******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 ) ) TCI OF RICHARDSON, INC. ) File Nos. CSB-A-0379, CSB-A-0522, ) CSB-A-0545 Petition for Reconsideration of Bureau Order) Resolving Local Rate Appeals ) (CUID TX1228) ) MEMORANDUM OPINION AND ORDER ON RECONSIDERATION Adopted: July 16, 1999 Released: July 20, 1999 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Pursuant to Section 1.106 of the Commission's rules, TCI of Richardson ("TCI-R") filed a Petition for Reconsideration ("Petition") on September 16, 1998 of Cable Services Bureau Memorandum Opinion and Order DA 98-1642 ("Order" or "Bureau's Order") released on August 17, 1998. The Bureau's Order and the Petition arise from three rate orders issued by the City of Richardson, Texas ("City") that rejected TCI-R's proposed 1996, 1997, and 1998 rates for its basic service tier ("BST") and for related equipment and installation. The City filed an Opposition to Petition for Reconsideration ("Opposition") on October 13, 1998, and TCI-R filed a Reply to Opposition to Petition for Reconsideration ("Reply") on October 20, 1998. TCI-R also filed a Supplement to Petition for Reconsideration on December 15, 1998, and the City filed an Opposition to Supplement to Petition for Reconsideration on January 19, 1999. 2. In the Petition, TCI-R argued that three parts of the Bureau's Order should be reconsidered. They relate to: (1) TCI-R's desire to aggregate its equipment and installation rates on a national level, rather than a regional or local level; (2) TCI-R's contention that it correctly accounted for certain "gap" period rate adjustments arising from its initial annual rate filing when it made its second annual filing; and (3) TCI-R's objection to complying with the City's rate orders while those orders are on appeal to the Commission. In this Order on Reconsideration, we review the City's treatment of TCI-R's aggregation of its equipment and installation rates and remand the issue to the City. Additionally, we grant TCI-R's request for reconsideration of our decision on the "gap" period rate adjustments. Finally, we reject TCI-R's request to reconsider the dismissal of its earlier stay requests. II. BACKGROUND a. Regulation and Review of Cable Rates 3. This Petition and the related local rate orders arose under the cable rate regulation provisions of the Communications Act of 1934, as amended ("Communications Act"). When a cable operator does not face effective competition in a local franchise area, it is subject to local franchising authority ("LFA") regulation of its rates for programming and for equipment and installation on the customer's premises. A rate- regulated operator must prove that its existing and proposed rates conform with Commission rules by submitting the necessary rate forms and responding to requests for supporting information. An LFA may review an operator's rate filing, along with any additional information, and may either approve the operator's requested rate increase, or may issue a written decision explaining why a proposed rate is unreasonable and why a prescribed rate, if any, is reasonable. 4. An operator may appeal an LFA's local rate order to the Commission. When the Commission reviews such an appeal, it does not conduct a de novo review, but instead will sustain the LFA's decision as long as the LFA did not act unreasonably in applying Commission regulations. If the Commission reverses an LFA's decision, it will not substitute its own judgment, but will remand the case to the franchising authority with instructions to resolve it consistent with the Commission's decision. In the current case, the Commission reversed in part and upheld in part the City's three local rate orders and remanded the case to the City. TCI-R asks the Commission to reconsider parts of that Order. b. Rate Forms 5. For the period beginning May 15, 1994, a rate-regulated operator must justify its rates by using the FCC Form 1200 series. In Form 1200, an operator calculates its initial maximum permitted rates ("MPRs") for the basic service programming tier. An operator may change its maximum permitted rates every quarter, using Form 1210, or every year, using Form 1240. In Form 1205, an operator determines the costs of regulated cable equipment and installation for the basic service tier. In the three rate filings at issue in this case, TCI-R used Forms 1205 and 1240. 6. The annual rate adjustment methodology reflected in Form 1240 permits an operator to establish its programming rate for the upcoming year using estimated costs. This involves two steps. First, an operator may adjust its previous rate to account for reasonably certain and quantifiable changes in external costs, inflation, and the number of regulated channels that it expects to occur during the 12 months after the new rate takes effect. Second, an operator adjusts, or "trues up," the previous year's rate to correct for differences between actual and projected costs. Pursuant to these true-up calculations, an operator must then decrease its new projected rate for overestimations and may increase its new projected rate for underestimations. 