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

In the Matter of:               )
                                )
FALCON CABLE                    )       File No. CSB-A-0462
                                )
Appeal of Local Rate Order Issued By)
New Hanover County, NC          )


                  MEMORANDUM OPINION AND ORDER

   Adopted:  March 27, 1998             Released:  March 31, 1998

By the Acting Chief, Cable Services Bureau:

     I.   INTRODUCTION

     1.   Pursuant to Section 76.944(b) of the Commission's rules, Falcon Cable ("Falcon"), a
franchised cable operator serving New Hanover County, North Carolina ("County"), has filed an Appeal from
two local rate orders ("Orders") issued by the County as the local franchising authority.  The issue is whether
the County could reject Falcon's rate increase requests solely because of an alleged failure to meet the
Commission's customer service obligations.  The County has not filed an opposition to the Appeal.

     2.   Under the Communications Act, the Commission reviews appeals of rate orders issued by local
cable franchising authorities ("LFAs").  When considering appeals, the Commission will not conduct a de novo
review, but instead will sustain the LFA's decision as long as it 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 decision.

     II.  DISCUSSION

     3.   On June 30, 1997, Falcon submitted FCC Forms 1205 and 1240 to the County requesting
increases in its equipment and installation rates and in its basic service rates.  The County's consultants
reviewed the submissions and found that Falcon's proposed rates were in compliance with Commission rules. 
In its September 15 Orders, the County agreed with its consultants, but nevertheless refused to approve
Falcon's proposed rates because Falcon allegedly failed to meet the Commission's customer service obligations. 
In rejecting Falcon's 1205 filing, the County also alleged that the operator had not included billing and
complaint procedures on subscribers' bills.

     4.   Falcon contends that the County may not reject a rate increase for service quality or similar
concerns, and states, "if there is no dispute with the figures presented in the cable operator's rate justification
form, the rate derived from the form must be approved."  Falcon requests that we remand the case to the
County.

     5.   The County may not use the Commission's rate regulation framework to address customer
service concerns or enforce the Commission's non-rate rules.  When reviewing an operator's rate filing, an LFA
must follow the Commission's rate regulations.  If an LFA does not dispute the bases for the figures presented
in a cable operator's rate filing or has not discovered any mathematical errors in the appropriate forms, the LFA
should approve the rates.  If an LFA rejects an operator's proposed rates, it must issue a written decision
affirmatively demonstrating why the rates are unreasonable.  An LFA may address other, non-rate concerns
through our rules on technical standards, our rules on customer service obligations, and the LFA's own cable
regulations and franchise agreement.  Because the County has rejected Falcon's rate increase for improper
reasons, we grant the Appeal and remand this case to the County.

     III. ORDERING CLAUSES

     6.   Accordingly, IT IS ORDERED that Falcon's Appeal IS GRANTED and this case IS
REMANDED to the County for resolution in accordance with the terms of this Memorandum Opinion and
Order.

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

                                                            FEDERAL COMMUNICATIONS COMMISSION



                                                            John E. Logan
                                                            Acting Chief, Cable Services Bureau