Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) MICKELSON MEDIA, INC. d/b/a ) FILE No. CSB-A-0630 CENTURY COMMUNICATIONS ) CUID No. NM0008 ) Appeal of Local Rate Order ) of the City of Las Vegas, New Mexico ) MEMORANDUM OPINION AND ORDER Adopted: June 25, 1999 Released: June 30, 1999 By the Deputy Chief, Cable Services Bureau: 1. Mickelson Media, Inc. doing business as Century Communications ("Century"), the franchised operator of a cable system serving the City of Las Vegas, New Mexico ("City") has petitioned for review of the opposition of the City to Century's scheduled May 1, 1999 basic service tier rate adjustment. Century also filed an Emergency Petition for Stay of Enforcement Pending Review on April 27, 1999. The City has not opposed Century's petition for review 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 has the burden of demonstrating that the increase is in conformance with the Commission's rules. In determining whether an operator's proposed increases are in conformance with the Commission's rules, a franchising authority may direct the operator to provide supporting information. After reviewing an operator's rate form, and any other additional information submitted, the franchising authority may either approve the operator's requested rate increase or issue a written decision explaining why the operator's rate increase is not reasonable. DISCUSSION 4. Century petitions the Cable Services Bureau to review the opposition of City to Century's basic service tier rate adjustment. Century intended to adjust rates for the period beginning on May 1, 1999. The City opposed Century's proposed rates in a letter sent to Century on April 9, 1999. The letter does not mention any determination made by the City as to the reasonableness of Century's proposed rate, nor does it specifically order Century to stay the proposed rate increase. Rather, the letter seems to outline two areas of concern to the City. According to the letter, Century and the City entered into a franchise agreement on November 13, 1997. The terms of the agreement stated in part that Century was to upgrade its CATV system in order to expand channel capacity. According to the letter, these upgrades had not taken place at the time of the City's decision to oppose the proposed rate increases. Additionally, the City notes the possible purchase of Century by another company. The City concluded that a rate increase was "premature" at the present time due to the lack of upgrades and the potential of new management, and thus opposed a rate increase. 5. The City's authority is to review the reasonableness of Century'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 using either the quarterly or annual adjustment method. 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. In rate regulation proceedings, the cable operator carries the burden of demonstrating that its proposed regulated rates are in compliance with the Commission's rules. If the local franchising authority determines that the operator's proposed rate exceeds the maximum permitted level as defined by the Commission's rate standards, and subsequently opposes the proposed rate, the local franchising authority must issue a written decision explaining why the operator's rate is unreasonable. 7. Assuming that the letter sent by the City to Century is meant to be a rate order, which is not clear from the face of the letter, the letter fails to demonstrate that the City's opposition to Century's rate increase is based on the Commission's rules governing rates. For this reason, the letter does 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 8. Accordingly, IT IS ORDERED that the Petition for Review filed by Mickelson Media, Inc., doing business as Century Communications, on April 27, 1999 IS GRANTED and the rate decision of the City of Las Vegas, New Mexico is remanded to the City for further consideration consistent with the terms of this Memorandum Opinion and Order. 9. IT IS FURTHER ORDERED that the Emergency Petition for Stay of Enforcement Pending Review filed by Mickelson Media, Inc., doing business as Century Communications, on April 27, 1999 IS DISMISSED as moot. 10. 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.  0.321 FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau