FOR RECORD ONLY
$//ORDER denying appeal in Galesburg, IL, DA 95-245//$
$/76.922 Rates for the basic service tier/$
$/76.923 Rates for equipment and installation/$
$/76.944 Commission Review of Franchising Authority Decisions/$
                                    
                               Before The 
                    Federal Communications Commission
                         Washington, D.C. 20554

In the Matter of      )          DA 95-245
     )                                                                     
TCI CABLEVISION OF    ) 
GALESBURG, INC.,      )   
     ) 
Appeal of Enforcement of Local Rate    ) 
Order of the City of Galesburg, Illinois.         ) 

                          ORDER
           
              Adopted:  February 15, 1995;          Released:  February 16, 1995 

By the Chief, Cable Services Bureau:  

I.   Introduction

     1.  On July 20, 1994, TCI Cablevision of Galesburg, Inc. ("TCI"), the franchisee in the
above-referenced matter, filed an appeal of a local rate order.  The local rate order was
adopted on June 20, 1994 by TCI's franchising authority, the City of Galesburg, Illinois
("City").  The City opposes TCI's appeal.  The Rate Order established a new regulated rate
schedule for TCI's basic service tier rates and associated equipment charges.  Specifically,
the City's Rate Order requires TCI to implement certain rate reductions and to issue refunds
to subscribers for overcharges levied during the period from September 1, 1993 to July 14,
1994.

     2.  Under our rules, rate orders made by local franchising authorities may be appealed
to the Commission.  In ruling on appeals of local rate orders, the Commission will not
conduct a de novo review, but instead will sustain the franchising authority's decision as long
as there is a reasonable basis for that decision.  Therefore, the Commission will reverse a
franchising authority's decision only if it determines that the franchising authority acted
unreasonably in applying the Commission's rules in rendering 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.  In this appeal, the issues TCI raises all involve calculations in FCC Form 393 and
include allegations that:  (1) the City refused to allow TCI to correct errors made by TCI on
its FCC Form 393 which were first discovered and brought to the City's attention on the day
the rate order was issued; (2) and that the City used an incorrect figure for total labor hours in
calculating TCI's Hourly Service Charge ("HSC").  We consider each of these issues in turn.

II.  Discussion

     4.  FCC Form 393 is the official form used by regulators to determine whether an
operator's regulated rates for programming, equipment and installations were reasonable
during the time period from September 1, 1993 until May 14, 1994.  Form 393 is divided
into three separate, but interrelated parts.  In Part II, the operator calculates its maximum
permitted programming rates, while in Part III, the operator calculates its maximum permitted
equipment and installation rates.  Part I is a cover sheet that lists the various programming,
equipment and installation rates that have been calculated in Parts II and III and compares
them to the rates the operator has actually charged during the period of review.

     5.  The operator's maximum permitted rates are derived by completing Parts II and III
of the Form 393, pursuant to which the operator calculates the actual aggregate revenues
collected by the operator for regulated programming, equipment and installation, as of the
initial date of regulation ("current rate") or as of September 30, 1992.  After calculating
actual aggregate revenues, the operator converts those revenues to a per-channel rate, and then
compares the per-channel figures to the applicable benchmark rate.  If an operator's current
per-channel rate is below the applicable benchmark rate, then the operator's rate is deemed
reasonable, but it must remain at its current level.  If its current per-channel rate exceeds the
benchmark rate, the operator must then compare its September 30, 1992 per-channel rate to
the applicable benchmark rate.  If its September 30, 1992 per-channel rate is above the
benchmark rate, it must reduce this rate to the benchmark rate or by 10%, whichever
reduction is less.  The adjusted rate will be its maximum permitted rate for programming.  
Maximum permitted rates for equipment and installation are based on actual cost and are
calculated in Part III of the Form 393.  Equipment rates are derived from capital and
maintenance costs per unit of equipment.  Installation rates are derived from the calculation of
a hourly service charge and application of that charge to different types of installations. 
Under our regulations, the maximum permitted rates are deemed to be reasonable, as required
by the 1992 Cable Act.  Requiring cable operators to set all or some of their rates for
programming, equipment or installation below their maximum permitted levels would force
them to charge rates at levels below those specifically allowed under our rules.

     A.  Errors in TCI's FCC Form 393

     6.  TCI claims it made errors in its FCC Form 393 filed with the City by
undercounting the number of units in service, converters and remotes, used in its calculations
in Schedule C (Capital Costs of Leased Customer Equipment), Part III of the Form.  The total
capital costs of customer equipment figure from Schedule C is used in Steps C, D and E to
calculate an operator's leased equipment charges.  TCI claims it did not discover these alleged
errors, however, until the day the City issued its rate order based on TCI's original Form. 
Due to the lateness of the attempted corrections, the City refused to reconsider them.  

