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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: ) ) CABLEVISION VII, INC. ) ) Appeal of Rate Order of ) the City of Fort Madison, Iowa ) MEMORANDUM OPINION AND ORDER Adopted: February 18, 1997 Released: February 21, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On May 30, 1996, Cablevision VII, Inc. d/b/a TCI Cablevision of Eastern Iowa ("TCI"), the franchised operator of a cable television system serving the City of Fort Madison, Iowa, filed a "Request For Expedited Appeal And Emergency Relief," asking that the Commission nullify the rate order adopted May 13, 1996 by the Fort Madison Cable Commission ("Fort Madison"), because the rate order contained no explanation whatsoever of the reasons for the denial. The rate order denied TCI's annual service and equipment rate adjustment, as reflected in its proposed increase in monthly basic cable rates from $9.21 to $9.71, effective June 1, 1996. No oppositions to this appeal were filed. After careful review of all the authorities, arguments, and comments submitted in this proceeding, we will grant TCI's appeal. II. BACKGROUND 2. Under the Commission's 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. FCC Form 1200 is the official form used to determine whether an operator's initial regulated programming rates are reasonable under the revised benchmark rules which apply to operators beginning May 15, 1994, or upon expiration of the deferral period provided under our rules for operators to comply with the revisions to our rules. In Form 1200, an operator calculates its provisional rates and its full reduction rates. An operator uses FCC Form 1240 to justify annual adjustments to the initial rates it computed on its FCC Form 1200. These rate adjustments reflect changes in certain external costs, including programming costs, channel additions and deletions, and inflation. External costs include the following categories of costs: state and local taxes specifically applicable to the provision of cable television service; franchise fees; costs of complying with franchise requirements; retransmission consent fees and copyright fees incurred for the carriage of broadcast signals; other programming costs; and Commission regulatory fees. 4. An operator that wants to increase its basic service tier rate has the burden of demonstrating that the increase is in conformance with our rules. In determining whether the operator's proposed increase is in conformance with our rules, a franchising authority has the right to direct the operator to provide supporting information. After reviewing an operator's FCC Forms 1200, 1240, and any other additional information submitted, the franchising authority may either approve the operator's requested rate increase, or it may issue a written decision explaining the factors it considered in denying the increase requested. III. SUFFICIENCY OF THE CITY'S ORDER A. TCI's Contentions 5. Citing the Bureau's prior decisions in Ultracom of Marple, Inc. and in Century Cable of Southern California, TCI states that franchising authorities are required to give sufficient explanation for any decisions that proposed rates are unreasonable. So far, however, Fort Madison has proffered no such explanation, but simply stated in its one page opinion that after ". . . having duly considered all information presented by TCI of Eastern Iowa including review of Form 1240," it has concluded that ". . . the proposed rate increase is unreasonable and should remain at the current level." TCI adds that the Bureau has repeatedly struck down rate decisions which fail to contain adequate explanation, such as the instant one, citing TCI TKR of Houston; A-R Cable Services-ME, Inc.; and Chillicothe Cablevision, Inc. B. Discussion 6. When the Commission adopted its Rate Order, it stated: "[w]e will thus require that a franchising authority issue a written decision to the public and give public notice of such decision whenever it disapproves, in whole or in part, either initial rates for the basic service tier and accompanying equipment, or a request for an increase in those rates, or approves a proposed rate over the objections of interested parties." In Chillicothe Cablevision, Inc., we held that Commission rules require local franchising authorities to issue written decisions, and that those decisions must affirmatively demonstrate why operators' proposed rates are unreasonable. From the record, it appears that Fort Madison did not comport with this requirement, since it did not affirmatively demonstrate why TCI's proposed rate was unreasonable. Therefore, we remand this case for further proceedings not inconsistent with this decision. IV. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the appeal filed May 30, 1996, by Cablevision VII, Inc. d/b/a TCI Cablevision of Eastern Iowa IS GRANTED and the issue of the system's proposed monthly increase in basic cable rates from $9.21 to $9.71 IS REMANDED to the City of Fort Madison, Iowa for proceedings consistent with the terms of this order. 8. 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. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau