*Pages 1--11 from  Microsoft Word - 25948.doc*
 Federal  Communications  Commission  DA  03-  784 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of  : 
 Community  TV  Corporation  d/  b/  a  The  Americable  Group 

 Appeals  of  Local  Rate  Order  in  Amherst,  New  Hampshire;  Litchfield,  New 
 Hampshire;  Merrimack,  New  Hampshire;  Milford,  New  Hampshire 

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 CSB-  A-  0132-  S  CSB-  A-  0135-  S 
 CSB-  A-  0136-  S  CSB-  A-  0137-  S 

 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  March  10,  2003  Released:  March  17,  2003 
 By  the  Deputy  Chief,  Policy  Division,  Media  Bureau: 
 I.  INTRODUCTION 
 1.  Community  TV  Corporation  d/  b/  a  The  Americable  Group  (  Community)  has  filed  separate  appeals  on  behalf  of  certain  New  Hampshire  communities  of  local  rate  orders  adopted  by  the 

 Towns  of  Amherst,  Litchfield,  Merrimack,  and  Milford,  New  Hampshire.  Community  is  appealing  the  following  rate  orders:  Milford,  New  Hampshire,  issued  January  16,  1995;  Merrimack,  New  Hampshire, 
 issued  January  19,  1995;  Litchfield,  New  Hampshire,  issued  January  23,  1995;  and  Amherst,  New  Hampshire,  issued  January  23,  1995. 

 2.  Each  Town  filed  an  opposition,  to  which  Community  filed  a  reply.  In  addition,  Community  filed  an  emergency  stay  request.  Because  we  resolve  the  issues  raised  in  these  appeals  on  the 
 merits,  the  emergency  stay  request  is  rendered  moot.  Several  issues  arise  in  the  pleadings.  Because  these  rate  appeals  have  identical  issues  and  involve  similar  parties,  we  will  consolidate  our  consideration  of 
 these  matters. 
 II.  BACKGROUND 
 3.  Under  the  Commissions  rules,  rate  orders  issued  by  local  franchising  authorities  may  be  appealed  to  the  Commission.  In  ruling  on  an  appeal  of  a  local  rate  order,  the  Commission  will  sustain  the 

 franchising  authoritys  decision  provided  there  is  a  reasonable  basis  for  that  decision,  and  will  reverse  a  franchising  authoritys  decision  only  if  the  franchising  authority  unreasonably  applied  the  Commissions 
 rules  in  its  local  rate  order.  1  If  the  Commission  reverses  a  franchising  authoritys  decision,  it  will  not  substitute  its  own  decision  but  will  remand  the  issue  to  the  franchising  authority  with  instructions  to 

 1  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)  (  Third  Order  on  Reconsideration). 
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 resolve  the  case  consistent  with  the  Commission  decision  on  appeal.  2 
 4.  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.  3  In 

 determining  whether  the  operators  proposed  increase  conforms  with  our  rules,  a  franchising  authority  may  direct  the  operator  to  provide  supporting  information.  4  After  reviewing  an  operators  rate  forms  and 
 other  additional  information  submitted,  the  franchising  authority  may  approve  the  operators  requested  rate  increase  or  issue  a  written  decision  explaining  why  the  operators  rate  is  not  reasonable.  5  If  the 
 franchising  authority  determines  that  the  operators  proposed  rate  exceeds  the  maximum  permitted  rate  as  determined  by  the  Commissions  rules,  it  may  prescribe  a  rate  different  from  the  proposed  rate  provided 
 that  it  explains  why  the  operators  rate  is  unreasonable  and  the  prescribed  rate  is  reasonable. 
 5.  In  the  rate  filings  at  issue  in  this  case,  Community  used  Form  1200,  1205  and  1210.  In  Form  1200,  an  operator  calculates  its  initial  maximum  permitted  rates  for  the  basic  and  cable  services 

 programming  tiers.  An  operator  may  change  its  maximum  permitted  rates  every  quarter,  using  Form  1210,  or  every  year,  using  Form  1240.  In  Form  1205,  an  operator  determines  the  costs  of  regulated  cable 
 equipment  and  installation  for  the  basic  service  tier. 
 III.  DISCUSSION 
 A.  Communitys  Rates  and  Refund  Liability. 
 6.  When  a  cable  operator  files  a  benchmark  rate  justification,  Commission  rules  provide  a  franchising  authority  30  days  in  which  to  review  the  rate  filing  before  the  proposed  rates  become 

 effective.  6  A  franchising  authority  may  toll  this  deadline  for  an  additional  90  days,  by  issuing  a  brief  written  order,  if  it  needs  more  time  to  review  the  filing,  which  gives  the  franchising  authority  a  total  of 
 120  days  to  issue  an  order  before  the  proposed  rates  go  into  effect.  7  In  addition,  our  rules  provide  that  if  a  franchise  authority  does  not  make  a  decision  by  the  end  of  the  90-  day  period,  it  must  issue  an  Accounting 
 Order  before  the  end  of  the  tolling  period  to  preserve  its  ability  to  order  refunds.  8 
 7.  If  an  operator  files  a  facially  incomplete  rate  justification,  which  includes  the  failure  to  file  necessary  supporting  schedules,  the  deadlines  for  the  franchising  authority  to  rule  on  the 

