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 P6QP.2J=.Xw&J\  P6Q&Pl2N=.X&N4  pQ&.P,%XJ,\  P6QJP.I(!X,(\  P6Q,Ply.G8*X%G4  pQ{,C8*X3FC*f9 xQX0J=.X3U&J*f9 xQ&X89:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`cdefghijklmnopqrstuvwxyz{|}~ S' X   + S' #&a\  P6G;w&P#Federal Communications Commission`(#YDA 991628 ă   yx}dddy +Q Before the "Federal Communications Commission  S'&RWashington, D.C. 20554 ă In the Matters of:) )  S'WESTERN RESERVE CABLEVISION, INC.)CSBA0406, CSBA0539,  S'd/b/a ADELPHIA CABLE COMMUNICATIONS)CSBA0607&  X  Sh')CUID OH0922 Appeals of Local Rate Orders of ) City of Hudson, Ohio ) )  S 'LORAIN CABLE TELEVISION, INC.)CSBA0405S, CSBA0540  Si 'd/b/a ADELPHIA CABLE COMMUNICATIONS)CUID OH0202 )  S 'PARNASSOS, L.P.)CSBA0606  S 'd/b/a ADELPHIA CABLE COMMUNICATIONS)CUID OH0202 ) Appeals of Local Rate Orders of) City of Lorain, Ohio)    S'  CONSOLIDATED MEMORANDUM OPINION AND ORDER ă   S8'X` hp x (#%'0*,.8135@8: Z$ yO 'ԍ8 FCC Rcd at 582425.> and a December 29, 1994 Public Notice of Questions and Answers  !Zon Cable Television Regulation, which address recovery of programming costs and the costs of signal  !Iboosting equipment. Adelphia argues that the LFAs' narrow interpretation is unfounded, that cable  !operators are entitled to recover the costs of ongoing maintenance expenses as well as capital costs  S' !^associated with wiring, and that the disputed charge is an equipment charge, not a programming charge. $ {OZ' !M ԍE.g., WRCA June 4, 1997 Appeal at 4 & n.7 and Jul. 21, 1997 Reply at 34; LCTA June 4, 1997 Appeal at 4 & n.7; LCTA July 21, 1997 Reply at 34.  S 'The LFAs argue that the cited precedent is controlling. D$ {O'ԍE.g., Hudson June 30, 1997 Opposition at 56; Lorain June 3, 1998 Opposition at 56.  S7 ' ( 5.` ` Section 623(b)(3) of the Communications Act requires that rates for regulated equipment  !gand installation services, including "installation and monthly use of connections for additional television  S ' !}receivers," be based on operators' actual costs. $ {OG'ԍ47 U.S.C.  543(b)(3)(B); see Rate Order, 8 FCC Rcd at 5800 paras. 27375, 580506 para. 282. Section 76.923 of the Commission's rules, which  !implements Section 623, requires that a cable operator "shall establish rates for . . . additional connections"  !and shall unbundle these rates from basic service tier rates and also shall unbundle these rates from the  S8' !rates for remote control units, converter boxes, and other customer equipment.A8h $ yO@'ԍ47 C.F.R.  76.923(b).A The first sentence of  S' !lSection 76.923(h) expressly provides that the costs of installation and monthly use of additional  S' !*connections shall be recovered as charges associated with the installation and equipment costs categories  S' !"and at rate levels determined by the actual cost methodology contained elsewhere in that section.A $ yO7'ԍ47 C.F.R.  76.923(h).A  Sl' !Paragraph 307 of the Rate Order addresses the question of whether operators should be allowed to charge  !for any other costs or services relating to additional outlets. Consistent with paragraph 307, the second  !sentence of Section 76.923(h) provides that an operator may also recover additional programming costs  !Qand the costs of customer premises equipment needed to boost the operator's signal when these costs are  !caused by the additional connections. These costs would be recovered as a separate monthly unbundled  !charge for additional connections and are in addition to the monthly use and installation costs associated  S;' !Mwith additional connections.V; $ {Oc%'ԍRate Order, 8 FCC Rcd at 5824 para. 307.V The December 29, 1994 Public Notice cited by the LFAs addresses the  !question of whether operators recovering the costs of additional outlets from their equipment and  !