WPC< 2B'J  CourierCG TimesCG Times BoldCG Times ItalicE37XPCG Timeset 4_230_1HPLAS4.PRS 4x  @\oeX@2' 6f ] Z  3|w s BoldCG Times Italic",tB^ f ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYd4dddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddCdoddd|8|H~d<|8dtddddHHdlLlLlLkd|H|8~ddddddddXXXd~ddkd~ddxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCYQQddddddFddddFCChhd44ddzzdddvooChdF"dhd9dCCzCddoddCdYds]zUvdYYCCCCz~ozoY~NYdYC8YooYdYzsdzdd~YYzozzz~CdzYzzzzCCdddddddzCsdYC\   pxtll\tll@\@\`LHP LaserJet 4_230_1HPLAS4.PRS 4Xw PE37\oeXP2Y vi p kO3|w a8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . a6DocumentgDocument Style Style GX  2kWvtra5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  A.  a7DocumentgDocument Style StyleyXX` ` (#` BibliogrphyBibliography:X (# 2  U a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  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A. a.(1)(a) i) a)Documentg2%a ee$$J%PleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxxp?rtoc 3toc 3<` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4=` hp x (# !(#  !(# ` hp x (#toc 5toc 5>` hp x (#h!(# h!(# ` hp x (#toc 6toc 6?` hp x (#!(#!(#` hp x (#2|@vDuAuBwCytoc 7toc 7@ toc 8toc 8A` hp x (#!(#!(#` hp x (#toc 9toc 9B` hp x (#!(#B!(#B` hp x (#index 1index 1C` hp x (#` !(# ` !(# ` hp x (#2dDF|Ed~FvGlindex 2index 2D` hp x (#` !(#B` !(#B` hp x (#toatoaE` hp x (#!(# !(# ` hp x (#captioncaptionF _Equation Caption_Equation CaptionG 2HrQM/qendnote referenceendnote referenceH 2: X-#Xw PE37XP#   Њ FOR RECORD ONLY $//Consolidated Appeal ORDER, in Ashland, CT, et al, DA 95720//$ $/76.922 Rates for the basic service tier/$  X-$/76.923 Rates for equipment and installation/$  X- $/76.944 Commission Review of Franchising Authority Decisions/$  Xv-2(X01Í ÍX01Í Í Before the W FEDERAL COMMUNICATIONS COMMISSION  XH-Washington, D.C. 20554 T  X -TP DA 95720  Y - In the Matter of:R) ă R) CROWN MEDIA, INC. R)  Y -d/b/a CROWN CABLER)hpp  Y-Appeal of Local Rate OrderR)hAshland, CT  Lebanon, CT 0  Yy-(Docket No. 931209) of R)hBrooklyn, CT  Mansfield, CT  Yb-the State of ConnecticutR)hCanterbury, CT  Pomfret, CT 0  YK-Department of Public R)hChaplin, CT  Scotland, CT  Y4-Utility Control; and hh@R)hColumbia, CT  Thompson, CT  Y-xR)hCoventry, CT  Willington, CT  Y-R)hEastford, CT  Windham, CT  Y-x` ` R)hHampton, CT  Woodstock, CT T  Y-Appeal of Local Rate OrderR)hBethlehem, CT   Newtown, CT  Y-(Docket No. 931210) of R)hBridgewater, CT  Roxbury, CT  Y-the State of ConnecticutTR)hBrookfield, CT  Sherman, CT  Y|-Department of Public R)hKent, CT  Southbury, CT  Ye-Utility Control  R)hMonroe, CT  Trumbull, CT  YN-R)hNew Fairfield, CT  Washington, CT(#(#X Y7-x` `  R)hNew Milford, CT  Woodbury, CT(#(#X  Y -Thpp  Y -8 CONSOLIDATED ORDER ă  Y- Adopted : April 3, 1995hh@h Released : April 5, 1995 By the Chief, Cable Services Bureau:  X#- I.xINTRODUCTION  YS%- I. A. 1. a.(1)(a) i) a) I. 1 1. a.(1)(a) i) a)x1.` ` By this Order, the Commission consolidates and resolves two separate appeals filed by Crown Media, Inc. ("Crown") concerning two separate local cable rate orders issued"<&0*0*0*`'"  Y-by the State of Connecticut Department of Public Utility Control ("DPUC").D Yy-ԍxUnder the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") and the Commission's implementing regulations, local franchising authorities  YK-may regulate rates for basic cable service and associated equipment. See Cable Television Consumer Protection and Competition Act, Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(b), 47 U.S.C.  543(b). Crown's first appeal was filed on September 26, 1994 and involves the rate order issued by the DPUC on  Y-August 24, 1994 in its Docket No. 931209.7D Y -ԍxThe appeal of the order in Docket No. 931209 involves the following communities in Connecticut: Ashland, Brooklyn, Canterbury, Chaplin, Columbia, Coventry, Eastford, Hampton, Lebanon, Mansfield, Pomfret, Scotland, Thompson, Willington, Windham and Woodstock.7 Crown's second appeal was also filed on September 26, 1994 and involves the rate order issued by the DPUC on August 17, 1994 in  Y-its Docket No. 931210., o Y-ԍxThe appeal of the order in DPUC Docket No. 931210 involves the following communities Connecticut: Bethlehem, Bridgewater, Brookfield, Kent, Monroe, New Fairfield, New Milford, Newtown, Roxbury, Sherman, Southbury, Trumbull, Washington and Woodbury., On October 6, 1994, the DPUC filed oppositions to each of Crown's appeals. Crown did not file replies to either of the DPUC's oppositions. We have determined that the proceedings are sufficiently similar to justify the joint resolution in a  Y_-single consolidated order of all of the issues raised by the parties.