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

In the Matters of:              )
                                )
WESTERN RESERVE CABLEVISION, INC.) CSB-A-0406, CSB-A-0539,
d/b/a ADELPHIA CABLE COMMUNICATIONS)    CSB-A-0607                 
                                )  CUID OH0922
Appeals of Local Rate Orders of )
City of Hudson, Ohio            ) 
                                )
LORAIN CABLE TELEVISION, INC.   )  CSB-A-0405-S, CSB-A-0540
d/b/a ADELPHIA CABLE COMMUNICATIONS)    CUID OH0202 
                                )
PARNASSOS, L.P.                 )  CSB-A-0606
d/b/a ADELPHIA CABLE COMMUNICATIONS)    CUID OH0202 
                                )
Appeals of Local Rate Orders of )
City of Lorain, Ohio            )
                                 
                                 
            CONSOLIDATED MEMORANDUM OPINION AND ORDER

        Adopted:  August 13, 1999          Released:  August 17, 1999

By the Deputy Chief, Cable Services Bureau:

                        I.  INTRODUCTION

     1.   Western Reserve Cablevision, Inc. d/b/a Adelphia Cable Communications ("WRC-A"), Lorain
Cable Television, Inc. d/b/a Adelphia Cable Communications ("LCT-A"), and Parnassos, L.P. d/b/a Adelphia
Cable Communications  ("P-A") (collectively "Adelphia") have filed appeals a total of six rate orders adopted
by the City of Hudson, Ohio ("Hudson") and the City of Lorain, Ohio ("Lorain").  By this Order, we
consolidate the six separate proceedings involving these operators and rule on the merits in each proceeding. 
We have determined that the Appeals are sufficiently similar to justify the resolution of all issues raised by each
of the parties in one consolidated proceeding.  Specifically, we resolve three Appeals filed by WRC-A from
local rate orders issued by the City of Hudson as the local franchising authority ("LFA") and two Appeals filed
with the Commission by LCT-A and one Appeal filed by P-A from local rate orders issued by the City of
Lorain as the LFA.  The issue involved in the Appeals is whether, under Commission regulations, the LFAs
acted unreasonably in disallowing proposed monthly equipment lease fees for wiring associated with additional
outlets or connections used by subscribers for their operation of additional television receivers on the cable
systems.  Each Appeal also challenges the LFAs' orders that the operators refund to subscribers any additional
outlet equipment charges collected by the operators back to specified dates.  Oppositions, replies, and, in some
instances, further responses, were filed in these proceedings and have been considered in our review.  Petitions
for Stays of Enforcement Pending Appeal and related pleadings filed in these proceedings are mooted by our
grant of the Appeals in this Order. 

     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. Under the Communications Act and the Commission's rules, this Agency reviews
appeals of rate orders issued by LFAs.  When considering appeals of local rate orders, the Commission will
not conduct a de novo review, but instead will sustain the LFA's decision as long as there is a reasonable basis
for that decision.  Therefore, the Commission will reverse an LFA's decision only if it determines that the
franchising authority acted unreasonably in applying the Commission's Rules in rendering the local rate order. 
If the Commission reverses an LFA's decision, it will not substitute its own judgment, but will remand the
matter to the franchising authority with instructions to resolve it consistent with the Commission's decision on
appeal.

     3.   In their rate orders, the LFAs disallowed additional outlet charges in their entirety because: 
(1) the operators did not incur additional programming costs or costs for signal boosters on the subscribers'
premises due to the additional outlets; (2) they did not charge for primary outlets and could not charge more
for additional outlets than for primary outlets; and (3) additional outlets are considered fixtures to the
homeowner's real property.  In their view, Adelphia can recover only additional programming costs or costs
for signal boosters, which Adelphia does not claim in these cases.  Adelphia disputes each of these findings and
emphasizes that the operators, not the subscribers, own the additional outlet equipment.  Adelphia argues that
the LFAs' rate orders bar the operators from charging for the cable home wiring equipment associated with
additional outlets, are inconsistent with statutory and regulatory provisions allowing cable operators to recover
the actual cost of equipment basket items plus a reasonable profit, constitute an unconstitutional taking of
property without just compensation, and fail to recognize that the cost of maintaining inside wiring is a
recoverable charge.

