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

In the Matter of:               )
                                )
TCI CABLEVISION OF CALIFORNIA, INC.)    CUID No. CA1097
                                )  File No. CSB-A-0623
Appeal of Local Rate Order      )
of the City of Pacifica, CA     )


                   MEMORANDUM OPINION AND ORDER


      Adopted:  May 26, 1999            Released:  May 28, 1999  

By the Deputy Chief, Cable Services Bureau:

     1.   TCI Cablevision of California, Inc. ("TCI"), the franchised operator of a cable system serving
the City of Pacifica, California ("City") has appealed the rate decision adopted by the City on March 22, 1999. 
The contested rate order rejects basic service and equipment rates submitted on FCC Forms 1205 and 1240
scheduled for implementation on or about June 1, 1999.  TCI also filed a Request for Emergency Stay of Local
Rate Order on April 21, 1999.  The City has not opposed TCI's appeal or stay request.
                            BACKGROUND

     2.   Under the Commission's rules, rate orders issued by local franchising authorities may be
appealed to the Commission.  In ruling on an appeal of a local rate order, 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.    An operator that wants to increase its basic service tier "BST" rate or its equipment and
installation rates has the burden of demonstrating that the increases are in conformance with the Commission's
rules.  In determining whether the operator's proposed increases are in conformance with the rules, a
franchising authority may direct the operator to provide supporting information.  After reviewing an operator's
rate forms, and any other additional information submitted, the franchising authority may either approve the
operator's requested rate increases or issue a written decision explaining why any or all of the operator's rates
are not reasonable.  If the franchising authority determines that the operator's proposed rates exceed the
maximum permitted rates as determined by the Commission's rules, it may prescribe rates different from the
proposed rates provided that it explains why the operator's rates are unreasonable and the prescribed rates are
reasonable.  Prescribed rates may not be less than the rates permitted under the Commission's rules.
                            DISCUSSION

     4.   TCI states that it submitted FCC Forms 1205 and 1240 on or about March 1, 1999 to justify
an increase in its basic service tier and equipment and installation rates for the period beginning June 1, 1999. 
The City rejected TCI's proposed rates at the City Council Regular Meeting held March 22, 1999.  According
to the Minutes of the Meeting, the staff report recommended approval of the rate increase. The Council voted
to disapprove the rate increase after council members expressed dissatisfaction with the availability of TCI's
channel guides, its billing practices regarding channels no longer offered, and the adequacy of its converter
boxes, and two council members advocated disapproving the rate increase as a "protest."

     5.   The City's authority is to review the reasonableness of the cable operator's rates on the basis
of regulations adopted by the Commission.  The Commission's rules allow periodic BST rate adjustments for
inflation, changes in external costs, and changes in the number of regulated channels for adjustments made
by either the quarterly or annual adjustment method.  They also provide for periodic adjustments to equipment
and installation rates based on the operator's actual costs.  The rules do not provide any other basis for rate
decisions.  If the franchising authority does not dispute the bases for the figures presented in the cable
operator's rate forms and has not discovered any mathematical errors in the forms, it should approve the
operator's rates as derived from the forms.  A cable operator must be allowed to charge up to the maximum
permitted rates derived from its rate forms.  The franchising authority may not arbitrarily deny a justified rate
increase in an effort to address non-rate matters.  Instead, non-rate matters should be addressed pursuant to
the Commission's rules on technical standards, the Commission's rules on customer service obligations, the
franchising authority's own cable regulations, or the franchise agreement.

     6.   The Minutes of the City Council Meeting fail to show that the Council's decision is based on
the Commission's regulations governing rates.  For this reason, the Minutes do not meet the standards for a
written decision under the Commission's rules, and the City's rate order is not reasonable.  This matter is
remanded to the City for further consideration consistent with this opinion.

                         ORDERING CLAUSE

     7.   Accordingly, IT IS ORDERED that the Appeal of Local Rate Order filed by TCI Cablevision
of California, Inc. on April 20, 1999 IS GRANTED and the rate decision of the City of Pacifica, California
is remanded to the City for further consideration consistent with the terms of this Memorandum Opinion and
Order.

     8.   IT IS FURTHER ORDERED that the Request for Emergency Stay of Local Rate Order filed
by TCI Cablevision of California, Inc. on April 21, 1999 IS DISMISSED as moot.

     9.   This action is taken by the Deputy Chief, Cable Services Bureau pursuant to authority
delegated by section 0.321 of the Commission's Rules.  47 C.F.R.  321.

                              FEDERAL COMMUNICATIONS COMMISSION



                              William H. Johnson
                              Deputy Chief, Cable Services Bureau