 reasonableness  of  proposed  rates  are  suspended  while  the  franchising  authority  awaits  receipt  of  the  necessary  information.  9  Once  the  supplemental  information  has  been  served  on  the  franchising  authority, 
 the  time  for  determining  the  reasonableness  of  the  rate  by  the  franchising  authority  will  recommence.  10  If  an  operator  files  a  complete  filing,  but  one  about  which  the  local  authority  has  questions,  the  deadlines 

 2  Rate  Order,  8  FCC  Rcd  at  5732. 
 3  47  C.  F.  R.    76.944. 
 4  See  Rate  Order,  8  FCC  Rcd  at  5718-  19. 
 5  47  C.  F.  R.    76.936;  see  Ultracom  of  Marple  Inc.,  10  FCC  Rcd  6640,  6641-  42  (CSB  1995). 
 6  See  47  C.  F.  R.    76.  933(  a). 
 7  See  47  C.  F.  R.    76.  933(  b).  In  the  case  of  a  cost-  of-  service  filing,  the  local  franchising  authority  may  extend  the 
 review  period  by  150  days.  Id.  This  would  give  the  local  franchising  authority  a  total  of  180  days  (the  original  30  days  plus  the  additional  150  days)  to  review  the  cost-  of-  service  filing  before  the  proposed  rates  would  go  into  effect. 

 8  47  C.  F.  R.    76.933(  c). 
 9  See  Third  Reconsideration  Order,  9  FCC  Rcd  at  4348. 
 10  Id. 
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 may  not  be  automatically  suspended.  11  Such  a  filing  would  be  one  that  is  submitted  in  good  faith,  but  about  which  the  regulatory  authority  has  certain  questions  or  reasonably  feels  requires  clarifying  or 
 substantiating  information.  12  However,  if  the  information  sought  is  so  significant  as  to  delay  the  entire  examination  of  the  rest  of  the  rate  justification  the  franchising  authority  could  be  justified  in  delaying  its 
 ruling.  13  Through  these  mechanisms,  the  franchising  authority  is  given  time  to  review  a  rate  justification  fully,  while  the  cable  operator  is  protected  from  having  to  operate  in  an  uncertain  regulatory  environment 
 for  an  indefinite  period  of  time. 
 8.  Community  states  that  on  June  23,  1994,  the  Towns  received  Communitys  Forms  1200  and  1205.  14  Community  indicates  that  on  July  13,  1994,  Amherst  sent  Community  a  letter  stating  that 

 Communitys  Form  1200  was  illegible,  and  requested  Community  to  provide  a  copy  of  the  Form  1200  to  Amherst  as  soon  as  possible.  15  Merrimack,  Milford,  and  Litchfield  made  a  similar  request  on  July  18, 
 1994.  16  Community  points  out  that  in  response,  it  reprinted  both  its  Form  1200  and  Form  1205  and  submitted  to  the  Towns  copies  of  these  forms.  17  In  the  Towns  July  13  and  July  18,  1994  letters, 
 Community  asserts  that  the  Towns  also  stated  that  each  was  still  in  the  process  of  analyzing  and  evaluating  the  Form  1200  and  that  an  additional  90  days  was  needed  to  review  the  proposed  rates,  subject 
 to  a  reservation  of  rights,  which  the  Towns  explained  as  being  the  right  to  extend  the  total  review  period,  effective  upon  receiving  a  legible  copy  of  the  Form  1200.  18  Community  asserts  that  pursuant  to  Section 
 76.933(  b)  the  Towns  were  only  permitted  to  extend  the  review  date  for  90  days  from  the  date  30  days  after  the  date  of  submission.  19  Community  states  that  the  Towns  acknowledged  that  the  forms  were 
 submitted  on  June  23,  1994  and  that  30  days  thereafter  would  be  July  23,  1994,  and  Community  argues  that  pursuant  to  Section  76.  933(  b),  Friday,  October  21,  1994,  was  the  end  of  the  extended  review  period.  20 

 9.  Community  asserts  that  in  October,  by  letter,  the  Towns  indicated  that  since  a  legible  copy  of  Form  1200  was  not  received  until  the  end  of  July,  the  Form  1200  review  period  would  run  until 
 the  end  of  November,  which  Community  asserts  was  in  direct  violation  of  Section  76.933(  c)  which  required  the  Towns  to  either  issue  a  rate  determination  by  October  21,  1994  or  issue  an  Accounting 
 Order.  21  Subsequently,  Community  advised  the  Towns  that  pursuant  to  Section  76.933(  c),  its  rates  had  become  effective  and  the  Towns  were  precluded  by  the  Commissions  rules  from  ordering  any  refunds. 