7. An operator filing Form 1240 must at the same time file Form 1205, the form for determining its regulated equipment and installation costs. Charges for equipment and installation are based on actual cost, and the Commission's rules allow operators to recover the costs of leasing equipment and service installations from charges for those activities. An operator bases its proposed annual customer equipment and installation rate adjustments on past costs. This use of actual, past costs in Form 1205 contrasts with the use of projected costs in Form 1240, because it is more difficult to project reasonably certain and reasonably quantifiable changes in equipment and installation costs than in programming service tier costs. Equipment rates are derived from total capital and maintenance costs per unit of equipment. Installation rates are derived from a calculation of an hourly service charge and an application of that charge to different types of installations. Regulated equipment is the equipment located in a subscriber's home, provided and maintained by the operator, that is used to receive the basic service tier. It includes converter boxes, remote control units, inside wiring, and any other categories the operator includes at its option. III. DISCUSSION A. Aggregation of Equipment and Installation Costs 8. Commission rules that existed prior to the Telecommunications Act of 1996 ("1996 Act") allowed cable operators to aggregate costs on a franchise, system, regional, or company level, consistent with the operator's accounting practices in effect when the Commission adopted its rate regulations in April 1993. The 1996 Act eliminated a restriction on changes in an operator's accounting practices, thereby allowing operators to change the level at which they aggregate costs. The 1996 Act also allowed operators to aggregate costs in broad categories, such as converter boxes, regardless of the varying levels of functionality of equipment within each category. However, the costs of customer equipment used by subscribers taking only the basic service tier may not be included in the aggregation. The 1996 Act did not change the requirement that the cable operator's rates must be based on actual cost. 9. According to the Commission's rules implementing the 1996 Act's new aggregation provision, equipment and installation rates must be set at the same organizational level at which an operator aggregates its costs. When submitting aggregated equipment and installation rates using an averaging methodology, a cable operator must provide a general description of the methodology and a justification that it produces reasonable rates. 10. TCI-R used data developed by sampling 40 of its more than 430 cable systems in developing aggregated equipment and installation rates at the company level for its 1997 and 1998 rate filings. In both the 1997 and 1998 Rate Orders, the City found that TCI-R's equipment and installation rates were "based upon a sampling methodology that has not been documented or justified in a manner sufficient for the City to carry out its responsibilities . . . and make an independent determination that such rates are reasonable and based upon cost;" that the equipment rates are not reasonable because of the amount of the increase; and that the City could not make an independent determination of the reasonableness of the rates due to the lack of supporting data from TCI. "[A]bsent such justification," the City rejected TCI-R's 1997 and 1998 equipment and installation rates and ordered the same rates it ordered in its 1996 Rate Order. The City's staff stated that there was a 64% increase over the 1996 Richardson rate in the first year of aggregation and a 95% increase over two years. 11. In its appeals, TCI-R charged that the City failed to identify specifically what proof was lacking, and established a burden of proof so high that TCI-R could never demonstrate that its cost aggregation and resulting rates were reasonable. TCI-R asserted that the rate orders lacked a rational basis because the City simply and summarily discarded TCI-R's national rates. The operator argued that it provided prompt and detailed responses to the City's requests for additional information, and specifically notes a professionally- prepared explanation of its sampling methodology. Finally, TCI-R stated that the City could not reject the proposed rates simply because they were significantly higher than previous rates. 12. Our Order resolving the appeals generally agreed with the City that TCI-R had not met its burden of proving the reasonableness of its aggregating methodology or resulting rates: TCI seeks to set prices at the company level, but it has not shown that it collects or gathers cost data at that level. Indeed, its reliance on a statistical sample rather than actual cost information suggests that it does not aggregate cost data at the company level. . . . . . . TCI has not provided sufficient information for determining whether its national sampling is accurate. It has not demonstrated that its proposed aggregation average accurately reflects actual cost data. Nor has TCI identified what costs it aggregated so that the City can better understand how TCI computed the averages used to determine rates. 