********************************************************    
                         NOTICE
********************************************************

This document was converted from
WordPerfect to ASCII Text format.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.

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

In the Matter of                     )
                                     )
TCI CABLEVISION OF                   )                 
ST. LOUIS, INC.                      )
                                     )
Appeal of Local Rate Order of the    )
City of St. Louis, Missouri          )


                      MEMORANDUM OPINION AND ORDER

   Adopted:  September 26, 1997                    Released:  September 29, 1997

By the Chief, Cable Services Bureau:

I.  INTRODUCTION

  1.    On July 8, 1996, TCI Cablevision of St. Louis, Inc. ("TCI-SL"), the franchisee in the
above matter, filed an appeal of a local rate order adopted on June 7, 1996 by its local franchising
authority, the City of St. Louis, Missouri ("the City").  TCI-SL filed FCC Forms 1240 and 1205 with the
City on March 4, 1996, proposing increases in TCI-SL's rates for both basic service and equipment.  TCI-
SL implemented the proposed increases on June 1, 1996.  The City's rate order requires a reduction only
of TCI-SL's Form 1205 equipment rates.  TCI-SL also filed a request for partial stay of the City's rate
order, asking that the order's rate reduction be stayed pending resolution of the appeal.  The City filed
an opposition to TCI-SL's appeal of the City's rate order, and TCI-SL filed a reply.

  2.    In this appeal, TCI-SL asserts that the City incorrectly evaluated the costs claimed in its
Form 1205 filing by tying its review of this Form to TCI-SL's original Form 1205 filing in 1994. 
Specifically, TCI-SL seeks review of the City's order with respect to four issues.  TCI-SL argues that the
rate reductions required by the City's order are erroneous and should be overturned by the Commission
because the City's order: (1) excludes $20 in "overhead" costs per converter including labor costs of
installing and retrieving converters, operating costs of managing converter inventory, and material costs
for converters from Schedule C of Form 1205; (2) denies TCI-SL's recovery of "unfunded" deferred taxes;
(3) denies TCI-SL's recovery of certain equipment related insurance costs; and (4) denies TCI-SL's
recovery of costs related to security devices.   

II.  STANDARD OF REVIEW
 
  3.    Under our 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.  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.

III.  DISCUSSION

  4.   Pursuant to the Cable Television Consumer Protection and Competition Act of 1992
("1992 Cable Act"), the Commission established standards for setting, on the basis of actual cost, the rates
for installation and lease of equipment used by subscribers to receive the basic service tier.  Under
Commission rules, cable operators have the burden of proof in demonstrating the reasonableness of
existing or proposed rates for their basic service tier and associated equipment.  Equipment rates are
derived from total capital and maintenance costs per unit of equipment.  Installation rates are derived from
a calculation of an hourly service charge and an application of that charge to different types of
installations.  Form 1205 is the official form used by regulators to determine whether an operator's 
regulated rates for equipment and installations are reasonable under the revised benchmark rules which
apply to operators beginning May 15, 1994.  Schedule B of Form 1205 is the schedule operators are
required to use for their annual operating expenses for service installation and maintenance of equipment. 
This schedule collects total annual operating expenses for installation and maintenance of cable facilities. 
Schedule C of Form 1205 is the schedule operators are required to use for their capital costs of leased
customer equipment.  This schedule computes the annual capital costs for each model or category of
customer premises equipment that the operator offers in connection with regulated service.  Maximum
permitted rates for installation and lease of equipment calculated pursuant to Commission regulations and
Form 1205 are deemed to be reasonable, and are, therefore, lawful under the 1992 Cable Act.  

  5.   Form 1205 may be submitted along with Form 1200, which is used to establish initial
programming service rates to determine initial rates for regulated cable services.  Alternatively, Form 1205
may be used to update permitted regulated equipment and installation charges based on equipment basket
costs.  Forms 1200 and 1205 establish a direct linkage between programming service rates and equipment
and installation costs and charges.  Using Form 1200, the operator calculates its total revenue requirement
per subscriber for all regulated services.  The operator then subtracts or "unbundles" costs associated with
the equipment basket.  The result is  that the costs of providing regulated services that are not included
in the equipment basket are included in the rates for programming services.  Therefore, for example, Form
1205 calculations resulting in lower equipment basket costs should lead to higher programming service
rates and correspondingly lower equipment and installation rates.  Similarly, calculations resulting in
higher equipment basket costs should lead to lower programming rates and correspondingly higher
equipment and installation rates.

