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 !((:#:#:#:#:#G55#1#1#1#1#:(:(:(:(:(:(:(:(:(:(:#:(:(:(:(:(-(:(:#:#5#5#5#1#1#1#:(:(::(:(:(:( (((:(11!:(:(:(G:55!--N$(#(((((<<(==(<##(P((NP#Pt,,,,-O,0S .-B9(@OSB((===5E,C1:.:*4':,-,/0#1#7.=*:,@7=72920>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>!((C>(-((((((((((---#J:55:1-:::1G::-:5-1::K::1&(#(#(#(((>((((((:((#&&+>>>(#P((P-G>>>>##(PN:>>:(((((=(-=( ,.$(<<<#::::::G51111:::::::-::::::-(######5#####(((((((,(((((((2 @R^{"5@^*7FSS$77Sq*7*.SSSSSSSSSS77qqqSffoxffxx7Jo]oxfxfS]xff]]A.AFS7SSJSJ.SS..J.xSSSSAA.SJoJJAC.CZ*7777CE7SSfSfSfSfSfSooJfJfJfJfJ7.7.7.7.oSxSxSxSxSxSxSxSxS]JfSxSxSxS]JxSfSfSfSfSoJoJoJfJfJfJxSxSxxSxSxSxSCS7S777SJoJ].]EoSoSxSofAfESASAN:*WSASSSSSS.4}}S2S}277]]S77SS7]72t7[\\[q\d*C`q.wRSSn\Cfx`xWlRx\]\cdIfIs`Wx\rriwgd*7FSS$77Sq*7*.SSSSSSSSSS77qqqSffoxffxx7Jo]oxfxfS]xff]]A.AFS7SSJSJ.SS..J.xSSSSAA.SJoJJAC.CZ7S]SS7S777]]:S7A7o]*ASSSS.S7.Sq7SC[227`W*724S}}}Sffffffoffff7777xoxxxxxqxxxxx]fSSSSSSSoJJJJJ....SSSSSSS[SSSSSJSy.K8?XpK\  P@QP8xCdX-Xx{2 PQXP7PC2X$ XP\  P6QXP .7UC2X:XU4  pQXW!0(X$h0\  P6QhPI-!&X,-\  P@Q,Py.C8*X$pC\  P6QP . y.G8*X:NG4  pQ a$6,!X$6\  P6QP  : X$ \  P6QP {,C8*XW-qC*f9 xQX 5PC2XWXP*f9 xQXX l6RC2Xv?XR9 xyQX2 @"*hb"5@^2Nodd8CCdr2C28ddddddddddCCrrrdNdzzozzzC8CrdCddYdYCdo88d8odddNN8oYdYNF,Fr2CC!CCPRCdddddddYYYYYN8N8N8N8oddddoooozYddddzYdzddddYYYYYYddddooPdNdNCNdddz8zRoodNRoNoNNF2ddNdddddd5the Commission's rules in rendering its local rate order.xd V {O-ԍRate Order, 8 FCC Rcd 5731 and Third Recon Order, 9 FCC Rcd at 4346.x If the Commission reverses a local  x<franchising authority's decision, it will not substitute its own decision but will instead remand the  xiissue to the local authority with instructions to resolve the case consistent with the Commission's  X-decision on appeal.xV {O"-ԍRate Order, 8 FCC Rcd 5731 and Third Recon Order, 9 FCC Rcd at 4346.x ",,(,([["Ԍ X- _(DISCUSSION  X-xA.` ` Converter data x  X- ` x4.` ` FCC Form 393 is the official form used by regulators to determine whether an  xoperator's regulated rates for programming, equipment and installations were reasonable during  Xv- x._the period from September 1, 1993 until May 14, 1994.nvV yO- xԍTo the extent that an operator has sought to take advantage of the refund deferral period available under the  yO- xSecond Order on Reconsideration, Fourth Report an Order, and Fifth Notice of Proposed Rulemaking in MM Docket  {O - x92266, 9 FCC Rcd 4119, 41834185 (1994) ("Second Recon. Order"), the maximum permitted rates determined  xunder 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.n Form 393 is divided into three separate  xzbut interrelated parts. In Part II, the operator calculates its maximum permitted programming  xrates, while in Part III, the operator calculates its equipment and installation costs and maximum  xpermitted equipment and installation rates. Part I is a cover sheet that lists the various  xLprogramming, 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 - ` Qx5.` ` The operator's maximum permitted rates are derived by completing Parts II and  xIII of the Form 393, pursuant to which the operator calculates the actual aggregate revenues  xcollected by the operator for regulated programming, equipment and installation, as of the initial  X- x!date of regulation ("current rate") or as of September 30, 1992.Y XzV yO- x-ԍAn operator must calculate its rate in effect on September 30, 1992, only if its current rate level is above the  xbenchmark 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.Y After calculating actual  xaggregate revenues, the operator converts those revenues to a perchannel rate, and then compares  xKthe perchannel figures to the applicable benchmark rate. If an operator's current perchannel rate  xlevel is at or below the applicable benchmark rate, then the operator's rate level is deemed  xreasonable, but it must remain at its current level. If its current perchannel rate level exceeds  xthe benchmark rate, the operator must then compare its September 30, 1992 perchannel rate level  xzto the applicable benchmark rate and must reduce this rate level to the benchmark rate or by  x10%, whichever reduction is less. After computing the permitted rate level in this manner  x=(whether based on current rates or September, 1992 rates), monthly equipment and installation  xzcosts are removed to derive the maximum permitted programming rates. Maximum permitted  xrates for equipment and installation are based on actual cost and are separately calculated in Part III of the Form 393.  Xe- ` x6.