13. In petitioning for reconsideration of the Bureau's Order, TCI argues that the Order reflects a misunderstanding of the Company's use of sampling in deriving its rates and a failure to properly consider the evidence presented. According to TCI-R, its aggregated rates were indeed "carefully and fairly derived" and "well documented." TCI-R contends that the City and Commission have misconstrued a cable company's burden of proof and, in any case, have not identified the "missing" information needed to conduct a reasonable review of TCI-R's rates. TCI-R argues that the City's rate orders are insufficient because they fail to reflect the information provided to the City and that the Bureau's opinion improperly allows the City to cut short the regulatory process and reject an operator's entire rate filing without an adequate explanation or an opportunity to cure any defects, simply because the franchising authority is unpersuaded by the information. TCI-R clarifies and defends it sampling methodology and questions the Order's conclusion that aggregated rates must be revenue neutral and that an operator must justify any large variances in costs between systems. It asks that the case be remanded to the City to complete a proper rate review. 14. The City opposes the Petition, arguing it did not get information it requested and needed from TCI-R to evaluate the sampling and the applicability of the aggregated rates to Richardson, specifically. It complains it did not receive corporate general ledger reports to determine that only relevant information was used. It argues that data TCI-R used in developing its hourly service charge, the most critical factor developed in FCC Form 1205, was flawed, and that TCI-R failed to show how the allocation percentage it used for separating customer premise and network activity followed from the sampling. The City adds that TCI-R "refused to provide data explaining how the sampled cities were used to derive costs for Richardson" and argues that the Commission's cost aggregation rules do not contemplate "the total disconnect between the city served and the rates charged that TCI-R promotes." According to the City, TCI-R had every chance to substantiate its rates during the City's review processes but did not meet its burden of proof. 15. In clarifying how it used the sampling, TCI states that it did not use sampling to develop costs across the board. It relied extensively on aggregate books and records and relied on sampling to facilitate its rate calculations in only three areas: (1) the average hours spent on different installation activities that must be reported on Schedule D, which it derived from field experience for the 40 sampled systems; (2) allocating certain accounting entries between customer premise activity and network activity; and (3) determining the percentage of "security devices" on either side of the customer demarcation point. According to TCI-R, looking beyond its books and records would be necessary in each of these circumstances, regardless of whether it developed aggregated or franchise specific rates. Had the Bureau understood the limited role sampling played in the derivation of TCI-R's Form 1205 rates, TCI-R argues, the Bureau would have placed more limited demands on TCI-R's evidentiary support. The City does not dispute that the data on Schedules A, B, and C of Form 1205 are actual data. It does dispute that TCI-R relied on the data in Schedules A and B to establish the customer portion of TCI's installation costs. According to the City, the company-wide HSC is derived from projections from the sample data. While we agree with the City that TCI-R's characterization is incomplete, the assumption in the Bureau's Order regarding the extent of the operator's reliance on sampling was overly broad. Accordingly, we are reviewing our conclusions about TCI-R's support of the equipment and installation rates addressed in the City's 1997 and 1998 Rate Orders and the adequacy of the City's Rate Orders. 16. With respect to TCI-R's responsiveness to the City's information requests, the parties' differing views are based in part on their differing views of the connection between nationally aggregated rates and the rates charged in Richardson. The City argues: [Its] Consultant never criticized the [TCI sampling] expert's procedures and calculations. Nor was Dr. Hannum's report ignored. Instead, the Consultant concluded that this report lacked any probative value because the results derived could not be attributable to the specific city involved. The use of aggregation was not approved so that cable operators could charge customers for services or equipment they do not use. Moreover, nothing in Dr. Hannum's study or in any other TCI-R submission proves that the costs identified or the rates charged have any connection to Richardson, Texas. The City was concerned, for example, that the costs of a dispatch system used in one of the sampled cities but not in Richardson were recovered through aggregated rates charged subscribers in Richardson. As TCI-R points out in its Reply, however, there is no requirement that every cost included in an aggregated Form 1205 be represented in each and every cable system covered by the filing. 17. Section 623(a)(7)(A) of the Communications Act, as amended by the Telecommunications Act of 1996, provides that cable operators may "aggregate, on a franchise, system, regional, or company level, their equipment costs into broad categories . . . ." In Equipment Aggregation Order, the Commission concluded that the term "equipment" in the statute includes installation and that operators should be able to aggregate installation costs at the same organizational level at which they aggregate equipment costs. The Commission specifically rejected the argument that operators be permitted to aggregate installation costs at higher organizational levels than previously only if they could demonstrate the similarity of the labor costs included in the aggregation. The Commission was concerned that limiting the level at which installation costs could be aggregated would result in different hourly service charges for different franchises, frustrating both the policy allowing operators to establish uniform rates and the statutory requirement that rates be based on actual costs. 