Before the

**Federal Communications Commission**

# Washington, D. C. 20554

In the Matter of: )

)

Mickelson Media, Inc., ) CSB-A-0380

d/b/a Century Communications ) CUID NM0085

)

Appeal of Local Rate Order )

of the County of Los Alamos, New Mexico )

# 

# MEMORANDUM OPINION AND ORDER

##  Adopted: December 8, 1999 Released: December 10, 1999

By the Deputy Chief, Cable Services Bureau:

I.  introduction

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1.  Mickelson Media, Inc., d/b/a Century Communications, operator of the
    cable system serving Los Alamos, New Mexico, ("Century") filed an
    appeal of the local rate order adopted by the County of Los Alamos,
    New Mexico, on January 31, 1997. The County filed an opposition to
    the appeal, and Century filed a reply.

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II. background

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2.  Under the Commission's rules, rate orders issued by local
    franchising authorities may be appealed to the Commission.[^1] In
    ruling on an appeal of a local rate order, the Commission will
    sustain the franchising authority's decision provided there is a
    reasonable basis for that decision, and will reverse a franchising
    authority's decision only if the franchising authority unreasonably
    applied the Commission's rules in its local rate order.[^2] If the
    Commission reverses a franchising authority's decision, it will not
    substitute its own decision but will remand the issue to the
    franchising authority with instructions to resolve the case
    consistent with the Commission decision on appeal.[^3]

3.  An operator proposing an increase in basic service tier (\"BST\"),
    equipment or installation rates bears the burden of demonstrating
    that the proposed increase conforms with our rules.[^4] In
    determining whether the operator\'s proposed increase conforms with
    our rules, a franchising authority may direct the operator to
    provide supporting information.[^5] After reviewing an operator\'s
    rate forms and any other additional information submitted, the
    franchising authority may approve the operator\'s requested rate
    increase or issue a written decision explaining why the operator\'s
    rate is not reasonable.[^6] If the franchising authority determines
    that the operator\'s proposed rate exceeds the maximum permitted
    rate as determined by the Commission\'s rules, it may prescribe a
    rate different from the proposed rate provided that it explains why
    the operator\'s rate is unreasonable and the prescribed rate is
    reasonable.

4.  Cable operators may justify adjustments to their rates on an annual
    basis using FCC Form 1240 to reflect reasonably certain and
    quantifiable changes in external costs, inflation, and the number of
    regulated channels that are projected for the twelve months
    following the rate change.[^7] Any incurred cost that is not
    projected may be accrued with interest and added to rates at a later
    time.[^8] If actual and projected costs are different during the
    rate year, a \"true‑up\" mechanism is available to correct estimated
    costs with actual cost changes.[^9]

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III. discusion and analysis

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5.  Century submitted an FCC Form 1240 to the County on February 1, 1996
    to establish a maximum permitted basic service tier ("BST") rate of
    \$25.83, which the County adjusted to a \$25.63 maximum permitted
    BST rate effective from May 1, 1996, in the January 31, 1997 rate
    order on appeal here. This rate adjustment was based on the County's
    correction of the maximum permitted rate entered on Line A1 of the
    Form 1240 from \$22.65 to the \$22.55 rate permitted in the County's
    September 16, 1996 rate order in which Century's immediately
    previous Form 1210 rate filing was reviewed. Century claims the
    County erred in not also correcting Worksheet 8 of the Form 1240 to
    reflect the Form 1210 permitted \$22.55 rate as well. Century claims
    this further correction was required because of the refund plan
    submitted to the County in response to the Form 1210 rate order.
    Century argues that its refund proposal in combination with the
    County's failure to adjust Worksheet 8 effectively subjected it to a
    double refund obligation.

