WPC 2 B'K Z CG TimesCG TimesCG Times BoldCG Times ItalicE37XP"<$  ^;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@\@\`LHP LaserJet 4M (PCL), ROOM 201HPLA4MPC.PRSXj\  P6G;\ TXXP2 C M E] 3|w Y-#Xw PE37=XP#ф|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdCG TimesCG Times Bold#Xw PE37=XP#2Z7yvp&HP LaserJet 4M (PCL) Room 7022HPLA4MPC.PRSXj\  P6G;\XPTimes New RomanCG TimesCG Times BoldCG Times Italica8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . 2kk3vCa6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  A.  a7DocumentgDocument Style StyleyXX` ` (#` 2Ct_  BibliogrphyBibliography:X (# a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  X(# a2Right ParRight-Aligned Paragraph Numbers C @` A. ` ` (#` a3DocumentgDocument Style Style B b  ?  1.  2] u ! a3Right ParRight-Aligned Paragraph Numbers L! ` ` @P 1. ` `  (# a4Right ParRight-Aligned Paragraph Numbers Uj` `  @ a. ` (# a5Right ParRight-Aligned Paragraph Numbers _o` `  @h(1)  hh#(#h a6Right ParRight-Aligned Paragraph Numbersh` `  hh#@$(a) hh#((# 2_88a7Right ParRight-Aligned Paragraph NumberspfJ` `  hh#(@*i) (h-(# a8Right ParRight-Aligned Paragraph NumbersyW"3!` `  hh#(-@p/a) -pp2(#p Tech InitInitialize Technical Style. k I. A. 1. a.(1)(a) i) a) 1 .1 .1 .1 .1 .1 .1 .1 Technicala1DocumentgDocument Style Style\s0  zN8F I. ׃  2:Ha5TechnicalTechnical Document Style)WD (1) . a6TechnicalTechnical Document Style)D (a) . a2TechnicalTechnical Document Style<6  ?  A.   a3TechnicalTechnical Document Style9Wg  2  1.   2C!u7  a4TechnicalTechnical Document Style8bv{ 2  a.   a1TechnicalTechnical Document StyleF!<  ?  I.   a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . 2'3u!"e&'Doc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxx><q*"xxxxWWxxxWWkkxxxttoc 2toc 2;` hp x (#` !(#B` !(#B` hp x (#toc 3toc 3<` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4=` hp x (# !(#  !(# ` hp x (#toc 5toc 5>` hp x (#h!(# h!(# ` hp x (#2?}?ov@vxAyB!{toc 6toc 6?` hp x (#!(#!(#` hp x (#toc 7toc 7@ toc 8toc 8A` hp x (#!(#!(#` hp x (#toc 9toc 9B` hp x (#!(#B!(#B` hp x (#2ACq}DEFv˃index 1index 1C` hp x (#` !(# ` !(# ` hp x (#index 2index 2D` hp x (#` !(#B` !(#B` hp x (#toatoaE` hp x (#!(# !(# ` hp x (#captioncaptionF 2MGlsHr߄IQJ}Ѕ_Equation Caption_Equation CaptionG endnote referenceendnote referenceH head1 #I'd#2p}wC@ #a1Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfJ$ 2KLMN8a2Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfK/` ` ` a3Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfL:` ` `  a4Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfME` ` `  a5Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfNP  ` ` ` hhh 2OPljQ Pa6Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfO[   a7Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfPf  a8Paragraph R!1. a. i. (1) (a) (i) 1) a)D )DDDFrfQq "<$  ^;C`ddCCCdCCCCddddddddddCCdxxxsCYoxxdoxxooCCCddCddYdY8dd88Y8ddddLL8dYYYLYdYddddddCddddddddd8xdxdxdxdxdYxYxYxYxYC8C8C8C8dddddddddoYxddddoYdxdxdxdxdXXddxxXxdxdxXdddddddD8ddddddddp8pHodp8p8dxddddxLxLxddLdLdLddpHp8oddddddodpLpLpLdoddddododxCddCCC/NdddCd]]ddddddFddddFCCddd88ddzzdddkddCddF"ddddCCzCdzdoddCdYds]zUvdYYCCCCzzzozoYzNoYdYC8YooYdYzzdzddoYoYzzozzzzzCdoozYzzzzCCddddzdddooozCsdYC\   pxtll\tll@\@\`L`L2 X-  ЊX01Í ÍX01Í Í  DE  $//Appeal ORDER,CENTURY COMMUICATIONS CORPORATION, D/B/A YUMAT CABLEVISION, DA 952111/$ $/76.922 Rates for the basic service tier/$ $/76.923 Rates for equipment and installation/$  Y-$/76.944 Commission Review of Franchising Authority Decisions/$ `(#(#X  X- $/1.45 Request for Stay/$ Đ Xw-T T 2(Before the W FEDERAL COMMUNICATIONS COMMISSION  X -Washington, D.C. 20554 TP  Y -In the Matter of:R) ă R) CENTURY COMMUNICATIONS R) CORPORATION, D/B/A YUMAR)  Yz- CABLEVISIONR)h DA 952111 R) Appeal of Local Rate Order of R) the City of Yuma, ArizonaR)  Y-}  MEMORANDUM OPINION AND ORDER ă  Y- Adopted : October 3, 1995hh@hpp Released : October 12, 1995 By the Chief, Cable Services Bureau:  Xi- I.xINTRODUCTION  I. A. 1. a.(1)(a) i) a) I. 1 1. a.(1)(a) i) a)  Y;-x1.