NEWS                                                      November 18, 1994

       CABLE SERVICES BUREAU ACTS ON CABLE RATE "LETTERS OF INQUIRY"
                       INVOLVING "A LA CARTE" ISSUES

     The Cable Services Bureau of the Federal Communications Commission today issued 
orders resolving the "a la carte" issues raised in three Letters of Inquiry (LOIs) that were issued
by the Commission.  The letters were issued in response to complaints received from local
franchising authorities and subscribers alleging that the cable operators had violated the
Commission's rate rules.  Today's orders address the regulatory status of so-called "a la carte
packages" offered by Comcast Cablevision in Tallahassee, Florida (LOI-93-2), Warner Cable
Communications in Milwaukee, Wisconsin (LOI-93-14) and Adelphia Cable Partners, L.P. in
South Dade County, Florida ( LOI-93-42).

     The packages at issue in the orders are collective offerings of individually available
channels that were removed from rate-regulated tiers of cable service on the eve of rate regulation
and repackaged as allegedly non-rate-regulated offerings.  The orders relating to packages offered
by Comcast and Warner Cable determine that refunds are not required because the Bureau cannot
conclude that the package offerings evaded the Commission's rate regulations.  They find that
the Commission's rules were unclear as to whether moving a small number of channels from
regulated tiers to an a la carte package constitutes an evasion.   However, the order relating to
the package offered by Adelphia determines that the package offering  evaded rate regulation and,
as a result, the operator may be liable to subscribers for refunds in its rate justification
proceedings.  

     In examining these cases, the Bureau also relied on the "going forward" rules adopted by
the Commission at the November 10, 1994 meeting.  In the going forward rules, the Commission 
determined that packages of  a la carte offerings are cable programming service tiers, and as such
are subject to rate regulation.

      Meredith Jones, Chief of the Cable Services Bureau stated, "These orders will bring
certainty and clarity to the Commission's treatment of a la carte packages.  We will issue orders
on additional LOIs that concern a la carte packages in the near future."

     Comcast and Warner created four-channel packages by removing channels from  the basic
and cable programming service tiers.  Adelphia created a 32-channel package by eliminating its
entire cable programming service tier.  In each case few subscribers actually took channels on
an individual basis and subscribers were automatically subscribed to the a la carte packages.

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     In the case of Comcast and Warner Cable offerings, the Bureau found that the
Commission's a la carte rules were sufficiently ambiguous that it was not clear to the operators
whether their four-channel packages were permissible under the Commission's a la carte rules. 
Accordingly, the Bureau determined that the channels comprising the packages need not be
considered rate-regulated channels for purposes of rate justifications.  The operators may treat the
packages as new product tiers under the Commission's recently announced going forword rules,
even though the channels that composed the packages were removed from rate-regulated tiers. 
Under the going forward rules, new product tiers cannot be composed of channels removed from
current basic or cable service programming tiers.

     In the case of Adelphia's offerings, however, the Bureau found that the Commission's a
la carte rules were sufficiently clear to indicate that removing what would otherwise be a 32-
channel tier of cable programming services from rate regulation would be an evasion of the
Commission's rate regulation rules.  The Bureau noted that the Commission's May 3, 1993 Rate
Order specifically stated that a cable operator could not escape rate regulation simply by calling
what otherwise would be a rate-regulated tier an a la carte package.  As a result, the Bureau
found that Adelphia's package was subject to rate regulation as of September 1, 1993 and that
Adelphia must count the channels composing the package as rate-regulated channels for purposes
of rate justification as of that date.  Adelphia was ordered to offer these channels as part of the
rate-regulated tiers from which they came or offer the channels collectively as a separate rate-
regulated tier of cable programming service.  
     
     Action by the Chief, Cable Services Bureau November 18, 1994, by Memorandum
Opinion and Orders (DA 94-1275 (Comcast); DA 94-1276 (Warner);  DA 94-1277 (Adelphia)).

                                  - FCC -

     News Media Contact: Morgan Broman at (202) 416-0852
     Cable Service Contacts: Mark Bollinger and Eli Johnson at (202) 416-0800