                                
                                
                                
                        II.  DISCUSSION

     4.   The LFAs found in their local rate orders that a monthly equipment charge for an additional
outlet is permissible only to recover additional programming costs, if any, and the costs of additional customer
premises equipment needed to boost the operator's signal.  Because Adelphia did not provide evidence of
programming costs or the need for signal boosting equipment, the local rate orders found the monthly fees for
additional outlets to be unreasonable.  The local rate orders relied on paragraph 307 of the Commission's Rate
Order and a December 29, 1994 Public Notice of Questions and Answers on Cable Television Regulation,
which address recovery of programming costs and the costs of signal boosting equipment.  Adelphia argues
that the LFAs' narrow interpretation is unfounded, that cable operators are entitled to recover the costs of
ongoing maintenance expenses as well as capital costs associated with wiring, and that the disputed charge is
an equipment charge, not a programming charge.  The LFAs argue that the cited precedent is controlling.

     5.   Section 623(b)(3) of the Communications Act requires that rates for regulated equipment and
installation services, including "installation and monthly use of connections for additional television receivers,"
be based on operators' actual costs.  Section 76.923 of the Commission's rules, which implements Section
623, requires that a cable operator "shall establish rates for . . . additional connections" and shall unbundle
these rates from basic service tier rates and also shall unbundle these rates from the rates for remote control
units, converter boxes, and other customer equipment.  The first sentence of Section 76.923(h) expressly
provides that the costs of installation and monthly use of additional connections shall be recovered as charges
associated with the installation and equipment costs categories and at rate levels determined by the actual cost
methodology contained elsewhere in that section.  Paragraph 307 of the Rate Order addresses the question
of whether operators should be allowed to charge for any other costs or services relating to additional outlets. 
Consistent with paragraph 307, the second sentence of Section 76.923(h) provides that an operator may also
recover additional programming costs and the costs of customer premises equipment needed to boost the
operator's signal when these costs are caused by the additional connections.  These costs would be recovered
as a separate monthly unbundled charge for additional connections and are in addition to the monthly use and
installation costs associated with additional connections.  The December 29, 1994 Public Notice cited by the
LFAs addresses the question of whether operators recovering the costs of additional outlets from their
equipment and installation charges can also add a charge for the value of delivering certain programming to
additional outlets.  Consistent with Section 76.923(h), the Public Notice explains that operators using the
benchmark methodology could not impose an additional outlet charge for receiving a new product tier unless
the operator incurred additional programming costs when providing the new product tier to additional outlets. 
Where the cable operators own the additional outlets, the LFAs' position that the only additional outlet costs
cable operators can recover are costs for programming or signal boosting equipment does take into account
other costs for the monthly use of additional outlets that may be recovered pursuant to Section 76.923(h) and,
therefore, is not reasonable.

     6.   The LFAs also found in their rate orders that cable operators cannot charge for additional
connections when, as in these cases, there is no primary outlet charge.  The LFAs rely on paragraph 306 of
the Commission's Rate Order, which states that "[r]emotes, converter boxes and other equipment involved [with
additional connections] would be leased at the same rate as equipment used with primary outlets."  Adelphia
disagrees, contending that whether or not there was a monthly lease charge for equipment associated with
primary outlets, their equipment charges for home wiring associated with additional connections were
"unbundled" from their tier rates and that Commission rules allow the recovery, through separate charges, of
costs associated with additional connections.  

     7.    Paragraph 306 provides that operators should recover the costs of additional connections in
the related equipment and installation charges.  The statement in paragraph 306, that remotes, converter boxes
and other equipment used with additional outlets would be leased at the same rate as equipment used with
primary outlets, is reflected in Section 76.923(f) and (g) of the Commission's rules, which provide for
computing charges for remotes and other equipment, respectively, on the basis of actual cost rather than some
arbitrary value.  This statement disallows rates for equipment used with additional outlets that are not based
on actual costs.  The LFAs' reading of paragraph 306 does not take into account the specific provisions in
Section 623(b)(3)(B) of the Communications Act and Section 76.923(h) of the Commission's rules directing
that rates or charges for the monthly use of connections for additional television receivers be based on actual
cost.  Tying the pricing of additional outlets to the pricing of the primary outlet and disallowing recovery of
additional outlet charges without regard to the costs associated with the additional outlet is inconsistent with
both the statute and the Commission's rules and is not required by paragraph 306.  

