WPC 2MBERK Z3|w Y-#Xw PE371(@Right Par 6Right Par 6.` hp x (#X` hp x (#0X` hp x (#0` hp x (#Right Par 7Right Par 7/` hp x (#X` hp x (#X` hp x (#` hp x (#Right Par 8Right Par 80` hp x (#X` hp x (#0X` hp x (#0` hp x (#Document 1Document 11` hp x (#X` hp x (#X` hp x (#` hp x (#2 H2$B3$E4l5G5lGTechnical 5Technical 52` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 6Technical 63` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 2Technical 24 Technical 3Technical 35 2O6$?H7lcJ8$J9$LTechnical 4Technical 46` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 1Technical 17 Technical 7Technical 78` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 8Technical 89` hp x (#X` hp x (# X` hp x (#` hp x (#2W:IO;gQ<S=Utoc 1toc 1:` hp x (#!(#B!(#B` hp x (#toc 2toc 2;` hp x (#` !(#B` !(#B` hp x (#toc 3toc 3<` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4=` hp x (# !(#  !(# ` hp x (#2^>W?Z@v/\A\toc 5toc 5>` hp x (#h!(# h!(# ` hp x (#toc 6toc 6?` hp x (#!(#!(#` hp x (#toc 7toc 7@ toc 8toc 8A` hp x (#!(#!(#` hp x (#2mgB^CaD1cEOetoc 9toc 9B` hp x (#!(#B!(#B` hp x (#index 1index 1C` hp x (#` !(# ` !(# ` hp x (#index 2index 2D` hp x (#` !(#B` !(#B` hp x (#toatoaE` hp x (#!(# !(# ` hp x (#2riFvgGlhHrhIhcaptioncaptionF _Equation Caption_Equation CaptionG endnote referenceendnote referenceH head1 #I'd#2p}wC@ #2kJ}iK!jLjM X-ԍ The Commission's rules provide that any participant at the franchising authority level in a ratemaking proceeding may file an appeal of the franchising authority's decision with the Commission. 47 C.F.R.  76.944(a) (1993). Mr. Hopper participated in the City's ratemaking proceedings by obtaining copies of ACV's Form 393 and all additional information elicited by Austin from ACV and then formally appearing before the City Council to express his views on the filings. While a subscriber during the period subject to review by the City, Mr. Hopper cancelled his cable service on some unspecified date prior to the adoption of the rate order. a subscriber of Austin CableVision ("ACV") during the period covered by the local rate order, filed with the Commission an appeal of the" 0*0*0*"  X-local order adopted by the City of Austin ("the City").s> Xy-ԍ ACV contends that Mr. Hopper failed to serve ACV, an affected party, and that his appeal should be dismissed for failure to include a certificate of service. However, both ACV  YK-and the City responded to the petition; thus we will not dismiss the appeal on this ground.#XR PjQ X-ԍ Under the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), and the Commission's implementing regulations, local franchise authorities may  X-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). The rate order also required ACV to implement refunds of $300,000 and provide free programming services valued at $479,000 to its subscribers as recompense for overcharges assessed for service provided during the period of September 1, 1993 to May 14, 1994. ACV implemented the refund agreement in July 1994 by providing billing credits and free programming to its then current subscribers. Both ACV and the City filed oppositions to the appeal.  XH-x2.` ` Mr. Hopper makes the following arguments regarding the City's ratemaking process and its decision and ACV's refund methodology. He claims ACV used an improper refund methodology by restricting its refund plan to current subscribers at the time of the  X -refund implementation and providing inkind refunds. > XW-ԍ Mr. Hopper states that he is barred from participating in the refund plan since he was not a subscriber at the time ACV implemented the refund plan. He also alleges that the City failed to consider its own staff recommendations when it agreed upon the refund plan suggested by ACV. Finally, he states that the City improperly approved ACV's a la carte package. In response, the City asserts that it is barred by Commission rules from prescribing a specific refund method. With respect to the allegations about the agreedupon refund plan, the City contends that its findings have a reasonable basis and that the operator provided evidence regarding the value of the programming services that would be offered at no charge. The City further states that it did not "approve" ACV's a la carte package and that it concluded the package was a regulated rate offering. ACV asserts that its decision to credit its subscribers for overcharges was appropriate under the Commission's rules. ACV disputes Mr. Hopper's allegation that the City failed to consider its regulatory staff's recommendations in establishing ACV's rates and associated refund liability. Finally, the operator states that although it believes its a la carte offering complied with applicable regulations, it does not contest the City's disallowance of the package.  X-x3.` ` In ruling on appeals of local rate orders, the Commission does not conduct a  X-de novo review, but instead will sustain the local authority's order as long as there is a  X~-reasonable basis for its decision.~= > Xl'-ԍ Implementation of Sections of the Cable Television Consumer Protection and  XU(-Competition Act of 1992: Rate Regulation, MM Docket 92266, Report and Order and  X>)-Further Notice of Proposed Rulemaking, 8 FCC Rcd 5631, 5731 (1993) ("Rate Order");">)0*0*0*L)" Implementation of Sections of the Cable Television Consumer Protection and Competition Act  Xy-of 1992, MM Docket 92266, and BuyThrough Prohibition, MM Docket No. 92262, Third  Xb-Order on Reconsideration, 9 FCC Rcd 4316, 4346 ("Third Reconsideration Order").  