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CSBA0627  S()ppXCUID NO. WI0040 Appeal of a Local Rate Order of) the City of Stevens Point, Wisconsin)   S (G  MEMORANDUM OPINION AND ORDER x  S (X` hp x (#%'0*,.8135@8:  } {O^( xԍ#X\  P6G;QwP#See Century Cable of Southern California, 11 FCC Rcd. 501 (Cab. Serv. Bur. 1995);  TCI of Iowa, Inc., 13  yO((FCC Rcd. 12020, 12022 (Cab. Serv. Bur. 1998).#Xj\  P6G;XP#>   S ( ` 4.` ` The Commission's rules allow periodic BST rate adjustments for inflation, changes in  S ( xHexternal costs,Z  } yO@( xԍ#X\  P6G;QwP#External costs include the following: state and local taxes applicable to the provision of cable television  xservice; franchise fees; costs of complying with franchise requirements; retransmission consent fees and copyright  xrfees incurred for the carriage of broadcast signals; other programming costs; and Commission cable system regulatory  yO(fees imposed pursuant to 47 U.S.C.  159. 47 C.F.R.  76.922(f).#Xj\  P6G;XP#Z and changes in the number of regulated channels using either the quarterly or annual  S ( xadjustment method. } yO(ԍ#X\  P6G;QwP#47 C.F.R. 76.922(d), (e).#Xj\  P6G;XP#ѓ They permit operators undertaking significant network upgrades to recover the net  SX( xcosts of the added capital investment allocated to the BST through an increase in the BST rate.@ Xp} yOh (ԍ47 C.F.R. 76.922(j).@ The  xfrules also provide for periodic adjustments to equipment and installation rates based on the operator's  S( xactual costs.=} yO#(ԍ47 C.F.R. 76.923.= The rules do not provide any other basis for rate decisions. If the franchising authority  xDdoes not dispute the bases for the figures presented in the cable operator's rate forms and has not  xdiscovered any mathematical errors in the forms, it should approve the operator's rates as derived from  xVthe forms. A cable operator must be allowed to charge up to the maximum permitted rates derived from  xits rate forms. The franchising authority may not arbitrarily deny a justified rate increase in an effort to"h,p(p(88"  S( x`address nonrate matters.^} {Oh( xԍ#X\  P6G;QwP#See TCI of Southeast Mississippi, 10 FCC Rcd 8728, 8730 (Cab. Serv. Bur. 1995), reconsideration denied on  {O2( x"other grounds, 13 FCC Rcd 11080 (Cab. Serv. Bur. 1998); TCI Cablevision of Texas, Inc., 13 FCC Rcd 6656, 6658  {O((Cab. Serv. Bur. 1998); Century Cable of Southern California, 11 FCC Rcd at 50102. Instead, nonrate matters should be addressed pursuant to the Commission's  xrules on technical standards, the Commission's rules on customer service obligations, the franchising authority's own cable regulations, or the franchise agreement.   S`( DISCUSSION   S( ` Bx5.` ` Marcus has appealed the City's denial of its BST rate adjustment. Marcus intended to  S( xadjust rates for the period beginning on June 1, 1999.:} {Ov ( xԍ#X\  P6G;QwP#See Letter from Denise M. Jones of Marcus Cable to Victoria L. Zdroik, City Clerk of City of Stevens Point,  yO@ ((Feb. 26, 1999), found at City Opposition, Exh. A.#Xj\  P6G;XP#: On February 26, 1999, Marcus' transmitted to  xthe City FCC Form 1240, the form for computing the annual BST rate adjustment, and FCC Form 1235,  xthe form for making an abbreviated cost of service showing to justify a network upgrade addon to the  xjBST rate, in order to justify an increase in the basic service tier rate. On April 19, 1999, the City passed  SH ( xand adopted a resolution denying Marcus' proposed rate increase.=H H} {O0(ԍSee Resolution.= The City "determined that Marcus'  xXproposed rate increase . . . from $6.76 to $8.22 represents a nearly 21% increase in price with no  S (justification provided by Marcus," found the increase "to be unreasonable," and therefore denied it.7 } {Or(ԍId. at 2.7  S ( ` 6.