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C. 20554 In the Matter of: ) ) Cablevision of the Midwest ) CSB-A- 0602 d/b/a Telerama, Inc. ) ) Appeal of Local Rate Order of the City of Euclid, Ohio ) (CUID No. OH0756) MEMORANDUM OPINION AND ORDER Adopted: January 10, 2000 Released: January 13, 2000 By the Deputy Chief, Cable Services Bureau: I. introduction 1. Cablevision of the Midwest, d/b/a Telerama, Inc. ("Cablevision"), filed an appeal of a local rate order adopted by the City of Euclid, Ohio, on September 21, 1998. The City filed an opposition to the appeal, and Cablevision filed a reply. II. background 3. 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 will remand the issue to the franchising authority with instructions to resolve the case consistent with the Commission decision on appeal. 4. 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. 5. Cable operators may justify adjustments to their rates on an annual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes in external costs, inflation, and the number of regulated channels that are projected for the twelve months following the rate change. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. If actual and projected costs are different during the rate year, a "true-up" mechanism is available to correct estimated costs with actual cost changes. VI. Discussion 7. At the end of September 1997, Cablevision neared the completion of a rebuild of its cable system serving subscribers in Euclid, Ohio. Although only 11 of approximately 14,000 subscribers remained on the "non-rebuild" portion of the system, Cablevision claims it nonetheless submitted separate Forms 1240 for the "rebuild" and the "non- rebuild" portions of the system to the City by mail on September 30, 1997. Cablevision, after responding to information requests from the City and the passage of 90 days without the issuance of a rate decision by the City, implemented the rate increases proposed in the Forms 1240 on January 1, 1998. Cablevision also submitted amended Forms 1240 for both the "rebuild" and "non-rebuild" portions of the system on March 12, 1998, at which time Cablevision re-submitted the September 30, 1997 Form 1240 for the "non-rebuild" portion of the system. On September 21, 1998, the City issued the rate order under appeal, which required Cablevision to refund the difference between Cablevision's basic service tier ("BST") rates in effect immediately before January 1, 1998 and its BST rates in effect between January 1, 1998 and June 11, 1998 pursuant to Forms 1240 filed by Cablevision. 8. The principal matter at issue in this appeal concerns the validity of the City's refund order. A subsidiary issue concerns whether Cablevision submitted two separate FCC Forms 1240 on September 30, 1997, one for the "rebuild" area and a second for the "non-rebuild" area, as it claims; or whether Cablevision first filed a Form 1240 for the "non-rebuild" area on March 12, 1998 when the amended Forms 1240 for both areas were received, as the City claims. The City's rate order acknowledges receipt on October 1, 1997 of Cablevision's Form 1240 for the "rebuild" area,. The rate order also acknowledges receipt on March 12, 1998 from Cablevision of a Form 1240 for the "non-build" portion of the cable system, as well as amended Forms 1240 for both the "rebuild" and the "non-build" portions of the cable system. The rate order then directs Cablevision not to implement BST rates proposed in the forms until June 11, 1998, and further directs Cablevision to make the described refunds for both the "rebuild" and "non-rebuild" portions of the system. 9. We address first the subsidiary conflicting claims concerning the filing of a separate Form 1240 for the "non-rebuild" area. We resolve this issue in favor of the City, because the record does not contain substantial and credible evidence showing that a Form 1240 for the "non-rebuild" portion was received by City until March 12, 1998. Cablevision claims that it submitted "filings for both the rebuild and non-rebuild portions of Euclid on October 1, 1997." Cablevision also asserts that, "Each of these was attested to and dated, and each was accompanied by a certified mail receipt dated October 1, 1997." Cablevision attempted to support this claim by providing copies of a letter dated September 30, 1997, copies of a certified mail return receipt (U.S. Postal Service PS Form 3811), and copies of Forms 1240 for the "rebuild" and the "un-rebuild" areas. Our examination of the copies of mail receipt provided by Cablevision shows them to be two copies of the same mail receipt, and not copies of two different receipts. The same may be said for the October 1, 1997 letter submitted by Cablevision. For that reason, we find that Cablevision failed to carry its burden of providing substantial evidence that both Forms 1240 were received by the City on October 1, 1997. Moreover, the City provided copies of correspondence with Cablevision, dated October 30, 1997, November 24, 1997, and January 21, 1998, each referring in the singular to "a Form 1240" or "the Form 1240" filed by Cablevision. If Cablevision submitted two forms on September 30, 1997, these letters put Cablevision on notice that only one form had been received by the City. Cablevision, the party with knowledge that another form had been submitted, failed to carry its burden of correcting the record before the City. 10. We reject as unreasonable, however, the City's requirement for a refund with respect to the "rebuild" portion of Cablevision's cable system in Euclid. The City attempted to justify its total system refund requirement on the grounds that Cablevision's Form 1240 filing was facially incomplete until the Form 1240 for the "non-rebuild" portion was received on March 12, 1998. The City's determination of incompleteness was based not on any difficiency of the Form 1240 received on September 30, 1997 for the "rebuild" portion. Instead, the determination of incompleteness was based only on the fact that a "non-rebuild" Form 1240 was not received until March 12, 1998. Other than this finding of incompleteness, the City found no other fault or need for correction of Cablevision's 1997 Form 1240 for the "rebuild" portion. On this record we reject as unreasonable the City's finding that Cablevision's 1997 Form 1240 for the "rebuild" portion of the Euclid cable system was incomplete, particularly since that Form 1240 covered all of the Euclid cable system except for 11 of approximately 14,000 subscribers served by that cable system. Accordingly, Cablevision's petition is granted with respect to this aspect of the City's refund order, which is remanded for further consideration consistent with this order. 11. On the other hand, we find that the City provided a reasonable basis for ordering refunds with respect to the "non-rebuild" portion of the cable system. A cable system may not increase BST rates unless the proper Commission forms are filed with the local franchising authority and then only consistent with Commission regulations appropriate to the forms filed. The record before us shows that Cablevision's Form 1240 for the "non-rebuild" portion of the Euclid system was not received by the City until March 12, 1998. The City correctly ruled that Cablevision's BST rates for the "non-rebuild" portion proposed in that Form 1240 could not become effective until 90 days later, or until June 11, 1998. Accordingly, Cablevision's petition is denied with respect to this aspect of the City's refund order. XII. ordering clauses 13. For the foregoing reasons, IT IS HEREBY ORDERED, pursuant to authority delegated by Section 0.321 of the Commission's rules, that the Petition for Review of Ordinance No. 205-1998 of the City of Euclid, Ohio, adopted September 21, 1998, filed by Cablevision of the Midwest d/b/a Telerama, Inc. IS GRANTED IN PART AND DENIED IN PART. 14. IT IS FURTHER ORDERED that Section 2 of the City's Ordinance No. 205-1998 IS REMANDED for further consideration consistent with this Memorandum Opinion and Order. 15. IT IS FURTHER ORDERED that the Petition for Stay Pending Review filed by Cablevision IS DISMISSED AS MOOT. 16. IT IS FURTHER ORDERED that the City of Euclid, Ohio shall not enforce Section 2 of Ordinance No. 205-1998 pending further action by the City on these matters. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau