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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

                                 
In the Matter of:                  )                         
                              )
MULTIMEDIA CABLEVISION, INC.  )                                  
                              )
Appeal of Rate Order of            )         
the County of Lenoir, North Carolina    )                    
                              

                  MEMORANDUM OPINION AND ORDER

   Adopted:  April 25, 1997              Released:  April 29, 1997

By the Chief, Cable Services Bureau:

I.  INTRODUCTION

     1.   Multimedia Cablevision, Inc. ("Multimedia"), the franchised operator of a cable
television system serving the County of Lenoir, North Carolina (the "County"), has filed an appeal
of a local rate order issued by the County, which denied Multimedia's request  to increase its basic
service tier ("BST") rate from $18.99 to $19.77.  Multimedia challenges the local rate order on the
grounds that the County failed to explain the reasons it rejected the system's proposed rate increase. 
The County has not filed an opposition.    

II.  BACKGROUND

     2.   Under the Commission's rules, rate orders made by local franchising authorities may
be appealed to the Commission.  In ruling on appeals of local rate orders, the Commission will not
conduct a de novo review, but instead will sustain the franchising authority's decision as long as
there is a reasonable basis for that decision.  Therefore, 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 local rate order.  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 case consistent with the
Commission's decision on appeal.

     3.   FCC Form 1200 is the official form used to determine whether an operator's initial
regulated programming rates are reasonable under the revised benchmark rules which apply to
operators beginning May 15, 1994, or upon expiration of the deferral period provided under our rules
for operators to comply with the revisions to our rules.  In Form 1200, an operator calculates its
provisional rates and its full reduction rates.  An operator uses FCC Form 1210 to justify annual
adjustments to the initial rates it computed on its FCC Form 1200.  These rate adjustments reflect
changes in certain external costs, including programming costs, channel additions and deletions, and
inflation.  External costs include the following categories of costs: state and local taxes specifically
applicable to the provision of cable television service; franchise fees; costs of complying with
franchise requirements; retransmission consent fees and copyright fees incurred for the carriage of
broadcast signals; other programming costs; and Commission regulatory fees.

     4.    An operator that wants to increase its basic service tier rate has the burden of
demonstrating that the increase is in conformance with our rules.  In determining whether the
operator's proposed increase is in conformance with our rules, a franchising authority has the right
to direct the operator to provide supporting information.  After reviewing an operator's FCC Forms
1200, 1210, and any other additional information submitted, the franchising authority may either
approve the operator's requested rate increase, or it may issue a written decision explaining the
factors it considered in denying the increase requested.                                  
III.  SUFFICIENCY OF THE CITY'S DECISION

     A.  Multimedia's contentions

     5.   Multimedia states that, even though the Commission's rules require that a franchising
authority must explain why it found an operator's rates unreasonable, the County has not explained
why it rejected Multimedia's proposed BST rate increase to $19.77.  Multimedia notes that the
County did not even review Multimedia's FCC Form 1210, which it filed with the County on
November 6, 1995.  In a letter dated January 9, 1996, Assistant County Manager, Reginald Lee,
states that "[o]ur Board has not yet determined if the request is within the FCC 's reasonable rate
standards."  Yet, approximately one month earlier, on December 4, 1995, the County issued a one
page resolution containing the following conclusions:

          WHEREAS, after prudently reviewing the cable operator rate request
          the Lenoir County Board of Commissioners believes the lack of
          improvements in the existing channel mix, signal quality, and level
          of programming as associated with the basic cable schedule does not
          justify an increase in the rate and would not be in the best interest of
          the citizens of Lenoir County.

          WHEREAS, on December 4, 1995, a motion was made . . . and upon
          being put to a vote was unanimously passed that the request by
          Multimedia to increase the basic service rate from $18.99 to $19.77
          effective February 1, 1996 be denied. 
  
Multimedia contends that these statements are not sufficient to meet the Commission's requirement
that franchising authorities issue written decisions which affirmatively demonstrate why a proposed
rate is unreasonable.

     B.  Discussion

     6.   We have addressed the need for local franchising authorities to explain the bases of
their decisions previously.  In the Rate Order, the Commission stated:  "[w]e will thus require that
a franchising authority issue a written decision to the public and give public notice of such decision
whenever it disapproves, in whole or in part, either initial rates for the basic service tier and
accompanying equipment, or a request for an increase in those rates, or approves a proposed rate
over the objections of interested parties."  In several subsequent decisions, including Chillicothe
Cablevision, Inc., the Bureau held that Commission rules require local franchising authorities to
issue written decisions, and that those decisions must affirmatively demonstrate why an operator's
proposed rates are unreasonable.  The County's explanation is vague and does not comport with
this requirement.  It does not affirmatively demonstrate why Multimedia's proposed rate is
unreasonable.  We remand this case for further proceedings not inconsistent with this decision.

IV.  ORDERING CLAUSES

     7.   Accordingly, IT IS ORDERED that the appeal filed January 16, 1996, by
Multimedia Cablevision, Inc. IS GRANTED and the resolution dated December 4, 1995 IS
REMANDED to the County of Lenoir, North Carolina for proceedings consistent with the terms
of this Order. 
                                                                         
     8.   This action is taken by the Chief, Cable Services Bureau, pursuant to authority
delegated by  0.321 of the Commission's Rules.  47 C.F.R.  0.321.


                              FEDERAL COMMUNICATIONS COMMISSION



                              Meredith J. Jones
                              Chief, Cable Services Bureau