18. The City's view that the operator must justify its aggregated costs on the basis of cost elements specifically present in Richardson likewise is inconsistent with the Congressional intent that operators be permitted to aggregate costs at the level of their choosing and implement uniform, cost-based rates. Although the cost elements present in individual communities may vary from community to community and some subsidies between systems may result from aggregating costs, Congress intended that subsidies be allowed in order to promote the development of a broadband, two-way telecommunications infrastructure, reduce the cost of advanced technology for consumers, and stimulate the deployment of digital technology. Disallowing cost elements properly included in the aggregated costs because the particular cost is not incurred in the franchise area would be inconsistent with the Communications Act and the Commission's rules. Because the record establishes that the City's conclusions in its 1997 and 1998 Rate Orders regarding TCI-R's unresponsiveness to its information requests reflect this misinterpretation of aggregated costs, these conclusions must be revisited. 19. The dispute about TCI-R's responsiveness to City information requests goes beyond the question of showing a Richardson nexus for the equipment and installation rates, however. The City complains that TCI-R did not provide requested full general ledger reports for the company as a whole and that the estimated labor hours used in the samples for computing the aggregated hourly service charge ("HSC") are flawed because TCI-R "never indicated, proved, or otherwise justified in any fashion that any `actual' installation times actually were calculated for any system." 20. The City explains its consultant needed the corporate general ledger reports "to look at the full source data to determine that only information that should have been considered in the Form 1205 actually was used." According to TCI-R, these financial statements do not identify costs in sufficient specificity to assist in a Form 1205 review and it supplied the City with detailed subsidiary records. The City does not claim that costs included in TCI-R's ratemaking, such as the dispatch system, were not identified. It argues, "Disclosure is not enough because . . . demonstrating the relevance of the cost to the city involved also is required." While cable operators must respond to requests for relevant information, franchising authorities are expected to address their requests to information "that is reasonably necessary to make a rate determination." The mere fact that a franchising authority requests information does not make the information relevant. The information TCI-R supplied from corporate subsidiary records and supplied or offered with respect to the sampled systems appears to have been sufficiently informative as a basis for identifying the costs claimed by TCI on its aggregated Forms 1205. Accordingly, TCI-R's failure to supply consolidated financial statements that were based on the more detailed records it did provide does not justify the City's conclusion that the rates were unsupported. 21. In contrast, the City's requests for information supporting TCI-R's estimated labor hours were relevant. The labor hours attributed to customer equipment are an important component in determining the HSC, a critical factor in developing equipment and installation rates. The HSC equals the operator's annual equipment basket costs allocated to customer installation and maintenance activities, other than the purchase cost of customer equipment, divided by the total person hours spent in installing, repairing, and servicing customer equipment. If the costs associated with an hour of labor increase, the HSC will increase. Conversely, if the costs are spread across more hours of labor, the HSC will decrease. Installation charges are determined at the operator's option by multiplying the actual time spent on each individual installation by the HSC or by multiplying the average time spent on a specific type of installation by the HSC. The monthly charge for leasing equipment includes repair costs computed using the HSC multiplied by an estimate of the average hours needed to repair the equipment. 