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(1) (a) (i) 1) a)D )DDDFrfQq "<$  ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYddddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddoddd|8|H~d<|8dtddddHHdlLlLlLkd|H|8~dddddddXXXd~ddkd~ddxCddCCC/NdddCYQQddddddFddddFCChhd44ddzzdddvooChdF"dhddCCzCddoddCdYds]zUvdYYCCCCz~ozoY~NYdYC8YooYdYzsdzdd~YYzozzz~CdzYzzzzCCdddddddzCsdYC\   pxtll\tll@\@\`L2 Hw^ J"<$  ^;C]ddCCCdCCCCddddddddddCCdxN`xoCCCddCdoYoYFdo8Co8odooYNCodddYdddddddddCddddddddo8dddddYYYYYN8N8N8N8oddddooooddpddddxodddXXddXddXdddddooL8doddrddo8PdN8ppoddXXdpLoNpLodPDdopoopdXYXodoodddCddCCC/NdddCdUUddddddFddddFCCssd44ddzzddd~ooCsdF"dsddCCzCddoddCdYds`zUvdddCCCCzozoYNYYYN8YooYdYzzdzddYYzozzzNdzYzzzzCCdddddddzCzdYC\   pxtll\tll@\@\`L"i~# ^$(8<><q*"xxxxWWxxxWWkkxxxfx6X@`7X@68wC;,=Xw PE37XPt7zC;,bXz_ pi7X6V"G($,hG PE37hP6uC;,^Xu&_ x7XX             X-#Xw PE37=XP#   #Xw PE37=XP#  +~  $//Appeal ORDER, Continental Cablevision, Mentor, OH, DA 951952//$ $/76.922 Rates for the basic service tier/$  X-$/76.944 Commission Review of Franchising Authority Decisions/$ Đ X-TX01Í ÍX01Í Í T 2(Before the W FEDERAL COMMUNICATIONS COMMISSION  X_-Washington, D.C. 20554 TP  Y1-`a(# DA 951952 In the Matter of:R) R) CONTINENTAL CABLEVISION R) OF OHIO, INC. R)  Y -R)hpp  Y-Appeal of Local Ratehh@hR) Order of City of Mentor, OhioR)  YL-  Y5-}  MEMORANDUM OPINION AND ORDER ă  Y- Adopted :` ` September 11, 1995hh@hpp Released :  September 15, 1995 By the Chief, Cable Services Bureau:  X- I.xIntroduction  I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)  Y-x1.` ` On April 19, 1995, Continental Cablevision of Ohio, Inc. ("Continental"), filed an Appeal of a local cable rate order adopted by its local franchising authority, the City of Mentor, Ohio (the "City). The City filed an Opposition to Continental's Appeal on May 4, 1995. Continental submitted a Reply to the City's Opposition on May 15, 1995. On  Y#-April 19, 1995, Continental also filed a Request for Emergency Stay of the local rate order.# Y-ԍ Because we are resolving this dispute on the merits presented in the appeal, the petition for stay has been rendered moot.  Y-x2.` ` In its local rate order, the City approved Continental's Form 393 rates and its  Y-Form 1200 rates for the basic service tier and associated equipment,Lb Y$-ԍ Under the Cable Television Consumer Protection and Competition Act of 1992, and the Commission's implementing regulations, local franchising authorities may regulate rates  Y&-for basic cable service, associated equipment and installations. 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). Local franchising authorities review"(0*0*0*(" the information contained in the FCC Form 393, and its successor forms, in order to determine cable operators' maximum permitted rates for basic service, associated equipment,  Yb-and installations under the Commission's rate regulations. See, Report and Order and Further Notice of Proposed Rulemaking in MM Docket 92266, 8 FCC Rcd 5631, 5770  Y6-(1993) ("Rate Order"). As part of the rate review process, Continental submitted an FCC Form 393 ("Determination of Maximum Initial Permitted Rates for Regulated Cable Programming Services and Equipment") to the City on November 22, 1993 and an FCC  Y-Form 1200 on August 24, 1994.  but found that"0*0*0* " Continental did not meet the necessary requirements to take advantage of the refund deferral  Y-period from May 15 to July 14, 1994K& Y-ԍ An operator was able to defer refund liability under our rules which became effective May 15, 1994 for the period from May 15 through July 14, 1994 if certain conditions were  Y-met. #Xw PE37=XP#See Second Order on Reconsideration, Fourth Report and Order, Fifth Notice of  Y -Proposed Rulemaking in MM Docket 92266, 9 FCC Rcd 4119, 4184 (1994) ("Second  Y -Recon. Order"). and required Continental to issue subscriber refunds for overcharges assessed during that period. In its Appeal, Continental challenges only that portion of the local rate order in which the City required Continental to issue refunds to subscribers for the period from May 15 to July 14, 1994. Continental argues that it intended to take advantage of the deferral period, that it satisfied the requirements to do so, and that the City cannot impose refund liability in a manner not in conformance with the Commission's rules. The City responds that Continental did not satisfy all of the necessary requirements for deferral, that Continental did not therefore qualify for deferral of the refund period, and that the overcharges assessed during the period must be returned.  X - II.xStandard of Review  Y -x3.` ` Under the Commission's rules, appeals of franchising authorities' local rate  Y -orders are reviewed by the Commission.f & Y-#Xw PE37=XP#э 47 C.F.R. 76.944.f In ruling on an appeal of a local rate order, the  Y -Commission will not conduct a de novo review, but instead will sustain the franchising  Y-authority's decision as long as there is a reasonable basis for that decision.W & Y-#Xw PE37=XP#э See Rate Order, 8 FCC Rcd at 5731; In the Matter of Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, Rate Regulation, Third Order on Reconsideration in MM Docket 92266, 9 FCC Rcd 4316, 4346 (1994)  YW-("Third Recon. Order").  