FOR FCC RECORD ONLY $//ORDER, Granting Stay to UltraCom of Haverford Rate Order, DA 94-1255//$ $/76.922 Rates for the basic service tier/$ $/76.923 Rates for equipment and installation/$ $/1.45(d) Request for Stay/$ Before the FEDERAL COMMUNICATIONS COMMISSION DA 94-1255 Washington, D.C. 20554 In the Matter of: ) ) ULTRACOM OF MARPLE, INC. ) ) ) Petition for Stay of Local ) Rate Order of Township of ) Haverford, PA ) ORDER Adopted: November 9, 1994 Released: November 10, 1994 By the Chief, Cable Services Bureau: I. Introduction 1. On October 28, 1994, UltraCom of Marple, Inc. ("UltraCom"), the franchisee in the above-matter, filed a Petition for Stay of Enforcement Pending Review ("Petition") of a local Rate Order adopted by its franchising authority, the Township of Haverford, Pennsylvania ("the Township" or "Haverford"). In its petition, UltraCom seeks a stay of the local Rate Order pending the Commission's resolution of UltraCom's appeal on the merits. On September 12, 1994, the Township of Haverford adopted a local Rate Order, under the FCC Form 393 regime, requiring UltraCom to establish a new rate schedule for its basic service tier and associated equipment and installations and to issue refunds to subscribers for charges in excess of the newly established rates. On October 11, 1994, the Township adopted a resolution establishing November 14, 1994 as UltraCom's required compliance date. UltraCom asserts that if a stay of the local Rate Order is not granted before its compliance date, it will be required to implement refunds to subscribers totaling $60,000. The Township has not filed an opposition to UltraCom's stay request. II. Background 2. UltraCom centers its petition for stay around four separate issues: (1) that the Township incorrectly set its rate for remote controls at zero; (2) that the Township incorrectly set its rate for home wiring repair, maintenance and rental at zero; (3) that the Township incorrectly set its rate for the basic service tier at $9.37; and (4) that the Township refused to disclose the basis for its decision. UltraCom claims that each of these actions were arbitrary and capricious and in violation of the Commission's rate regulations. Consequently, UltraCom argues that the Rate Order is defective and must be stayed. 3. Specifically, UltraCom argues that the Township's decision to set UltraCom's rates for remote controls and home wiring at zero was inconsistent with statutory and regulatory provisions allowing cable operators to recover their actual costs for regulated equipment and constitutes an unconstitutional taking of UltraCom's property without just compensation. UltraCom also claims that the Township acted unreasonably in setting its maximum permitted rate for the basic service tier below the rate calculated by UltraCom using the official FCC Form 393 spreadsheet, after the Township had requested that UltraCom file an official version of the Form 393 to replace its original unofficial filing. Finally, UltraCom asserts that the Township's actual Rate Order did not disclose the basis for its decision and therefore failed to satisfy the procedural requirements of the Commission's rules. III. Discussion 4. The Commission evaluates petitions for stay under well-settled principles. To support a stay, petitioners must demonstrate: (1) that they are likely to prevail on the merits; (2) that they will suffer irreparable harm if a stay is not granted; (3) that other interested parties will not be harmed if the stay is granted; and (4) that the public interest favors grant of a stay. As described below, resolution of this particular stay rests mainly on the strength of petitioner's argument concerning the first prong of this test. 5. Under the Cable Television Consumer Protection and Competition Act and the Commission's rules, cable operators are required to set their rates for regulated customer equipment and installations using a cost-based method. In effect, cable operators must supply customer equipment, such as converters and remote controls, at rates based on their costs including a reasonable rate of return. In this case, UltraCom contends that the Township's setting of UltraCom's remote control rates at zero violates the Commission's rate regulations because it is not based on cost and therefore has no basis under the Commission's rules. Because it is likely that Haverford's setting of UltraCom's remote control rates at zero is not based on cost, it appears to us that this action may not be in accordance with our rules and may not be within the scope of Haverford's regulatory authority. 6. Because the Township requested that UltraCom submit an official version of FCC Form 393, it should not have set UltraCom's rate for the basic service tier according to the terms of the unofficial version of Form 393. Instead, it should have set the rate for UltraCom's basic service tier at the rate that UltraCom derived using the official FCC spreadsheet version of the form. Because a franchising authority should set rates based on the best information available, it is presumed that as between an official and an unofficial version of Form 393, the official version would constitute the best information available and therefore should be used to set rates. In the Third Order on Reconsideration, we decided that ". . . substitute forms are unacceptable." We also ordered all subsequent forms to be filed on official versions and that all forms that had been filed on unofficial versions be refiled using the official versions of FCC Form 393. This requirement cannot be overlooked by a franchising authority when determining an operator's reasonable rates, especially when the franchising authority, itself, has requested the refiling. 7. We grant the stay requested by UltraCom with regard to the local Rate Order adopted by the Township for UltraCom's basic service tier rates and associated equipment and installations. We conclude that Haverford appears to have misapplied our rules by setting UltraCom's rates for remote controls at zero and by setting UltraCom's rate for the basic service tier below the level permitted under our rules. 8. During the period of this stay, UltraCom is ordered to deposit in an interest- bearing escrow account the total amount of money that the Township has ordered UltraCom to refund to its customers. Alternatively, UltraCom may elect to post a bond for the benefit of the Township. The amount of the bond shall be the total amount of money subject to the refund order, plus interest on that amount for a twelve (12) month period from the date of this Order. The bond shall provide that if UltraCom is unable to fulfill its refund obligations for any reason, then the surety will fulfill that obligation to the Township, on behalf of UltraCom's subscribers. 9. Accordingly, IT IS ORDERED that the local Rate Order adopted by the Township of Haverford, Pennsylvania with respect to UltraCom of Marple, Inc.'s rates for basic tier service and associated equipment and installations is STAYED pending the resolution of UltraCom's Appeal. 10. IT IS FURTHER ORDERED that the amount of the refunds required by the Township of Haverford's Rate Order SHALL BE PLACED by UltraCom in an interest- bearing escrow account, OR SHALL BE SECURED by the posting of a bond for the benefit of the Township of Haverford for the amount of money the Township has ordered UltraCom to refund, plus interest. The amount of the bond shall be the total amount of money subject to the refund order, plus interest on that amount for a twelve (12) month period from the date of this Order. Proof of UltraCom's compliance with this Order shall be filed with the Commission within thirty (30) days of the release of this Order. Interest shall accrue, or be computed, at the prevailing U.S. Internal Revenue Service Rate. 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