WPC- 2M BR Z CG Times Roman3|wew RomanTimes New Roman BoldXPHP4Si; PCL; LPT1; Room 201_1HPLA4SA0.PRSXw PE37\QrJXP|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$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd; LPT1; Room 201_1HPLA4SA0.PRSXj\  P6G;\QrJXP2   f 3|w",tB^ f ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYd4dddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddCdoddd|8|H~d<|8dtddddHHdlLlLlLkd|H|8~ddddddddXXXd~ddkd~ddxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCYQQddddddFddddFCChhd44ddzzdddvooChdF"dhd9dCCzCddoddCdYds]zUvdYYCCCCz~ozoY~NYdYC8YooYdYzsdzdd~YYzozzz~CdzYzzzzCCdddddddzCsdYC\   pxtll\tll@\@\`L2;KvpqCG TimesTimes New Roman2HPLA4MP0.PRSXw PE37\Ft]XP"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdodPDdopoopodXYXodoodddCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCdUUddddddFddddFCCssd44ddzzddd~ooCsdF"dsd9dCCzCddoddCdYds`zUvdddCCCCzozoYNYYYN8YooYdYzzdzddYYzozzzNdzYzzzzCCdddddddzCzdYC\   pxtll\tll@\@\`La8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . 2kk~va6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# a2DocumentgDocument Style Style<o   ?  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A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxxf?h@vjtoc 4toc 4=` hp x (# !(#  !(# ` hp x (#toc 5toc 5>` hp x (#h!(# h!(# ` hp x (#toc 6toc 6?` hp x (#!(#!(#` hp x (#toc 7toc 7@ 2tAkBmCoDqtoc 8toc 8A` hp x (#!(#!(#` hp x (#toc 9toc 9B` hp x (#!(#B!(#B` hp x (#index 1index 1C` hp x (#` !(# ` !(# ` hp x (#index 2index 2D` hp x (#` !(#B` !(#B` hp x (#2wE5tFvSvGlvHr5wtoatoaE` hp x (#!(# !(# ` hp x (#captioncaptionF _Equation Caption_Equation CaptionG endnote referenceendnote referenceH 2 KwK?KKՇ"i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd-ЍReport and Order, 8 FCC Rcd at 5731; Third Order on Reconsideration in MM Docket  X' -92266, 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 acted  X-unreasonably in applying the Commission's rules in rendering its local rate order.<:  X#-ԍId. < 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"0*(("  X-case consistent with the Commission's decision on appeal.::  Xy-ԍId.: "B0*(("Ԍ X-  A.` ` Timeliness of Appeal  X_-4. ` ` On October 4, 1994, the City adopted a local rate order disapproving in part certain rates and charges for Cablevision's basic service tier and associated equipment in  X1-effect from September 1, 1993 to July 14, 1994.W 1.:  X-ԍCity of Chino Rate Order at 3,  3.W The rate order establishes a new regulated  X -rate schedule for Cablevision's basic service tier and associated equipment.I  :  X-ԍId. at Exhibit A. I The City ordered Cablevision to issue refunds or credits to subscribers for those charges collected between September 1, 1993 and July 14, 1994, which were in excess of Cablevision's maximum permitted rates. Section 4 of the City's rate order states as follows: XThe Operator is hereby directed and ordered to provide refunds with interest as provided by law to subscribers for any accounts collected since September 1, 1993 to July 14, 1994 in excess of the rates prescribed herein in a manner consistent with Section 76.942(d) of the FCC's Rules and Regulations within sixty (60) days of the date of this Resolution and to provide the City with written evidence of compliance  X4-within ninety (90) days of the adoption of this Resolution.@ 4:  Xw-ԍId. at 3.@(# On December 2, 1994, Cablevison submitted its refund plan to the City, and sought to demonstrate that it had no refund liability after offsetting equipment and installation undercharges against programming overcharges. On or about December 12, 1994, William M. Marticorena, Special Counsel for the City, telephoned Thomas Prevette, a representative of Cablevision, to indicate that the City disputed Cablevision's conclusion in its refund plan that it had no refund liability, since Cablevision, during the September 5, 1994 City Council meeting, had "acquiesced" to the payment of refunds for programming overcharges without  Xe-consideration of equipment and installation undercharges.A eE :  X[%-ԍOpposition at 6.A In a letter submitted to the City, dated December 16, 1994, Mr. Prevette reasserted Cablevision's right to offset refunds against"N 0*(("  X-undercharges.I :  Xy-ԍId. at Exhibit 3. I The City, however, continued to refuse to accept Cablevision's refund plan which resulted in no refund liability. Thus, by letter dated January 25, 1995, the City gave "formal notice" to Cablevision that it was in breach of the rate order by failing to implement a refund plan consistent with the City's October 4, 1994 order. The City also determined that Cablevision could not offset past overcharges with past undercharges, since Cablevision had  X-"waived" that right.I{:  X-ԍAppeal at Attachment A. I Cablevision filed its appeal within 30 days of the January 25, 1995 letter.  