@installation charges can also add a charge for the value of delivering certain programming to additional",l(l(,,"  !outlets. Consistent with Section 76.923(h), the Public Notice explains that operators using the benchmark  !methodology could not impose an additional outlet charge for receiving a new product tier unless the  !Qoperator incurred additional programming costs when providing the new product tier to additional outlets.  !Where the cable operators own the additional outlets, the LFAs' position that the only additional outlet  !7costs cable operators can recover are costs for programming or signal boosting equipment does take into  !account other costs for the monthly use of additional outlets that may be recovered pursuant to Section 76.923(h) and, therefore, is not reasonable.  Sh' ( 6. ` ` The LFAs also found in their rate orders that cable operators cannot charge for additional  S5' !connections when, as in these cases, there is no primary outlet charge.}5$ {O 'ԍE.g., Lorain Ordinance No. 8497  I.C; Hudson Ordinance No. 9763  1.D.} The LFAs rely on paragraph 306  S' !of the Commission's Rate Order, which states that "[r]emotes, converter boxes and other equipment  !involved [with additional connections] would be leased at the same rate as equipment used with primary  S ' !outlets."O Z$ {O 'ԍRate Order, 8 FCC Rcd at 582324.O Adelphia disagrees, contending that whether or not there was a monthly lease charge for  !equipment associated with primary outlets, their equipment charges for home wiring associated with  !additional connections were "unbundled" from their tier rates and that Commission rules allow the  S 'recovery, through separate charges, of costs associated with additional connections. $ yO' ! ԍWRCA July 21, 1997 Reply to Hudson Opposition Hudson at 4 & n.2; LCTA July 21, 1997 Reply to Lorain Opposition at 4 & n.2.  S ' ( 7. ` ` Paragraph 306 provides that operators should recover the costs of additional connections  Sk' !in the related equipment and installation charges.LkD$ {OO'ԍRate Order, 8 FCC Rcd at 5823.L The statement in paragraph 306, that remotes,  !converter boxes and other equipment used with additional outlets would be leased at the same rate as  S' !equipment used with primary outlets, is reflected in Section 76.923(f) and (g) of the Commission's rules,F$ yO{'ԍ47 C.F.R.  76.923(f), (g).F  !which provide for computing charges for remotes and other equipment, respectively, on the basis of actual  !cost rather than some arbitrary value. This statement disallows rates for equipment used with additional  !outlets that are not based on actual costs. The LFAs' reading of paragraph 306 does not take into account  !the specific provisions in Section 623(b)(3)(B) of the Communications Act and Section 76.923(h) of the  S' !Commission's rules directing that rates or charges for the monthly use of connections for additional  S' !television receivers be based on actual cost.`f $ yO'ԍ47 U.S.C.  543(b)(3); 47 C.F.R.  76.923(a), (b).` Tying the pricing of additional outlets to the pricing of the  !kprimary outlet and disallowing recovery of additional outlet charges without regard to the costs associated  !pwith the additional outlet is inconsistent with both the statute and the Commission's rules and is not required by paragraph 306.  S'  S' ( d8. ` ` Although specifically finding the additional outlet charges unreasonable because Adelphia  !did not show any costs for programming or signal boosters specifically associated with the additional  !@outlets, and stating in their pleadings that this is their primary argument, the LFAs also found in all but  S;' !the May 5, 1997 Lorain rate order that the wiring inside the home associated with the outlets are fixtures"; ,l(l(,,"  S' !to the real property of the homeowner.i$ {Oh'ԍSee  1.G. of all but the Lorain May 5, 1997 rate order.i They interpret this to mean that Adelphia does not own the  S' !equipment associated with the outlets and, therefore, cannot impose a lease charge for use of the outlets.Z$ {O' ! ԍSee Hudson June 30, 1997 Opposition at 7; June 1, 1998 Opposition at 45; Hudson Ordinance 98158  1.G; Lorain June 3, 1998 Opposition at 45; Lorain Ordinance 23798  1.G.  