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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: ) ) FALCON COMMUNITY VENTURES I ) ) File No. CSB-A-0365 Appeal of a Local Rate Order CUID OR0124 of the City of Roseburg, Oregon ) MEMORANDUM OPINION AND ORDER Adopted: June 26, 1998 Released: June 30, 1998 By the Acting Chief, Cable Services Bureau: I. Introduction 1. Petitioner, Falcon Cable Systems ("Falcon"), requests that we review a rate order adopted by the City of Roseburg, Oregon ("Roseburg") on October 28, 1996 ("October 1996 Rate Order"). In the October 1996 Rate Order, Roseburg denied Falcon's request to increase its Basic Service Tier ("BST") rate charge for cable programming. For the reasons discussed below, we remand this matter to Roseburg for further proceedings consistent with this Memorandum Opinion and Order and appropriate authority. II. Procedure and Standard of Review 2. In rate regulation proceedings, the cable operator bears the burden of proving the reasonableness of its existing or proposed rates for the BST and associated equipment. The local franchising authority must provide the cable operator with an opportunity to participate in the rate review process and to provide documentation supporting its proposed rates. In addition, the local franchising authority must provide a reasonable opportunity for the consideration of the views of interested parties. If the local franchising authority determines that the cable operator's proposed rates exceed the maximum levels set forth in the Commission's rate standards, it may prescribe rates different from those proposed, provided that it affirmatively demonstrates, in a written decision that is available to the public, why the cable operator's rates are unreasonable and why its prescribed rates are reasonable. 3. A rate order entered by local franchising authorities may be appealed directly to the Commission. The Commission will not conduct a de novo review of the challenged rate order, but will examine the decision to determine whether the local franchising authority has provided a reasonable basis for its decision. If the Commission determines that no reasonable basis exists in the record to sustain the local franchising authority's challenged rate order, the Commission will remand the rate order to the local franchising authority for resolution of the matter in a manner consistent with the Commission's decision and appropriate authority. III. Discussion 4. Falcon submitted FCC Form 1240 to Roseburg on August 28, 1996, seeking approval for an increase of its BST rate from $21.05 to $23.40 (an increase of $2.35). According to Falcon, Roseburg's Cable consultant found that Falcon had used an inflation rate that was higher than that sanctioned and published by the Commission. Recalculating Falcon's BST rate with the correct inflation rate, the consultant determined that Falcon was entitled to increase its BST rate to $22.43 (an increase of $1.38, an amount $0.97 lower than Falcon's proposed increase). Roseburg, however, rejected all of Falcon's proposed increase, finding that Falcon used an "excessively high" inflation figure to calculate its proposed BST rate increase and that its proposed BST rate exceeded the maximum permitted rate, which it did not specify. On appeal, Falcon alleges that Roseburg erred in rejecting the entire amount of its proposed increase to its BST rate and compounded that error by not providing any explanation for its decision other than stating that Falcon used the wrong inflation rate. 5. Roseburg failed to issue a proper rate order. Roseburg carries the burden of affirmatively demonstrating in its written decision why Falcon's proposed BST rate was unreasonable and why, on the other hand, its prescribed rate was reasonable. The requirement of a written order protects the cable operator's right to due process by having the local franchising authority explain why it is rejecting the rate and also provides that cable operator with a basis to refile its rate or appeal the local franchising authority's decision to the Commission. As evidenced by previous Commission rulings, local rate orders that summarily or vaguely reject a cable operator's proposed rate increase cannot be sustained and will be remanded. Although Roseburg states that Falcon used the wrong inflation figure, that finding, standing alone, is insufficient to explain why Roseburg rejected Falcon's proposed BST rate increase in its entirety. Thus, we remand the October 1996 Rate Order for further proceedings consistent with the discussion contained in this Order. IV. Ordering Clauses 6. Accordingly, IT IS ORDERED that Petition for Review filed by Falcon Community Ventures I IS GRANTED to the extent noted herein. 7. IT IS FURTHER ORDERED that this matter IS REMANDED to the City of Roseburg to conduct further proceedings consistent with this Memorandum Opinion and Order and appropriate authority. 8. This action is undertaken by the Acting Chief, Cable Services Bureau, pursuant to authority delegated under 47 C.F.R.  0.321(a)(3). FEDERAL COMMUNICATIONS COMMISSION John E. Logan Acting Chief, Cable Services Bureau