6.  The County opposes Century's appeal on the grounds that its Line A1
    adjustment and its determination not to adjust the entry on
    Worksheet 8 is consistent with the Instruction for FCC Form
    1240.[^10] The County asserts that Century entered on Worksheet 8
    the rate from its rate card, and that this figure was not changed as
    part of its Form 1240 review. The County contends the Cable Services
    Bureau has not permitted the kind of adjustment requested by Century
    when it reviews Forms 1240 in cable programming service tier
    ("CPST") rate cases,[^11] and argues that such an adjustment would
    be improper in this case. The County also contends that Century has
    not made any refunds as a result of the Form 1210 review, but
    instead has only submitted a refund plan that proposes refund
    offsets that are not permitted with respect to rates set by means of
    Form 1210. Accordingly, the County argues that the determination not
    to adjust Century's entry on Worksheet 8 is correct despite the
    refund plan submitted by Century.

7.  In reply, Century asserts that the Cable Services Bureau has made
    adjustments to Worksheet 8 consistent with its adjustments to Line
    A1, and points to the figure appearing on Line H1 of the corrected
    Form 1240 prepared by the Bureau in *TKR Cable Company*. Century
    states that the entry on Line H1 of the Bureau staff's corrected
    Form 1240 in that case is derived from the Form 1210 permitted rate
    with which the Bureau staff adjusted the Line A1 entry on the
    corrected Form 1240.[^12] Century reiterates its contention that the
    County's failure similarily to adjust the Worksheet 8 true-up rate
    figure to reflect the earlier Form 1210 permitted rate effectively
    subjects it to a double refund obligation -- "once through the Form
    1210 refund order and once through the Form 1240 true-up
    calculation."[^13]

8.  Century's appeal will be denied. As noted above, the instructions
    for Worksheet 8 require the entry of "the rate which was in effect
    for each month of \[the True-Up Period\] .... The rate used should
    be the figure from your rate card at the time."[^14] The record
    shows that the County followed these instructions. The County did
    not adjust the Worksheet 8 filed by Century to reflect the
    operator's Form 1210 determined BST maximum permitted rate. Instead,
    the County reviewed Century's Form 1240 with Worksheet 8 showing the
    actual rate as indicated on Century's rate card. Given a record
    showing that the County followed the Form 1240 instructions with
    respect to Worksheet 8, we find the County's determination not to
    make the adjustment to Worksheet 8 to be reasonable.

9.  We reject Century's argument that the County's determination not to
    adjust Worksheet 8 results in a double refund obligation for
    Century. The record shows that Century has not made any refunds of
    overcharges determined by the County in its review of Century's
    Form 1210. The record further shows that, although Century submitted
    to the County a refund plan, that plan includes a proposal for an
    impermissable offsetting of refunds. Century's refund plan proposes
    an aggregation of "all receipts for basic service and regulated
    customer equipment," with that total "compared to the total
    permitted charges."[^15] As the County points out, an offsetting of
    receipts from BST charges with receipts from equipment charges is
    not permitted under the Commission's rules relating to rates
    established pursuant to Forms 1210 and 1240.[^16] While the
    Commission has allowed an operator to conform its true-up to an
    approved refund plan,[^17] or to account for the payment of refund
    liability, contingent on timely actual payments of refunds,[^18] the
    County's determination not to adjust the true-up where the
    previously ordered refund is unpaid and disputed is not
    unreasonable.[^19] Nothing herein prevents the County from allowing
    the operator to reflect in its refund plan the refund liability that
    has been incorporated in a projected period true-up
    calculation,[^20] or to reflect approved refunds in the next
    true-up. [^21]

    **IV. ORDERING CLAUSE**

10. For the foregoing reasons, **IT IS HEREBY ORDERED**, pursuant to
    authority delegated by Section 0.321 of the Commission\'s rules,
    that the Petition for Review of the Local Rate Order of the County
    of Los Alamos, New Mexico, (CSB-A-0380), filed by Mickelson Media,
    Inc., d/b/a Century Communications on March 3, 1997, **IS DENIED**.

    FEDERAL COMMUNICATIONS COMMISSION

    William H. Johnson Deputy Chief, Cable Services Bureau

[^1]: 47 C.F.R. § 76.944.

