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Continental Cablevision of Ohio Appeal of Local Rate Order of the City of Avon Lake, Ohio

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Released: January 19, 1996


Before the


FEDERAL COMMUNICATION COMMISSION


Washington, D.C. 20554



DA
95-2471


In the Matter of:



)







)
CONTINENTAL CABLEVISION
)
OF
OHIO

)






)
Appeal of Local Rate

)
Order of the City of

)
Avon
Lake,
Ohio
)




ORDER



Adopted

: December 12, 1995


Released

: January 19, 1996

By the Chief, Cable Services Bureau:

I. INTRODUCTION




1.
On August 24, 1995, Continental Cablevision of Ohio ("Continental"), by its
attorneys, filed with the Commission an appeal of the local rate order adopted on July 24, 1995
by the City of Avon Lake, Ohio ("City").1 Continental also filed a request for stay of the local
order on August 24, 1995.2 In its order, the City established Continental's rates for basic cable
service, equipment, installations and hourly service charges.3

1
The City did not file an opposition to the Appeal.
2 Continental's Request for Stay of the Local Rate Order is dismissed as moot in light of the
decision on the merits herein.
3
Under the Cable Television Consumer Protection and Competition Act of 1992 ("1992
Cable Act") Pub. L. No. 102-385, 106 Stat. 1460 (1992), Communications Act of 1934,
§ 623(b), 47 U.S.C. § 543(b) (1992) and the Commission's implementing regulations, local
franchising authorities may regulate rates for basic cable service and associated equipment.




1




2.
Continental challenges the City's rate order with respect to two issues. First,
Continental argues that the City ordered Continental to cease collecting a monthly fee for in-
home wiring and required Continental to make refunds to subscribers for a seven month period
for an alleged overcharge associated with the inside wiring fee. Continental argues that the
specific charge in question is an unbundled wire maintenance charge supported factually by
equipment basket labor and material cost actually incurred by the company and reported on its
FCC Form 1205. Second, Continental asserts that the city failed to provide the necessary sixty
days for Continental to comply with the local rate order.


3.
Under our rules, rate orders made by local franchising authorities may be
appealed to the Commission.4 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.5 Therefore, the Commission will reverse a
franchising authority's decision only if the Commission determines that the franchising authority
acted unreasonably in applying the Commission's rules in rendering its local rate order.6 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.7


II. DISCUSSION



A.

INSIDE WIRING MAINTENANCE PLAN




4.
Continental alleges that the City ordered Continental to cease collecting a
monthly fee for in-home wiring and required Continental to make refunds to subscribers for a
seven month period for an alleged overcharge associated with the inside wiring fee.


4
47 C.F.R. § 76.944 (1993).
5 See Implementation of Sections of the Cable Television Consumer Protection and Competition
Act of 1992: Rate Regulation, Report and Order, MM Docket 92-266, 8 FCC Rcd 5631, 5837
(1993) ("Rate Order"); and Implementation of Sections of the Cable Television Consumer
Protection and Competition Act of 1992: Rate Regulation, Buy-Through Prohibition, Third Order
on Reconsideration, MM Docket No. 92-266 and 92-262, 9 FCC Rcd 4316, 4346 (1994) ("Third
Reconsideration Order"
).
6 Id.
7 Rate Order, 8 FCC Rcd at 5732; Third Reconsideration Order, 9 FCC Rcd at 4346.




2






5.
The Commission has previously stated that the regulatory treatment of inside
wiring and the costs associated with its maintenance depends upon who owns the wiring8 An
operator is not likely to be the owner of a subscriber's inside wiring if it did not install the wiring
in the subscriber's premises. In addition, an operator is not the owner if the operator installed the
wiring but transferred ownership of the wiring to the subscriber. If an operator installs inside
wiring and retains ownership of that wiring, our rules specifically provide that the rate for the
lease of that equipment must be justified on Form 1205.9 That rate for the operator-owned
wiring includes a component for maintenance costs.10 Under those circumstances, Continental's

8 See Order, ML Media Partners, L.P., Trading As Multivision Cable TV, DA 95-1352 (Cab.
Serv. Bur., released June 19, 1995).
9
Under our rules, subscriber charges for inside wiring shall not exceed actual costs. See 47
C.F.R. § 76.923(a). Section 76.923(a) of our rules identifies equipment subject to price regulation as
including but not limited to "other cable home wiring." Form 1205, Step E provides space to
compute maximum permitted rates for leased equipment which, per the form's instructions, includes
"cable home wiring."
10
First Reconsideration Order, 9 FCC Rcd at 1200.