` ` On September 30, 1994, Century Communications Corporation d/b/a Yuma Cablevision ("Century") filed with the Commission an appeal of a local rate order adopted on  Y -August 31, 1994 by its local franchising authority, the City of Yuma, Arizona ("the City").O_ h Y -ԍ On August 31, 1994, the City issued its local rate order at the City's Special Council Meeting. In the Rate Order, the City adopted as the basis for its order a separate written report dated August 18, 1994, entitled "Order of the City Council of Yuma, Arizona Regarding Rates for Basic Services and Equipment Charged by Yuma Cablevision," which had been prepared by the City's Cable Commission. (The August 31, 1994 order is hereafter referred to as the "Local Order;" the earlier report is hereafter referred to as the "August 18, 1994 Report.")O " 0*0*0*"  Y-In its rate order, based on the FCC Form 393O Yy-Ѝ FCC Form 393 is the official form used by cable operators to determine whether their regulated rates for programming, equipment and installations were reasonable for the period beginning September 1, 1993 and ending May 15, 1994. filed by Century, the City established rates for basic tier service and associated equipment and installations and required Century to "Qr 0*0*0*>"  Y-I.II.III.refund overcharges to subscribers dating back to September 1, 1993.O Yy-Ѝ Under 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). On October 17, 1994, the City filed an opposition to Century's appeal, and on October 27, 1994,  Y-Century filed a reply to the City's opposition.O Y -ԍ Century also filed a petition for stay on September 30, 1994. Because we are issuing a decision on the merits, the petition for stay has been rendered moot.  Y-x1.` ` Century raises three issues on appeal: (1) the City improperly treated Century's "Century Select" a la carte offerings as a regulated service; (2) the City impermissibly ordered Century to reduce all of its nongrandfathered bulk rates to the lowest nongrandfathered bulk rate that Century offers; and (3) the City improperly prohibited Century from charging its hourly service charge ("HSC") for repair calls. We consider each issue in turn.  X - II.xSTANDARD OF REVIEW  Y -x2.` ` Under the Commission's rules, appeals of franchising authorities' local rate  Y -orders are reviewed by the Commission.@ O Y(-ԍ 47 C.F.R.  76.944.@ In ruling on appeals of local rate orders, 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.ej O Y-ԍ Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket 92266, Report and Order and  Y-Further Notice of Proposed Rulemaking, 8 FCC Rcd 5631, 5731 (1993) ("Rate Order"); see Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket No. 92266, and BuyThrough Prohibition, MM  Y<-Docket No. 92262, Third Order on Reconsideration, 9 FCC Rcd 4316, 4341 (1994) ("Third  Y' -Reconsideration 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 its  YM-local rate order.3MO Y$-ԍ Id.3 If the Commission reverses a franchising authority's decision, it will not"MJ0*(( " 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.3O Yb-ԍ Id.3  X- _III.xDISCUSSION  X-x A.` ` TREATMENT OF A LA CARTE PACKAGE  Yv- x  X_-x` ` 1. Positions of the Parties  Y1-x4.` ` _ As part of its decision setting Century's basic tier rates, the City found Century's package offering of three individually available channels (TNT, CNN, and the  Y -Family Channel), known as the Century Select package, to be a regulated tier of service.I  {O Y/-ԍ August 18, 1994 Report at 510.I This a la carte package was first offered to Century's subscribers on September 1, 1993, when Century restructured its service offerings to comply with the Commission's rules. Century states that its restructuring involved eliminating two cable programming services ("CPS") tiers and offering TNT, CNN, and the Family Channel on an individual basis and also as a package that Century alleges is not subject to rate regulation. Century moved the  Yy-remaining channels from its CPS tiers to its basic service tier.  Yb-  YK-x5.` ` Century argues that the City's decision to treat its a la carte package as a regulated tier of service is contrary to the objectives of the 1992 Cable Act and the  Y-Commission's a la carte rules. Century contends that it was the Commission's prerogative, not the City's, to determine the validity of Century's a la carte package as part of the  Y-Commission's inquiry into Century's a la carte package.@ ,O Y-ԍ Century Appeal at 34.@ Century further argues that its Century Select package complies with the Commission's a la carte rules in effect at the time  Y-the package was created. O YO-ԍ See Rate Order, 8 FCC Rcd at 58365838; Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, First Order on Reconsideration, MM Docket No. 92266, 9 FCC Rcd 1164, 118485 (1993).. and that the Cities' reliance upon the 15 interpretive guidelines announced by the Commission in March 1994 to determine the regulatory status of Century's a la carte channels constituted an unlawful retroactive application of the Commission's  Y|-rules.@ |b O Y$-ԍ Century Appeal at 47.@ However, Century claims that the Century Select tier comports with both the"| 0*((|"  Y-interpretative guidelines the Commission established in its Second Reconsideration Order cO Yy-ԍ In the Second Reconsideration Order, the Commission set out 15 guidelines "that local authorities and the Commission should consider in assessing in an individual case whether an a la carte package enhances consumer choice and does not constitute an evasion of rate regulation." Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Second Order on Reconsideration, Fourth Report  Y-and Order and Fifth Notice of Proposed Rulemaking, MM Docket 92266, 9 FCC Rcd 4119,  Y-4214 ("Second Reconsideration Order").ք  Y-and the original standards the Commission adopted in its Rate Order.AO Y -ԍ Century Appeal at 813.A In response, the City asserts that it properly applied the Commission's guidelines on a la carte packages in treating Century's package as a regulated tier and, therefore, its decision is reasonable and should be  Y-sustained.C O Y-ԍ City Opposition at 1436.C  Xz-x` ` 2. Discussion  YL-x6.` ` The a la carte package at issue was first offered to Century's subscribers on September 1, 1993, the effective date of our regulations. As a result of Century's tier restructuring, Century began offering the three channels at issue on an individual basis and also as a package that Century alleges is not subject to regulation. TNT and CNN were originally offered as part of Century's Gold tier and the Family Channel was originally offered as part Century's Silver tier.  Y -x7.` ` We examined this precise issue in our decision resolving the letter of inquiry  Y-we issued to Century regarding its a la carte offerings. In that decision, Century Cable TV of  Y-Yuma,U O Y-ԍ Century Cable TV of Yuma, Arizona, Letter of Inquiry on A La Carte Issue, LOI 9339, DA 941360, 10 FCC Rcd 123 (1994). we found that we could not say that it was clear that the a la carte package at issue  Yj-in this appeal was not a permissible nonrate regulated offering under our rules.<j O Y -ԍ Id. at 125. < We further concluded that in light of the prior confusion over what constituted a permissible nonrate regulated a la carte offering, it would be inequitable to subject the operator to refund liability or to require the operator to restructure its tiers so as to return the channels offered  Y-in the a la carte package to regulated tiers.3O Ya%-ԍ Id.3 Instead, we found that the a la carte package at"U0*(("  Y-issue in this appeal may be treated as a new product tier under the Commission's Going  Y-Forward Order. O Yd-ԍ Id. at 126, citing Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Sixth Order on Reconsideration and Fifth Report and Order, MM Docket Nos. 92266 and 93215, 10 FCC Rcd 1226 (1994)  Y!-("Going Forward Order"). New product tiers are cable programming services that, subject  Y -to certain conditions, are not rate regulated. Id. at 123339. In the Going Forward Order, the Commission reconsidered its regulatory treatment of collective offerings of a la carte channels. Specifically, the Commission determined that such packages are cable programming service tiers within the meaning of Section 3(1)(2) of the 1992 Cable Act and  Y -therefore will be subject to our general rate regulation rules. Id. at 1243. However, the Commission also stated that with respect to packages created between April 1, 1993, and September 30, 1994, where it is not clear that a particular package was not a permissible offering under the a la carte rules in effect at the time it was created, the package may be  YX-treated as a new product tier. Id.  