 11  Id. 
 12  Id. 
 13  Id. 
 14  Appeal  Petition  at  3-  4. 
 15  Id.  at  4. 
 16  Id. 
 17  Id.  Community  submitted  copies  of  these  forms  to  the  Town  of  Merrimack  on  July  22,  1994;  to  the  Town  of 
 Milford  on  July  26,  1994;  and  the  Towns  of  Amherst  and  Litchfield  on  July  29,  1994.  18 
 Id.  at  5.  19 
 Id.  20 
 Id.  21 
 Id.  at  5-  6.  The  letter  from  the  Towns  of  Amherst  and  Litchfield  to  Community  was  dated  October  17,  1994;  the  letter  from  the  Town  of  Milford  to  Community  was  dated  October  18,  1994;  and  the  letter  from  the  Town  of 

 Merrimack  to  Community  was  dated  October  21,  1994.  The  Towns  of  Amherst  and  Litchfield  indicated  that  the  Form  1200  review  period  would  run  from  July  29,  1994  to  November  29,  1994;  the  Towns  of  Milford  and 
 Merrimack  indicated  that  the  Form  1200  review  period  would  run  from  July  26,  1994  to  November  26,  1994  (Community  notes  that  the  review  period  for  the  Town  of  Merrimack  should  run  from  July  22,  1994  and  not  July  26, 
 1994). 
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 Community  argues  that  the  Towns  claim  that  the  Forms  1200  and  1205  were  illegible  does  not  permit  it  to  extend  the  period  for  review  until  the  end  of  November,  1994,  and  moreover  the  forms  submitted  were 
 nowhere  near  completely  illegible  as  claimed  by  the  Towns.  22  In  addition,  Community  asserts  that  the  Commission  has  explained  the  proper  treatment  of  deficient  rate  justifications  and  has  expressly  rejected 
 the  notion  that  an  incomplete  filing  may  be  rejected  automatically  and  treated  as  a  non-  filing.  23 
 10.  In  their  opposition,  the  Towns  state  that  Communitys  initial  Forms  1200  and  1205  submitted  on  June  23,  1994,  were  totally  illegible  and  unsigned  and  that  on  July  18,  1994,  they  wrote 

 Community  requesting  legible  copies  of  the  forms.  24  The  Towns  assert  that  each  extended  the  period  to  review  Communitys  basic  rates  and  equipment  charges  for  an  additional  90  days,  effective  upon  receipt 
 of  legible  copies  of  the  forms.  25  The  Towns  acknowledge  that  Community  resubmitted  legible  copies  of  its  Forms  1200  and  1205  in  July,  however,  each  points  out  that  neither  form  had  been  signed.  26  The 
 Towns  also  claim  that  although  legible  copies  of  Communitys  Forms  1200  and  1205  were  resubmitted,  the  copies  still  carried  the  initial  submission  date.  27  In  addition,  the  Towns  assert  that  because  the  120- 
 day  review  period  had  been  extended  until  the  end  of  November,  1994,  the  Accounting  Orders  submitted  were  filed  in  a  timely,  reasonable  and  responsible  manner.  28  The  Towns  assert  that  thereafter  in 
 December  1994,  each  received  a  letter  from  Community  claiming  that  the  Accounting  Orders  were  issued  after  the  end  of  the  120-  day  review  period.  29  However,  the  Towns  note  that  at  no  time  prior  to  the 
 issuance  of  the  Accounting  Order  did  Community  disagree  in  any  way  with  the  Towns  review  period  extension.  30 

 11.  In  reply,  Community  states  that  the  Towns  did  not  have  the  authority  to  extend  the  rate  review  period  until  the  end  of  November  and  accordingly,  since  the  Towns  did  not  issue  Accounting 
 Orders  within  the  time  frame  specified  in  the  rules,  a  refund  cannot  be  ordered.  31  Community  asserts  that  its  Forms  1200  and  1205  were  not  totally  illegible  as  claimed  and  that  the  filing  was  not  so  incomplete 
 that  the  Towns  should  have  been  able  to  toll  the  review  period.  32  However,  Community  adds  that  even  if  its  original  rate  filing  was  completely  illegible,  Commission  rules  only  permit  an  extension  for  the  time  it 
 takes  to  cure  the  alleged  illegibility,  33  and  in  that  case,  each  Town  should  have  issued  an  Accounting  Order  based  on  that  date,  which  each  failed  to  do.  34  In  addition,  Community  asserts  that  the  Towns 

 22  Id.  at  8-  9.  Community  states  that  even  if  the  forms  were  completely  illegible,  the  maximum  permitted  extension 
 would  have  been  the  time  between  when  the  Towns  notified  Community  of  the  problem  and  the  date  Community  filed  reprinted  forms. 