__o Y-ԍxCrown raises the same issues and relies on substantially the same arguments in each appeal. Likewise, the DPUC has filed substantially similar oppositions to both appeals. (For purposes of administrative ease, all citations will be to pleadings submitted with respect to the DPUC order in Docket No. 931210.) In addition to the appeals of the two local cable rate orders, Crown separately filed on September 26, 1994 requests for stays of each of the local rate orders. Because we are resolving the disputes on the merits presented in the two appeals, the requests for stay have been rendered moot.  Y1-x2.` ` In each local rate order, the DPUC approved Crown's maximum permitted rates for the basic service tier, but found that Crown's rates for equipment, hourly service charge and installation were above the maximum permitted rates. The DPUC ordered Crown to reduce its rates for equipment, hourly service charge and installation to no more than the maximum permitted levels. The DPUC also ordered Crown to issue refunds or credits to subscribers for the overcharges levied since September 1, 1993.  Y-x3.` ` Crown raises two issues in its appeals. First, Crown challenges the DPUC's decision to reject Crown's valuation of capital costs for equipment and installation. Crown argues that the DPUC inappropriately applied costofservice principles in reviewing Crown's"b0*(("  Y-rates for equipment and installation.}o Yy-ԍxCrown Appeal of Order in DPUC Docket No. 931210, at 710 ("Crown Appeal").} Second, Crown argues that the DPUC's disallowance  Y-of Crown's "inventory allocation" is contrary to instructions in FCC Form 393.myo Y-ԍxCrown Appeal at 10. Crown included the inventory allocation argument in both of its appeals. We note, however, that the DPUC made the inventory disallowance only in the  Y-order in Docket No. 931210. See DPUC Order in Docket No. 931209, at 811; DPUC Order in Docket No. 931210, at 9.m  Y-x4.` ` In response, the DPUC maintains that it applied the Commission's benchmark  Y-guidelines in reviewing Crown's rates for basic service and related equipment.Ho Y< -ԍxDPUC Opposition at 46.H The DPUC argues that it adjusted Crown's capital costs for equipment using an asset valuation method commonly referred to as "original cost" in order to comply with the Commission's rule that  Y_-equipment and installation rates be based on "actual costs."F_o Y-ԍxDPUC Opposition at 4.F With respect to the inventory allocation disallowance, the DPUC asserts that Crown did not meet its burden of proof in  Y1-supporting the significant addition to Crown's equipment costs.H 1I o Y+-ԍxDPUC Opposition at 67.H  X - II.xDISCUSSION  Y -x5.` ` Under our rules, rate orders made by local franchising authorities may be  Y -appealed to the Commission.Q o Yi-ԍxSee 47 C.F.R. 76.944.Q In ruling on appeals of local rate orders, the Commission will  Y -not conduct a de novo review, but instead will sustain the franchising authority's decision as  Y-long as there is a reasonable basis for that decision.{ | o Y-ԍxSee Implementation of Sections of the Cable Television Consumer Protection and  Y-Competition Act of 1992: Rate Regulation, Report and Order, MM Docket No. 92266, 8  Y-FCC Rcd 5631, 5731 (1993) ("Rate Order"); and Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation & BuyThrough Prohibition, Third Order on Reconsideration, MM Docket Nos. 92266 and 92262,  Y"-9 FCC Rcd 4316, 4346 (1994) ("Third Reconsideration Order").{ Therefore, the Commission will reverse a franchising authority's decision only if it determines that the franchising authority  Yd-acted unreasonably in applying the Commission's rules in rendering the local rate order.l do Y&-ԍxThird Reconsideration Order, 9 FCC Rcd at 4346.l If the Commission reverses a franchising authority's decision, it will not substitute its own"M 0*((H" 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.: o Yb-ԍxId.:  Y-x6.