Y-x8.` ` We find that the City's determination that Century's Century Select package is  Y-a regulated tier is inconsistent with the action taken in Century Cable TV of Yuma.o O Y-ԍxThe Commission recently affirmed the Cable Service Bureau's decision in another  Y-letter of inquiry order in which the Bureau held, as it did in Century Cable TV of Yuma, that the operator's a la carte package in Tallahassee, Florida should be treated as a nonregulated  Y-new product tier. See In the Matter of Comcast Cablevision, City of Tallahassee, Florida, FCC 95341 (released August 15, 1995) We  Y-further find that, in accordance with that decision, Century's a la carte package should not be treated as a rate regulated tier of service. Accordingly, we are remanding this issue to the  Ye-City so that it can enter a revised order consistent with our findings in Century Cable TV of  YP-Yuma. aPO Y-ԍ We need not address Century's argument with respect to the "retroactive" application  Y-by the City of the 15 guidelines set forth in the Second Reconsideration Order, in light of the fact that we grant Century's appeal regarding its a la carte offerings and remand the issue to the City.a  X$ - vx B.` ` ADJUSTMENTS TO BULK ACCOUNT RATES  X -x` ` 1. Positions of the Parties  Y -x9.` ` During its rate review proceeding, the City found that Century was charging  Y -nonuniform vrates to its various bulk account customers.G 6O Y&-ԍ August 18, 1994 Report at 16.G As a result, the City requested more information from Century to support its existing bulk account rate structure. In its rate"0*((<" order, the City concluded that Century had failed to establish any basis for charging different  Y-rates to different bulk account customers.=O Yb-ԍ Id. at 1617.= As a result, the City ordered that "bulk rate customers subject to bulk rate agreements with Century that are not grandfathered under FCC rules, shall receive the lowest bulk rate offered by Century that is not grandfathered, unless Century first received authority from the Council to charge a higher rate, based on  Y-justified costs."h{O Y-ԍ Local Order at 3; see also August 18, 1994 Report at 17.h  Y_-x 10.` ` On appeal, Century argues that the City does not have the authority to require Century to set all nongrandfathered bulk account rates at the lowest nongrandfathered bulk rate because the Commission's rules specifically allow operators to establish different bulk rates so long as they are based on cost savings and offered on a uniform basis to similarly Y -situated customers.B .O Y-ԍ Century Appeal at 1314.B Century maintains that "it is the cable operator's option either to charge the standard residential rate (not to exceed the maximum permitted rate) or to establish a uniform, nonpredatory discounted bulk rate applicable to the class in which the  Y -particular MDU [multiple dwelling unit] in question falls.": O YN-ԍ Id. at 15.: According to Century, because bulk accounts are offered at the operator's discretion, a franchising authority must either approve the discounted rates offered by the operator or require the operator to discontinue  Yy-the offerings.:yO Y-ԍ Id. at 14.: Finally, Century argues that the effect of the City's order "will be to create anticompetitive pricing by reducing the rates for certain bulk customers to predatory  YK-levels."=KE O YA-ԍ Century Reply at 9.=  Y-x 11.` ` In its opposition, the City maintains that although the Commission's rules allow an operator to charge different rates to multiple dwelling units ("MDUs"), the operator must affirmatively demonstrate that it experiences identifiable cost savings from serving  Y-various MDUs that justify charging different rates to each of them.C O Y"-ԍ City Opposition at 3738.C These cost savings may be based upon building size and type and the duration of the contract, while the same bulk  Y-rate must be offered to the same class of MDU subscribers.: O Y&-ԍ Id. at 38.: The City claims that, despite being provided numerous opportunities, Century never submitted sufficient evidence to"Z0*((" support its different levels of bulk rates, but only stated that its bulk rates were based on numerous factors, which were never explained in sufficient detail or specifically applied to  Y-separately justify each of its bulk rates.