` ` The Commission's rules generally require an operator to measure its maximum  XN- xpermitted rates from data that is current as of the initial date of regulation. XNV yO%- xԍ47 C.F.R.  76.922(b)(1)(ii) (superseded); Form 393, Worksheet 1 "Calculation of Rates in Effect on Initial  xDate of Regulation and Benchmark Comparison." With respect to the basic service tier, the initial date of regulation  x;is the date on which the franchising authority certifies to regulate rates. For cable programming services, the initial")' ,,(,(='"  xdate of regulation is the first date on which a complaint on the appropriate form is filed with the Commission concerning cable programming service tier rates. 47 C.F.R.  76.922(b)(7) (formerly 47 C.F.R.  76.922(b)(2)).  However, the"N  ,,(,([["  X- xCommission has created an exception to this general rule.  V {O- xԍSee Third Recon. Order, 9 FCC Rcd at 434950. Pursuant to Commission regulation, the initial date of regulation  xg for the basic service tier is the date that the franchise authority notifies the operator that the local authority is certified  xto regulate rates. For cable programming services, the initial date of regulation is the first date on which a complaint  xon the appropriate form is filed with the Commission concerning cable programming service tier rates. 47 C.F.R.  76.922(b)(7) (formerly 47 C.F.R.  76.922(b)(2)). In the Third Recon. Order, the  xCommission addressed the issue of updating rate calculations due to changes in data that are  x[material to determining an operator's permitted rates, after an operator has already restructured  X- xOits rates in accordance with the Commission's rules.W V {O@ -ԍThird Recon. Order, 9 FCC Rcd at 434950.W In the Third Recon. Order, the  xyCommission stated that "[o]perators should not be penalized for making good faith attempts to  X- xcomply with our rules in a timely manner."T d V {O-ԍThird Recon. Order, 9 FCC Rcd at 4349.T At the same time, the Commission was cognizant  xof the need for regulatory authorities to accurately verify the reasonableness of an operator's rates  xOand to ensure that any inaccuracies were not compounded in future rate increases or  XL- x<adjustments.1L V {O-ԍId.1 In order to balance these concerns, the Commission determined, for the purposes  xof initial rate setting, an operator would not be required to adjust its rates to reflect current data,  X - xprovided that the operator was able to justify its rates.X V {OW-ԍThird Recon. Order, 9 FCC Rcd at 434950. X However, if a cable operator failed to  xjustify its rates, those rates must be adjusted in accordance with the most accurate data available  X -at the time of analysis.5 V {O- xԍ47 C.F.R.  76.922(b)(9)(iii). See also Third Recon. Order, 9 FCC Rcd at 434950. "Accordingly, we will require  xthe following actions when different rates are dictated by data used in initial ratesetting than by data current as of  x,the time an FCC Form 393 (and/or FCC Forms 1200/1205) is actually submitted to the franchising authority or the  xCommission. When current rates are accurately justified by analysis using the old data (and that data was accurate  xat the time), cable operators will not be required to change their rates. In these circumstances, however, when such  xoperators make any subsequent changes in their rates (such as when seeking their annual inflation increase), those  yOm- xchanges must be made from rate levels derived from the updated information. When current rates are not justified  x<by analysis using the old data (so that a rate adjustment would be necessary in any event), cable operators will be  xrequired to correct their rates pursuant to current data. In these circumstances, the resulting rates must be based on current data." (emphasis in original)5     X - ` 2x7.` ` In anticipation of rate regulation, Sammons voluntarily restructured its rates prior  xto July 1993, using May 1993 data for determining the number of converters in service and  xannual converter cost data from December 31, 1992. When Sammons completed its FCC Form  x393 for the City's ratemaking proceeding in November 1993, the operator used October 1993 data  xifor determining the number of converters in service, but still used annual converter cost data from"f,,(,([["  xDecember 31, 1992. When Sammons provided the State with the underlying data used to  xcomplete its FCC Form 393, it provided the local franchising authority only the October 1993  X- x\converter unit data.V yOK- x,ԍIt is unclear from the pleadings whether a more recent figure for the annual cost of converters was available, and if it was available, why Sammons provided the State with the older December 31, 1992 figure. Sammons did not provide the State with May 1993 data regarding the  xnumber of converters in service, which the operator used at the time it voluntarily set its rates  xjin anticipation of regulation. The State reviewed the FCC Form 393, accepted the October 1993  xconverter unit data contained in the form, which differed from the data Sammons originally used  xto restructure its rates, and set Sammons' rates based on the data Sammons submitted, the October 1993 converter unit data and the December 31, 1992 annual converter cost data.  