FOR RECORD ONLY
$//Consolidated Appeal ORDER, in Boston, MA, et al, DA 95-441//$
$/76.922 Rates for the basic service tier/$
$/76.944 Commission Review of Franchising Authority Decisions/$

 Before the
 FEDERAL COMMUNICATIONS COMMISSION
 Washington, D.C. 20554

 DA 95-441

In the Matter of ) Acton, MA
 ) Bedford, MA
CABLEVISION OF BOSTON LIMITED ) Boston, MA
 PARTNERSHIP ) Brookline, MA
A-R CABLE SERVICES, INC. ) Braintree, MA
CSC ACQUISITION - MA, INC. ) Fitchburg, MA
 ) Gardner, MA
Appeals of Local Rate Orders of the ) Georgetown, MA
Massachusetts Community Antenna ) Groveland, MA
Television Commission ) Haverhill, MA
 ) Hudson, MA
 ) Leominster, MA
 ) Lexington, MA
 ) Lunenburg, MA
 ) Lynnfield, MA
 ) Maynard, MA
 ) Norwood, MA
 ) Peabody, MA
 ) Stow, MA
 ) Sudbury, MA
 ) Templeton, MA
 ) Westminster, MA
 ) Westwood, MA

CONSOLIDATED ORDER

 Adopted: March 7, 1995; Released: March 8, 1995

By the Chief, Cable Services Bureau:

I. Introduction

 1. On June 20, 1994, Cablevision of Boston Limited Partnership, Cablevision of
Brookline Limited Partnership, A-R Cable Services, Inc. and CSC Acquisition-MA, Inc.
(collectively "Cablevision"), filed a consolidated Appeal of certain local rate orders adopted May 20, 1994 by the Massachusetts Community Antenna Television Commission
("CATC"). The CATC filed a Motion for Extension of Time on June 30, 1994, which the
Commission granted on July 5, 1994. The CATC filed a Consolidated Opposition to
Cablevision's Appeal on August 1, 1994. Cablevision then filed a Consolidated Reply to the
CATC's Opposition on August 8, 1994.

 2. The parties are in agreement that the CATC's local rate orders for the
Communities are identical with respect to the issue being appealed. In the interest of
administrative efficiency, the Commission has decided that each of the proceedings is
sufficiently related to one another to justify the resolution of Cablevision's Appeal of the
various local rate orders in this Consolidated Order.

 3. In its local rate orders, the CATC established regulated rates for Cablevision's
basic cable service and associated equipment and installation charges, pursuant to the Cable
Television Consumer Protection and Competition Act of 1992. Cablevision challenges only
those portions of the local rate orders in which the CATC calculated Cablevision's maximum
permitted rates using Cablevision's revised figure on Line 301 of Worksheet 3 of its FCC
Form 393s, and its original figure for Line 104 on Worksheet 1.

II. Standard of Review

 4. Under the Commission's rules, appeals of franchising authorities' local rate
orders are reviewed by the Commission. 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. 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 a
local rate order. If the Commission reverses a franchising authority's decision, it will not
substitute its own decision, but instead it will remand the issue to the franchising authority
with instructions for its resolution.

III. Discussion

 5. FCC Form 393 is the official form used by regulators to determine whether an
operator's regulated rates for programming, equipment and installations comply with the
Commission's rules. FCC Form 393 is divided into three separate, but interrelated, parts.
In Part II, the operator calculates its permitted programming rates, while in Part III, the
operator calculates its permitted equipment and installation rates. Part I is a cover sheet that
lists the various programming, equipment and installation rates that have been calculated in
Parts II and III and compares them to the rates the operator has actually charged during the
time period under review.

 6. The operator's maximum permitted rates are derived by completing Parts II
and III of FCC Form 393, pursuant to which the operator calculates the actual aggregate
revenues collected by the operator for regulated programming, equipment and installation, as
of the initial date of regulation, or as of September 30, 1992 if the operator's current per
channel rate exceeds its benchmark per channel rate. After calculating actual aggregate
revenues, the operator converts those revenues to a per-channel rate, and then compares the
per-channel figures to the applicable benchmark rate. If an operator's current per-channel
rate exceeds the benchmark rate, the operator must reduce the per-channel rate to the
benchmark rate or by 10%, whichever reduction amount is less. After computing the permitted rate level in this manner, monthly equipment and installation costs are removed to
derive the maximum permitted programming rates. Maximum permitted rates for equipment
and installation are based on actual cost and are calculated in Part III of FCC Form 393.