The Commission will therefore reverse a local authority's"~M0*0*0*" decision only if it is determined that the local authority acted unreasonably in applying the"~0*0*0*"  X~-Commission's rules in rendering its local rate order.4~) > XX(-ԍ Id.4 If the Commission reverses a local authority's decision, it will not substitute its own decision but will instead remand the issue to"g0*0*0*" the local authority with instructions to resolve the case consistent with the Commission's  X-decision on appeal.4> Xb-ԍ Id.4  X- II.x DISCUSSION  X-x 4. ` ` 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.Bx .> X-ԍ To 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 Reconsideration 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.B 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 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.  Xy-x5.` ` 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  X4-initial date of regulation ("current rate") or as of September 30, 1992.0 4n > XS-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.0 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 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 rate for programming. The adjusted rate will be its"N 0*0*0*" maximum permitted rate for programming. Maximum permitted rates for equipment and installation are based on actual cost and are calculated in Part III of the Form 393. Under our regulations, the maximum permitted rates are deemed to be reasonable, as required by the  X-1992 Cable Act.k > X4-ԍ See Communications Act, 623(b), 47 U.S.C. 543(b).k  X-x6.` ` To satisfy its refund liability under the local rate order, ACV states that in its July 1994 billing cycle, it provided current subscribers a refund of $300,000, approximately $2.51 per subscriber, and provided programming services worth approximately $479,000 to subscribers as of July 1994 free of charge. Mr. Hopper asserts that this was improper and that all subscribers on the system who were served between September 1, 1993 though May 26, 1994 should receive a refund and the form of that refund should be in cash. He states that he cancelled his cable service prior to the adoption of the rate order and that he therefore is barred from participating in the refund plan. Both ACV and the City argue that the Commission's rules give an operator the latitude to choose the method it may use to refund  X -overcharges.p 3 {> X-ԍ Mr. Hopper further asserts that the credit procedure chosen by ACV is a negative option billing practice. ACV and the City dispute this assertion. The 1992 Cable Act provides that "a cable operator shall not charge a subscriber for any service or equipment that  X-the subscriber has not affirmatively requested by name."  See 47 U.S.C.  543(f). This prohibited practice is known as negative option billing. Mr. Hopper characterizes the credit procedure chosen by ACV as a "negative option billing" practice. However, under ACV's refund plan, ACV provided subscribers with two new channels on its basic service tier and  XK-three new a la carte channels at no charge. Negative option billing is not at issue because the customer is not required to pay for these new services. p  X-x7.` ` Under our rules an operator is not required to provide a refund in cash to  Xy-subscribers.N yv > X-ԍ See 47 C.F.R.  76.942(d). N Furthermore, the operator may legitimately restrict the class of subscribers  Xb-receiving refunds to current subscribers, as ACV did here. hb) > X<-ԍ The Commission recognized in the Rate Order that it may be difficult or impossible in many circumstances to identify and locate those actual subscribers who are due a refund.  X!-Rate Order, 8 FCC Rcd at 5866. Therefore, the Commission allowed operators the choice of either refunding the overcharges to current subscribers or refunding the overcharges to  X"-subscribers who actually paid the overcharges. 47 C.F.R.  76.942(d); see also Rate Order, 8  Y#-FCC Rcd at 5866; Public Notice, Questions and Answers on Cab#XR PjQ Xy-ԍ As we are denying Mr. Hopper's requested relief, we need not address Mr. Hopper's concerns regarding the City's alleged failure to consider its own staff recommendations or the City's regulatory treatment of ACV's a la carte package. However, based on the record it appears that the City did consider its staff recommendations in adopting its local rate order. As evidence of its consideration of the record, the City attached and incorporated its staff's reports and recommendations into the local rate order. With respect to ACV's a la carte package, our review of the City's rate order and incorporated staff reports reveals that, contrary to Mr. Hopper's assertion, the City concluded that ACV's fourchannel a la carte  X -package, "Plus Package," is in fact subject to rate regulation. See City's Opposition, Attachment 1, Local Order, at 2. Specifically, the City's staff "determined that the [a la  X -carte] package to be a third tier of regulated service." See City's Opposition, Attachment 1,  X -Local Order, Exhibit A at 46.  Xi - Ğ  X-III.xORDERING CLAUSES  X-  X-x8.` ` Accordingly, IT IS ORDERED that the appeal petition filed by Mr. Jack  X-Hopper of the local rate order adopted by the City of Austin IS D ENIED .  Xv-  X_-x9.` ` 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