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$//ORDER Remanding Appeal in League City, TX, DA 95-1607//$
$//76.933 Franchising Authority Review of Basic Rates//$

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

                                             DA 95-1607


In the Matter of:                  )
                              )
TCI TKR OF HOUSTON            )
                              )
Appeal of Local Rate Order              )
of City of                         )
League City, Texas                 )


                                   ORDER

Adopted: July 18, 1995             Released: July 24, 1995

By the Chief, Cable Services Bureau:

I.   INTRODUCTION

     1.   On May 15, 1995, TCI TKR of Houston d/b/a/ TCI Cablevision of Houston
("TCI-H"), filed with the Commission an appeal ("Appeal") of the local rate order ("local
order") adopted by the City of League City, Texas (the "City") on April 13, 1995.  In its
local order, the City denied a proposed rate increase sought by TCI-H.  In its Appeal, TCI-H
argues that the City failed to provide a written decision which comports with Commission
requirements. 

     2.   Under our rules, rate orders made by local franchising authorities may be
appealed to the Commission.  In ruling on appeals of local rate orders, 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.  The Commission will reverse a
franchising authority's decision only if it is determined that the franchising authority acted
unreasonably in applying the Commission's rules in rendering its local rate order.  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
resolve the case consistent with the Commission's decision on appeal.  

II.  DISCUSSION

     3.   The City, by resolution dated April 13, 1995, denied a proposed rate increase
sought by TCI-H in its FCC Form 1210 filing.  The City's written decision consists of a
one-page document that merely states that the City denies TCI-H's proposed rate increase. 
The local order does not state why the City found TCI-H's proposed rates to be
unreasonable.  In rate regulation proceedings, the cable operator bears the burden of proving
the reasonableness of all of its proposed regulated rates.  The local franchising authority,
however, must provide the cable operator with an opportunity to participate in the rate
review proceedings and to provide documentation supporting its proposed rates.  While a
local franchising authority is free to seek the assistance of a consultant to review and verify
the information presented in an operator's rate justification filings, nothing in our rules
requires the local franchising authorities to do so.  Similarly nothing in our rules requires a
local franchising authority to provide cable operators with reports and calculations that it may
have relied upon in rendering its rate decision.  If the local franchising authority determines
that the operator's proposed rate exceeds the maximum permitted level as defined by the 
Commission's rate standards, it may prescribe a rate different from the proposed rate
provided that, after giving the operator an opportunity to participate, the local franchising
authority explains in a written decision why the operator's rate is unreasonable and why its
prescribed rate is reasonable.  

     4.   In order to comply with our rules, the City's rate order should have contained
such an explanation.  Since it appears from the record below that the City's written decision
did not comport with our rules in this area, we remand this case for further proceedings
consistent with this decision.

III. ORDERING CLAUSE

     5.   Accordingly, IT IS ORDERED that TCI-H's Appeal of the local order of the
City of League City, Texas, is hereby REMANDED to the City for further proceedings
consistent with this Order.

     6.   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