` ` FCC Form 393 is the official form used by regulators to determine whether an operator's regulated rates for programming, equipment and installations were reasonable  Y-during the time period from September 1, 1993 until May 14, 1994.Av{o Y-ԍxTo the extent that an operator has sought to take advantage of the refund deferral  Y -period available under the Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Second Order on Reconsideration, MM Docket No. 92266, 9 FCC Rcd 4119, 418385 (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.A 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 period of review.  Y -x7.` ` 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  Y -initial date of regulation ("current rate") or as of September 30, 1992./ o Y-ԍ An 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./ After calculating actual aggregate revenues, the operator converts those revenues to a perchannel rate, and then compares the perchannel figure 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. After computing the permitted rate level in this manner (whether based on current rates or September, 1992 rates), monthly equipment and installation costs are removed to derive the maximum permitted programming rates. Maximum permitted rates for equipment and installations are based on actual cost and are calculated in Part III of the Form 393. Equipment rates are derived from capital and maintenance costs per unit of equipment. Installation rates are derived from calculation of an"|< 0*((m"  Y-hourly service charge and application of that charge to different types of installations.*vo Yy-ԍxTo calculate the hourly service charge ("HSC"), an operator adds its annual capital costs plus expenses for equipment necessary for the maintenance of customer equipment and the installation of basic tier service, excluding the capital costs of customer equipment. The operator then divides the total by the total number of personhours spent in those activities over the past year. The HSC is used as a factor in developing charges for installation and monthly lease of individual pieces of equipment. * Under our regulations, the maximum permitted rates are deemed to be reasonable, as  Y-required under the 1992 Cable Act.ro Y -ԍxSee Communications Act,  623(b), 47 U.S.C.  543(b).r  X-x A.` ` Valuation of Capital Costs  Y- x  Yv-x8.` ` As required by Form 393, Crown completed Part III Schedule A (Capital Costs of Service Installation and Maintenance of Equipment) and Schedule C (Capital Costs of Leased Customer Equipment). Both of these schedules require information regarding certain capital costs. Crown provided the required capital cost information using gross book valuations as recorded on Crown's books. In the local rate orders, the DPUC adjusted Crown's reported gross book values in order to reflect instead the original cost of the assets. The DPUC's adjustments reduced Crown's capital costs of service installations and  Y -maintenance and of leased customer equipment. o Y?-ԍxIn the order in Docket No. 931209, this amounted to a 17.57 percent reduction; in Docket No. 931210, it amounted to a 24.71 percent reduction. DPUC Order in Docket No. 931209, at 11; DPUC Order in Docket No. 931210, at 9.  Y -x9.` ` On appeal, Crown argues that it was inappropriate for the DPUC to adjust Crown's capital costs to reflect original cost. Crown argues that this action is improper where an operator has elected to justify rates using the benchmark approach. Crown asserts  Yb-that the DPUC inappropriately relied on the Commission's Cost Order,b< o YO-ԍxImplementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Report and Order and Further Notice of Proposed Rulemaking, MM Docket No. 93215, 9 FCC Rcd 4527 (1994). which established rules applicable to costofservice proceedings, as authority to support calculating Crown's  Y6-capital costs based on original cost.o6o Y#-ԍxCrown Appeal at 89. In its rate orders, the DPUC cites to paragraphs 54 through 56  Y$-of our Cost Order (9 FCC Rcd at 45554556). See DPUC Order in Docket No. No. 9312 Yz%-09, at 11 nn.3536; DPUC Order in Docket No. 931210, at 8 n.34, 9 nn.3536. o Crown maintains that as long as Crown's financial acquisition records reflect the acquired assets at fair market value and those records are maintained in accordance with generally accepted accounting principles, its valuation data"D0*((" should be used by the DPUC in calculating Crown's capital costs for equipment and installation on Schedules A and C.  Y-x 10.