S' !The LFAs rely on Metropolitan Cablevision v. Cox Cable Cleveland Area, (1992) 78 Ohio App. 3d 273,  !in which the court found that the wiring in the subscriber's home is a fixture and cannot be removed by  S5' !3the operator. The court distinguished between wiring securely annexed to the premises and "movable  !components" of the cable service. Relying on this distinction, Adelphia argues that its "inside wiring  !attached to additional outlets includes wiring that runs from a wall plate to the back of a subscriber's  !television or converter. It is visible, located in open space, easily movable and readily detached. Thus,  Si' !this wiring does not qualify as a fixture."i$ yO ' !& ԍWRCA June 10, 1998 Reply to Opposition of Hudson at 3; LCTA June 11, 1998 Reply to Opposition of Lorain at 3. Adelphia further states that the work order/customer agreement  !"used in Hudson and Lorain recites that all equipment installed upon the premises by Adelphia or its  S' !kagents, except for the service drop and connectors, shall remain the property of Adelphia. $ yO' ! ԍWRCA June 10, 1998 Reply to Opposition of Hudson at 34; LCTA June 11, 1998 Reply to Opposition of Lorain at 34. Whatever the  S' !@applicability of Metropolitan, it argues, "most, if not all, of the wiring at issue belongs to Adelphia and  S ' !is properly subject to a lease charge (including a maintenance component) . . . ." d $ yO' !& ԍWRCA June 10, 1998 Reply to Opposition of Hudson at 4; LCTA June 11, 1998 Reply to Opposition of Lorain at 4. Even if some portion  !of the equipment is deemed to be owned by the subscriber, Adelphia argues it is entitled to impose a  !monthly maintenance charge. In response, the LFAs assert that they are confident they can dispute  !QAdelphia's extravagant costs and maintenance hours for a wire running from the wall to the television and  S ' !Zthe minimal maintenance that would be associated with that equipment, $ yO.'ԍHudson June 26, 1998 Response to Reply at 2; Lorain June 26, 1998 Response to Reply at 2. although the local rate orders do not reflect LFA consideration of any such analysis.  S9' ( 9. ` ` Whether additional outlets and the associated wiring in a subscriber's home are fixtures  !to the real property is a question of state or local law that should be addressed by the franchising authority  S' !or in a state or local court.L $ {O' ! ԍSee generally 47 C.F.R.  76.944(a) (appeals of ratemaking decisions by franchising authorities that do not  ! depend upon determining whether a franchising authority has acted consistently with the Communications Act or the  {OQ!' ! Commission's rate rules may be heard in state or local courts). Cf. Falcon Cablevision (Thousand Oaks, CA), 11  !@ FCC Rcd 10511, 1052425 para. 31 (Cab. Serv. Bur. 1996) (because regulation of late fees is within the purview  ! of local franchising authorities, a state or local court is the appropriate forum to hear questions regarding rates for late fees). Thus, Adelphia's arguments that most, if not all, of the wiring at issue falls  S' !7within the exception noted in the Metropolitan case is a question to be decided after a review of the facts  Sn' !Zby the franchising authority or a state or local court.n$ {O&' ! ԍSee Metropolitan, 78 Ohio App.3d at 27677, quoting from Masheter v. Boehm (1974), 37 Ohio St.2d 68, 77, 307 N.E.2d 533, 540. The LFAs state in their responses to Adelphia's"n",l(l(,, "  !7replies that Adelphia has altered its explanation for its additional outlet charge over time, has not explained  !Ewhat equipment it includes and what maintenance is involved, and never specified in its written  !Iexplanations to the cities that the equipment covered by additional outlet charges includes the cable  Sg' !running from the television to the wall as stated in its June 1998 replies to the Commission. g$ yO'ԍHudson June 26, 1998 Response to Reply at 12; Lorain June 26, 1998 Response to Reply at 12. From this  !