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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: ) ) MEDIAONE ) File No. CSB-A-0592 ) Appeal of Local Rate Order of ) Douglas County and the Cities of Austell) And Tyrone, Georgia ) MEMORANDUM OPINION AND ORDER Adopted: September 14, 1999 Released: September 17, 1999 By the Deputy Chief, Cable Services Bureau: I. INTRODUCTION 1. MediaOne ("MediaOne"), the operator of cable television systems in Douglas County and the Cities of Austell and Tyrone, Georgia, filed Petitions for Review of local rate orders of Douglas County and the Cities of Austell and Tyrone, Georgia (the LFA's"). The City filed oppositions to the petitions, and Falcon filed replies. Because the petitioner and the issues are the same in each of these appeals, we consolidate them for administrative convenience. II. 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 sustain the franchising authority's decision provided there is a reasonable basis for that decision, and will reverse a franchising authority's decision only if the franchising authority unreasonably applied the Commission's rules in 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 proposing an increase in basic service tier ("BST"), equipment or installation rates bears the burden of demonstrating that the proposed increase conforms with our rules. In determining whether the operator's proposed increase conforms with our 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 approve the operator's requested rate increase or issue a written decision explaining why the operator's rate is not reasonable. If the franchising authority determines that the operator's proposed rate exceeds the maximum permitted rate as determined by the Commission's rules, it may prescribe a rate different from the proposed rate provided that it explains why the operator's rate is unreasonable and the prescribed rate is reasonable. 4. MediaOne's submitted the 1997 and 1998 Forms 1240 pursuant to the annual rate adjustment procedures, which require that Forms 1240 be filed with the LFA at least 90 days before the effective date of the annual rate adjustments proposed, providing the LFA opportunity to review the rates before they become effective. These annual rate adjustment procedures, under certain conditions that apply here, allowed the LFAs additional time not to exceed one year from the date MediaOne filed each set of Forms 1240 in which to issue a rate order adjusting the rates proposed in each of those filing. The rules also provided Media with a 90 day window following the filing of each set of Forms 1240 in which to submit amended Forms 1240 if there is a material change in the operator's circumstances. The Commission has stated that the one-year period should provide ample time for LFA review and should provide operators with certainty with respect to refund liability and filed rates remaining in effect. The Commission has also indicated that the procedural periods established in connection with the annual rate adjustment system strike "a good balance among the interest of subscribers, franchising authorities and cable operators." III. DISCUSSION AND ANALYSIS 5. The issue for consideration in these local rate order appeals concerns the LFA's refusal to accept two sets of amended FCC Forms 1240 MediaOne filed with the LFAs in August of 1998. MediaOne filed the first set of amended forms in place of its initial Forms 1240 submitted in October of 1996 in connection with its January 1, 1997 rate adjustments ("1997 Forms 1240"). The LFAs had accepted MediaOne's rates submitted with the 1997 Forms 1240 without making any rate adjustments or issuing any rate orders. 6. The second set of amended Forms 1240 amended initial Forms 1240 submitted in August of 1997 in connection with its January 1, 1998 rate adjustments ("1998 Forms 1240"). Upon review of the 1998 Forms 1240, the LFA found that certain data on the 1998 Forms 1240 was not consistent with data on the 1997 Forms 1240 and in November of 1997 requested MediaOne to clarify the discrepancies. In December of 1997, MediaOne informed the LFAs that the questioned data on the 1998 Forms 1240 were taken from the 1997 Forms 1240 and submitted Forms 1240 which it represented as being the 1997 Forms 1240. In January of 1998, the LFAs requested MediaOne to verify whether the 1997 Forms 1240 submitted in December had ever been filed, noting that data on those forms were inconsistent with data on the 1997 Forms 1240. MediaOne did not provide any verification or clarification of the questioned 1997 Forms 1240 until it submitted the amended 1997 and 1998 Forms 1240 to the LFAs in August of 1998. At that time MediaOne stated that it could not confirm that the amended 1997 Forms had been filed in December of 1997 and assumed that the initial 1997 Forms 1240 were the only ones filed. 7. MediaOne argues that the LFAs' refusal to accept and use the most accurate information available on the amended Forms 1240 is error that should be overturned. MediaOne contends that acceptance of the amended Forms 1240, which it claims accurately reflect applicable true-up periods, would not unduly burden the LFAs. MediaOne also argues that the LFAs had ample time after submission of the amended forms in August of 1998 to consider them in the rate orders issued in September of 1998. MediaOne asserts that the corrected true-up information in the amended 1997 Forms 1240 supports the amended 1998 Forms 1240, and that acceptance of both sets of amended forms would permit correction of errors in the true-up periods in the 1998 Forms 1240 which the LFAs's consultant noticed but essentially ignored. MediaOne also argues that the procedural periods established by the Commission in connection with LFA consideration of annual rate adjustments submitted on Forms 1240 were for the protection of cable operators, not regulators. MediaOne contends that the established one year review period should not have precluded consideration of the amended 1997 Forms 1240. 8. The LFAs contend that the Commission's rules do no permit operators to amend their Forms 1240 more than ninety (90) days after they are filed. Accordingly, the LFAs assert that the last date for filing amendments to the 1997 Forms 1240 filed in September of 1996 was approximately January 1, 1997, and the last date for amendments of the 1998 Forms 1240 filed in August of 1997 was approximately January 1, 1998. The LFAs take the position that MediaOne in essence is requesting waivers of the established filing deadlines for Form 1240 amendments, but failed to provide good cause for doing so. The LFAs point out that MediaOne did not file the amended Forms 1240 until August of 1998, only shortly before the one-year period for review of the 1998 Forms 1240 was due to expire. They note further that almost one year had expired after expiration of the one-year period for decision on the 1998 Forms 1240. The LFAs contend it would be unfair to them and subscribers to require them to discard their reviews of the 1998 Forms 1240 and then require them to conduct new reviews within the remainder of the one-year review period available to them under in the Commission's rules for making their decision. 9. As noted earlier, the Commission established a one-year review period to provide LFAs with ample time to review annual rate adjustments and to provide operators with certainty with respect to refund liability and that filed rates will remain in effect. The Commission also indicated that the procedural periods established in connection with the annual rate adjustment system strike "a good balance among the interest of subscribers, franchising authorities and cable operators." Given the procedural balance the Commission set out to achieve, we find reasonable the LFAs' refusal to accept MediaOne's amended 1997 Forms 1240 that were filed in August of 1998, nearly two years after the initial 1997 Forms 1240 were filed in September of 1996. We note in this connection that MediaOne admitted that amended 1997 Forms 1240 had not previously been filed, and further that the Forms 1240 accompanying its December 1997 submission to the LFAs were unsigned. Accordingly, we deny MediaOne's petitions to the extent they seek to reverse the LFAs' refusal to accept the amended 1997 Forms 1240. 10. We also deny the petitions to the extent they seek reversal of the LFAs' rejection of the amended 1998 Forms 1240. First, the Commission's rules permitted MediaOne to submit any amended 1998 Forms 1240 within 90 days of the filing of the initial 1998 Forms 1240, which it failed to do. Moreover, in January of 1998 the LFAs requested MediaOne to clarify the inconsistencies found in the data on the initially filed 1998 Forms 1240. When the inconsistencies remained unresolved, the LFAs repeated the request in March of 1998 and again in July of 1998. We find reasonable the LFAs' refusal to accept amended 1998 Forms 1240 that were dependent upon data contained in the amended 1997 Forms 1240 that we already have found the City reasonable in rejecting. Moreover, the amended 1998 Forms were not submitted until August of 1998, despite the City's several earlier requests for clarification of discrepancies. IV. ORDERING CLAUSES 11. For the foregoing reasons, IT IS HEREBY ORDERED that the captioned Petitions for Review of the local rate orders of Douglas County and the Cities of Austell and Tyrone, Georgia, (CSB-A- 0592), filed by MediaOne, ARE DENIED. 12. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau