10 FCC Red No. 20 Federal Communications Commission Record DA 95-1177
Before the
Federal Communications Commission 
Washington, D.C. 20554
In the Matter of
TIMES MIRROR CABLE 
TELEVISION OF ORANGE 
COUNTY, INC. d/b/a 
DIMENSION CABLE SERVICES,
Appeals of Local Rate Orders 
of the following Cities:
Dana Point, California 
Laguna Niguel, California 
Lake Forest, California 
Mission Viejo, California
CONSOLIDATED ORDER 
Adopted: May 30, 1995; Released: June 1, 1995
By the Chief, Cable Services Bureau:
I. INTRODUCTION
1. By this Order, we consolidate four proceedings involv 
ing Times Mirror Cable Television of Orange County, Inc. 
d/b/a Dimension Cable Services ("Dimension") and rule on 
the merits in each proceeding. In deciding this matter, the 
Bureau has reviewed all the pleadings filed in the separate 
proceedings. We have determined that the proceedings are 
sufficiently similar to justify the resolution of all the issues 
raised by each of the concerned parties in one consolidated 
proceeding.1 Specifically, in this Consolidated Order, the 
Bureau resolves Dimension's four separate appeals of the 
local rate orders issued by the local franchising authorities:
the Cities of Dana Point, Laguna Niguel, Lake Forest and 
Mission Viejo, California ("the Cities").2 The rate orders 
establish new regulated rate schedules for Dimension's ba 
sic service tier and associated equipment and installations.3 
Specifically, the Cities' rate orders require Dimension to 
implement certain rate reductions and to issue refunds to 
subscribers for overcharges for the period September 1, 
1993 through July 14. 1994 (based on FCC Form 393), and 
for the period beginning July 15, 1994 (based on FCC 
Form 1200). The Cities did not file responses to Dimen 
sion's appeals.
2. 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 reason 
able basis for that decision.5 Therefore, the Commission 
will reverse a franchising authority's decision only if it 
determines that the franchising authority acted unreason 
ably in applying the Commission's rules in rendering its 
local rate order. If thehCommission reverses a franchising 
authority's decision, it will not substitute its own decision 
but instead will remand the issue to the franchising author 
ity with instructions to resolve the case consistent with the 
Commission's decision on appeal.7
II. DISCUSSION
A. FCC Form 393
3. FCC Form 393 is the official form used by regulators 
to determine whether an operator's regulated rates for pro 
gramming, equipment and installations were reasonable 
during, the time period from September 1, 1993 until May 
14, 1994.8 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.
1 In these appeals. Dimension is represented by the same law 
firm. Except for minor factual variations, the four separate 
appeals are identical and raise the same issues: whether the 
Cities properly prevented Dimension from allocating a portion 
of its franchise fees to equipment revenues on Form 393 and 
whether the Cities exceeded their authority by reserving the 
right to adjust Dimension's rates and order additional refunds 
based on Dimension's FCC Forms 393 and 1200.
2 Dana Point's rate orders were issued on January 31, 1995, 
and Dimension filed its appeal on March 2, 1995. Laguna 
Niguel's rate orders were issued on February 21, 1995, and 
Dimension filed its appeal on March 23, 1995. Lake Forest's rate 
orders were issued on February 7. 1995, and Dimension filed its 
appeal on March 8, 1995. Mission Viejo's rate orders were issued 
on January 23, 1995, and Dimension filed its appeal on Feb 
ruary 22, 1995.
3 Under the Cable Television Consumer Protection and Com 
petition Act of 1992 ("1992 Cable Act") and the Commission's 
implementing regulations, local franchising authorities may reg 
ulate rates for basic cable service and associated.equipment. See 
Cable Television Consumer Protection and Competition Act,
Pub. L. No. 102-385, 106 Stat. 1460 (1992); Communications Act, 
§ 623(b), 47 U.S.C. § 543(b).
4 See 47 C.F.R. § 76.944.
5 See Implementation of Sections of the Cable Television Con 
sumer Protection and Competition Act of 1992: Rate Regulation, 
MM Docket No. 92-266, Report and Order and Further Notice 
of Proposed Rulemaking, 8 FCC Red 5631, 5731(1993) ("Rate 
Order"); Implementation of Sections of the Cable Television 
Consumer Protection and Competition Act of 1992: Rate Regu 
lation, MM Docket No. 92-266, and Buy-Through Prohibition, 
MM Docket No. 92-262, Third Order on Reconsideration, 9 
FCC Red 4316, 4346 (1994) ("Third Recon. Order").
6 Id. 
1 Id.
8 To the extent that an operator has sought to take advantage 
of the refund deferral period available under the Second Order 
on Reconsideration, Fourth Report an Order, and Fifth Notice 
of Proposed Rulemaking in MM Docket 92-266, 9 FCC Red 
4119, 4183-4185 (1994), the maximum permitted rates deter 
mined under Form 393 may also apply from May 15, 1994 until 
the date that the operator implemented its new rates, as deter 
mined under the Form 1200 series.
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DA 95-1177 Federal Communications Commission Record 10 FCC Red No. 20
4. 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 rev 
enues collected by the operator for regulated programming, 
equipment and installation, as of the initial date of regula 
tion ("current rate") or as of September 30, 1992.9 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 ap 
plicable 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 Sep 
tember 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 ap 
plication 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. 10 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."
B. Franchise Fees
5. Dimension first contends that the Cities improperly 
excluded a portion of its franchise fees ($33.703 in each 
City) from Dimension's rate justification calculations. Di 
mension included the franchise fees as part of its equip 
ment revenue on Line 204 of Worksheet 2, in Part II of 
Dimension's Form 393. Dimension argues that the Com 
mission's benchmark rates were calculated by excluding 
the franchise fee expense on programming service rev 
enues, but not the franchise fee expense on equipment 
revenues. Dimension claims the Cities's exclusion of fran 
chise fees from its equipment revenue resulted in a sub 
stantial understatement of its base per-channel rate. The 
Cities, however, concluded that allowing Dimension to in 
clude within Line 204 equipment revenues allocable to 
franchise fees would yield a double recovery, once for the 
amount that effectively becomes embedded in Line 204 and 
again as franchise fees are added as a pass-through to the 
maximum permitted rates.
6. The franchise fee issue raised in Dimension's appeals 
has been addressed in cable programming service (CPS) 
rate orders issued for each City. 12 In the Times Mirror CPS 
Orders, we stated that, if franchise fees are both included in 
the base from which maximum permitted rates are cal 
culated and permitted as an addition to maximum 
permitted rates (as a pass-through), the operator would 
recover these costs twice. 13 We find that, in accordance 
with the Times Mirror CPS Orders, Dimension should not 
be allowed to include $33,703 of its franchise fees, as part 
of its equipment revenue on Line 204 of Worksheet 2, in 
Part II of Dimension's Form 393, in justifying its rates for 
basic cable service, equipment and installations. The Cities' 
decisions in this regard were therefore reasonable and Di 
mension's appeals of this issue are denied.
C. Reserved Authority
7. Dimension next contends that, in both their 393 and 
1200 based rate orders, the Cities exceeded their authority 
by reserving the right to order additional rate reductions 
and refunds based on any future Commission action. Di 
mension has not alleged, however, that the Cities have 
taken or have attempted to take any such actions. Until, if 
ever, the Cities attempt to revisit their 393 or 1200 based 
rate orders, however, there is no controversy to resolve. 
This issue is therefore dismissed.
III. ORDERING CLAUSES
8. Accordingly, IT IS ORDERED that Dimension's ap 
peals, with respect to the issue of including franchise fees 
as a part of equipment revenue on Form 393, ARE DE 
NIED.
9. IT IS FURTHER ORDERED that Dimension's ap 
peals, with respect to the issue of reserved authority, ARE 
DISMISSED.
10. This action is taken by the Chief, Cable Services 
Bureau, pursuant to authority delegated by section 0.321 of 
the Commission's rules. 47 C.F.R. § 0.321.
FEDERAL COMMUNICATIONS COMMISSION
Meredith J. Jones
Chief. Cable Services Bureau
9 An operator must calculate its rate in effect on September 30, 
1992, only if its current rate is above the benchmark rate. If an 
operator's current rate is at or below the benchmark rate, it is 
not required to calculate its September 30, 1992 per-channel 
rate.
10 See Communications Act, § 623(b), 47 U.S.C. § 543(b).
11 If a franchising authority required an operator to set its 
rates for equipment and installations below their maximum 
permitted levels, the operator could, in effect, be forced to 
provide equipment and installations at levels below actual cost.
12 Times Mirror Cable Television of Orange County, Inc. (Dana
Point, California), DA 94-1337, 10 FCC Red 817 (Cab. Serv. 
Bur. 1995); Times Mirror Cable Television of Orange County, 
Inc. (Laguna Niguel, California), DA 94-1336, 10 FCC Red 808 
(Cab. Serv. Bur. 1995); Times Mirror Cable Television of Orange 
County, Inc. (Lake Forest, California), DA 94-1338, 10 FCC Red 
826 (Cab. Serv. Bur. 1995); Times Mirror Cable Television of 
Orange County, Inc. (Mission Viejo, California), DA 94-1339, 10 
FCC Red 836 (Cab. Serv. Bur. 1995) ("Times Mirror CPS Or 
ders").
13 See, for example, Times Mirror - Dana Point, 10 FCC Red at 
822.
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