     7.  Under the Commission's rules, cable operators have the burden of proof in
demonstrating that the existing or proposed rates for their basic service tier and associated
equipment are reasonable.  Moreover, operators also have the obligation to timely file their
rate justifications with the LFAs.  Although we have stated that an operator should have an
opportunity to cure any deficiencies in its original filing if its LFA has issued an order to toll
the effective date of the proposed rates, we have not required a LFA to consider information
submitted by a cable operator after a rate order has been issued.  That same reasoning
applies to the situation here, where the new information was submitted on the day the City
held a public meeting, during which the rate order was issued.

     8.  In this instance, the City notified TCI that it was certified to regulate rates by letter
dated November 3, 1993.  The City received TCI's initial Form 393 on December 22, 1993,
approximately 20 days late under our rules.  By letter dated January 12, 1994, the City
notified TCI that the date for issuing a rate order was being extended until April 22, 1994,
and that the City would be requesting additional information from TCI.  The City's request
for additional information concerned both equipment and installation issues.  In responding to
the equipment issue, TCI reaffirmed the number of its original units in service by including
calculations using the same figures contained in its December 22, 1993 submission.  On May
10, 1994, the City published a public notice of a May 23, 1994 meeting of its Cable
Television Commission at which a proposed rate order was to be discussed.  The City sent a
copy of its consultant's report and the proposed rate order to TCI on May 12, 1994.  At the
Cable Television Commission meeting, it was noted that the City Council was scheduled to
meet to take action on the proposed rate order on June 20, 1994.  Following the Cable
Television Commission meeting, TCI indicated that the numbers for converters and remotes in
its original submission to the City were incorrect.  TCI did not bring the errors regarding its
units-in-service calculations to the City's attention until June 20, 1994, the day the rate order
was issued and approximately six months after TCI filed its original From 393 with the City. 


     9.  Having not raised the issue with the City before the day the rate order was issued,
when the record was open and the City could have considered the issue, TCI is not entitled to
have its mistakes corrected by the Commission on appeal.  Moreover, TCI has offered no
reason why it could not have raised the issue earlier or why the City should be required to
reopen the record in its proceeding.  Furthermore, TCI provided no evidence to support its
claim that the new figures are more accurate than the numbers originally submitted and
reaffirmed.  To hold otherwise would prevent LFAs from issuing rate orders in a timely
fashion, since constant revisions by operators could indefinitely postpone final resolution. 
Based upon the best available information at the time, the City acted reasonably in issuing its
rate order and in declining to consider the new, last-minute information.  

     B.  Hourly Service Charge (HSC)  

     10.  TCI next contends that the City used an incorrect figure for total labor hours (for
1992) in calculating TCI's HSC.  The City counters that since TCI was unable to substantiate
its assumptions and estimates in calculating total labor hours, the City was forced to
recalculate the figure, using installation figures for the six-month period from October 1993
through March 1994, the only actual figures provided by TCI.  

     11.  TCI estimated 1992 total labor hours by multiplying the number of full-time
equivalent technical employees by the estimated average annual work hours for such
employees, which, TCI claims, resulted in a figure representing the total number of hours
worked by its technical employees.  TCI then multiplied that number by the estimated
percentage of time spent by technical employees on maintenance and installation, which
resulted in an estimate of 2323 total labor hours devoted to equipment maintenance and
installation.  Because the City felt TCI's total labor hours figure was low, the City requested
information regarding the number of installations TCI performs annually.  TCI's response,
however, did not provide any 1992 data, nor did it provide average annual installations
calculated over a period of years.  Instead, the only actual installation numbers provided by
TCI were for the six-month period from October 1993 through March 1994.  The City then
extrapolated estimates from the number of installations which resulted in annual figures for
each type of installation.  The City then multiplied those figures by the number of hours
required for each type of installation, information which was provided by TCI, to arrive at an
estimate of 3648 total labor hours.  

     12.  TCI's only objection to the City's actions in this regard is that the City used data
from 1993 and 1994 to arrive at total labor hours rather than using data from 1992.  TCI cites
instructions to Form 393 which state that the total labor hours for maintenance of customer
equipment and service installations should come from the "12 month period ending at the
close of the most recent accounting period."  The City explains, however, that it would have
used 1992 data, but the only actual installation data provided by TCI was for a portion of
both 1993 and 1994.  Had TCI used 1992 data in its original Form 393 or given that data to
the City, it is clear from the record below that the City would have used that information in
calculating TCI's HSC.  Since, however, the only actual installation information provided by
TCI was for a portion of both 1993 and 1994, the City used the more recent data.  Its actions
in that regard were reasonable.      
  
III. Ordering Clauses

     13.  Accordingly, IT IS ORDERED that TCI's appeal of the City's local rate order IS
DENIED.  

     14.  This action is taken by the Chief, Cable Services Bureau, pursuant to authority
delegated by  0.321 of the Commission's rules.  47 C.F.R.  0.321 (1993).  


     FEDERAL COMMUNICATIONS COMMISSION



     Meredith J. Jones
     Chief, Cable Services Bureau