  A.  Capitalization of Certain Converter Costs

  6.   In its appeal, TCI-SL raises several arguments concerning the treatment, in Form 1205,
of labor costs of installing and retrieving converters, operating costs of managing converter inventory and
material costs for converters.  TCI-SL included $20 in capital costs per converter in its Form 1205 to
account for all of these costs.  TCI-SL derived the $20 figure by adding the following capital costs: $7
per converter for the labor costs of installation, $7 per converter for the labor costs of retrieving a unit
from a customer's home, $3 per converter for inventory management costs, and $3 per converter for
material costs, including cable jumpers, fittings and splitters.  By capitalizing its converter costs, i.e.,
including these costs in Schedule C, Capital Costs of Leased Customer Equipment, of Form 1205, TCI-SL
calculated a lease rate of $3.06 per month for addressable converters and $1.98 per month for standard
converters.  The City disallowed TCI-SL's capitalization of converter costs for the following five reasons:
(1) the costs are inconsistent with the Commission's definition of "annual purchase costs;" (2)
capitalization of the costs is inconsistent with generally accepted accounting principles ("GAAP"); (3)
material and labor costs associated with installation of converters are already incorporated by TCI-SL in
its installation charges in Schedule B of Form 1205; (4) labor or other operating costs associated with
converter disconnects and converter inventory management are already incorporated by TCI-SL in its
programming service rates; and (5) the proposed capital costs for converters are not based on the books
and records of the local system.  The City excluded the $20 per unit capital cost from Form 1205,
thereby reducing TCI-SL's lease rates for addressable and standard converters to $1.87 and $0.85 per
month, respectively.  In its appeal, TCI-SL challenges each of the City's reasons for disallowing its
inclusion of $20 of capital costs per converter.

  7.   In TCI-SL's challenge of the City's finding that the converter costs cannot be included as
annual purchase costs, TCI-SL cites Commission rules which allow for recovery of incidental costs as part
of annual purchase costs.  TCI-SL acknowledges that none of the costs at issue are among those listed
in the rule describing incidental costs of annual purchase costs, but the operator argues that this list is not
exclusive.  TCI-SL contends that its $20 of "overhead" costs per converter are incidental costs that must
be included in Schedule C in order to ensure that converters are priced at actual cost.  TCI-SL also
contests the City's claim that TCI-SL should not be permitted to capitalize its converter costs because such
costs are not capitalized under GAAP.  According to TCI-SL, the Commission should focus on whether
an operator's accounting treatment meets the Commission's regulatory objective of establishing actual costs
for converters rather than on whether the operator is adhering to GAAP.  In support of this claim, TCI-
SL cites a Commission rule that states that the Commission's accounting rules are based on GAAP only
"to the extent regulatory considerations permit."  Contending that the converter costs at issue are actual
costs, TCI-SL maintains that regulatory considerations of establishing converter rates at actual cost
outweigh the importance of adhering to GAAP in this instance.  Thus, TCI-SL claims that it should be
allowed to recover these costs.  Finally, TCI-SL challenges the City's assertion that the $20 in capital
costs per converter should be rejected because the $20 figure was not based on the records of the local
system.  TCI-SL admits that the $20 figure is based on national, rather than system-specific information. 
However, TCI-SL contends that, because of the discrepancy between TCI-SL's accounting system and the
regulatory demands now placed upon that accounting system,  it made more sense for TCI-SL to derive
cost figures based on a national cost survey rather than to develop system-specific figures.