` ` In response, the DPUC maintains that it did not transform the review of Crown's Form 393 from a benchmark proceeding into a costofservice proceeding. The DPUC claims that it analyzed Crown's rates for basic service and related equipment under the Commission's guidelines for benchmark proceedings. The DPUC contends that it used original cost data rather than Crown's fair market valuation in order to satisfy the requirement, established by the Section 623(b)(3) of the 1992 Cable Act and by the  Y1-Commission's rules, that equipment and installation rates be based on "actual cost."r1o Y -ԍxDPUC Opposition at 4 (citing Communications Act,  623(b)(3)).r The  Y -DPUC argues that while the Cost Order discusses the advantages of original cost valuation in the context of costofservice proceedings, that discussion is also applicable in the benchmark context because rates for regulated equipment and installation are required to be based on  Y -actual costs.L yo Y-ԍxDPUC Opposition at 45. L  Y -x 11.` ` Pursuant to the 1992 Cable Act, the Commission was required to establish  Y-standards and procedures to prevent unreasonable charges for regulated equipment.n*o Ym-ԍxCommunications Act,  623(b)(5), 47 U.S.C.  543(b)(5).n In doing so, we were to ensure that the rate justification methods we permit operators to use are consistent with the 1992 Cable Act and contain principles that will result in reasonable rates  YM-at lower cost for subscribers and with the least administrative burden.`Mo Y-ԍxSee Rate Order, 8 FCC Rcd at 57515752. ` The 1992 Cable Act also directs the Commission to establish standards for setting, on the basis of actual cost, the rates for installation and lease of equipment used by subscribers to receive the basic service  Y-tier.no YG-ԍxCommunications Act,  623(b)(3), 47 U.S.C.  543(b)(3).n  Y-x 12.` ` In establishing a framework for regulating basic service as required under the 1992 Cable Act, the Commission adopted two distinct regulatory methods to allow cable operators to justify the reasonableness of their rates: the benchmark and costofservice  Y-methods._? o Y#-ԍxSee Rate Order, 8 FCC Rcd at 57515752. _ The benchmark approach serves as the primary regulatory mechanism for setting  Y~-initial regulated rates and for governing rates on a going forward basis.D~ o Y!&-ԍxId. at 5755. D As a backup, a cable operator may use a costofservice approach if it believes that the maximum rate under"g 0*((" the benchmark formula would not enable the operator to recover costs that it reasonably  Y-incurred.:o Yb-ԍxId.: With respect to the rules we established for the benchmark approach, we stated  Y-in the Rate Order: x` ` [W]e will require the local franchising authorities to follow the detailed guidelines we now adopt for identifying the costs to be recovered through equipment and installation rates and for calculating those rates. We believe that our guidelines satisfy the statutory requirements, and thus, a local franchising authority's proper use of [the guidelines] to determine reasonable rate levels cannot form the basis of a cable operator's  Y -complaint to the Commission. {o Y1-ԍxRate Order, 8 FCC Rcd at 5801. See generally 47 C.F.R.  76.923 (guidelines for determining rates for equipment and installation used to receive the basic service tier).x` As part of the guidelines we established for setting rates, we required cable operators  Y -electing the benchmark approach to submit FCC Form 393. o Y-ԍxRate Order, 8 FCC Rcd at 5703, 5760 n.501, 5771. For establishing the reasonableness of rates in effect after May 15, 1994, operators choosing the benchmark approach must submit FCC Forms 1200 and 1205.  Y-x 13.` ` The general instructions to Form 393, Part III ("Worksheet for Calculating Equipment and Installation Charges") state that the operator "should complete this form using financial data from the company's general ledger and subsidiary records maintained in  YM-accordance with generally accepted accounting principles."EMo Y-ԍxFCC Form 393, at 27.E The instructions to Part III, Schedule A (Annual Capital Costs Associated with Maintenance and Installation of Cable Facilities and Service) direct operators to enter in Column B for the equipment categories in Column A "the gross book value for the categories listed in Column A as of the date you last  Y-closed your books."E M o Y -ԍxFCC Form 393, at 33.E The instructions to Part III, Schedule C (Capital Costs of Customer Equipment) direct operators to enter in Column B "the gross book value of the listed  Y-equipment."E! o Yr$-ԍxFCC Form 393, at 33.E Crown followed these instructions in completing Schedules A and C, and" !0*((" consequently included as the gross book values information recorded on Crown's general  Y-ledger and subsidiary records as of the date it last closed its books.