=O YK-ԍ Id. at 3839.=  Y-x 12.` ` The City further argues that requiring Century to charge all of its nongrandfathered MDUs the lowest rate offered to any nongrandfathered MDU is an appropriate remedy and is consistent with the 1992 Cable Act's objective to require operators  Y_-to offer all similarlysituated customers the same competitive rate.: _{O Y -ԍ Id. at 39.: The City disputes Century's position that the City's remedial authority is limited to requiring Century to discontinue its bulk rate offerings and, instead, charging these subscribers the benchmark  Y -rate.! .O Y-ԍ The City also asserts that Century has mischaracterized the terms of its rate order by stating that the City requires all nongrandfathered rates to be charged at the lowest nongrandfathered rate. The City claims that its rate order expressly permits Century to charge  Y-bulk rates other than the lowest grandfathered rate if they are first justified to the City. Id. at 3637. The City argues that, under this theory, the City would be required to prohibit Century from offering lower rates in an effort to compete with the service offered by a  Y -competitor, which is clearly contrary to the Commission's rules.=" O Y"-ԍ Id. at 3940.= The City maintains that it was reasonable to assume that the lowest nongrandfathered bulk rate offered by Century best  Y -approximates the rate that would be charged in a competitive environment.:# 8 O Y-ԍ Id. at 40.: Therefore, requiring an operator to charge a rate set by competitive forces (e.g., the lower discounted rate) to all similarlysituated customers "is a better approach than requiring the operator to  Yy-charge a higher benchmark rate, which at best is a proxy for competition."@$y O Y-ԍ Id. at 40, n.90.@  XK-x` ` 2. Discussion  Y-x 13.` ` Franchising authorities have the authority to ensure that an operator's rate  Y-structure is in compliance with the uniform rate provisions of the 1992 Cable Act.N%O YU$-ԍ Rate Order, 8 FCC Rcd at 5899.N In rate proceedings, the cable operator, not the local franchising authority, bears the burden of"Q%0*(("  Y-proving the reasonableness of its proposed regulated rates.J&O Yy-ԍ See 47 C.F.R.  76.937.J After providing the cable operator with an opportunity to participate in the rate review process and to submit documentation supporting its proposed rates, the local franchising authority is fully justified in making its findings based on the best information available to it at the time it issues its  Y-rate order.W'{O Y-ԍ See Rate Order, 8 FCC Rcd at 57235724.W Under the Commission's rules, cable operators may offer different nonpredatory bulk rates to MDUs that vary with the size of the MDUs and the duration of the contracts, provided the operator is able to justify the rate differences based on relative  Y_-cost savings.i( _.O Y> -ԍ 47 C.F.R.  76.984 states: x` ` Cable operators may offer different rates to multiple dwelling units of different sizes and may set rates based on the duration of the contract, provided that the operator can demonstrate that its costs savings vary with the size of the building and the duration of the contract, and as long as the same rate is offered to buildings of the same size with contracts of similar duration.x`  Yq-See also Rate Order, 8 FCC Rcd at 589699; Third Reconsideration Order, 9 FCC Rcd at 432527.i Cable operators must, therefore, provide franchising authorities with adequate information to determine if their bulk agreements are in compliance with the Commission's rules.  Y - x 14.