` ` The City's Resolution fails to meet the standards set by the Commission for a written  xdecision. The City concluded in the Resolution that the proposed rate increase is unreasonable but did  x8not base this conclusion on findings that are relevant under the Commission's rate regulations. Although  S0( xthe City acknowledges receiving the rate forms required to justify Marcus' BST rate,0l } yO<(ԍ"[T]he City received Marcus's completed FCC Forms 1240, 1235 and 1205 . . . ." Resolution at 1. namely, Forms  S( x1240 and 1235, } {O( xԍSee 47 C.F.R.  76.922(e)(1) (operators making annual rate adjustments must file Form 1240); FCC Form 1235 Instructions at 1 (Feb. 1996) (Form 1235 is to be used to establish a network upgrade). the City does not make any findings that dispute the figures in the rate forms or point  xtto mathematical errors in the forms. The City objects to the size of the rate increase, but "the magnitude  S( x$of a rate increase alone is not determinative of its reasonableness."V } {O (ԍTCI of Pennsylvania, Inc. (Shaler Twp., PA), 13 FCC Rd 5119, 512021 para. 7 (Cab. Serv. Bur. 1998). The City's conclusion that the rate  S(is unjustified is not otherwise explained.  S@( `  7. ` ` In its opposition to Marcus' appeal, the City argues that Marcus undertook system  xupgrades to better position the company in the telecommunications field, and that these upgrades were  S( xVpremature given that the City has not renewed its franchise with Marcus.I} {Ox&(ԍSee City Opposition at 13.I This concern is not reflected &@  "z,p(p(88""  S( xRin the Resolution.} {Oh( x<ԍSee Century Cable of Southern California, 11 FCC Rcd at 502 (explanations for denying a rate developed in an opposition pleading are not sufficient to sustain the denial of a rate). Even if it were reflected, this concern would not be a basis for disallowing a rate  xincrease otherwise supported by Form 1240s and 1235. The Communications Act provides that a  xjfranchising authority may regulate the rates for the provision of cable television service only to the extent  S( xprovided by section 623 of the Act.A"} yOJ(ԍ47 U.S.C.  543(a)(1).A It further provides that the regulation of BST rates shall be pursuant  xto Commission regulations designed to achieve the goal of protecting subscribers from BST rates in excess  S8( xof the rates that would be charged if the cable system were subject to effective competition.A8} yO (ԍ47 U.S.C.  543(b)(1).A Franchising  xvauthorities may establish requirements for facilities and equipment through the franchising process  x.consistent with section 624 of the Act and solicit proposals for system upgrades in the franchise renewal  S( x8process pursuant to section 626 of the Act,NB} yO(ԍ47 U.S.C.  624(b), 626(b)(2).N but nothing in the Act or the Commission's rate regulations  x4links rates permitted by the Commission's rules and forms to franchising actions. Because the City's  xdecision to deny Marcus' proposed rate increase is not based on the Commission's rates regulations, the  xdenial of Marcus' BST rate adjustment is not reasonable. For this reason, we are remanding this case for further proceedings consistent with this decision.   S (eX01Í ÍX01Í Í ORDERING CLAUSE   S ( ` *x8.` ` Accordingly, IT IS ORDERED that the Petition for Review filed by Marcus Cable  xPartners, L.L.C., on May 21, 1999 IS GRANTED and the Resolution of the City of Stevens Point,  xWisconsin is remanded to the City for further consideration consistent with the terms of this Memorandum Opinion and Order.  S( ` 29.` ` IT IS FURTHER ORDERED that the Request for Emergency Stay of Local Rate Orders by Marcus Cable Associates, L.P. on June 7, 1999 IS DISMISSED as moot.  S@( ` 810.` ` 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  ` `  ,hhhFEDERAL COMMUNICATIONS COMMISSION ` `  ,hhhWilliam H. Johnson ` `  ,hhhDeputy Chief, Cable Services Bureau