%" o Yb-ԍxFCC Form 1205, which is the successor to Part III of Form 393, includes virtually identical instructions as in Form 393. The General Instructions to Form 1205 state that operators "should complete this Form using financial data from the company's general ledger and subsidiary records maintained in accordance with generally accepted accounting principles." FCC Form 1205, at 3. The Instructions for Schedule A" (Capital Costs of Service Installation and Maintenance of Equipment and Plant) direct that for Line B, Gross Book Value, operators enter for each category of equipment and plant listed, the "gross book value as of the date you closed books for the time period covered by the Form." FCC Form 1205, at 7. The Instructions for Schedule C (Capital Costs of Leased Customer Equipment) direct that for Line D, Gross Book Value, operators "enter the gross book value of the listed equipment as of the date you closed books for the time period covered by the filing of this Form." FCC Form 1205, at 12.%  Y-x 14.` ` In requiring Crown to report as its gross book values the original cost of the assets, the DPUC disregarded the instructions to Form 393, Part III directing operators to use "financial data from the company's general ledger and subsidiary records maintained in accordance with generally accepted accounting principles" and to use data "as of the date you last closed your books." The DPUC's reliance on the more general statement in the General Instructions to Form 393 that equipment and installation rates must be based on "actual cost" is inappropriate in light of the specific instructions directing the use of the general ledger data. Because the specific instructions to Part III tell operators which information to use, local franchising authorities do not have the authority to further interpret the term "actual  Y -cost" as used in the 1992 Cable Act, in our Rate Order, and in the general instructions to Form 393. Form 393 is an integral part of the Commission's guidelines and therefore local franchising authorities are required to follow Form 393's requirements.  X-x B.` ` Inventory Allocation  Yd-x15.` ` In addition to the original cost adjustment discussed above, the DPUC in Docket No. 931210 made another adjustment to Crown's reported gross book values of leased customer equipment (in Part II, Schedule C). Specifically, before making the original cost adjustment, the DPUC disallowed from Crown's reported equipment gross book values that portion of the gross book values attributable to what Crown refers to as an "inventory  Y-allocation."Y#| o Y#-ԍxDPUC Order in Docket No. 931210, at 9.Y On Schedule C, Crown had reported the gross book value of converters,  Y-remotes and tuners as $3,796,706.c$-o Y%-ԍxSee DPUC Order in Docket No. 931210, at 9.c However, in a pleading Crown later filed with the DPUC, Crown stated that the fair market value of the converters, remotes and tuners was"$0*(("  Y-$2,674,001.%o Yy-ԍxDPUC Order in Docket No. 931210, at 9 (citing Crown July 28, 1994 Exceptions to Draft Decision, Attachment A, Part ISummary of Values). In response to a DPUC interrogatory Crown indicated that the additional $1,222,706 included in the cost of leased customer equipment on Schedule C was due to  Y-"inventory allocation."