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

In the Matter of: )           
                  )
TCI OF IOWA, INC. )    FILE No. CSB-A-0400             
                  )    CUID No. IA0013
Appeal of Rate Order of )     
the City of Cascade, Iowa     )                        
                  

MEMORANDUM OPINION AND ORDER

   Adopted:  June 15, 1998                          Released:  June 18, 1998  

By the Acting Chief, Cable Services Bureau:

I.  INTRODUCTION

  1.    TCI of Iowa, Inc. ("TCI"), the franchised operator of a cable television system serving the
City of Cascade, Iowa ("Cascade"), has filed an appeal of a local resolution, Resolution No. 15-97,
adopted March 24, 1997.  TCI challenges the resolution on the grounds that Cascade failed to adequately
explain the reasons it rejected the system's proposed $0.55 monthly rate increase, effective June 1, 1997,
for its basic service tier.  Cascade 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 Forms 1210 or 1240 to justify adjustments to the initial
rates it computed on its FCC Form 1200.  Form 1210 can be filed as often as quarterly.  Form 1240 is
filed annually.  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. 
FCC Form 1205 is used to justify equipment and installation costs.  Operators filing Form 1240 to justify
tier costs file Form 1205 at the same time.

  4.    The Commission's annual rate adjustment methodology using FCC Form 1240 provides
for a ninety-day review process, at the end of which the operator can put its new rate into effect, unless
the rate changes are rejected as unreasonable.  A local franchising authority may disapprove a rate increase
only after completing its review of the requested rate increase and determining that the rates are
unreasonable, pursuant to Commission rules governing local rates.  During its review, a franchising
authority may request information that is related to the rate determination.  If the franchising authority
does not issue a rate decision and the operator makes a rate adjustment after the ninety-day period expires,
the franchising authority has twelve months from the date the operator filed for the rate adjustment to
issue a rate order requiring a prospective rate reduction and refunds, where appropriate.  A rate decision
disapproving any part of a rate increase must explain the bases for the franchising authority's action so
that the cable operator can know why the rate was disapproved and can appeal the decision to the
Commission if it believes the decision is unfair.
                                  
III.  SUFFICIENCY OF THE CITY'S DECISION

  A.  TCI's contentions

  5.    The Cascade resolution states that TCI has not justified its proposed rate increase due to
increased programming costs "because the true-up period should reflect a lower increase for Basic and
Expanded Basic Cable Service."  The City Council of Cascade, therefore, "objects" to TCI's rate increase
for Basic and for Expanded Basic Cable Service, and it directs TCI to provide detailed information
concerning the figures it used in FCC Forms 1205 and 1240 by April 21, 1997.  TCI wrote to Cascade
seeking clarification.  The record does not show any response.  TCI argues that the resolution is a request
for additional information, rather than a rate order.  If the resolution is considered to be a rate order, TCI
argues that it is insufficient.  Citing the Bureau's prior decision in Cablevision VIII, Inc., TCI contends
that the Cascade's Resolution does not meet the Commission's requirement that franchising authorities
issue written decisions which affirmatively demonstrate why a proposed rate is unreasonable.  According
to TCI, Cascade's one-page resolution constitutes a request for additional information, and it does not
actually reject or deny TCI's rate increases.   

  B.  Discussion
 
  6.    On its face, the Cascade resolution does not appear to be a rate decision.  While the City
"objects" to the cable operator's BST changes and points to an area of concern in the cable operator's BST
rate filing, it directs the operator to provide additional information by a date certain.  It does not decide
questions about the operator's rate increase or clearly disapprove all or part of the increase.  A resolution
directing the operator to file additional information documenting that its prices meet the Commission's
reasonableness standard is not a determination of the cable operator's rates.  However, even if the City's
resolution is considered to be a rate decision, because of the City's objection to TCI's rate increases, it
fails to meet the standard for written decisions; namely, that the decision affirmatively demonstrate why
the proposed rate increase is unreasonable.  Therefore, we remand this case for further proceedings 
consistent with this decision.


IV.  ORDERING CLAUSE

  7.    Accordingly, IT IS ORDERED that the appeal filed April 23, 1997, by TCI of Iowa, Inc,
Cablevision, Inc. IS GRANTED and Resolution No. 15-97 dated March 24, 1997 IS REMANDED to
the City of Cascade, Iowa 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



        John E. Logan                        
                        Acting Chief, Cable Services Bureau