement is in
    47 C.F.R. § 76.1603.

[^22]: Opposition at 4-5, Rate Order at 5712-5713 (1993).

[^23]: *TCI Cablevision of Dallas, Inc.*, 15 FCC Rcd 9535 (2000).

[^24]: 47 C.F.R. § 76.935.

[^25]: *E! Entertainment Television, Inc., c/o Donna C. Gregg, Esq.*, 10
    FCC Rcd 922 (1994).

[^26]: Resolution 215.

[^27]: Resolution 216.

[^28]: *Falcon Cable Media*, 13 FCC Rcd 11996, 11998 (1998).

[^29]: 47 C.F.R. § 76.936.

[^30]: Rate Order, 8 FCC Rcd at 5723-24.

[^31]: *See Valley Cable TV, Inc.*, 13 FCC Rcd 6378-79, 6379 n. 8
    (1998).

[^32]: 47 C.F.R. § 76.936(a), (b); *See* Rate Order, 8 FCC Rcd at 5715;
    *Falcon Cable Media*, 13 FCC Rcd at 11998.

[^33]: 47 C.F.R. § 76.935.

[^34]: *Id.*

[^35]: Appeal at 4 and Attachment A.

[^36]: 47 C.F.R. § 0.283.