` ` As noted above, we will sustain the franchising authority's decision as long as  Y -there is a reasonable basis for that decision.U) O Y-ԍ See Discussion supra at  3.U In this case, we will not disturb the City's finding that Century failed to justify its bulk rates. The record demonstrates that the City provided Century with several opportunities to supply information that sufficiently explained and justified Century's various bulk rates. In its appeal, Century does little to counter the City's allegation that the information it submitted to the City to justify its bulk rates was incomplete and inadequate. The record indicates that Century provided the City with a rate schedule that identified the various types and sizes of its MDUs, the durations of the particular bulk contracts, and the rates offered to each category of MDUs. However, there is no evidence that Century provided the City with data regarding the underlying cost savings  Y-that form the basis for its varying bulk rates.*O Y~%-ԍ To make an adequate showing of cost savings, an operator is not required to specifically quantify the exact cost savings that it experiences from providing service pursuant to bulk agreements. It should, however, explain to the franchising authority,"P')0*((m'" through a combination of numerical data and narrative description, what cost factors allow it to offer its bulk discounts to particular bulk subscribers more cheaply than to other bulk subscribers. In the absence of this information, the City"K*0*((" was unable to determine whether the bulk contracts were in conformance with the Commission's rules. We find that the City had reasonable grounds upon which to conclude that Century had not adequately justified its bulk rates.  Y-x15.` ` However, we find that the City's remedy of requiring Century to reduce all of its nongrandfathered bulk rates to the lowest nongrandfathered bulk rate is inconsistent with  Yv-our rules.+vKO Yr -ԍ See Comcast Cablevision of Tallahassee, Inc., Appeal of Local Rate Order of City of Tallahassee, Florida, DA 951561 (Cab. Serv. Bur., released July 17, 1995). As noted earlier, our rules allow cable operators to offer different bulk rates to MDUs that vary according to the size and type of the MDU and the duration of the contracts, provided the operator can justify the rate differences based on relative cost  Y1-savings.V,1O Y-ԍ See Discussion supra at  13.V In a previous order resolving an appeal of a local rate order, SBC Media  Y -Ventures, Inc.,- O Yg-ԍ SBC Media Ventures, Inc., Appeal of Local Rate Order of Montgomery County, Maryland, DA 941251, 9 FCC Rcd 7175, 7181 (1994). we explained that where an operator fails to meet this burden, the local franchising authority may require that the rates for one MDU be reduced to a lower rate established by the operator for another MDU of the same size under the same conditions  Y -i.e., a similarlysituated MDU.3. 4 O Y-ԍ Id.3 We noted, however, that the local franchising authority may not simply reduce all bulk rates offered by the operator to the lowest bulk rate offered  Y -to any MDU.3/ O YE-ԍ Id.3 In this case, the City may only require Century to reduce its nongrandfathered bulk rates to the lowest rate offered to nongrandfathered MDUs of the same class and category. Century has provided the City with enough information to distinguish between classes of MDUs. Therefore, the City may not claim that all MDUs served by Century are similarlysituated. Accordingly, we remand this issue to the City so that it may enter an order in accordance with our findings herein.     X -x C.` ` DISALLOWANCE OF REPAIR CHARGES  X-x` ` 1. Positions of the Parties  Y- x16.` ` In its rate review proceeding, the City noted that although Century's rate card indicated that Century intended to charge for repairs of subscriber equipment based on its" /0*(("  Y-HSC, Century had not justified such a charge for repairs on its Form 393.\0O Yy-ԍ August 18, 1994 Report at 1819; Local Order at 2.\ Although the  Y-City approved Century's proposed HSC, it did so subject to the condition, inter alia, that "the HSC may not be charged for repair calls, because those costs are supposed to be  Y-recovered through the basic rate, unless separately justified.";1yO Y-ԍ Local Order at 2.;  Y-x17.