^it appears that the LFAs were unclear about what was covered by Adelphia's additional outlet charges and  !3may not have fully reviewed the facts in these cases when finding the additional outlets to be fixtures.  !On remand, the LFAs should clarify the facts and review their finding on the basis of the clarified facts.  !ZThe Lorain rate order passed on May 5, 1997 did not find that Adelphia's additional outlets are fixtures and is not covered by this direction.  S' ( F 10. ` ` Adelphia also argues that, when the cities elected to opt into the Adelphia Resolution  !reached between Adelphia and the Commission, Adelphia's unbundling of equipment rates on FCC Form  S ' !1205 at that time was deemed to be approved by the LFAs.! X$ yO ' ! ԍWRCA June 4, 1997 Appeal at 4 n.8; June 10, 1998 Reply at 45; Dec. 16, 1998 Appeal at 3 n.4; LCTA June 4, 1997 Appeal at 4 n.8; June 11, 1998 Reply at 45; PA Dec. 1, 1998 Appeal at 34 n.5. According to Adelphia, acceptance of  Sj ' !Adelphia's initial unbundling calculation in the Adelphia Resolution precludes the LFAs from disallowing  !ythe separate recovery of unbundled costs in subsequent years. While we agree with the general  !kproposition that an operator may continue to charge costbased rates for equipment basket elements it has  !Dunbundled from the tier rate, an operator may only charge for the leasing of equipment it owns. The fact  !Mthat it once may have collected a leasing charge does not require that it continue to do so if the charge  !is not justified. Nor do we agree that equipment an operator does not own should be reflected in the tier  !rate if the operator can no longer lease the equipment. If the LFAs find on remand that the additional  !outlets at issue here are fixtures owned along with the realty to which they are affixed, the LFAs are not  !&precluded from addressing the rate consequences of this determination because the costs were earlier unbundled from the tier rate.  S:' (  11. ` ` These proceedings are remanded to the Cities of Hudson and Lorain for further  !gconsideration consistent with this Consolidated Memorandum Opinion and Order. If the LFAs find on  !remand that additional outlets are fixtures and that ownership has transferred to the owner of the realty,  !any refund orders should address the question of compensation to the operators for the value of the  Sn' !fixtures.""n$ yO' ! ԍIn its June 30, 1997 opposition at 7, Hudson acknowledged that its opposition to Adelphia's lease charges for  {O' ! fixtures went to "any charge above and beyond the cost of the equipment itself." See generally Implementation of  ! the Cable Television Consumer Protection and Competition Act of 1992: Cable Home Wiring, 8 FCC Rcd 1435, 1437 para. 15, 1438 para. 18 (1993). Neither LFA treated additional outlets as fixtures in its 1995 rate order, and Lorain also did  !not treat additional outlets as fixtures in its 1997 rate order. Adelphia has based its rate structure on its  !stated belief that it owned the equipment associated with additional outlets and could lease the equipment  S' !to subscribers. Adelphia also argues in its June 1997 appeals at 4 that the cost of maintaining inside  !*wiring is a recoverable charge and in its May 1998 appeals at 2 that denying it any recovery of its proven  So' !costs for maintaining inside wiring represents an unconstitutional taking of property.#o$ yO$' ! ԍThese arguments are incorporated into the WRCA Dec. 16, 1998 Appeal at 3 and the PA Dec. 1, 1998 Appeal at 3. The lease charge"o #,l(l(,,"  S' !&for operatorowned equipment includes maintenance as well as equipment costs.y$$ {Oh'ԍSee 47 C.F.R.  76.923(f) as incorporated into 47 C.F.R.  76.923(h).y When subscribers  !own the equipment, operators may offer maintenance and repair services to subscribers through an optional  !costbased wire maintenance plan that is priced according to Commission rules or through an asneeded  Sg' !repair option based on the hourly service charge.