 23  Id.  at  9.  See  Third  Order  on  Reconsideration,  9  FCC  Rcd  4316  (1994). 
 24  Opposition  at  3.  The  Town  of  Amherst  sent  its  letter  on  July  13,  1994. 
 25  Id. 
 26  Id.  The  Towns  of  Amherst,  Litchfield,  and  Milford  note  that  at  a  rate  hearing  held  November  7,  1994  each 
 informed  Community  that  neither  Form  1200  nor  Form  1205  had  been  signed.  The  Town  of  Merrimack  held  its  rate  hearing  on  November  14,  1994,  and  informed  Community  of  the  unsigned  forms  at  that  time. 

 27  We  note  that  Communitys  resubmission  of  legible  copies  of  its  already  filed  forms  would  not  warrant  adopting  a 
 new  submission  date.  28 
 Id.  at  4.  29 
 Id.  30 
 Id.  31 
 Reply  at  3.  32 
 Id.  at  4.  See  Third  Order  on  Reconsideration,  9  FCC  Rcd  at  4348.  33 
 Id.  34 
 Id. 
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 allegation  of  unsigned  Forms  1200  and  1205  is  without  merit  because  the  cover  letter  to  Communitys  filings  was  signed  by  an  officer  of  Community,  and  the  Towns  were  not  prejudiced  in  their  review  and 
 could  easily  have  asked  for  signed  copies.  35 
 12.  Based  on  our  review  of  the  record,  the  Towns  argument  that  the  review  period  was  extended  into  November  is  unavailing.  36  The  Towns  notified  Community  of  their  need  for  additional 

 review  time  of  Communitys  rate  filings  within  the  allotted  time  to  issue  such  a  tolling  order.  37  Section  76.933(  a)  of  the  Commissions  rules  provides  that  proposed  rates  will  become  effective  after  30  days 
 from  the  date  of  submission,  unless  a  franchising  authority  tolls  the  deadline  by  issuing  a  brief  written  order  explaining  the  need  for  additional  time  to  review  the  rates.  38  Although  the  Towns  requests  for 
 additional  time  were  in  the  form  of  a  letter,  not  an  order,  the  letter  document  sent  to  Community  served  the  purpose  of  explaining  the  decision  of  the  Towns  to  extend  the  review  period  of  Community 
 documents  until  October  23,  1994.  Therefore,  we  will  treat  the  Towns  correspondence  as  a  brief,  written  order  which  was  in  compliance  with  the  Commissions  rules. 

 13.  Accordingly,  we  find  that  the  Towns  adopted  a  tolling  order  with  respect  to  Communitys  Forms  1200  and  1205  which  extended  the  review  period  for  90  days,  in  accordance  with  the 
 Commissions  rules  from  July  23,  1994,  until  October  21,  1994.  39  We  can  accept  the  Towns  argument  that  the  forms  were  totally  illegible,  thus  suspending  the  review  period,  but  even  that  additional  time  does 
 not  make  the  Towns  Accounting  Orders  timely.  The  Town  of  Amherst  requested  legible  copies  of  Communitys  forms  on  July  13,  1994  and  received  them  on  July  29,  1994.  So  its  review  period  was 
 further  extended  16  days.  The  other  three  towns  requested  legible  copies  on  July  18,  1994.  The  Town  of  Merrimack  received  its  copies  on  July  22,  1994,  gaining  an  additional  four  days.  The  Town  of  Milford 
 received  its  copies  on  July  26,  1994,  gaining  an  additional  eight  days.  And  the  Town  of  Litchfield  received  its  copies  on  July  29,  1994,  gaining  an  additional  11  days.  The  Accounting  Orders,  however, 
 were  issued  on  November  16,  1994;  November  17,  1994;  and  November  21,  1994,  which  were  all  beyond  the  end  of  the  extended  review  period.  Because  the  Towns  failed  to  present  a  formal  review  of 
 Communitys  rates  in  a  timely  manner,  the  Towns  did  not  retain  their  authority  to  order  Community  to  issue  refunds.  However,  although  we  find  that  the  Towns  lost  their  authority  to  require  subscriber  refunds 
 as  part  of  their  rate  orders,  they  did  not  lose  their  authority  to  regulate  rates  and  order  prospective  rate  reductions.  40 

 14.  We  also  find  that  the  alleged  absence  of  signatures  on  Communitys  forms  did  not  produce  the  effect  the  Towns  ascribe  to  it.  The  Towns  allege  that  the  forms  were  not  signed  by 
 Community,  warranting  a  further  extension  of  the  review  period.  Community  argues  that  the  Towns 

 35  Id.  at  4.  Moreover,  Community  states  that  contrary  to  what  the  Towns  allege,  Community  never  acknowledged 
 that  it  failed  to  sign  its  Form  1200s.  36 
 We  note  that  the  Towns  letter  dated  July  18,  1994,  only  indicated  that  additional  time  was  needed  to  analyze  and  evaluate  Communitys  Form  1200.  No  reference  is  made  to  reviewing  Form  1205.  In  the  pleadings  filed,  however, 

 both  Community  and  the  Towns  include  Communitys  Form  1205  and  Form  1200  in  the  argument  discussing  issues  related  to  the  Towns  extension  of  time  request.  Therefore,  the  extension  of  the  review  period  that  applies  to 
 Communitys  Form  1200  also  applies  to  its  Form  1205.  37 
 See  47  C.  F.  R.    76.  933(  a).  38 
 See  47  C.  F.  R.    76.  933(  a)  and  76.  933(  b).  39 
 Community  asserts  that  the  applicable  date  should  be  October  21,  1994,  and  we  note  that  in  the  July  18,  1994,  letter,  the  Towns  requested  until  October  23,  1994,  to  extend  the  period  of  time  to  review  Communitys  rates. 

 Although  Community  appears  to  have  indicated  no  opposition  to  that  date  before  the  filing  of  this  appeal,  the  90-  day  period  ended  on  October  21,  1994. 
 40  See  TCI  Cablevision  of  Oakland  County,  Inc.,  11  FCC  Rcd  2542,  2544  (CSB  1996). 
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 charge  is  without  merit  because  the  forms  were  submitted  under  a  cover  letter  signed  by  an  officer  of  Community.  We  agree.  The  Towns  cannot  use  the  alleged  absence  of  signatures  on  the  forms  themselves 
 to  extend  the  review  period  beyond  the  extensions  afforded  by  the  issuance  of  the  tolling  order  and  by  the  request  for  legible  copies.  The  absence  of  signatures  on  the  forms  themselves  is  not  so  significant  as  to 
 warrant  delaying  the  Towns  examination  of  the  forms.  41 
 B.  Communitys  Form  1210  Update  Form  Ended  30  Days  After  Submitted. 
 15.  On  June  29,  1994,  Community  submitted  Form  1210,  the  update  form  which  reflected  the  addition  of  Court  TV  to  the  BST.  Community  states  that  the  Towns  continued  their  review  of 

 Communitys  Form  1210  past  the  end  of  the  review  period.  42  With  regard  to  its  Form  1210  submission,  Community  states  that  the  Towns  never  issued  a  tolling  order  and  as  a  result  Communitys  Form  1210 
 submission  should  be  deemed  approved  by  the  Towns  within  the  initial  30-  day  review  period.  43  Community  requests  that  the  Commission  advise  the  Towns  that  their  review  period  for  Form  1210  has 
 lapsed,  and  that  Communitys  Form  1210  is  deemed  to  have  been  approved.  44 
 16.  As  Community  indicates,  the  Towns  did  not  issue  an  order  specifically  relating  to  Form  1210.  45  Nor  in  their  discussions  regarding  needing  additional  time  to  review  Communitys  Forms  1200 

 and  1205  did  the  Towns  reference  Form  1210.  Pursuant  to  Section  76.933,  if  a  franchising  authority  determines  that  a  cable  operators  current  rates  for  the  basic  service  tier  and  accompanying  equipment  are 
 reasonable  under  the  Commissions  rate  standards,  the  rates  will  go  into  effect  30  days  after  they  are  submitted.  46  If  the  franchising  authority  is  unable  to  determine  whether  the  proposed  rates  for  the  basic 
 service  tier  and  accompanying  equipment  are  reasonable,  based  on  the  material  before  it,  the  franchising  authority  may  toll  the  effective  date  of  the  proposed  rates  for  an  additional  period  of  time  to  make  a  final 
 determination.  47  To  toll  the  effective  date  of  the  proposed  rates,  the  franchising  authority  must  issue  a  brief  order,  within  the  initial  30-  day  period,  explaining  that  the  franchising  authority  needs  additional  time 
 to  review  the  proposed  rates.  48  No  such  order  was  issued.  Therefore,  Communitys  Form  1210  and  the  rates  therein,  are  deemed  to  have  become  effective  30  days  after  submission. 

 C.  Home  Wiring  Maintenance  Charge. 
 17.  Regarding  Communitys  home  wiring  maintenance  charge,  Community  notes  that  the  Towns  ordered  refunds  of  its  monthly  $0.13  home  wiring  maintenance  charge,  based  on  the  conclusion 

 that  such  a  charge  violated  the  prohibition  against  negative  option  billing.  49  Community  asserts  that  this  charge  was  unbundled  from  previously  bundled  rates,  and  as  such  is  not  subject  to  the  negative  option 
 billing  prohibition.  50  Community  argues  that  the  Commission  has  held  that  restructuring  of  tiers  and 