` ` In its appeal, Century argues that the City may not prohibit Century from charging the HSC for repair calls. Century maintains that the City is incorrect in asserting that repair costs are to be recovered through basic service rates. Century acknowledges that repair costs for leased equipment are to be recovered through leased equipment rates, but argues that repair calls "unrelated to leased equipment such as service calls resulting from the malfunction or misconnection of the subscriber's own equipment may be charged to the  Y -customer at the regulated, HSC rate."?2 *O Y-ԍ Century Appeal at 15.?  Y -x18.` ` In its opposition, the City maintains that it reasonably concluded that Century should not be allowed to charge the HSC for repair calls because Century did not separately  Y -justify such a charge on its rate filing.@3 O Y5-ԍ City Opposition at 41.@ The City contends that Century's rate filing only  Y-requested approval of the HSC for installationrelated activities.34O Y-ԍ Id.3 The City is concerned that Century's rate card indicates that it will charge the HSC for a broader range of activities than Century's rate filing incorporates into its HSC. Although the City agrees with Century's position on appeal that the HSC may not be charged for the maintenance of leased equipment in addition to the monthly rates for the lease of that equipment, the City contends that  Y-Century's rate card does not limit this charge in such a manner.=5? O Y-ԍ Id. at 4142.= Specifically, the City asserts that the description of the charge on the rate card does not distinguish between repairs to leased equipment and repairs to customerowned equipment. Thus, the City claims that it reasonably concluded that the rate card suggests that Century may attempt to impose this  Y-charge for all repair calls, including those involving leased equipment.36 O Yf#-ԍ Id.3  Y-x19.` ` In reply, Century claims that the Commission's rules allow cable operators to establish maintenance charges for customerowned equipment based on the system's HSC, and, therefore, the City may not prohibit Century from charging customers for service calls"g 60*(("  Y-that relate to maintenance of the subscriber's own equipment.>7O Yy-ԍ Century Reply at 10.> Century contends that once it has established an HSC, no further approval should be necessary for Century to use the HSC  Y-as the basis for repair charges related to service calls of customerowned equipment.38yO Y-ԍ Id.3  X- x` ` 2. Discussion  Yv-x20.` ` Under our rules, a cable operator is required to establish an Equipment Basket to which it will assign the direct costs of service installation, additional outlets, and leasing  YH-and repairing of equipment.N9H,O Y% -ԍ Rate Order, 8 FCC Rcd at 5815.N From this Equipment Basket, an operator calculates its rates for the lease, repair and maintenance of equipment and for installationrelated activities. As part of this process, an operator must derive a standard Hourly Service Charge applicable to  Y -regulated activities.: O Y-ԍ "An operator must also calculate an Hourly Service Charge (HSC) through which it would recover all Equipment Basket cost (including a reasonable profit) except for the operator's capital costs of remotes, converter boxes and other customer equipment up to the  YN-time it is leased to the subscriber." Rate Order, 8 FCC Rcd at 581516. The HSC is calculated by dividing the total number of labor hours associated with regulated installations, maintenance and repairs by the total costs associated  Y -with such activities._; M O Y-ԍ "The HSC would be computed by taking the sum of all equipment basket costs except purchase cost of all equipment, and dividing the sum by the operator's total annual person  Y-hours dedicated to leasing, installing and equipment repair services." Rate Order, 8 FCC Rcd at 5816, n. 716._ For each type of regulated equipment, the costs of the repair and  Y -maintenance of such equipment are included in the calculation of the monthly lease rate.< O Y*-ԍ Rate Order, 8 FCC Rcd at 5816. An operator's various equipment lease charges are derived by multiplying the HSC by the total number of hours per year the operator spends maintaining and servicing the equipment, plus the annual capital costs for that equipment, and then allocating this total amount over the number of equipment units in service.  