Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) CENTURY CABLE OF NORTHERN ) File No. CSB-A-0603S CALIFORNIA, INC. ) CUID CA0024 ) Petition for Stay of Local Rate Order) of San Buenaventura, California ) ORDER Adopted: November 20, 1998 Released: November 24, 1998 By the Associate Chief, Cable Services Bureau: 1. On October 29, 1998, Century Cable of Northern California Inc. ("Operator") requested a stay of the local rate order adopted by (the City of San Buenaventura, California) ("the City") on September 29, 1998, pending action on its appeal of that local rate order. The City filed an Opposition on November 5, 1998 and an Errata on November 6, 1998. 2. Franchising authorities may regulate rates for basic cable service and associated equipment and installation charges pursuant to section 623(a) of the Communications Act of 1934, as amended ("Communications Act") and the Commission's implementing regulations adopted pursuant to section 623(b) of the Communications Act. The City issued Order 98-02 ("local rate order") on September 23, 1998, ordering Operator to reduce its basic service tier rates, adjust its equipment and installation rates, and issue refunds to subscribers. Operator has sought a stay of the enforcement of this local rate order, arguing that it is subject to effective competition from a competing provider in its franchise area and, therefore, is not subject to rate regulation by the City. It previously filed a Petition for Revocation of the City's certification to regulate rates because of this alleged effective competition. This petition is pending before the Commission. Operator argues that it has already reduced its basic tier rates and made refunds and would be irreparably harmed by further any rate reductions and refunds when its rates should not be subject to regulation. It states it will place in escrow the amount of refunds that it would be required to make absent the stay and will accumulate in the escrow the difference between the rate ordered by the City and the rate charged customers during the pendency of the underlying appeal of the local rate order. The City opposes the stay request, arguing that Operator is not likely to succeed on the merits of its appeal; that it will not suffer irreparable harm because it will be able to charge unregulated rates if found to be subject to effective competition; that subscribers will be harmed by a delay in rectifying rates; and that the public interest is not served by evasions of the Commission's rate regulations. 3. The Commission evaluates petitions for stay under well settled principles. To support a stay, a petitioner must demonstrate: (1) that it is likely to prevail on the merits; (2) that it will suffer irreparable harm if a stay is not granted; (3) that other interested parties will not be harmed if the stay is granted; and (4) that the public interest favors granting a stay. The likelihood of success on the merits is an important element in a petitioner's showing. However, the degree to which a probability of success on the merits must be found will vary according to the Commission's assessment of the other factors. When confronted with a case in which other elements strongly favor interim relief, the Commission may exercise its discretion to grant a stay. 4. Resolution of this stay request centers primarily on Operator's argument regarding the third and fourth prongs of the test. Operator has committed to making refunds and to ensuring that the funds for refunds will be available by committing to placing funds for current and potential future refund liability in an escrow account. In order to protect the interests of subscribers and ensure that refunds will be paid if Operator does not prevail on the merits, we will grant operator's request that the local rate order be stayed pending a resolution of this case on the merits on condition that Operator create the promised escrow account. During the period of this stay, Operator must deposit in an interest-bearing escrow account the total amount that the City has ordered Operator to refund to its customers in Order 98-02 and must accumulate in the escrow account the difference between the rates ordered by the City and the rates charged customers during the pendency of the underlying petition for review of the City's local rate order. Alternatively, Operator may elect to post a bond for the benefit of the City. The amount of the bond shall be the total amount of money the City has ordered Operator to refund to its customers plus an estimate of the additional amount that will accumulate on the basis of the difference between the rates ordered by the City and the rates charged customers until Century's next annual rate adjustment is scheduled to take effect, plus interest. The bond shall provide that, if operator is unable to fulfill its refund obligation for any reason, then the surety will fulfill that obligation to the City on behalf of Operator's subscribers. 5. Although the City is concerned that subscribers who may be overpaying may not be the subscribers who ultimately receive refunds, the Commission's rules permit operators to implement refunds either by returning overcharges directly to subscribers who actually paid the overcharges or by a prospective reduction in rates for current subscribers by means of a specifically identified, one time credit. Because Operator can choose to make refunds by means of credits to the then-current class of subscribers, a delay in implementing refunds does not create a harm recognized under the Commission's rules. 6. In addition, in resolving complaints about rates for cable programming services tiers, the Commission has found that the public interest would be served by holding refund liability in abeyance while reviewing an operator's claim that it is subject to effective competition. The Commission explained that there is an administrative burden on the operator in implementing a refund plan, which it seeks to avoid, if the operator's petition is subsequently granted. The instant proceeding involves a rate rollback in addition to a refund. A stay in the circumstances in this proceeding would similarly serve the public interest. 7. Accordingly, IT IS ORDERED that the Emergency Petition for Stay of Enforcement Pending Review filed by Century Cable of Northern California Inc. IS GRANTED pending resolution of Century's appeal of Order 98-02 on the merits. 8. IT IS FURTHER ORDERED that the total amount of money the City has ordered Operator to refund to consumers SHALL BE PLACED in an interest bearing escrow account and that Operator SHALL ACCUMULATE in this account on an ongoing basis the difference between the rates ordered by the City and the rates charged customers during the pendency of the underlying appeal. Alternatively, Operator SHALL SECURE this amount by posting a bond for the benefit of the City for the total amount of money that the City has ordered Operator to refund to its customers, plus an estimate of the additional amount that will accumulate on the basis of the difference between the rates ordered by the City and the rates charged customers until Operator's next annual rate adjustment is scheduled to take effect, plus interest for the period covered by this bond at the prevailing U.S. Internal Revenue Service Rate for tax refunds and additional tax payments. Proof of Operator's compliance with this Order shall be filed with the Commission within thirty (30) days of the release of this Order. 9. This action is taken by the Associate Chief, Cable Services Bureau, pursuant to authority delegated by section 0.321 of the Commission's rules. 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Marjorie Reed Greene Associate Chief, Cable Services Bureau