**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of: )

)

CoxCom, Inc. ) CUID No. VA0152

) File No. CSB-A-0538

Appeal of Local Rate Order )

of the Town of Vinton, VA. )

**MEMORANDUM OPINION AND ORDER**

**Adopted: December 13, 1999 Released: December 15, 1999**

By the Deputy Chief, Cable Services Bureau:

1\. CoxCom, Inc. ("Cox") filed an Appeal challenging Ordinance No. 691
("local rate order") issued by the Town of Vinton, Virginia ("Town").
The local rate order disallowed Cox's rate adjustment and required
refunds. The Town filed an Opposition to Cox's Appeal. Cox filed a
Reply.

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 not conduct a
*de novo* review, but instead will sustain the franchising authority\'s
decision as long as there is a reasonable basis for that decision.[^2]
Therefore, the Commission will reverse a franchising authority\'s
decision only if it determines that the franchising authority acted
unreasonably in applying the Commission\'s rules in rendering its local
rate order. 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.[^3]

3\. On November 27, 1997, Cox submitted its 1998 FCC Form 1240 to the
Town in support of its rate adjustment for its Basic Service Tier
("BST") for the period March 1, 1998 to February 28, 1999. On April 7,
1998, the Town approved the local rate order, which disallowed the rate
increase of \$0.47 because Cox had used the median household income
figure for Roanoke County, where Vinton is located, rather than the
lower income figure for the Town when completing line C5 of its Form
1200 in 1994.[^4] The Town ordered refunds from May 15, 1994 to May 15,
1998.

4\. In its appeal, Cox contends that the local rate order should be
reversed and remanded because the Town did not have the authority to
deny a 1998 rate adjustment based upon its belief that an error was
contained in Cox's 1994 filing of FCC Form 1200. According to Cox, the
Town effectively approved the rates justified by the 1994 FCC Form 1200
nearly four years ago by failing to take any action, and lost its
jurisdiction over rates when it either approved or failed to conduct any
proceedings with regard to earlier filed FCC Forms 1200, 1205, 1210 and
1240. Cox argues that the Town did not dispute the basis of the
calculations supporting the 1998 Form 1240 and did not object to any
other aspect of the rate filing and, therefore, had no reasonable basis
upon which to disallow the rate adjustment. Cox further argues that the
Town's rationale for disallowing the 1998 rate adjustment and ordering
refunds for the period from May 1994 to present is mistaken because the
census income data reflected in the FCC Form 1200 was provided to Cox by
the Cable Services Bureau on FCC Form 1201, and properly stated census
income information for the county. In its Opposition, the Town explains
that Cox 1998 rate for Vinton was higher than the rates for other
franchise areas in the Roanoke Valley for two reasons: the census income
figure used in the original Form 1200; and Form 1240 true-up benefits
for upper tier programming overcharges that were the subject of
successful complaints from the other communities but not challenged by
Vinton.[^5] Because the Operator had declined to resolve this disparity,
the Town explained it disallowed the Operator's proposed March 1, 1998
rate increase.[^6] The Town argues that its action is consistent with
the Commission policy of capping permitted rates at a lower rate in less
affluent communities, and the operator's refusal to settle for any rate
less than the MPR is inconsistent with the Commission's policy of
encouraging cable operators to work cooperatively with the communities
they serve.[^7] In its Reply Cox argues that the Town's admitted that
Cox's BST rate does not exceed its maximum permitted rate ("MPR").

5\. In setting up rate regulation, the Commission determined that a
benchmark approach should be the primary approach for determining
initial or capped BST rates. This approach uses a simple formula for
measuring the reasonableness of the cable operator's rate that is based
on the Commission's analysis of the rates of systems subject to
effective competition.[^8] Reasonable rates approximate the rates of
similarly situated systems that are subject to effective competition.
The benchmark formula as revised in the *Second Order on
Reconsideration* measures the characteristics of cable systems that
might have affected rates, including variables reflecting the costs of
providing service. One of these is the median income in the franchise
area, which is used as a proxy for wage rates.[^9] This is shown as the
Census Income Level entered in Line C5 on FCC Form 1200, the form used
to determine initial or capped rates after May 14, 1994. The
instructions for Line C5 provide:[^10]

To find the median household income of the franchise area you serve, you
may use the information provided in 1990 Census of Population and
Housing: Summary Social, Economic, and Housing Characteristics, 1990
CPH5 or 1990 U.S. Census Summary Tape File 3-C. If your franchise area
is located in a municipality that is identified in these Census Bureau
materials, use the figure for median household income for that
municipality. If your franchise area is not located in a municipality
identified in the Census Bureau materials, use the figure for the county
your franchise serves.