X1- ` x8. ` ` On appeal, Sammons contends that the State erred in recalculating Sammons'  xkmaximum permitted rates for nonaddressable converters by using the data contained in the  xNoperator's FCC Form 393. First, Sammons alleges that the State erred by using "partially  xjrefreshed data" when the State used the December 31, 1992 annual converter cost data and the  x[more recent October 1993 data regarding the number of converters in service. In support of its  X - xargument, Sammons cites the Bureau's decision in the Matter of Suburban Cablevision  X - x(Livingston, NJ) 9 FCC Rcd 4073 (Cab. Serv. Bur. 1995) ("Suburban Cablevision"), a petition  X- xfor stay filed by Suburban Cablevision, in which we held that an operator is not permitted to  xcalculate its rates based on a mixture of data current at the time of restructuring and data current  Xd- xat the time of filing its FCC Form 393.Zd V {O5- xԍAccord  In the Matter of Suburban Cablevision (Livingston, NJ), 10 FCC Rcd 10817 (Cab. Serv. Bur. 1995)  x,affirming that an operator is not permitted to calculate its rates based upon a mixture of data current at the time of  yO-restructuring and data current the time of filing its FCC Form 393. Ę Sammons explains that the FCC Form 393 which it  xsubmitted to the local authority contained the October 1993 data regarding the number of  x[converters in service because the form instructed operators to use the data most current at the  xtime of filing. According to Sammons, after submitting its initial filing it "verbally explained"  X-to the State that its rates set prior to regulation were accurate.BV yO- xKԍAppeal at 6. Sammons does not indicate that it provided the State with any documents to support its "verbal explanation."  X- ` ox9.` ` Sammons next alleges that since its rates were accurately calculated at the time  xLof restructuring, it should not have to adjust those rates to reflect subsequent increases in the  X- x>number of converters in service.#V yO!- xJԍAccording to Sammons, as of May 1993, the number of nonaddressable converter units in service was 8,722 and  {O"-as of October 1993 the number of nonaddressable converter units in service was 9,502. See Appeal at 7.# In response, the State disputes Sammons' claim that the  xfranchising authority used "partially refreshed data." Instead, the State asserts that the only  xnumbers it used to review the filing were those supplied by Sammons in its FCC Form 393. The  xzState does not specifically address Sammons' claim that its rates set prior to regulation were  xjaccurate. Rather, the State asserts that Sammons' restructured rates were not justified because  x\the numbers were inaccurate at the time of the Commission's September 1, 1993 deadline for"9 ,,(,([["  x-restructuring rates. In support of this position, the State claims that the May 1993 data regarding  xthe number of converters in service was compiled three months prior to the September 1, 1993  xCommission deadline whereas Sammons' October 1993 data regarding the number of converters  xwas available only one month after the deadline. Accordingly, the State argues that it was  xcorrect in requiring rate changes based upon the October 1993 data which was used in Sammons' FCC Form 393, rather than relying on some earlier, and unsupplied, figures.  X_- ` 2x10.` ` With respect to Sammons' claim that the rates it set in anticipation of regulation  xwere accurate, under the Commission's rules the cable operator bears the burden of proving the  X1- xyreasonableness of its existing or proposed rates for basic services and associated equipment.A1V yO -ԍ47 C.F.R.  76.932(a).A  xyIf the operator fails to provide the local franchising authority with the information necessary to  xMreview an operator's rate calculations, the local franchising authority may set the operator's  X - xKmaximum permitted rates based upon the best available evidence.\ XV {O-ԍThird Recon. Order at 9 FCC Rcd 434648.\ In the present case, although  xafter submitting its initial filing the operator "verbally explained" that its rates set prior to  xregulation were accurate, Sammons failed to provide the State with an amended rate filing  X - x/utilizing the May 1993 data.4 V yOB-ԍAppeal at 7.4 Having failed to provide the State with an amended FCC 393  xbefore the issuance of the rate order, when the record was open and the State could have  xconsidered the issue, Sammons is not entitled to have the mistake corrected by the Commission  Xb- xzon appeal.