     8.   Although specifically finding the additional outlet charges unreasonable because Adelphia did
not show any costs for programming or signal boosters specifically associated with the additional outlets, and
stating in their pleadings that this is their primary argument, the LFAs also found in all but the May 5, 1997
Lorain rate order that the wiring inside the home associated with the outlets are fixtures to the real property
of the homeowner. They interpret this to mean that Adelphia does not own the equipment associated with the
outlets and, therefore, cannot impose a lease charge for use of the outlets.  The LFAs rely on Metropolitan
Cablevision v. Cox Cable Cleveland Area, (1992) 78 Ohio App. 3d 273, in which the court found that the
wiring in the subscriber's home is a fixture and cannot be removed by the operator.  The court distinguished
between wiring securely annexed to the premises and "movable components" of the cable service.  Relying on
this distinction, Adelphia argues that its "inside wiring attached to additional outlets includes wiring that runs
from a wall plate to the back of a subscriber's television or converter.  It is visible, located in open space, easily
movable and readily detached.  Thus, this wiring does not qualify as a fixture."  Adelphia further states that
the work order/customer agreement used in Hudson and Lorain recites that all equipment installed upon the
premises by Adelphia or its agents, except for the service drop and connectors, shall remain the property of
Adelphia.  Whatever the applicability of Metropolitan, it argues, "most, if not all, of the wiring at issue
belongs to Adelphia and is properly subject to a lease charge (including a maintenance component) . . . ." 
Even if some portion of the equipment is deemed to be owned by the subscriber, Adelphia argues it is entitled
to impose a monthly maintenance charge.  In response, the LFAs assert that they are confident they can dispute
Adelphia's extravagant costs and maintenance hours for a wire running from the wall to the television and the
minimal maintenance that would be associated with that equipment, although the local rate orders do not
reflect LFA consideration of any such analysis.

     9.   Whether additional outlets and the associated wiring in a subscriber's home are fixtures to the
real property is a question of state or local law that should be addressed by the franchising authority or in a
state or local court.  Thus, Adelphia's arguments that most, if not all, of the wiring at issue falls within the
exception noted in the Metropolitan case is a question to be decided after a review of the facts by the
franchising authority or a state or local court.  The LFAs state in their responses to Adelphia's replies that
Adelphia has altered its explanation for its additional outlet charge over time, has not explained what equipment
it includes and what maintenance is involved, and never specified in its written explanations to the cities that
the equipment covered by additional outlet charges includes the cable running from the television to the wall
as stated in its June 1998 replies to the Commission.  From this it appears that the LFAs were unclear about
what was covered by Adelphia's additional outlet charges and may not have fully reviewed the facts in these
cases when finding the additional outlets to be fixtures.  On remand, the LFAs should clarify the facts and
review their finding on the basis of the clarified facts.  The Lorain rate order passed on May 5, 1997 did not
find that Adelphia's additional outlets are fixtures and is not covered by this direction.

     10.  Adelphia also argues that, when the cities elected to opt into the Adelphia Resolution reached
between Adelphia and the Commission, Adelphia's unbundling of equipment rates on FCC Form 1205 at that
time was deemed to be approved by the LFAs.  According to Adelphia, acceptance of Adelphia's initial
unbundling calculation in the Adelphia Resolution precludes the LFAs from disallowing the separate recovery
of unbundled costs in subsequent years.  While we agree with the general proposition that an operator may
continue to charge cost-based rates for equipment basket elements it has unbundled from the tier rate, an
operator may only charge for the leasing of equipment it owns.  The fact that it once may have collected a
leasing charge does not require that it continue to do so if the charge is not justified.  Nor do we agree that
equipment an operator does not own should be reflected in the tier rate if the operator can no longer lease the
equipment.  If the LFAs find on remand that the additional outlets at issue here are fixtures owned along with
the realty to which they are affixed, the LFAs are not precluded from addressing the rate consequences of this
determination because the costs were earlier unbundled from the tier rate.