\*\*\*

The FCC's Cable Services Bureau can assist you in obtaining the
appropriate figure. You may fax your request to the Bureau..., using
Form 1201.[^11]

6\. Cox received the Census Income Level figure from the Commission[^12]
and used it in Line C5. This figure was for Roanoke County in which
Vinton is located because, according to Cox and not disputed by the
Town, the census material referenced in the instructions did not provide
the company with income data for the Town.[^13] Cox's action in seeking
the figure from the Commission and its use of the county figure provided
by the Commission was consistent with the instructions for Line C5 of
Form 1200 and was permissible. Although the Town now disagrees with the
census income figure used in Cox's Form 1200 in 1994,[^14] the
Commission's rules do not require changes to a properly computed initial
regulated rate on Form1200 because more detailed information becomes
available over time or from sources different from those specified by
the Commission. The Town is concerned that subscribers in Vinton may pay
higher rates than subscribers in neighboring jurisdictions, but a cable
operator is entitled to charge up to the maximum permitted BST rate
computed on its rate from, if the bases for the figures in the rate form
are justified and the franchising authority has not discovered
mathematical errors in the rate from.[^15] Furthermore, a franchise
authority may not disallow a properly computed BST rate because of
concern that the upper tier rate may be too high. When upper tier rates
were subject to rate regulation, upper tier rate increases were to be
addressed in complaints timely filed with the Commission, not through
offsets or adjustments to justified BST rates.[^16] We are granting the
Operator's appeal and remanding the local rate order to the Town for
further consideration consistent with this Memorandum Opinion and Order.

7\. Accordingly, IT IS ORDERED that .the Appeal of CoxCom, Inc. from a
Rate Order of the Town of Vinton, Virginia, CSB-A-0538, IS GRANTED and
Ordinance No. 691 of the Town of Vinton , Virginia IS REMANDED to the
Town for further reconsideration consistent with the terms of this
Memorandum Opinion and Order.

8\. IT IS FURTHER ORDERED that the Town of Vinton shall not enforce
matters remanded for further consideration pending further action by the
Town on those matters.

9\. This action is taken pursuant to authority delegated by Section
0.321 of the Commission's Rules. 47 C.F.R. § 0.321.

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, Report and
    Order and Further Notice of Proposed Rulemaking in MM Docket No.
    92-266, 8 FCC Rcd 5631, 5731 (1993) ("*Rate Order*"); Third Order on
    Reconsideration in MM Docket No. 92-266, 9 FCC Rcd 4316, 4346
    (1994).

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

[^4]: Local rate order at 1.

[^5]: Town Opposition at 2-3, 5. The Town filed a complaint about the
    operator's March 1, 1998 cable programming services tier ("CPS")
    rate increase. In reviewing this complaint, the Cable services
    Bureau reviewed how the operator established its 1998 rate, starting
    with operator's FCC Form 1200. Because the operator had not been
    subject to Commission regulation at the time of the complaint, the
    Commission review could have been limited to the increase that was
    the subject of the complaint. At the operator's request, the Bureau
    reviewed the full 1200 series filing. In conducting this review, the
    Bureau made corrections to the operator's Forms 1240 for the CPST
    rates which took effect on March 1, 1996 and March 1, 1997, and
    carried the corrected MPR rates forward to the Form 1240 for the
    period starting on March 1, 1998. As a result of these and other
    corrections, the Bureau found that the March 1, 1998 CPST rate was
    unreasonable and ordered refunds for the period stating March 3,
    1998, the date of the first complaint about the 1998 rate. *Cox
    Communications Roanoke* (Vinton, VA), 13 FCC Rcd 18398 (Cab. Serv.
    Bur. 1998).

[^6]: Town Opposition at 3.

[^7]: *Id*. at 3-4.

[^8]: *See Rate Order*, 8 FCC Rcd at 5755.

[^9]: Implementation of Sections of the Cable Television Consumer
    Protection and Competition Act of 1992: Rate Regulation, Second
    Order on Reconsideration, Fourth Report and Order, and Fifth Notice
    of Proposed Rulemaking, 9 FCC Rcd 4119, 4158 para. 84 (1994).

[^10]: FCC Form 1200, Setting Maximum Initial Permitted Rates for
    Regulated Cable Services Pursuant to Rules Adopted February 22,
    1994, pp. 16-17 (May 1994) (Instructions for Module C, Line C5).

[^11]: The Form 1200 instructions alternatively allow cable operators to
    use census income data by zip code, weighted to reflect the number
    of subscribers in each zip code served. *Id*. at 17.

[^12]: *See* Cox Appeal, Exh. 3.

[^13]: Cox Appeal at 10.

[^14]: Even if Cox had used an incorrect census income figure in Form
    1200, the Town's failure to issue any tolling or accounting order
    within the time periods specified in 47 C.F.R. § 76.933 precludes
    ordering any refunds for Form 1200.

[^15]: *See* *TCI Cablevision of California, Inc*., DA 99-1015 (Cab.
    Serv. Bur. released May 28, 1999).

[^16]: See 47 U.S.C. § 543(c)(3); 47 C.F.R. § 76.950(a); see also
    *Cencom Cable Income Partners II, L.P*., 12 FCC Rcd 7948, 7958-60
    paras. 20-22 (1997).