 41  See  Third  Order  on  Reconsideration,  9  FCC  Rcd  at  4348. 
 42  Appeal  Petition  at  21. 
 43  Id.  See  47  C.  F.  R.    76.  933. 
 44  Id.  at  22. 
 45  See  Exhibit  B.  Letter  from  Town  of  Litchfield  to  Harmon  S.  White,  President,  The  Americable  Group,  dated  July 
 18,  1994.  46 
 See  47  C.  F.  R.    76.  933.  47 
 Id.  48 
 Id.  49 
 Appeal  Petition  at  15.  50 
 Id. 
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 equipment,  including  any  restructuring  due  to  implementation  of  the  Cable  Act,  51  will  not  bring  the  negative  option  billing  provision  into  play  if  subscribers  will  continue  to  receive  the  same  number  of 
 channels  and  the  same  equipment.  52  Consequently,  Community  asserts  that  because  subscribers  continued  to  receive  the  same  level  of  service  before  and  after  unbundling,  such  a  charge  did  not  violate 
 the  negative  option  billing  prohibition  and  that  the  Commission  should  find  that  the  Towns  rejection  of  its  home  wiring  maintenance  charge  was  improper.  53 

 18.  The  Towns  assert  that  Community  started  charging  this  new  home  wiring  maintenance  charge  without  receiving  advance  authorization  to  do  so  from  any  subscribers.  54  Although  Community 
 states  that  it  has  a  right  to  charge  home  wiring  maintenance  costs,  the  Towns  argue  that  Section  76.981  of  the  Commissions  rules  provides  that  subscribers  must  affirmatively  request  any  services  and/  or 
 equipment  and  that  subscribers  in  the  Towns  have  not  affirmatively  requested  the  home  wiring  maintenance  charge  nor  have  they  been  afforded  a  choice  on  whether  or  not  they  wanted  such  a  wiring 
 plan.  55  The  Towns  point  out  that  unlike  the  Comcast  Cablevision  case,  which  Community  uses  for  support  of  its  charge,  Community  never  notified  subscribers  that  the  wiring  charge  was  optional  and  that 
 subscribers  could  cancel  by  telephone.  56  The  Towns  submit  that  Community  must  refund  all  subscribers  the  $0.13  monthly  home  wiring  maintenance  charge,  retroactive  to  August  1,  1994,  and  prospectively 
 until  such  time  as  Community  complies  with  the  rate  order.  57 
 19.  In  its  Reply,  Community  states  that  its  home  wiring  maintenance  charge  is  not  a  negative  option,  because  the  charge  meets  the  following  conditions:  (i)  it  previously  was  part  of  Communitys 

 bundled  charges  for  the  BST;  (ii)  following  restructuring,  the  home  wiring  maintenance  charge  was  charged  separately;  and  (iii)  Communitys  subscribers  continued  to  receive  the  same  service  after 
 bundling  as  before.  Community  points  out  these  conditions  have  all  been  met.  58  In  addition,  Community  states  that  the  Towns  assertion  that  it  did  not  define  what  the  additional  charge  for  certain  other  service 
 calls  would  be  is  simply  incorrect.  59  Community  asserts  that  its  stated  policy,  which  is  clearly  stated  in  footnote  six  of  the  schedule  of  rates  Community  submitted  to  the  Towns,  and  of  which  the  Towns  should 
 be  aware,  is  to  charge  for  wiring  service  calls  if  a  subscriber  tampers  with  the  wiring  or  negligently  damages  the  wiring.  60 

 20.  Section  623(  f)  of  the  Cable  Act  provides  that  an  operator  may  not  charge  a  subscriber  for  any  service  or  equipment  that  the  subscriber  has  not  affirmatively  requested  by  name.  61  It  further 
 specifies  that  a  subscribers  failure  to  refuse  a  cable  operators  proposal  to  provide  such  service  or  equipment  shall  not  be  deemed  to  be  an  affirmative  request  for  such  service  or  equipment.  This 
 prohibited  billing  practice  is  referred  to  as  negative  option  billing.  In  Comcast  Cablevision,  the 
 51  Cable  Television  Consumer  Protection  and  Competition  Act,  Pub.  L.  No.  102-  385,  106  Stat.  1460  (1992)  (  Cable 
 Act).  52 
 Id.  at  16.  See  Rate  Order,  8  FCC  Rcd  at  5907.  53 
 Id.  at  16.  54 
 Opposition  at  5.  55 
 Id.  56 
 Id.  at  6.  See  Comcast  Cablevision,  10  FCC  Rcd  2106  (1995).  57 
 Id.  58 
 Reply  at  5.  See  Comcast  Cablevision,  10  FCC  Rcd  at  2109.  59 
 Id.  60 
 Id.  at  5-  6.  61 
 47  U.  S.  C.    543(  f). 
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 Commission  determined  that  the  operator  did  not  violate  the  prohibition  against  negative  option  billing  when  it  restructured  and  began  charging  subscribers  separately  for  an  existing  wire  maintenance  service 
 plan.  62  The  Commission  held  that  the  operators  separate  itemization  of  this  charge  on  subscriber  bills  simply  complied  with  Commission  rules  requiring  unbundling  and  did  not  constitute  negative  option 
 billing.  63  The  Commission  pointed  out  that  subscribers  continued  to  receive  the  same  level  of  service  before  and  after  the  operator  had  unbundled  its  equipment  rates.  64  Based  on  Communitys  description  of 
 the  restructuring  and  the  unbundling  in  connection  with  home  wiring  maintenance,  the  circumstances  are  similar  to  that  found  in  Comcast  Cablevision.  In  the  instant  case,  there  was  no  significant  change  in  the 
 service  provided  to  its  subscribers  and  the  negative  option  billing  provision  is  not  implicated.  Consequently,  the  Towns  rejection  of  the  home  wiring  maintenance  charge  was  not  warranted. 