The Commission will reverse a franchising authority's decision only if it determines that the franchising authority acted unreasonably in applying the Commission's rules in rendering a  YM-local rate order.\M& Y"-#Xw PE37=XP#э Id. \ 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  Y-instructions to resolve the case consistent with the Commission's decision on appeal.Zz& YJ&-#Xw PE37=XP#э Id.Z x"-0*(("Ԍ X- III.xBackground x  Y-x4.` ` On November 22, 1993, Continental submitted FCC Form 393 to the City.& YK-ԍ FCC Form 393 is the official form used by cable operators to determine whether their rates for programming, equipment and installations were reasonable for the period beginning September 1, 1993 and ending May 15, 1994. At the City's request, Continental supplied the City with additional information on January 18, 1994 and April 5, 1994. The City was still in the process of reviewing Continental's  Y-Form 393 when the Commission released the Second Recon. Order, which revised our rate regulations.  YJ-x5.` ` Under the terms of the Second Recon. Order, operators were required to  Y5-comply with the revised regulations by May 15, 1994.W 5K& Y1-ԍ Second Recon. Order, 9 FCC Rcd at 4183.W The Commission recognized, however, that many operators would need more time to change their rates to bring them into compliance with the revised rules. The Commission therefore provided that if an operator needed to reduce its rates in order to comply with the revised regulations, exposure to possible refund liability could be deferred from May 15, 1994 until July 14, 1994 if certain  Y -conditions were met.< & Yq-ԍ Id. at 4184.< The Second Recon. Order set out these general conditions: (1) the cable operator could not change its rates for any regulated service or equipment or restructure any regulated service or equipment offering between March 30, 1994 and July 14, 1994; (2) the operator had to give subscribers at least 30 days' notice of any rate or service change made pursuant to the new rules; and (3) all rate and service restructuring must have  YQ-been completed by July 14, 1994.C Q& Y-ԍ Id. at 41834185. C Section 76.922 (b)(6)(ii) of our rules codifies the first  Y:-and third of these prerequisites.J :d & YO-ԍ 47 C.F.R.  76.922(b)(6)(ii).J Section 76.964 effectively codifies the second requirement because even though this section does not refer to any prerequisites for qualifying for the deferral period this section does require that an operator give 30 days' written notice to  Y-subscribers before implementing any rate change.Y _ & Y!-ԍ 47 C.F.R.  76.964. This section also requires that, in addition to other notice requirements, a cable operator "shall give the relevant franchising authority a minimum of 30 days advance written notification of any changes in rates for cable programming service or associated equipment." The notice must state the precise amount of any rate change and explain the cause of the rate change. While the parties agree that appropriate notices were sent to subscribers they do not contend that such a notice was delivered to the local franchising authority.Y "< 0*(("Ԍx  Y-x6.` ` With respect to operators such as Continental, which were "involved in  Y-proceedings concerning basic cable rates" at the time of the release of the Second Recon.  Y-Order, that Order imposes two additional conditions for qualifying for refund deferral.W& Y6-ԍ Second Recon. Order, 9 FCC Rcd at 4187.W The Order required that any such operator which "elects to take advantage of the refund deferral period," had to notify the local franchising authority by June 14, 1994 that it intended to do  Yz-so.Bz{& Y -ԍ Id. at 4187 n.190.B The Order also provides that such an operator had to submit the relevant FCC rate  Yc-justification forms to the local franchising authority no later than August 15, 1994.3c.& YB -ԍ Id.3  Y5-x7.` ` Continental made no changes in its rates between May 15, 1994 and July 14, 1994. On the latter date, it reduced its rates to comply with the Commission's revised benchmark regulations. Continental also provided appropriate notice to subscribers of the rate changes 30 days in advance. Continental does not contend that it provided any formal notice to the City that it was taking advantage of the deferral period. However, on June 20,  Y -1994, the City received a copy of a Form 1200 & YT-ԍ FCC Form 1200 is the official form used to review rates for programming, equipment, and installations beginning May 15, 1994 or upon the expiration of the deferral period. filing from a law firm, addressed to the Commission and relating to Continental's cable programming service rates in the City of Roseville, Michigan ("Roseville CPS Filing"). The City ignored this document since it was from an unfamiliar law firm, was addressed to the FCC and involved another city in a  Yf-different state.Jfd & Y{-ԍ See Pohl Declaration at 3.J On August 15, 1994, the City received a Form 1205 regarding  YO-Continental's rate for a new addressable converter.O & Y-ԍxFCC Form 1205 is the official form used to determine equipment costs beginning May 15, 1994 or upon the expiration of the deferral period. Since the City had not yet received a Form 1200, the City contacted Continental on August 22, 1994 and asked why the City had not received a copy of Form 1200. Continental said it had mailed the form on August 14, 1994 and would send another copy. A copy of Form 1200 with a cover letter dated August 17, 1994 was received by the City on August 24, 1994. The cover letter stated that this Form was previously mailed to the City on June 14, 1994, but that a postal or other type of error may have prevented the City from receiving a copy.  