22. TCI-R responded to the consultant's requests for information supporting the estimated labor hours by referring him to the Statistical Analysis Reports, which merely aggregate the estimates derived from the sampled systems, or by referring him to data from one of the sampled systems, which contain only unsupported estimates of the hours required to perform each of the listed installation and maintenance activities. According to the City, its consultant determined that the time elements used by TCI-R were not reflective of actual times. They resulted in a 10-hour day and appeared to be used as an incentive base and a guideline for employees. TCI-R said only that it derived the average hours from "field experience." According to the Manager of Regulatory Compliance for TCI Communications, "The average times were based on a sample of systems experience in performing such activities as well as information gathered and utilized in scheduling technicians and installers. The `budget' or `scheduling' information . . . was simply used to test the reasonableness of the actual times provided by each system." He states this had been explained to the City's consultant, but he does not state that the field experience for any of the sampled systems has been documented in submissions to the City. 23. The City was concerned that TCI-R's HSC increased substantially during both years that TCI- R used aggregated rates. While TCI-R correctly states that the magnitude of a rate increase does not create a prima facie case that its figures are wrong, increases of the magnitude of the Richardson increases raise a question. TCI-R explains that the "rate increase that occurred in this case is attributable to both a change from local to national figures and an increase in TCIC's national costs related to equipment, and associated installation and maintenance activities." The change to national aggregation could account for some or all of the HSC rate increase in 1997, but it should have no effect on the increase in the aggregated rates in 1998. We note that the company's costs associated with customer equipment and installation estimated in the Statistical Analysis Reports decreased slightly from 1997 to 1998, salaries and benefits from TCI's Capital Assets/General Ledger Audit Reports, when weighted by the customer percentages from the Statistical Analysis Reports, decreased 0.9%, and the customer percentage declined about 2.4%. Yet, customer maintenance and installation hours calculated in the Reports declined from 14.6 million to 11.86 million, or almost 18.8%, over the same period. Given the normally strong correlation between salaries and benefits and labor hours, this result would not be expected, and it does not appear to be explained by information provided in the record. A franchising authority that "reasonably feels it requires clarifying or substantiating information . . . has the right to request and receive clarifying or substantiating information." If the cable operator fails to provide the requested information or fails to provide complete information in good faith, the franchising operator could hold the cable operator in default and mandate appropriate sanctions, which could include entering an order finding the operator's rate unreasonable and mandating appropriate relief based on the best information available at the time relevant to the requested information. 24. Finally, TCI-R questions the sufficiency of the City's 1997 and 1998 rate orders to support the City's action. The record shows that a significant City concern about TCI-R's sampling methodology was that the aggregated rates were not related specifically to Richardson, not because the methodology itself was invalid. The record also shows that the City relied strongly on TCI-R's failure to provide the disputed corporate general ledgers when concluding that TCI-R was unresponsive to its information requests, although these ledgers were not shown to be relevant in light of the more detailed corporate records TCI-R did provide, and the City's interest in these records appeared to be related to its concern about a Richardson nexus in the rates. Because aggregated rates need not be related to the circumstances of individual franchise areas and TCI- R's failure to provide summaries of the more detailed financial information given to the City would not impede the City's review of its equipment and installation rates, neither of these general concerns supports the City's findings in its rate orders or provides a valid basis for rejecting TCI-R's rates. The City also sought cost information, such as the information about the labor hours reflected in the sample results and used to establish TCI-R's aggregated HSC, and has argued that the sample is flawed because of problems with the data concerning labor hours, but the rate orders and supporting documents do not provide insight about how the City's concern, which it developed in its Opposition here, weighed in the rate orders. Explanations for denying a rate developed in an opposition pleading are not sufficient to sustain the denial of a rate. The rate orders also find the rates to be unreasonable because they result in a significant increase over TCI-R's pre-aggregation rates in Richardson. Although the magnitude of a rate increase may be a reason to closely examine supporting information, "the magnitude of a rate increase alone is not determinative of its reasonableness." Finally, the record does not identify any specific concern about the capital costs used to compute TCI-R's monthly rates for its leased equipment. Although the City's concerns about using sampling to develop the HSC would affect the maintenance component of the lease rate, the extent of the City's adjustments to TCI-R's rates for leased equipment is not substantiated by its rate orders or supporting documents. 