 8.   In its opposition to TCI-SL's appeal, the City cites the five reasons it provided in its staff
report for disallowing TCI-SL's capital costs and argues that TCI-SL's appeal fails "to present any grounds
for considering the City's decision irrational."  The City argues that, as stated in the staff report,
components of TCI-SL's $20 overhead amount must be excluded pursuant to Commission rules because
they are incurred after the time the converter is provided to the customer."  The City notes that TCI-SL
does not dispute that the Commission's rules exclude such costs, but that TCI-SL argues in favor of
changing those rules.  The City argues that it cannot be found to have acted unreasonably because it
followed the Commission's rules rather than rewriting them as TCI-SL would wish.  The City argues that
the costs at issue may have been recovered in current equipment and installation charges based on TCI-
SL's Form 1205, Schedule B cost entries.  The City further argues that, to the extent that TCI-SL has
included the entire, pre-depreciation cost of assets in its $20 estimate, some or all of the alleged costs may
also have been recovered in other charges paid by subscribers prior to rate regulation.  The City notes
that TCI-SL's response, in its appeal, appears to misstate the burden of proof, alleging that the City has
not shown that the costs at issue are otherwise incorporated in TCI-SL's equipment charges.  The City
points out that, under the Commission's rules, it is TCI-SL's burden, not the City's, to show that the
disputed costs are not otherwise included.  The City argues that TCI-SL's appeal fails to provide any
reason to consider irrational the City's finding that TCI-SL had failed to carry its burden of proof.  Finally,
arguing that TCI-SL has not offered any system-specific justification for its proposed costs but has merely
repeated its original claim that the $20 figure attributed to St. Louis was at the low end of a range of
nationwide estimates, the City maintains that TCI-SL did not provide the City with any evidence
indicating that the operator actually incurs an additional $20 of capital costs per converter.  The City
maintains that TCI-SL has failed to meet its burden of proof with respect to these costs.  Accordingly,
the City argues that TCI-SL has failed to present a basis upon which to conclude that the City's finding,
denying TCI-SL's claim of $20 per converter for overhead costs, was irrational.

 9.   The Commission rule defining the "equipment basket" states that the basket shall include
all "direct and indirect material and labor costs of providing, leasing, installing, repairing, and servicing
customer equipment."  Pursuant to the 1992 Cable Act, material and labor costs included in the
equipment basket must be recoverable by the operator.  The costs of installing and retrieving converters,
the costs of managing the converter inventory, and the material costs of converters are clearly related to
providing and installing equipment, and are properly classified as part of the equipment basket.  Thus,
TCI-SL must be permitted to recover the labor costs of installing and retrieving converters, the costs of
managing converter inventory, and the material costs of converters.

 10.  TCI-SL, however, does not adequately justify its reasons for treating the labor costs of
installing and retrieving converters as capital costs and including them in Schedule C of Form 1205. 
Indeed, TCI-SL does not clearly distinguish these costs from the operating expenses and labor costs that
are ordinarily included in Schedule B.  Instead, TCI-SL argues that it should include these costs in
Schedule C because it has not listed them elsewhere in Form 1205. The Commission's instructions for
completing Schedule B specifically provide that operators include "all annual operating expenses . . . for
installation and maintenance of all cable facilities" on Schedule B.  Moreover, operating expenses
incurred specifically to maintain and install customer equipment are referenced expressly.  Thus, the
Commission's instructions for Form 1205 clearly indicate that TCI-SL should include the labor costs of
installing and retrieving converters on Schedule B rather than on Schedule C.  Such costs are thereby
included in installation charges or in the maintenance element of the equipment lease charges.  They may
not be included on Schedule C, which is used only to "compute the annual capital costs of equipment
leased to customers."

  11.    TCI-SL states that certain costs in question are related to inventory management and
claims that such costs are incidental costs that may be included as annual purchase costs.  We agree that
certain costs of managing converter inventory may be capitalized and therefore included on Schedule C
as converter costs.  Pursuant to Commission rules, purchase costs that are capitalized and reported on
Schedule C as converter costs would include "acquisition price and incidental costs such as sales tax,
financing, and storage up to the time [the converter] is provided to the customer.  Although the list of
incidental costs in 76.923(f) is not exhaustive, the costs at issue, i.e., labor costs of retrieval and
reinstallation of converters, the cost of inventorying such items, and the material supplies associated with
their reinstallation, are not incidental to the activities associated with placing new converters into service. 
The rules define incidental costs as costs incurred up to the time the equipment is provided to the
customer.  The converter installation and retrieval costs that TCI-SL seeks to capitalize appear to have
been incurred after the initial converter installation.  The rules do not provide for the capitalization of the
costs of retrieval, re-installation and re-inventorying of converters.

