Responding to a consultant's report that Paragon Cable overcharged for some of its services, two South Bay cities have ordered the cable company to make refunds to residents.
Two other cities plan to take action next month on the report, which also found that the company changed the status of two channels to evade rate regulation.
Paragon has informed the cities that it will appeal rate changes and refunds to the Federal Communications Commission. Gardena, Hawthorne, Lawndale and Torrance jointly hired Telecommunications Management Corp. to review the documents that Paragon submitted in calculating its rates for basic service from Sept. 1 to July 14.
Based on the consultant's findings, Gardena and Lawndale voted this week to order Paragon to refund the overcharge, reduce rates by as much as 56 cents, and make changes in its advertising and billing practices.
Hawthorne's City Council will review the issue Oct. 10, and the Torrance council will take it up Oct. 11.
The dispute concerns whether FCC rules permit Paragon to remove two channels (American Movie Classics and Turner Broadcasting System) from basic service and make them "a la carte" channels that viewers have the option of paying for separately.
If the FCC agrees with the consultant's interpretation of FCC rules, Paragon would owe more than $1 million to its 66,000 customers. That would mean a refund of about $20 for each subscriber.
Because the FCC could take months to make a decision on the rate structure, residents probably won't see any refund soon, said Michael J. Friedman, the cities' consultant.
Although Paragon agreed to make the changes suggested by the consultant concerning itemizing fees on customer bills and including franchise fees in advertised prices, the company objects to the consultant's conclusions about the two channels. By Paragon's estimation, it owes a total of $88,000 in all four of the cities.
In addition, Paragon officials say, the company has undercharged subscribers under the most recent FCC rules. The company has proposed allowing the rates to remain the same until it has undercharged by the same amount it believes it has overcharged.