25. For these reasons, we are remanding the 1997 and 1998 Rate Orders to the City for further review of TCI-R's equipment and installation rates and are vacating our discussion of the aggregation of equipment and installation costs at paragraphs 22 through 30 of the Bureau's Order. The City's review should be focused on whether the rates at issue are accurately calculated pursuant to the Commission's rules, using accurate information. If the City determines that the rates are not reasonable under this test, it should clearly state its reasons for this conclusion in its written decision. Briefing the operator, which the City claims it did, does not substitute for an explanation in a written decision that is reviewable by the Commission. The City may adjust rates to the level permitted by the Commission's rules or, when reviewing proposed rates, prescribe rates consistent with the Commission's rules that are based on the best information available relevant to the rates or rate elements at issue for the time periods at issue. B. Form 1240 "Gap" Period Rate Adjustments a. Background 26. A cable operator using FCC Form 1240 sets annual rates by projecting expected changes in external costs, inflation, and channels for the coming year and by correcting for differences between past projections and actual costs during the previous year. In comparison, cable operators using Form 1210 to calculate quarterly rate adjustments do not adjust for the previous year's overestimations or underestimations. This is because Form 1210 bases rate changes on past costs only, so cost projections do not play a role. When a cable operator switches from the quarterly rate adjustment method to the annual rate adjustment method, the operator may not have actual cost data for costs incurred up to the time it makes its first annual adjustment. The operator, therefore, could experience a delay in recovering those costs until it implements rates after its second annual Form 1240 filing. The Cable Services Bureau realized that this delay would create a disincentive for operators to switch to the annual rate adjustment methodology and, in 1996, granted TCI-R's parent, TCI, a one-time waiver that allowed TCI to estimate costs for the period before as well as after its new annual rates were to become effective. This time is known as the "gap" period. The Commission subsequently extended this waiver to all cable operators. Importantly, the waiver only applies to an operator's first Form 1240 filing. It works as follows: an operator's initial Form 1240 filing may include projected changes in costs, inflation, channels, and subscriber information attributable to the period between the last full month for which cost data is available and the effective date of the new annual rates. An operator must include with its projections a separate calculation and explanation of the basis for these projected costs. Because this gap period waiver resulted in two projected periods in a cable operator's first Form 1240 filing, an operator must true up the gap period as well as the standard projected period when making its second filing on Form 1240. 27. In its 1997 Rate Order, the City stated that TCI-R failed to make some gap period adjustments, which originated in its first Form 1240 filing, when it made its second Form 1240 filing. The adjustments relate to the calculation of the base rate in Module D of Form 1240. A proper calculation of the base rate is especially important because an operator uses the base rate to build its true-up and projected period MPRs. As noted, an operator usually performs a true-up only for its previous rate period. It uses the true-up segment, recorded on Line I8 of Form 1240, to calculate its MPR for the projected rate period. In its next rate filing, an operator will enter the same Line I8 true-up figure on Line D6 to calculate the base rate. However, when an operator calculates a true-up figure for the gap period on a separate form from the projected period, as described above, Line I8 is not sufficient to calculate the base rate by itself because it does not include the gap period calculation. An operator must also include the gap period figure from its gap period calculation. The Commission requires operators to make this adjustment when calculating their upper tier (cable programming service tier or "CPST") rates. 28. The City adjusted TCI-R's BST rate in its 1997 Rate Order based on its consultant's report that TCI-R did not include the gap period figure in Module D when it calculated the base rate, thereby making TCI-R's base rate too high. The consultant also found that TCI-R improperly deducted inflation adjustments, which were not included in the previous MPR, from the gap period. The total effect of adjustments to the gap period calculations resulted in a $0.28 reduction in TCI-R's requested 1997-1998 MPR. In its appeals and Petition, TCI-R defended its calculation by citing a January 9, 1997 letter from the Chief of the Cable Services Bureau that expressly approved the methodology TCI-R used. The City has agreed that TCI-R's calculations are consistent with the letter, but has stated that TCI-R's gap adjustments were simply incomplete. In our Order resolving the Appeals, we agreed with the City's assessment and held that it had not acted unreasonably in carrying through the gap period and inflation adjustments. We therefore upheld the City's decision without remanding it. 29. In its Petition, TCI-R complains that the Bureau's Order erred by upholding the City's "unilateral modification" of TCI-R's Form 1240 gap calculation. TCI-R argues that it should be allowed to make certain remedial modifications consistent with Bureau precedent. TCI-R asks the Bureau to remand the issue