[^2]: *See Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992*, Rate Regulation, 8 FCC Rcd
    5631, 5731 (1993) (*\"Rate Order\"*); *See also Implementation of
    Sections of the Cable Television Consumer Protection and Competition
    Act of 1992*, Rate Regulation, *Third Order on Reconsideration*, 9
    FCC Rcd 4316, 4346 (1994).

[^3]: *Rate Order* at 5732.

[^4]: ^ ?^47 C.F.R. § 76.937(a).

[^5]: ^  ?^*See* *Rate Order*, 8 FCC Rcd at 5718-19.

[^6]: ^ ?^47 C.F.R. § 76.936; *see* *Ultracom of Marple Inc.*, 10 FCC
    Rcd 6640, 6641-42 (CSB 1995).

[^7]: *See* 47 C.F.R. Section 76.960; *see also Implementation of
    Sections of the Cable Television Consumer Protection and Competition
    Act of 1992;* Rate Regulation, Thirteenth Order on Reconsideration,
    (\"*Thirteenth Reconsideration Order*\"), 11 FCC Rcd 388, 391
    (1995).

[^8]: *Thirteenth Reconsideration Order* at 392.

[^9]: *Id*.

[^10]: The County notes that those instructions for Worksheet 8 require
    the entry of "\... the rate which was in effect for each month of
    \[the True-Up Period\] \... The rate used should be the figure from
    your rate card at the time." County opposition at p. 3.

[^11]: *Citing TKR Cable Company*, 12 FCC Rcd 1009 (CSB 1997).

[^12]: *See* Century reply at 2, and the exhibits described at n. 2.
    Century also cites *Maryland Cable Partners, L.P.*, 11 FCC Rcd 20890
    (CSB 1996).

[^13]: Century reply at 2.

[^14]: Instructions for FCC Form 1240 for Worksheet 8, p 40-41.

[^15]: County opposition, Attachment B.

[^16]: *See Telerama, Inc.*, 11 FCC Rcd 17369, 17372 (CSB 1996), at n.
    13.

[^17]: *See Time Warner Cable* (Perinton, NY), DA 99-1868 para. 6, 1999
    WL 714006 (F.C.C.) (CSB released Sept. 15, 1999).

[^18]: *See Cox Communictions of Roanoke* (Roanoke County, VA), 13 FCC
    Rcd 22317, 22320 n.22 (CSB 1998). Although Century relies on
    *Maryland Cable Partners, L.P.*, 11 FCC Rcd 20890 (CSB 1996), the
    record in that case shows that Worksheet 8 was not adjusted on the
    corrected Form 1240 prepared by the Bureau staff to reflect the
    previously determined Form 1210 maximum rate, although Paragraph 11
    of the Memorandum Opinion and Order indicated that such an
    adjustment was made. The Memorandum Opinion and Order in *TKR Cable
    Company*, 12 FCC Rcd 1009 (CSB 1997), reflects no adjustment to
    Worksheet 8. Neither does the Worksheet 8 of the corrected Form 1240
    prepared by Bureau staff in that case. The adjustment to Line H1 of
    the corrected Form 1240 prepared by Bureau staff is not explained in
    the record.

[^19]: The general Commission practice in reviewing CPST rates is to
    reflect the accurate maximum permitted rate from the previous rate
    form in Line A1 and the actual rate charged during the true-up
    period in Worksheet 8. *See, e.g., Comcast Cablevision*, 13 FCC Rcd
    18498, 18499 (CSB 1998); *Cox Communications Roanoke* (Vinton, VA),
    13 FCC Rcd 18398, 18400 (CSB 1998); *Meredith Cable*, 13 FCC Rcd
    17409, 17411 (CSB 1998); *Time Warner Cable* (Carrboro, NC), 13 FCC
    Rcd 16650, 16652 (CSB 1998).

[^20]: *See Marcus Cable Associates* (Montrose, CA)*,* 14 FCC Rcd 3390,
    3392 n.16 (CSB 1999).

[^21]: *See Time Warner Cable* (Perinton, NY), DA 99-1868 para. 6, 1999
    WL 714006 (F.C.C.) (CSB released Sept. 15, 1999).