Y -For installations or services not associated with the maintenance or repair of leased equipment, the operator may charge subscribers either the HSC multiplied by the actual time necessary to complete the service or a flat rate based on the HSC multiplied by the average  Yb-number of hours required to complete the service.3=b)O Y<%-ԍ Id.3 However, an operator may only establish installationrelated charges based on the HSC for those activities where the"K =0*((9" underlying labor hours and costs were first included in the calculation of the HSC on its rate  Y-filing.>O Yb-ԍ See Falcon Cablevision, Appeal of Local Rate Order of City of Thousand Oaks, California, DA 951115 at  79 (Cab. Serv. Bur., released May 19, 1995).  Y-x21.` ` Rates for regulated equipment repairs are subject to the franchising authority's  Y-review.f?dO Y-ԍ Communications Act 623(b)(3), 47 U.S.C. 543(b)(3).f In rate proceedings, the cable operator, not the local franchising authority, bears  Y-the burden of proving the reasonableness of its proposed regulated rates.J@O YS -ԍ See 47 C.F.R.  76.937.J Consequently, it was incumbent upon Century to establish in its rate filing the reasonableness of charging its HSC for repairs. We agree with the City that Century's rate card ambiguously establishes a service rate applicable to "connections and repair calls," suggesting that Century may intend to apply the HSC to a broader range of activities than indicated in its rate filing. Although in its appeal Century attempts to limit the application of this charge to repairs of customer Y -owned equipment, the rate card suggests otherwise. As the City correctly argues, our rules provide that maintenance costs associated with equipment that is leased by the subscriber are  Y -to be recovered through a component of the equipment's monthly lease charge.A O YN-ԍ 47 C.F.R. Sec. 76.923(f) and (g); Rate Order, 8 FCC Rcd at 5816. See also  Y9-Discussion supra at  20.  Y -x22.` ` Even if Century only intends to charge the HSC for service calls not related to leased customer equipment, Century would need to demonstrate that its calculation of the HSC included all of the labor hours and costs attributable to the repair and connection services to which it intends to apply the HSC. It is unclear from the pleadings filed by both parties exactly what activities were incorporated into Century's HSC. Therefore, we are unable to determine whether the City's decision was reasonable or not. The resolution of this issue depends solely upon factual determinations that have not been established by the pleadings and appear to not have been clearly established during the rate proceeding. Therefore, we will remand this issue to the City for resolution in accordance with the terms of this memorandum opinion and order. On remand, we will require Century to provide the City with a list of the specific activities for which it intends to charge subscribers. We will also require Century to explain how each of these activities was incorporated into the HSC on its rate filing. The City must then allow Century to charge the HSC for those activities that are incorporated into the HSC."| f A0*((|"  X- IV.xORDERING CLAUSES  Y-x23.` ` Accordingly, IT IS ORDERED that the appeal by Century Communications  Y-Corporation regarding the City of Yuma's treatment of Century's Century Select package IS  Y-REMANDED to the City so that it may enter an order consistent with our findings in  Y-Century Cable TV of Yuma.  Yd-x24.` ` IT IS FURTHER ORDERED that the appeal by Century of the City's  YN-adjustment to Century's bulk account rates IS REMANDED to the City so that it may enter an order in accordance with the terms of this memorandum opinion and order.  Y -xx25.` ` IT IS FURTHER ORDERED that the appeal by Century of the City's  Y -disallowance of Century's repair charges IS REMANDED to the City so that it may enter an order in accordance with the terms of this memorandum opinion and order.  Y -x26.` ` This action is taken by the Chief, Cable Services Bureau, pursuant to authority xdelegated by Section 0.321 of the Commission's rules. 47 C.F.R. 0.321. x` ` x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhMeredith J. Jones x` `  hhChief, Cable Services Bureau