and instruct the City on the "controlling legal standards." TCI-R wants any revised calculation of its BST rates to include a City review of its 1996 and 1997 on-form filings. In its Opposition to the Petition, the City states that a remand is unnecessary because its Rate Orders were consistent with the Commission's requirements and TCI-R has not demonstrated otherwise. b. Discussion 30. When TCI-R's parent, TCI, first received the gap period waiver from the Bureau, it was instructed to include in its initial Form 1240 filing certain calculations that were to be performed "on" Form 1240 (primarily in Module G) or "off" Form 1240 in an alternative showing done pursuant to guidelines outlined by the Bureau. Initially, TCI chose to use an alternative showing pursuant to these guidelines rather than perform its calculations directly on Form 1240, and the Bureau accepted this approach in Margate Video Systems, Inc. (Margate I). In TCI of Plano, a CPST rate review, the operator submitted gap calculations using an alternative showing, but the Bureau determined that neither of the alternative Form 1240 filings produced identical results to filings that would have been made on the Commission's standard Form 1240. At the Bureau's request, the operator submitted two revised Form 1240s to the Bureau for its 1996 and 1997 rates. Consistent with its treatment of gap cases since TCI of Plano, the Bureau reconsidered the Margate I decision to make clear that gap calculations must be submitted on standard Forms 1240 in all cases. 31. We affirm our conclusion that TCI's rate filings did not properly carry its gap period adjustment through the rate form. We find, however, that the City should have computed the gap period adjustment using the "on form" method used in TCI of Plano and Margate II for both periods. For this reason, we are remanding the gap issue for further review. Local franchise authorities, including the City in this case, should use the same approach when reviewing BST gap period calculations that the Commission has ordered for CPST gap period calculations. C. Stay Request 32. In light of the action on the merits of TCI-R's appeals, the Bureau's Order dismissed TCI-R's request for a stay as moot. TCI-R asks that this order be reconsidered and a stay granted retroactively. In this case, where past rates were unresolved while local rate orders were on appeal to the Commission, TCI-R has argued that it should be able to implement rate adjustments on the basis of its proposed rates rather than implementing the City's prescribed rates while its appeals of the City's rate orders are pending. TCI-R contends that its inability to implement its proposed rates would, over time, result in irreparable financial harm because lost revenues could not be realistically recovered. Consumers would be protected, the operator argues, because TCI-R would owe consumers refunds for any overcharges that might occur while the local rate orders are being adjudicated. TCI also argues that relief is needed because the City is taking action to enforce its 1998 Rate Order. The City opposes this request, arguing that TCI-R's fears of economic harm were based on the expectation that TCI-R's proposed rates would be approved, but they were not, and that the City deferred its enforcement action pending Bureau action on the underlying appeals. 33. As a general matter, stays are not granted automatically by the Bureau, and stays granted by the Bureau have been granted only pending resolution of the operator's appeal on the merits. The Bureau's Order on the merits disagreed with TCI-R's position that its rates were reasonable and that it could implement rate increases disallowed by the City. We ordered TCI-R to revise and re-file its basic service tier rate forms with the City and, subject to the City's right to review the rate filings, required TCI-R to implement revised rates to reflect the rulings discussed therein within 60 days. We denied TCI-R's appeal of issues regarding its 1996 equipment and installation rates and concluded that the City was not unreasonable in its treatment of TCI- R's 1997 and 1998 equipment and installation rates. We granted TCI-R's appeal only with respect to increases in franchise-required community access payments. Although, we have revisited parts of the Bureau's Order on reconsideration, we have not found that the disputed rates were reasonable as proposed by TCI-R. We further understand that TCI-R has complied with the City's order, so a stay of the Bureau's Order appears to be unnecessary. IV. ORDERING CLAUSES 34. Accordingly, IT IS ORDERED that the Withdrawal of Motion to Strike Petition for Reconsideration filed by the City of Richardson on September 25, 1998 IS GRANTED and the Motion to Strike Petition for Reconsideration filed by the City of Richardson on September 22, 1998 IS DISMISSED. 35. IT IS FURTHER ORDERED that the Petition for Reconsideration filed by TCI of Richardson, Inc. on September 16, 1998 IS GRANTED IN PART AND DENIED IN PART. 36. IT IS FURTHER ORDERED that the discussion of aggregated rates in Memorandum Opinion and Order, DA 98-1642 at paras. 22-30 IS VACATED. 37. IT IS FURTHER ORDERED that this case IS REMANDED to the City for proceedings consistent with this Memorandum Opinion and Order. 38. This action is taken pursuant to authority delegated by  0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen Chief, Cable Services Bureau