 7. Cablevision, which restructured its rates as of September 1, 1993, submitted
an FCC Form 393 for each of the Communities to the CATC in November 1993. Following
a January 31, 1994 prehearing conference attended by both the CATC and Cablevision,
Cablevision submitted revised FCC Form 393s for each of the Communities. In the revised
FCC Form 393s which it submitted, Cablevision amended the calculation of its Hourly
Service Charge ("HSC") in Step A, Part III to include all hours which Cablevision's
independent contractors spent repairing converters and remotes. Cablevision's revised
calculations resulted in a new higher figure for Line 301 (Monthly Equipment and
Installation Cost) on Worksheet 3 of its FCC Form 393s. As it had done in its initial filings
with the CATC, Cablevision equated Line 104 (Monthly Equipment Revenue) with Line
301. However, when the CATC reviewed Cablevision's calculations, it used Cablevision's
revised entry for Line 301, but retained Cablevision's original entry for Line 104. It is
Cablevision's position that this action was in violation of the Commission's rules, as clarified
in the November 10, 1993 Public Notice. Cablevision contends that the CATC deprived it of
the opportunity to recalculate its Base Rate per Channel using the adjusted equipment costs,
thus causing its Base Rate per Channel to be artificially low. This, Cablevision contends,
lowered the maximum permitted rate for Cablevision's basic service and cable programming
service tiers.

 8. The CATC claims that it "unlinked" Lines 104 and 301 in order to preserve
the underlying mathematical principles of the Commission's benchmark methodology. The
CATC claims that when an operator's equipment rates increase or decrease due to changes in
Part III of its FCC Form 393, the only way to ensure a proper inverse corresponding change
in programming rates is to unlink Lines 104 and 301. Although Cablevision's equipment
rates increased due to the revisions made to its FCC Form 393, Cablevision made no
corresponding decrease in the maximum permitted per channel rate for programming as
required by the Commission's regulations. In order to correct this problem, the CATC
retained Cablevision's original entry for Line 104, but it allowed Cablevision to update its
Line 301 entry. The CATC claims that had it not unlinked Lines 104 and 301, then
Cablevision would have been afforded an unjustified increase in its aggregate maximum
permitted rate.

 9. Line 301 reflects the costs an operator incurs in an average month for
customer equipment and installations. Line 104 reflects an operator's average monthly
equipment and installation revenue. Whether substitution of line 301 for 104 on FCC Form
393 is appropriate depends on whether an operator restructured its rates before the initial date
of regulation. Restructured, maximum permitted rates for equipment and installation are
based on actual cost. If an operator had restructured its rates before September 1, 1993, to
comply with benchmark rate regulation, Line 301 and Line 104 should be the same, or
nearly the same, because the revenue received for equipment and installation (Line 104)
should equal the cost of the equipment and installation plus a reasonable return on investment
(Line 301). Since Cablevision did restructure its rates prior to September 1, 1993,
Cablevision's entries on Lines 104 and 301 should be the same, or nearly the same.
Therefore, the CATC acted unreasonably when it permitted Cablevision to revise Line 301,
but prohibited Cablevision from revising Line 104. Accordingly, we remand the local rate
order to the CATC for resolution in accordance with the terms of this Order.

IV. Ordering Clauses

 10. Accordingly, IT IS ORDERED, that the consolidated Appeal filed by
Cablevision of Boston Limited Partnership, Cablevision of Brookline Limited Partnership, A-
R Cable Services, Inc. and CSC Acquisition-MA, Inc. is REMANDED to the CATC for
resolution in accordance with the terms of this Order.

 11. This action is taken by the Chief, Cable Services Bureau, pursuant to authority
delegated by Section 0.321 of the Commission's rules. 47 C.F.R. 0.321.

 FEDERAL COMMUNICATIONS COMMISSION

 Meredith J. Jones
 Chief, Cable Services Bureau