Y-x` ` x8.` ` The City sent a letter to Continental on August 31, 1994, which the City amended by a letter dated September 30, 1994, informing Continental that, if the City's" 0*((" review of Continental's filings indicated that refunds were required, it would not be eligible for the refund deferral period since Continental had failed to comply with the Commission's requirements. The City noted that Continental's Form 1200 was filed nine days late and that the only document it received in June was the Roseville CPS Filing. On December 5, 1994 the City requested additional information from Continental. Continental submitted the additional information on January 13, 1995. On March 21, 1995, the City issued a rate order finding that the rates set forth in Continental's Form 393 and 1200 filings were reasonable and thereby approved. However, the City also found that "Continental has failed to comply with all the terms set by the FCC for obtaining the benefits of the deferral  Y1-extension period."B1& Y -ԍ Rate Order at  2(d).B The City therefore found that Continental should have implemented its reduced rates on May 15, 1994. The City thus concluded that Continental's rates between May 15, 1994 and July 14, 1994 were unreasonable and ordered Continental to make the appropriate refunds for that period.  X - IV. Discussion x  Y-x9. ` ` The sole issue raised in Continental's Appeal is whether Continental complied with all necessary conditions imposed by the Commission to qualify for the refund deferral period from May 15 to July 14, 1994. Continental argues there are only three such conditions; the City argues that two additional requirements are imposed in certain cases. Both parties agree that Continental has complied with the three general prerequisites of the  Y-Second Recon. Order relating to (1) stability of rates prior to July 15, 1994, (2) 30 days  Y-notice to subscribers, and (3) completion of rate restructuring by July 14, 1994.Ry& Y2-ԍ See Appeal at 2; Opposition at 13.R Continental argues that these are the only conditions an operator had to meet in order to qualify for the deferral period. The City maintains that while these are the general requirements for qualifying for the refund deferral period, the Commission imposed additional conditions on those operators, like Continental, who were "currently involved in  Y-proceedings concerning basic cable rates" before a local franchising authority.W,& Yr-ԍ Second Recon. Order, 9 FCC Rcd at 4187.W The City further contends that Continental did not comply with the two additional notice and filing  Yg-requirements the Commission has imposed on such operators. Continental maintains that the Commission did not specify additional notice or filing requirements as conditions for refund deferral.  Y -x 10.` ` The Second Recon. Order provides that: x` ` x` ` [I]f the operator elects to take advantage of the deferral of  Y -refund liability described above at para. 135138, supra, it must notify the local franchising authority by [June 14, 1994] that it"!0*(("" is electing that option. The [operator] will then have 30 days from the date on which it ultimately restructures its rates to submit the relevant FCC forms, although in no event will such  Y-forms be filed more that 30 days after July 14, 1994....B& Y4-ԍ Id. at 4187 n.190.Bx`  Y-The City is correct that this passage in the Second Recon. Order requires that operators who were involved in basic rate proceedings at the time of the release of that Order had to meet these two additional requirements in order to qualify for the refund deferral period. Since Continental was such an operator, we conclude that the City properly found that Continental had to meet the two additional notice and filing requirements in order to take advantage of the refund deferral period. x  Y -x 11.` ` The City further argues that Continental failed to meet each of these two additional conditions. As to the first requirement, that an operator notify the franchising authority by June 14, 1994 that it elected to take advantage of the deferral period, Continental argues that we should find that the following constituted actual or constructive notice to the franchising authority that it intended to take advantage of the refund deferral period: (1) the City's receipt of the Roseville CPS Filing on June 20, 1994; (2) the  Yd-subscriber notificationd{& Y-ԍ Continental had provided notice to subscribers of the July 15, 1994 rate changes 30  Yy-days in advance. See para. 7, supra. that, Continental alleges, included various city officials; and, (3) the fact that the revised lower rates were implemented on July 14, 1994. We decline to make a finding that these actions