\bzV {O- xԍSee New England Cablevision of Massachusetts, Inc. (Amesbury, MA et al.), 10 FCC Rcd 908 (Cab. Serv. Bur.  {OW- x1994) (holding that an operator that failed to bring errors in its filing to the attention of the local authority before the issuance of the order cannot raise the issue later on appeal). Moreover, Sammons has offered no reason why it could not have provided an  xLamended FCC Form 393 earlier nor why the State should be required to reopen the record in its  xproceeding. Therefore, the State was reasonable in relying on the data supplied by the operator  xin its Form 393. To hold otherwise would prevent local authorities from issuing rate orders in  x]a timely fashion, since constant revisions by operators could indefinitely postpone final  xresolution. Based upon the best available information at the time, the State acted reasonably in issuing its rate order.  X-x B.` ` Calculation of Refund Liability  X- x  X|- ` x11.` ` After its review of Sammons' Form 393, the State disapproved Sammons'  xpermitted rates for nonaddressable converters, Sammons' Hourly Service Charge (HSC), and its  xinstallation charges. The State directed that those rates be reduced to the maximum permitted  x\levels which the State had calculated. The State also reduced Sammons' basic tier rate from  x$8.38 per month to the State's maximum permitted rate of $8.35 per month and ordered refunds  xbased on this reduction. The State did not utilize the reduced equipment rates in determining the" ,,(,([[y"  x-operator's basic tier rate. Sammons argues that the State improperly reduced Sammons' regulated  x-revenues by reducing its rates for nonaddressable converters and HSC without a corresponding  xNincrease of Sammons' tier charge for basic service. It maintains that if a lower charge for  xequipment is deducted from the base rate per channel (FCC Form 393, Line 300), the base  xservice rate (FCC Form 393, Line 304) will increase. The State disputes the existence of such a correlation.  X_- ` ax12.` ` Upon revising an operator's calculations, a local franchising authority must  x.consistently use those revisions throughout its review of the operator's FCC Form 393. In the  xpresent case, the State found that Sammons failed to justify the reasonableness of an increased  x nonaddressable converter cost and HSC. Thus, the State recalculated those two charges.  x{However, the State failed to recalculate Sammons' basic service rate using these reduced  xequipment costs in Line 301. The State must do so now. The 1992 Cable Act required operators  xto unbundle programming service rates from equipment and installation rates. Thus, in FCC  xForm 393, Worksheet 3, operators are required to separate equipment and installation rates from  xprogramming service rates. To accomplish this objective, the operator must divide equipment  x/and installation costs in Line 301 by the channel factor in Line 302 to determine its cost per  xsubscriberchannel. This cost is then subtracted from the operator's base rate per channel (Line  Xb- x-300).bV yO- xԍAn operator's channel factor is determined by multiplying the number of channels in a tier by the number of customers who subscribe to that particular tier. Accordingly, using this formula, Sammons' base service rate per channel should increase.  xWe are remanding this issue to the State for further consideration so that it can enter a ruling  X4-consistent with these findings.    ORDERING CLAUSES  X-  X- `  x13.` ` Accordingly, IT IS ORDERED that Sammons Communications of New Jersey,  xyInc.'s appeal of the State of New Jersey Board of Regulatory Commissioners' Rate Order for the  xyCommunity of Phillipsburg, regarding the issue of the State's use of refreshed nonaddressable  X-converter unit data is DENIED.  X|-  Xe- ` x14.` ` IT IS FURTHER ORDERED that Sammons Communications of New Jersey,  xyInc.'s appeal of the State of New Jersey Board of Regulatory Commissioners' Rate Order for the  xjCommunity of Phillipsburg, regarding the issue of Sammons' permitted charge for basic service  X -tier rates and related refunds is REMANDED.    X- ` x15.` ` IT IS FURTHER ORDERED that, in light of the resolution of its appeal herein,  X- xthe request for stay filed by Sammons Communications of New Jersey, Inc. is DISMISSED as  X -moot . "! ,,(,([[ "Ԍ X- ` o1x16.` ` 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 x` `  hh@Meredith J. Jones  XH-1x` `  hh@Chief, Cable Services Bureau