XH-5.` ` Under the Commission's rules, any participant in a ratemaking proceeding at the franchising authority level may file an appeal of the franchising authority's rate decision with the Commission within 30 days of the release of the text of the franchising authority's  X -decision.P ,:  X-ԍ47 C.F.R.  76.944(b).P Cablevision asserts that, had the October 4, 1994 rate order been clearer on the issue of offsetting, it would have appealed the rate order within 30 days of that date. Cablevision contends that, given the rate order's failure to address offsetting, Cablevision could not have been aware that it had an issue to appeal. Cablevision therefore argues that the applicable decision for it to appeal is the January 25, 1995 letter it received from the City, which Cablevision asserts was the City's first written decision addressing the City's position on offsetting.  XK-6.` ` We agree. At the time the City issued its rate order, we had already examined the issue of offsets, stating: X[R]efund liability should be calculated based on the difference between the old bundled rates and the sum of the new unbundled program service charge(s) and the new unbundled equipment charge(s). The intent of the refund mechanism is to place subscribers in the same position they would be had they been subject to "reasonable" rates. To not allow cable operators to factor in equipment charges could result in an operator being required to make a rate reduction that is greater than the maximum  X|-reduction required under application of the benchmark approach.p|:  X !-ԍThird Recon. Order, 9 FCC Rcd at 4353 (footnote omitted).p(#  XN-In addition, at the time we issued the Third Order on Reconsideration, we incorporated  X9-offsetting into our rate regulations.J9:  Xz%-ԍ47 C.F.R.  76.942(a).J At that time, we had also interpreted this provision in"9A 0*(("  X-issuing several stays of local rate decisions.v:  Xy-ЍSee, e.g., TCI Cablevision of St. Louis, Inc. (St. Louis, Missouri), DA 94424, 9 FCC Rcd 2141(1994) (not allowing increase of basic service charge to offset reduction in permitted rates for remotes and coverters results in refund to subscribers in excess of the maximum liability that may be assessed).v In sum, we had clearly stated that operators were to use offsetting in calculating their refund liability. Cablevision had the right to expect that the City's rate order would comply with the Commission's decisions on using offsets in calculating refund liability.  X-7.` ` The City argues that its position regarding offsets was provided in its rate order in that its order references 47 C.F.R.  76.942(d), the method by which an operator may implement a refund, and not 47 C.F.R.  76.942(a), which contains the references to net offsets. We cannot agree with the City. By becoming certified, a franchising authority agrees to adopt and administer regulations that are consistent with all of the Commission's  X -regulations.M 6:  X-ԍ47 C.F.R.  76.910(b)(1).M A franchising authority may not choose to disregard a Commission rule simply because the franchising authority fails to cite the rule in its rate order. The City also argues that its rate order required that Cablevision implement its refunds within 60 days rather than submit a proposed refund plan in that period. The City claims that Cablevision cannot create a legally significant event for which it can now appeal by submitting a refund plan. We disagree. Cablevison's appeal is based on a new written decision by the City, subsequent to the rate order, to reject offsetting. The City's rate order does not expressly prohibit Cablevision from offsetting, nor would Cablevision have any reason to believe that the order implicitly did so. It was the City's action (not Cablevision's), by its January 25, 1995 letter actually prohibiting Cablevision from offsetting its refund liability with undercharges in equipment charges, which triggered the second review period.  X- 8.` ` Finally, the City asserts that Cablevision was aware that the City would not accept offsetting at the time Mr. Prevette wrote to Mr. Marticorena on December 16, 1994,  X-reasserting Cablevision's right to offset.W:  Xp-ԍSee Opposition at 6 & Exhibit 3.W Therefore, even accepting Cablevision's other arguments, the City contends that Cablevision nevertheless filed its appeal more than 30 days after it knew the City's position on offsets. Regardless of whether the City is correct in this  X-assertion, an operator must base its appeal on an official written decision.Y:  X"-ԍ47 C.F.R.  76.936(a), 76.944(b).Y The City's first written statement indicating that it would not allow Cablevision to offset was not issued until  Xe-the City's January 25, 1995 letter to Cablevision.ReK :  Xa&-ԍSee Appeal at Attachment A R An appeal of that January 25, 1995 decision would have been due no later than February 24, 1995. Cablevision filed its appeal"N 0*((" with the Commission on February 24, 1995. Accordingly, we find that Cablevision's appeal  X-is timely .  