constituted timely notice to the City that Continental intended to take advantage of the deferral period. As to whether the Roseville CPS Filing could serve as notice of Continental's intention to take advantage of the deferral period, the City did not receive this document by the June 14, 1994 deadline for notifying the franchising authority. Even if the Roseville CPS Filing had been timely received, it was not addressed to the City and referred to a different community in a different state. Nor did this document refer to the deferral option. Therefore, the Roseville CPS Filing could not have served as a timely filing  Y-of the required notice to the City.T & Y]-ԍ Continental alleges that a "mailing error" prevented the City from receiving the correct document in June of 1994. However, the document that Continental alleges it intended to submit was not a notice to the City that Continental was electing to take advantage of the refund deferral period. The document that Continental claims it intended to submit to the City in June was a copy of a cable programming service rate filing made with the Commission for Mentor, Ohio ("Mentor CPS Filing"). The Mentor CPS Filing did not refer in any way to an election to take advantage of the deferral period. In fact, the letter accompanying the Mentor CPS Filing was not even addressed to the City, referred only to cable programming services rates and did not mention basic service or equipment and installation rates.T In addition, nothing in the record supports Continental's"0*((n" argument that the 30day subscriber notification should serve as the required notice to the franchise authority of Continental's election to take advantage of the deferral period. Continental submitted no evidence that the subscriber notification was received by any particular City official nor do we have any evidence that this notification referred to an election to defer refund liability. Finally, the fact that Continental lowered its rates on July 14, 1994 cannot serve as the notice that we required by June 14, 1994 of operators seeking to take advantage of the deferral period since it took place a month after the notice was required. For all of these reasons, we find that Continental did not notify the local franchising authority of its decision to take advantage of the refund deferral period by June  Y1-14, 1994 as required by the Second Recon. Order. We further find that Continental's actions did not constitute constructive notice to the City of such a decision. Continental should have taken some steps, in a timely fashion, which would have enabled the City to reasonably conclude that Continental intended to take advantage of the deferral period. While we do not require any particular form that the notice must take, a short letter from Continental sent to the City by June 14, 1994, simply stating that Continental intended to take advantage of the deferral period would have been sufficient. x  Y{-x 12.` ` As to the final requirement for refund deferral, that an operator submit the relevant rate justification forms to the franchising authority by August 15, 1994, Continental admits that it did not submit its Form 1200 to the City by the August 15, 1994 deadline. Continental's Form 1200 filing was received by the City on August 24, 1994 and accompanied by a cover letter dated August 17, 1994. Continental argues, however, that the City's failure to notify Continental that it had received an incorrect Form 1200, (the Roseville CPS filing), should preclude the City from taking advantage of its own inaction and that the City was not prejudiced by the late filing. We do not need to decide whether, under  Y-the facts in this case, Continental's late filing of the relevant forms in and of itself would prevent it from qualifying for the refund deferral period since we have already determined that Continental did not meet the notice requirement for refund deferral.  Yg-x 13.` ` Finally, Continental argues that requiring a refund in this case would constitute a penalty and be inconsistent with the Commission's objective of rational and fair implementation of its rate regulations. A finding that a refund is due since Continental did not qualify for the deferral period does not constitute the imposition of a penalty. The  Y -Commission's revised benchmark regulations became effective May 15, 1994.W & Y -ԍ Second Recon. Order, 9 FCC Rcd at 4183.W Subscribers were entitled to receive the benefit of reduced rates under the new regulations from that date forward unless the operator qualified for the refund deferral period. It does not constitute a penalty to enforce the revised rate regulations beginning with their effective date. Since Continental did not meet all of the requirements for the refund deferral period, we therefore deny Continental's appeal. "j${0*((%"Ԍ X- V.xOrdering Clauses  Y-x 14.` ` Accordingly, IT IS ORDERED that the Appeal filed by Continental  Y-Cablevision of Ohio, Inc. IS DENIED .  Y-x15.` ` IT IS FURTHER ORDERED that the Request for the Stay of the City of  Yy-Mentor's rate order filed by Continental Cablevision of Ohio, Inc. IS DISMISSED as moot.  YL-x16.` ` 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