 D.  Permitted  Charge  for  Remotes. 
 21.  Community  also  states  that  in  the  January  rate  order  the  Towns  deleted  all  73  hours  entered  by  Community  in  its  Form  1205  as  Total  Maintenance/  Service  Hours  for  remotes.  65  It  states  that 

 the  Towns  believe  there  is  no  reason  why  Community  would  spend  any  time  actually  repairing  remote  control  devices  and  that  Community  was  unable  to  provide  verification  or  substantiation  regarding  the  73 
 hours.  66  Contrary  to  the  Towns  assertion  that  Community  was  unable  to  provide  verification  or  substantiation  regarding  the  73  hours,  Community  states  that  it  provided  ample  justification  regarding  the 
 hours.  67  It  states  that  73  hours  were  spent  on  remotes,  but  that  no  time  was  spent  on  remotes  pursuant  to  installation  or  trouble  calls  from  subscribers.  68  Community  explained  that  73  hours  were  required  not  for 
 repairing  remotes  but  for  programming  and  handling  them  before  they  are  issued  to  subscribers.  69  Community  argues  that  the  Commission  should  find  that  the  Towns  unreasonably  rejected  the  73  hours 
 entered  by  Community  for  time  spent  on  remotes  and  that  the  Towns  misinterpreted  the  Total  Maintenance/  Service  Hours  category  as  being  limited  only  to  repairs.  70 

 22.  In  opposition,  the  Towns  state  that  Community  failed  to  provide  verification  or  substantiation  regarding  the  73  hours,  and  they  also  state  that  Community  admitted  that  it  spends  no  time 
 at  all  servicing  or  maintaining  its  nonaddressable  converters.  71  The  Towns  assert  that  deleting  the  73  hours  resulted  in  a  revised  figure  for  Calculating  Total  Equipment  and  Installation  Costs  of  $2.  735  and  as 
 a  result,  the  Towns  assert  that  the  monthly  permitted  charge  for  remotes  should  be  $.  12  per  month,  rather  than  the  permitted  charge  calculated  at  $.  14  per  month.  72 

 23.  Community  replies  that  the  73  hours  listed  were  fully  supported  and  that  the  Towns  have  nothing  to  challenge  Communitys  showing  other  than  to  express  a  vague  form  of  disbelief.  73  Moreover, 
 62  Comcast  Cablevision,  10  FCC  Rcd  2106  (1995). 
 63  Id. 
 64  Id. 
 65  Appeal  Petition  at  17. 
 66  Id. 
 67  Id.  at  18. 
 68  Id. 
 69  Id.  at  19. 
 70  Id. 
 71  Opposition  at  7. 
 72  Id. 
 73  Reply  at  6. 
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 Community  asserts  that  not  only  are  the  Towns  not  permitted  to  substitute  zero  hours  on  line  B  of  Form  1205,  Schedule  C,  but  Community  would  have  been  in  violation  of  the  Commissions  rules  if  it  had  not 
 incorporated  the  hours  required  for  maintenance  of  remotes  on  Form  1205.  74 
 24.  Community  seeks  to  include  the  programming  and  handling  of  remotes  in  the  actual  cost  calculations  for  the  installation  and  maintenance  of  customer  premises  equipment.  Under  Commission 

 rules,  equipment  basket  costs  are  limited  to  the  direct  and  indirect  material  and  labor  costs  of  providing,  leasing,  installing,  repairing,  and  servicing  customer  equipment.  75  We  agree  with  Community  that 
 providing  customer  service  for  equipment  does  not  only  involve  repairing  that  equipment.  Servicing  of  customer  equipment  can  also  be  defined  to  include  programming  and  handling  of  subscriber  remote 
 controls.  76  Making  a  remote  control  device  work  efficiently  and  effectively  would  be  the  objective  in  providing  proper  installation  and  maintenance.  Proper  programming  of  a  remote  is  a  necessity. 
 Therefore,  the  programming  of  a  remote  is  property  classified  as  installation  and  maintenance  and  hours  spent  providing  such  service  may  be  considered  and  calculated  when  compiling  service  hours.  Since 
 Community  states  that  the  programming  and  handling  of  remotes  were  not  recovered  in  programming  service  rates,  recovery  of  such  costs  through  installation  and  maintenance  calculations  is  appropriate.  We 
 remand  this  issue  to  the  Towns. 
 E.  Refund  Liability  With  Undercharges  for  Equipment. 
 25.  Community  states  that  it  has  been  charging  and  continues  to  charge  $0.07  less  for  converters  than  its  maximum  permitted  charge  and  that  its  non-  addressable  converter  monthly  charge  is 