X- B.` ` Calculating Refund Liability  X-9.` ` 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  X_-during the time period from September 1, 1993 until May 14, 1994.?x_:  X-ԍTo the extent that an operator has sought to take advantage of the refund deferral  X -period available under the Second Order on Reconsideration, Fourth Report an Order, and Fifth Notice of Proposed Rulemaking in MM Docket 92266, 9 FCC Rcd 4119, 41834185  X -(1994) ("Second Recon. Order"), 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 equipment and installation costs and maximum 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.  X -10.` ` The operator's maximum permitted rates are derived by completing Parts II and III of the 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  Xb-initial date of regulation ("current rate") or as of September 30, 1992.Bb:  X-ԍAn operator must calculate its rate in effect on September 30, 1992, only if its current rate level is above the benchmark rate. If an operator's current rate level is at or below the benchmark rate, it is not required to calculate its September 30, 1992 perchannel rate.B 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 level is below the applicable benchmark rate, then the operator's rate level is deemed reasonable, but it must remain at its current level. If its current perchannel rate level exceeds the benchmark rate, the operator must then compare its September 30, 1992 perchannel rate level to the applicable benchmark rate. If its September 30, 1992 perchannel rate level is above the benchmark rate, it must reduce this rate level 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 installation are based on actual cost and are separately calculated in Part III of the Form 393. "7 0*(({"Ԍ X-11.` ` 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, the franchising authority should then approve the operator's maximum permitted rates, as derived by the form. A franchising authority should not require the operator to set a particular rate for programming, equipment or installations at any rate less than its maximum permitted rate, even if its current or actual rate is below its maximum permitted rate. Instead, the franchising authority should allow the operator to charge up to its maximum permitted rates, as derived  X_-by Form 393.,_:  X-ԍTCI Cablevision of North Central Kentucky, 10 FCC Rcd 926 (1994). An operator is not required, however, to raise its rates to the maximum permitted level. An operator may voluntarily choose to charge less than the maximum permitted rate.,  X1-12.` ` 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  X -charges exceed maximum permitted levels during the applicable period of review.Q M:  X-ԍSee 47 C.F.R.  76.942.Q 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  X -to subscribers. :  XX-ԍSee Third Recon. Order, 9 FCC Rcd at 4353 ("Although maximum permitted rates are  XC-always determined on 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 Cablevision should be calculated based on this method.  X4-13.` ` 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 calculating  X-an operator's refund liability.Y :  X!-ԍSee Report and Order, 8 FCC Rcd at 5731; Third Recon. Order, 9 FCC Rcd at 4345. Thus, the City must offset or reduce any refunds it may order by the difference between the actual equipment rates that Cablevision charged and the  X-maximum permitted rates that it could have charged during the applicable period of review.a :  X~%-ԍSee Third Recon. Order, 9 FCC Rcd at4353.a  X- "0*((Q"Ԍ X-III.ORDERING CLAUSES  X-  X-14.` ` Accordingly, IT IS ORDERED that American Cable T.V. Investors, Ltd d/b/a Chino Valley Cablevision's appeal of the local rate order of the City of Chino, California is  X- REMANDED to the City of Chino for further proceedings consistent with the terms of this Order.  Xv-   X_-15.` ` IT IS FURTHER ORDERED that the Request for Emergency Stay filed by  XH-American Cable T.V. Investors, Ltd d/b/a Chino Valley Cablevision is DISMISSED as moot.   X -16.` ` 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 - ` ` ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,Meredith J. Jones ` `  hh,Chief, Cable Services Bureau