&bo Y-ԍxSee DPUC Order in Docket No. 931210, at 9; DPUC Opposition, Exhibit B, Crown Response to Interrogatory CATV22, at 8. The DPUC noted in its Order that Crown explained in its written exceptions to the City's revised draft decision only that the inventory allocation was appropriate because "'substantial amounts of equipment are required in inventory to provide continued service to existing customers' while the system is undergoing a significant  Yv-rebuild/upgrade."'vo Y% -ԍxDPUC Order in Docket No. 931210, at 10 (quoting Crown August 9, 1994 Exceptions, p. 4). The DPUC stated in its Order: x` ` The Company did not explain how this $1.2 million increase to inventory could take place overnight or why the number of units did not increase along with the increase in inventory value. The Department agrees that costs associated with a reasonable level of inventory are properly included in the equipment basket. In this case, however, the Company has not met its burden of  Y -proof in justifying this $1.2 million addition to inventory.Z( o Y-ԍxDPUC Order in Docket No. 931210, at 10.Zx` The DPUC therefore disallowed the $1,222,706 from Crown's reported gross book value of  Yy-leased equipment.)yI o Ys-ԍx DPUC Order in Docket No. 931210, at 9. After making the disallowance, the DPUC then adjusted the remaining amount ($1,551,295) by the amount necessary to reflect original cost.  YK-x16.` ` In its Appeal, Crown maintains that it followed the instructions to Part III, Schedule C in including in its equipment costs inventory "attributable to equipment kept for  Y-new customers and as replacement for broken equipment."D* o Y"-ԍxCrown Appeal at 10.D Crown also states that "the dollar amounts allocated to Schedule C were higher than normally would be expected due to  Y-the system being rebuilt."E+}o Y&-ԍxCrown Appeal at 10. E In its Opposition to Crown's appeal, the DPUC maintains that it disallowed Crown's "inventory allocation" on the ground that Crown "had simply failed to" .+0*(("  Y-make an adequate showing of why the value of equipment was increased."F,o Yy-ԍxDPUC Opposition at 6.F The DPUC argues that Crown did not support the claim that substantial amounts of inventory were  Y-necessary to provide service during the rebuild and upgrade.H-yo Y-ԍxDPUC Opposition at 67.H The DPUC argues that "such an unusually high proportion of equipment costs allocated to inventory requires a showing  Y-more than the simple, unsupported assertion of need offered by Crown."H.*o Y -ԍxDPUC Opposition at 67.H     Yv- x17.` ` In rate regulation proceedings, the cable operator, not the local franchising  Y_-authority, bears the burden of proof.Q/_o Y -ԍxSee 47 C.F.R.  76.937.Q The determination of whether a cable operator should be allowed to recover the costs of allegedly excess inventory in its rates is an issue to be left to the discretion of the local franchising authority, and we will not disturb the findings of local franchising authorities if there is a reasonable basis for its decision. Based on the record before us, we do not find that it was unreasonable for the DPUC to adjust Crown's equipment costs to remove the "inventory allocation." Crown had notice of the City's concern about the inventory allocation and had ample opportunities through its exceptions to the City's draft order, and again to the revised draft order, to provide an adequate  Y -explanation of the amount at issue.f0 o Y-ԍxSee DPUC Order in Docket No. 931210, at 910.f Crown's arguments on appeal fail to identify or even suggest any basis for finding it unreasonable for the DPUC to have required additional information or for the DPUC to have found Crown's explanation insufficient. We believe that the DPUC was within its authority to require Crown to provide a detailed explanation of the increase to equipment values. The DPUC was also within its authority to find Crown's explanation insufficient and therefore to disallow the amounts attributable to the "inventory allocation." Accordingly, we reject Crown's arguments that the "inventory allocation" must be included in calculating Crown's leased equipment capital costs.  X- III.xORDERING CLAUSES  Y-x18.` ` ACCORDINGLY, IT IS ORDERED that the appeals of local rate orders filed by Crown Media, Inc., with respect to the issue of the valuation of Crown's capital  Y}-costs, are REMANDED to the State of Connecticut Department of Public Utility Control for resolution in accordance with the terms of this Order.  Y9-x19.` ` IT IS FURTHER ORDERED that the appeals of local rate orders filed by Crown Media, Inc., with respect to the issue of the disallowance of the inventory allocation  Y -are DENIED ."  A 00*((;"Ԍ Y-ԙx20.` ` IT IS FURTHER ORDERED that, in light of the resolution of its appeals  Y-herein, the requests for stay filed by Crown Media, Inc. ARE DISMISSED as moot .  Y-x21.` ` 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. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhMeredith J. Jones x` `  hhChief, Cable Services Bureau