3


subscribers can not also be charged a separate wire maintenance fee.11 On the other hand, if
Continental's subscribers own their inside wiring, no lease rate would apply, but Continental's
costs of providing any maintenance and repair of that wiring may be recovered through a service
contract.12 Our rules provide that charges for such service contracts must be based on the
operator's Hourly Service Charge multiplied by either the estimated average number or the actual
number of hours for maintenance and repair.13 However, we are unable to rule on this issue as
presented in this appeal because the record is unclear with regards to the ownership of the wiring
at issue. Accordingly, we remand this issue to the City in order to allow Continental to clarify
these facts and for the City to issue a order consistent with our findings.14



B.

REFUND

TIMETABLE




11 See 47 C.F.R. § 76.923(a)(4).
12 See 47 C.F.R. § 76.923(i).
13 Id. Rates for service contracts are subject to rate regulation for the same reason that sales of
equipment are regulated. See First Reconsideration Order, 9 FCC Rcd at 1192. If we were to
exempt service contracts from regulation, we could create a loophole that would allow operators to
avoid our rules on equipment rates merely because of the form in which the equipment is offered to
subscribers. Under our rules, the lease and maintenance of inside wiring owned by an operator is
rate-regulated. An offer by the operator to maintain that wiring if it is owned by the subscriber must
also be rate-regulated to close the loophole that would otherwise exist.
14 In light of our remand here, Continental's argument that they be entitled to an offset in
equipment by increasing their programming service cost is moot.




4



6.
Continental next contends that the City's requirement that Continental issue
refunds for overcharges within 30 days from the date the local rate order was adopted violates
Commission procedural rules. Specifically, Continental relies on language in our rules which, in
the context of cable programming service rate orders, requires operators to issue rate reductions
or refunds within 60 days from the date an order is released declaring rates unreasonable and
mandating a remedy.15


15 Rate
Order, 9 FCC Rcd at 5867-68.




5



7.
The 60-day requirement, on which Continental relies, on its face applies to cable
programming service rate reductions or refunds ordered by the Commission not basic service
orders.16 We have stated in our orders that cable operators should be given the opportunity to
provide 30 days' notice of any rate changes or refunds to its subscribers.17 In providing operators
such an opportunity, we further stated that the franchising authority should consider the amount
of time required to prepare and send notices and bills reflecting the rate change with particular
attention paid to the impact of cycle billing, if applicable.18 Continental has claimed that the
City's 30-day time limit on issuing refunds does not give Continental the opportunity to provide
its subscribers notice and that claim has not been rebutted. Based on the record before us, we
determine that the City did not give Continental adequate time to comply with the local rate
order. This issue is therefore remanded to the City for further proceedings consistent with this
order.


III. ORDERING

CLAUSES


8.
Accordingly,

IT IS ORDERED

that the appeal of the local order, with regard to
the regulatory treatment of inside wiring maintenance fees,

IS REMANDED

for further
proceedings consistent with this Order.

9.
Accordingly,

IT IS FURTHER ORDERED

that Continental's appeal, with
respect to the issue of the refund timetable,

IS GRANTED

.




10.
Accordingly,

IT IS FURTHER ORDERED

that Continental's request for stay,
with respect to its appeal,

IS DISMISSED

as moot in light of the decision on the merits herein.


11.
This action is taken by the Chief, Cable Services Bureau, pursuant to authority

16 Id.
17
Times Mirror Cable Television of Springfield, Inc. (Springfield, Illinois), DA 95-155 (Cab.
Serv. Bur., released February 7, 1995); Questions and Answers on Cable Television Rate
Regulation, Question/Answer 3 (released May 18, 1994).
18 Id.




6


delegated by section 0.321 of the Commission's rules. 47 C.F.R. § 0.321 (1993).


FEDERAL
COMMUNICATIONS
COMMISSION



Meredith
J.
Jones
Chief,
Cable
Services
Bureau




7

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