  12.    Further, TCI-SL does not clearly explain the basis for including the material and
equipment costs in question on Schedule C.  Certain materials and supplies associated with equipment
installations may be capitalized.  Where such material and supplies have been capitalized as part of the
converter cost, it would be proper to include such costs on Schedule C and recover them in the converter
lease charge.  Alternatively, incidental material and supplies could be expensed, included on Schedule B,
and recovered in installation charges or in the maintenance element of the appropriate lease charge.  The
accounting treatment, under GAAP, would determine which schedule is used.  If Schedule C is
appropriate, the accounting would determine which asset group it should be included with on this
schedule.  Thus, if the operator capitalizes certain converter installation materials and supplies in the
converter account, it would be proper to report the costs on Schedule C for converters.  It is not clear
from the record in this case, however, where all of the materials and supplies in question have been
recorded.  It appears that the costs involved either are not capitalized or have been capitalized in accounts
for equipment for which TCI-SL has not established a separate regulated charge.  In either case, we find
nothing in the record to indicate that they may be included with the converter costs on Schedule C. 

  13.    We find that TCI-SL has not provided any support for its $20 figure for converter capital
costs, aside from its assertion that the figure is based on a national survey.  The instructions to Form 1205
state, in part, that "data may be identified at the level of organization at which the records are kept, e.g.,
system-wide."  As noted above, although TCI-SL concedes that the City correctly notes that it "relied
on national, rather than system-specific, information to calculate the $20 figure," it contends that because
of conflicts between its bookkeeping and regulatory demands, "it made far more sense to derive a
conservative figure based on a national cost survey than trying to develop numerous system-specific
figures."  Moreover, TCI-SL continues, the $20 figure is at the lowest end of its sampled range and it
found "no reason to believe that local conditions in St. Louis warrant a lower figure."  The onus is not
upon the City to accept TCI-SL's proposed $20 figure and reasons in support
thereof, but rather, on TCI-SL to provide the City with data collected and maintained on the same
organization level at which TCI-SL keeps its other records.  We are not persuaded by TCI-SL's
justifications to deviate from that requirement.  We find, therefore, that TCI-SL has failed to meet its
burden under Commission rules to demonstrate the reasonableness of its rates.  Accordingly, we deny
TCI-SL's appeal with respect to the labor costs of installing and retrieving converters, the operating costs
of managing converter inventory, and the material costs of converters.

 B.  Unfunded Deferred Taxes

 14.  In its FCC Form 1205 filing, TCI-SL included an amortization of what it termed 
"unfunded deferred taxes."  TCI-SL explains that in traditional rate-regulated industries, deferred taxes
are viewed as "subscriber provided" funds.  But according to TCI-SL, the problem with applying the
traditional regulatory approach is that the subscribers never provided the funds for TCI-SL's deferred
taxes.  Prior to the implementation of rate regulation in 1993, TCI-SL states it operated on a cash (or
"flow through") method of cost recovery rather than an accrual  (or "full normalization") method.  Under
this cash method, TCI-SL did not attempt to account for the effect of deferred taxes in setting rates and,
therefore, its deferred taxes were "unfunded" because subscribers did not provide the funds.  TCI-SL
states that Form 1205 initially credits subscribers with the benefit of TCI-SL's deferred taxes by including
a deduction from the rate base in Schedules A and C.  Because the subscribers had not previously
funded these deferred taxes, however, TCI-SL claims it represents a subscriber windfall in this situation. 
TCI-SL maintains it is attempting to correct this problem by amortizing the deferred tax balance in
existence on the date of initial regulation as an expense over the remaining useful lives of the related
assets.  With this expense entry, TCI-SL's asserts that its subscribers now will fund the deferred tax
account with which the Form already credits them and that this "regulatory symmetry" should be
allowed.

 15.    The City responds that TCI-SL failed to show that "unfunded deferred tax balances"
represents a valid equipment cost.  The City argues that such figures do not represent costs to TCI-SL
at all, but rather tax benefits TCI-SL obtains by treating assets differently for tax purposes than it does
on its own books.  The City points out that if deferred taxes were considered additional costs, the result
would be that TCI-SL would recover more than the actual cost of its assets.  Deferred taxes are taken
into account on the Commission's rate forms to adjust the presumed effective tax rate, but are otherwise
considered costs under the Commission's rules.  The City's staff report found that TCI-SL failed to carry
its burden of proof to justify any extraordinary treatment beyond the Commission's rules for deferred
taxes.  The City points out that TCI-SL does not claim that the Commission's rules permit deferred taxes
as costs. 

