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I.   a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . Doc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)Documentg2%a ee$$J%PleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxx -92266 and 92262, 9 FCC Rcd 4316, 4346 (1994) ("Third Recon. Order"). Therefore, the Commission will reverse a franchising authority's decision only if it determines that the franchising authority  Ya-acted unreasonably in applying the Commission's rules in rendering its local rate order.X a< Y-ԍThird Recon. Order at 4346.X 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  Y -resolve the case consistent with the Commission's decision on appeal.B  d < Y1-ԍId. B  Y - 5.` ` FCC Form 393 is the official form used by regulators to determine whether a cable operator's rates for programming, equipment and installations were reasonable during  Y -the time period from September 1, 1993 until May 14, 1994.  v  < Y-ԍTo the extent that an operator has sought to take advantage of the refund deferral  Yq-period available under the Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking, MM Docket 92266, 9 FCC Rcd 4119, 41834185 (1994), the maximum permitted rates determined under Form 393 may also apply from May 15, 1994 until the date that the operator implemented its new rates, as determined under the Form 1200 series.  Form 393 is divided into three separate, but interrelated parts. In Part II, the operator calculates its maximum 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 period of review.  Y-6.` ` The operator's maximum permitted rates are derived by completing Parts II and III of 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"U 0*(("  Y-initial date of regulation ("current rate") or as of September 30, 1992.6 < Yy-ԍAn operator must calculate its rate in effect on September 30, 1992, only if its current rate is above the benchmark rate. If an operator's current rate is at or below the benchmark rate, it is not required to calculate its September 30, 1992 perchannel rate.6 After calculating actual aggregate revenues, the operator converts those revenues to a perchannel rate, and then compares the perchannel figures to the applicable benchmark rate. If an operator's current perchannel rate is below the applicable benchmark rate, then the operator's rate is deemed reasonable, but it must remain at its current level. If its current perchannel rate exceeds the benchmark rate, the operator must then compare its September 30, 1992 perchannel rate to the applicable benchmark rate. If its September 30, 1992 perchannel rate is above the benchmark rate, it must reduce this rate to the benchmark rate or by 10%, whichever reduction is less. The adjusted rate will be its maximum permitted rate for programming. Maximum permitted rates for equipment and installation are based on actual costs and are calculated in Part III of Form 393. In this proceeding, the City approved the maximum permitted rates for equipment and installation calculated by TCI in its Form 393, but the City did not provide for the possibility of offsetting TCI's undercharges for equipment and installation against its overcharge for basic service.  Y - 7.` ` After setting the various regulated rates that an operator is permitted to charge on a prospective basis, a franchising authority should then determine if the operator is liable for any subscriber refunds. A refund liability can be imposed when an operator's actual  Yb-charges exceed maximum permitted levels during the applicable period of review.W bK< Y^-ԍSee 47 C.F.R.  76.942.W If an operator's aggregate revenues computed from its actual rates exceed its revenues computed from its permitted rates during the period of review, the operator must refund the difference  Y-to subscribers.< Y-ԍSee Third Recon. Order at 4353 ("Although maximum permitted rates are always  Y-determined in an unbundled basis, i.e., separately for program service and equipment, refund liability may stem from bundled rates. We conclude that the refund liability should be calculated based on the difference between old bundled rates and the sum of the new unbundled program service charge(s) and the new unbundled equipment charge(s)."). If the operator's aggregate revenues computed from its permitted rates exceeded its aggregate revenues computed from its actual rates, the operator will not be required to issue any refunds for that period of review. In this proceeding, any refunds to be paid by TCI should be calculated based on this method.  Y-8.` ` While the Commission will sustain the decisions of franchising authorities if there is a reasonable basis for doing so, we expect franchising authorities to adhere to the mathematical principles underlying the benchmark methodology, particularly when"|W 0*((m"  Y-calculating an operator's refund liability._5< Yy-ԍSee Report and Order at 5731; Third Recon. Order at 4346. In its Opposition, the City expressed concern that, if we allow TCI to offset any overcharges by any undercharges, it would be compelled to conduct a "burdensome and unworkable" process of auditing "a cable operator's subscriber billings . . . to determine the exact amounts of undercharges and  Y-overcharges." Opposition Brief, at 4. We find, however, that such a process would be unnecessary. If a franchising authority does not dispute the bases for the figures presented in a cable operator's Form 393 or has not discovered any mathematical errors in the form, and then subsequently approves the operator's maximum permitted rates, an auditing is not necessary when calculating an operator's refund liability. _ In this case, the City must offset or reduce any refunds it may order by the difference between the actual equipment and installation rates that TCI charged and the maximum permitted rates that it could have charged during the  Y-applicable period of review.V < Y1-ԍSee Third Recon. Order at 4353.V We are remanding this issue to the City so that it can  Y-reconsider its ruling in a manner consistent with these findings.Kx < Y-ԍSee TCI Cablevision of North Central Kentucky, Inc. (Mount Washington, KY), DA  Y-941479 (Cab. Serv. Bur., released December 14, 1994); see also Community TV Corporation (Town of Alton, N.H.), DA 95147 (Cab. Serv. Bur., released February 6, 1995). K  Xv- III.ORDERING CLAUSES  YH-9.` ` Accordingly, IT IS ORDERED that TCI Cablevision of Ohio, Inc.'s appeal of the City of Warren, Ohio's local rate order, regarding the issue of inflation adjustment is  Y - DISMISSED as moot.  Y -10.` ` IT IS FURTHER ORDERED that TCI Cablevision of Ohio Inc.'s appeal of the City of Warren, Ohio's local rate order, regarding the issue of refund calculation is  Y - REMANDED to the local franchising authority for resolution in accordance with the terms of this Order.  Y}- 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.  ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,Meredith J. Jones ` `  hh,Chief, Cable Services Bureau