%gZ$ {Oa'ԍSee TCI of Southeast Mississippi, 13 FCC Rcd 11080, 11084 para. 14 (Cab. Serv. Bur. 1998). Thus, under the Commission's rules, cable operators  !are entitled to compensation for their costs of maintaining wiring on subscribers' premises. If the LFAs  !Ddetermine that additional outlets are fixtures under Ohio law and disallow Adelphia's lease charges for this  !*reason, they should consider in any refund orders the proven costs Adelphia has incurred for maintaining additional outlets in the periods covered by the refund orders.  S5' ( F 12. ` ` The cable operator has the burden of proving that its equipment and installation rates  S' !comply with Section 623 of the Communications Act and Sections 76.923 of the Commission's rules.>&$ yO 'ԍ47 C.F.R.  937(a).>  !&If the cable operator fails to meet its burden, has improperly calculated its rates, or is unresponsive to  !requests for relevant information, the franchising authority can take appropriate action, including, for  Si ' !example, adjusting the rates and ordering refunds based on the best information available.'i |$ {O'ԍSee Rate Order, 8 FCC Rcd at 572025; Third Reconsideration, 9 FCC Rcd at 434648. Although we  !&have found it necessary to remand this proceeding in light of the matters discussed above, we are not  !^suggesting on remand that either LFA must accept the specific charges proposed by the operator. Where  !Adelphia has retained ownership of any or all of the equipment associated with additional outlets, or where  !7Adelphia's ownership of the equipment is not at issue, the LFA should review Adelphia's Forms 1205 and supporting information to determine whether Adelphia's additional outlet rates are justified.  S'Hr III. ORDERING CLAUSES Đc  S' ( q 13.` ` Accordingly, IT IS ORDERED that Western Reserve Cablevision, Inc. d/b/a Adelphia  Sk' !Cable Communications' Appeals of the City of Hudson's rate orders, Ordinances No. 9763, 9868, and  S8' !98158, ARE GRANTED to the extent provided herein and those cases ARE REMANDED to the City for resolution in accordance with the terms of this Consolidated Memorandum Opinion and Order.  S' ( ~   14. ` ` IT IS FURTHER ORDERE D that Lorain Cable Television, Inc. d/b/a Adelphia Cable  Sl' !ZCommunications' Appeals of the City of Lorain's rate orders, Ordinances No. 8497, and 7698, ARE  S9' !^GRANTED to the extent provided herein and those cases ARE REMANDED to the City for resolution in accordance with the terms of this Consolidated Memorandum Opinion and Order.  S' ( 15.` ` IT IS FURTHER ORDERE D that Parnassos, L.P. d/b/a Adelphia Cable Communications'  Sm' !Appeal of the City of Lorain's rate order, Ordinance No. 23798, regarding the issue of the City's  !disallowance of proposed monthly equipment lease fees for cable home wiring associated with additional  S' !outlets and related refund liability IS GRANTED to the extent provided herein and that case IS  S' !DREMANDED to the City for resolution in accordance with the terms of this Consolidated Memorandum Opinion and Order.  S;' ( 16.` ` IT IS FURTHER  ORDERED that, in light of the resolution of the appeals herein, the requests for stays filed by Western Reserve Cablevision, Inc. d/b/a Adelphia Cable Communications, " ',l(l(,,6!"Ԍ !ԙLorain Cable Television, Inc. d/b/a Adelphia Cable Communications, and Parnassos, L.P. d/b/a Adelphia  S'Cable Communications ARE DISMISSED as moot.  Sg' ( 17. ` ` IT IS FURTHER ORDERED that the Motions for Extension of Time filed by the City  S4'of Lorain and the City of Hudson on June 18, 1997 ARE GRANTED .  S' ( 18.` ` This action is taken pursuant to authority delegated by Section 0.321 of the Commission's Rules. 47 C.F.R.  0.321. ` `  ,hh]FEDERAL COMMUNICATIONS COMMISSION ` `  ,hh]William H. Johnson  S6 '` `  ,hh]Deputy Chief, Cable Services Bureau