 $0.01  less  than  the  maximum  permitted  rate.  77  However,  Community  asserts  that  nowhere  in  the  rate  order  do  the  Towns  permit  Community  to  offset  any  refund  liability  by  these  equipment  undercharges.  78 
 Community  argues  that  the  Commission  has  specifically  held  that  local  franchising  authorities  must  permit  operators  to  offset  refund  liability  by  equipment  undercharges.  79 

 26.  To  not  allow  cable  operators  to  factor  in  equipment  charges  could  result  in  an  operator  being  required  to  make  a  rate  reduction  that  is  greater  than  the  maximum  reduction  required  under 
 application  of  the  benchmark  approach.  80  This  analysis  is  consistent  with  the  view  that  the  cable  operator  must  make  prospective  billing  adjustments  to  refund  overcharges  and  offset  any  undercharges  in 
 a  reasonable  manner.  81  Moreover,  the  Commission  has  determined  that  a  franchising  authority  must  offset  or  reduce  any  refunds  it  may  order  by  the  difference  between  the  actual  equipment  rates  that  an 
 operator  charged  and  the  maximum  permitted  rates  that  it  could  have  charged  during  the  period  of  review.  82  Therefore,  we  remand  this  issue  to  the  Towns. 

 74  Id. 
 75  See  47  C.  F.  R.    76.  923(  c).  See  also  TCI  Cablevision  of  St.  Louis,  Inc,  12  FCC  Rcd  15287  (CSB  1997).  We  note 
 that  Form  1205  may  be  used  to  update  permitted  regulated  equipment  and  installation  charges  based  on  equipment  basket  costs. 

 76  Id. 
 77  Appeal  Petition  at  19. 
 78  Id. 
 79  Id.  at  20. 
 80  See  Third  Order  on  Reconsideration,  9  FCC  Rcd  at  4353. 
 81  Id. 
 82  See  Community  TV  Corporation,  10  FCC  Rcd  2327  (CSB  1995). 
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 F.  Increase  in  Rates  Without  Prior  Town  Review  and  Approval. 
 27.  Community  states  that  the  Towns  ordered  Community  not  to  increase  the  BST  rates  or  related  equipment  and  installation  rates  without  prior  approval  of  the  Towns.  83  Community  requests  that 

 the  Commission  instruct  the  Towns  that  Commission  regulations  permit  certain  increases,  namely  increases  in  franchise  fees  and  FCC  regulatory  fees  to  be  passed  along  to  subscribers  without  prior  local 
 franchising  authority  approval.  84 
 28.  Increases  in  basic  rates  attributable  to  increases  in  franchise  fees  and  FCC  regulatory  fees  are  not  subject  to  the  prior  approval  requirements  for  proposed  rate  increases  set  forth  in  Section 

 76.933(  a)-(  c)  of  the  Commissions  rules.  85  Commission  rules  permit  operators  to  pass  through  such  fees  as  external  costs  on  30  days  notice.  86  Franchise  fees,  in  particular,  are  set  by  the  franchising  authority, 
 which  should  be  aware  of  and  sensitive  to  the  fees  impact  on  subscribers  rates.  Prior  regulatory  review  of  franchise  fees  is  less  necessary  from  a  consumer  protection  standpoint  than  it  is  for  other  categories  of 
 external  costs.  87  Community  may  adjust  its  rates  to  reflect  increases  in  such  fees  on  30  days  notice. 
 IV.  ORDERING  CLAUSES 
 29.  Accordingly,  IT  IS  ORDERED  that  the  Appeals  of  Community  TV  Corporation  d/  b/  a  The  Americable  Group  from  Rate  Orders  by  the  Local  Franchising  Authorities  for  the  Towns  of  Amherst, 

 Litchfield,  Merrimack,  and  Milford,  New  Hampshire  ARE  GRANTED  as  provided  herein  and  the  Rate  Orders  ARE  REMANDED  for  further  consideration  consistent  with  this  Memorandum  Opinion  and 
 Order. 
 30.  This  action  is  taken  pursuant  to  authority  delegated  by    0.283  of  the  Commissions  rules.  47  C.  F.  R.    0.  283. 

 FEDERAL  COMMUNICATIONS  COMMISSION 

 John  B.  Norton  Deputy  Chief,  Policy  Division 
 Media  Bureau 

 83  Appeal  Petition  at  23. 
 84  Id.  at  24. 
 85  Fourth  Order  on  Reconsideration,  9  FCC  Rcd  5795  (1994). 
 86  See  Thirteenth  Order  on  Reconsideration,  11  FCC  Rcd  at  432. 
 87  Id. 
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