     11.  These proceedings are remanded to the Cities of Hudson and Lorain for further consideration
consistent with this Consolidated Memorandum Opinion and Order.  If the LFAs find on remand that additional
outlets are fixtures and that ownership has transferred to the owner of the realty, any refund orders should
address the question of compensation to the operators for the value of the fixtures.  Neither LFA treated
additional outlets as fixtures in its 1995 rate order, and Lorain also did not treat additional outlets as fixtures
in its 1997 rate order.  Adelphia has based its rate structure on its stated belief that it owned the equipment
associated with additional outlets and could lease the equipment to subscribers.  Adelphia also argues in its
June 1997 appeals at 4 that the cost of maintaining inside wiring is a recoverable charge and in its May 1998
appeals at 2 that denying it any recovery of its proven costs for maintaining inside wiring represents an
unconstitutional taking of property.  The lease charge for operator-owned equipment includes maintenance
as well as equipment costs.  When subscribers own the equipment, operators may offer maintenance and
repair services to subscribers through an optional cost-based wire maintenance plan that is priced according
to Commission rules or through an as-needed repair option based on the hourly service charge.  Thus, under
the Commission's rules, cable operators are entitled to compensation for their costs of maintaining wiring on
subscribers' premises.  If the LFAs determine that additional outlets are fixtures under Ohio law and disallow
Adelphia's lease charges for this reason, they should consider in any refund orders the proven costs Adelphia
has incurred for maintaining additional outlets in the periods covered by the refund orders.  

     12.  The cable operator has the burden of proving that its equipment and installation rates comply
with Section 623 of the Communications Act and Sections 76.923 of the Commission's rules.  If the cable
operator fails to meet its burden, has improperly calculated its rates, or is unresponsive to requests for relevant
information, the franchising authority can take appropriate action, including, for example, adjusting the rates
and ordering refunds based on the best information available.  Although we have found it necessary to remand
this proceeding in light of the matters discussed above, we are not suggesting on remand that either LFA must
accept the specific charges proposed by the operator.  Where Adelphia has retained ownership of any or all of
the equipment associated with additional outlets, or where Adelphia's ownership of the equipment is not at
issue, the LFA should review Adelphia's Forms 1205 and supporting information to determine whether
Adelphia's additional outlet rates are justified.  

                     III.  ORDERING CLAUSES

     13.  Accordingly, IT IS ORDERED that Western Reserve Cablevision, Inc. d/b/a Adelphia Cable
Communications' Appeals of the City of Hudson's rate orders, Ordinances No. 97-63, 98-68, and 98-158, ARE
GRANTED to the extent provided herein and those cases ARE REMANDED to the City for resolution in
accordance with the terms of this Consolidated Memorandum Opinion and Order.

     14.  IT IS FURTHER ORDERED that Lorain Cable Television, Inc. d/b/a Adelphia Cable
Communications' Appeals of the City of Lorain's rate orders, Ordinances No. 84-97, and 76-98, ARE
GRANTED to the extent provided herein and those cases ARE REMANDED to the City for resolution in
accordance with the terms of this Consolidated Memorandum Opinion and Order.

     15.  IT IS FURTHER ORDERED that Parnassos, L.P. d/b/a Adelphia Cable Communications'
Appeal of the City of Lorain's rate order, Ordinance No. 237-98, regarding the issue of the City's disallowance
of proposed monthly equipment lease fees for cable home wiring associated with additional outlets and related
refund liability IS GRANTED to the extent provided herein and that case IS REMANDED to the City for
resolution in accordance with the terms of this Consolidated Memorandum Opinion and Order.  

     16.  IT IS FURTHER ORDERED that, in light of the resolution of the appeals herein, the
requests for stays filed by Western Reserve Cablevision, Inc. d/b/a Adelphia Cable Communications, 

Lorain Cable Television, Inc. d/b/a Adelphia Cable Communications, and Parnassos, L.P. d/b/a Adelphia
Cable Communications ARE DISMISSED as moot.

     17.  IT IS FURTHER ORDERED that the Motions for Extension of Time filed by the City of
Lorain and the City of Hudson on June 18, 1997 ARE GRANTED.

     18.  This action is taken 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