 16.    FCC Form 1205 is used to determine the costs associated with related equipment and
installation for the basic service tier.  On this Form, we require operators to reduce their net rate base
(investment in property, plant, and equipment used for regulated services) by the deferred tax balance
associated with the investment.  The requirement to reduce the rate base by this amount is premised on
the assumption that the operator has included the tax expense in its rates even though the amount was not
payable to taxing authorities.  In these instances, since the operator has use of these "no cost funds"
provided by the rate payer, an adjustment is made to the rate base for an appropriate reduction to the
revenue requirement.  TCI-SL claims, however, that it did not recover these amounts from rate payers,
and consequently, the deferred tax balance is unfunded.  TCI-SL, therefore, included an amortization of
the amount in its depreciation provision on Form 1205.  There is no provision in our rules or in the
instructions to include the amortization of the deferred tax balance in the depreciation provision on FCC
Form 1205.

 17.    Previously, we required operators to reduce the regulated rate base by the total deferred
taxes associated with the rate base investment.  Subsequently, we modified this rule to require that the
rate base be reduced by associated deferred taxes accrued only since the date the operator became subject
to regulation.  We believe that this action by the Commission adequately addresses TCI-SL's concern. 
As provided in our Second Report and Order, TCI-SL may reduce its deferred tax balance by any pre-
regulation amounts before reducing the rate base for deferred taxes.  Our rules do not provide for the
amortization provision that TCI-SL included in its depreciation expenses on FCC Form 1205.  Because
TCI-SL's methodology was improper, we find that the City was correct in disallowing that amount in TCI-
SL's equipment rates.  The computation proposed by TCI-SL allows it to recover more than its acquisition
costs of the assets providing regulated services.  TCI-SL should be allowed to defer taxes as provided in
our Second Report and Order, but only as of the Order's effective date.  Accordingly, we remand this
issue for resolution consistent with the terms of this Order.

 C.  Insurance Costs

 18.    TCI-SL seeks to include insurance costs in the actual cost calculations for the installation
and maintenance of customer premises equipment.  TCI-SL appeals the City's rate order that denied TCI-
SL the recovery of insurance costs through its equipment rates because such costs "are general
administrative costs not includable in the equipment basket."  The insurance expenses include a number
of separate insurance policies: liability, property loss, auto and workmen's compensation, as well as the
parent company's self insurance expenses.  TCI-SL claims the "insurance costs included are inextricably
linked to the installation and maintenance of equipment."  TCI-SL states the City incorrectly relied on
Commission rules prohibiting general overhead from the equipment basket.  According to TCI-SL, these
costs are easily distinguished from general overhead because insurance costs are directly attributable to
the provision of customer premises equipment. 

 19.    In its opposition, the City maintains that the insurance costs are general administrative
overhead costs, which the Commission's rules clearly exclude from the equipment basket.  Moreover,
the City argues that even if TCI-SL's proposed insurance costs may be included in the equipment basket,
TCI-SL failed to satisfy its burden of justifying these costs.

 20.    Under Commission rules, equipment basket costs are limited to the direct and indirect
material and labor costs of providing, leasing, installing, repairing, and servicing customer equipment. 
We agree with TCI-SL that insurance costs are distinguished from general overhead because insurance
costs can be attributable to providing customer service equipment.  Worker's compensation, for example,
is generally part of the cost of labor.  Similarly, hazard protection and liability coverage on vehicles used
for maintenance of equipment could be properly included in Schedule B of Form 1205.  When TCI-SL
filed Form 1205, in 1994 and 1995, TCI-SL did not include these insurance costs in its calculation of
equipment basket costs.  These costs, therefore, were recovered in program service rates.  In assigning
these costs now to its equipment basket, TCI-SL should have deducted them from its program service
rates, otherwise TCI-SL would be recovering these costs twice.  TCI-SL had these costs at the time it
unbundled its rates, but only now identifies these costs as ones that should be included in the equipment
basket, thereby revealing that TCI-SL's original unbundling was inadequate.  TCI-SL did not, as it should
have done, propose equitable adjustments to programming service rates on a going forward basis. 
Accordingly, we deny TCI-SL's appeal with respect to this issue.

 D.  Security Devices 

 21.    TCI-SL also appeals the City's rate order on the ground that it improperly reduces TCI-
SL's claimed equipment costs by rejecting cost-related security devices, other than converters.  The
security devices, or traps, block the delivery of certain programming services to non-subscribing
customers, and function along with converters to ensure signal delivery security.  TCI-SL acknowledges
that traps are located outside subscribers' homes on utility poles but argues that it "defies logic to establish
an entirely different regulatory treatment (and preclude cost recovery) for this customer-specific signal
security device depending on whether it happens to be located inside or outside the customer's home." 
Without the traps, TCI-SL states the cost of converters would be materially higher.

 22.    The City counters that TCI-SL should not be allowed to include the cost of traps in its
Form 1205 for purposes of calculating the rate for converters because such traps are outside the
demarcation point set by the Commission and hence are not customer premises equipment at all, but rather
network components.  Moreover, the City contends that traps are not associated with converters in any
obvious fashion and are not integral or necessary to the functioning of converters.  A subscriber may have
one or more traps with or without a converter, and may have one or more converters with or without
traps.  Therefore, the City argues, TCI-SL's approach, even if it were not otherwise forbidden by the
Commission's rules and methodology, would impose the cost of traps inequitably only on those subscribers
with converters.  In addition, the City points out that traps are not used to receive the basic tier.  Rather,
traps are used to prevent unauthorized subscribers from receiving services they have not paid for. 
Accordingly, the City argues that traps cannot be included as regulated equipment under the Commission's
rules.

 23.    TCI-SL acknowledges that traps are not the same as, but function along with, converters. 
Traps are, in essence, security devices, they either block or allow unscrambled signals to reach a
subscriber.  TCI-SL has an obligation to prevent certain programming from reaching nonsubscribers,
and has an interest in preventing subscribers from receiving programming other than that to which they
are entitled.  Under current Commission rules, there are three primary types of subscriber premises
equipment: converter boxes, remote controls, and inside wiring.  Subscriber drops up to the Commission-
defined cable network demarcation point at the customer's premises are considered network equipment
and may not be included as subscriber equipment on Schedule C.  The subscriber's premises begins
twelve inches outside of where the cable wire enters the premises.  TCI-SL proffers no justification,
other than cost, for us to conclude that traps should be regarded as subscriber premises equipment. 
Accordingly, we deny TCI-SL's appeal on this issue.

IV.  SANCTIONS

 24.    The City, in its Opposition, is requesting that the Commission sanction TCI-SL for
allegedly attempting to evade the Commission's rules.  We do not find that sanctions are warranted.  As
TCI-SL notes in its reply, cable operators are entitled to complete the benchmark forms consistent with
their interpretation of the governing rules, and local franchising authorities are entitled to review those
forms to determine if the operator has completed them correctly.  If the local franchising authority
mandates a reduction in a proposed rate, the cable operator is entitled to seek review at the Commission. 
In addition, the City is requesting sanctions against TCI-SL for allegedly implementing rate increases prior
to the 90-day review period established by Commission regulations.  TCI-SL sent its Form 1240 and
Form 1205 to the City of St. Louis on March 1, 1996; the City received TCI-SL's forms on March 4,
1996.  TCI-SL then implemented its rate increase on June 1, 1996.  We do not find that these
circumstances warrant the imposition of sanctions.  Accordingly, the City's request for sanctions is denied. 
V.  ORDERING CLAUSES

 25.    Accordingly, IT IS ORDERED that the appeal by TCI Cablevision of St. Louis, Inc., of
the local rate order of the City, with respect to the capitalization of the labor costs of installing and
retrieving c onverters, the operating costs of managing converter inventory, and material costs of
converters, IS DENIED.

 26.    IT IS FURTHER ORDERED that the appeal by TCI Cablevision of St. Louis, Inc., of
the local rate order of the City, with respect to the inclusion of unfunded deferred taxes IS REMANDED
to the City for resolution in accordance with the terms of this Order.

 27.    IT IS FURTHER ORDERED that the appeal by TCI Cablevision of St. Louis, Inc., of
the local rate order of the City, with respect to the inclusion of insurance costs in equipment rates, IS
DENIED.

 28.    IT IS FURTHER ORDERED that the appeal by TCI Cablevision of St. Louis, Inc., of
the local rate order of the City, with respect to the inclusion of the costs of security devices, traps, in
equipment rates, IS DENIED.

 29.    IT IS FURTHER ORDERED that the request for sanctions by the City of St. Louis
against TCI Cablevision of St. Louis, Inc. IS DENIED.  

 30.    This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated
by  0.321 of the Commission's rules.

 FEDERAL COMMUNICATIONS COMMISSION



 Meredith J. Jones
 Chief, Cable Services Bureau