FOR RECORD ONLY $//Appeal ORDER, in Santa Monica, CA, DA 94-123//$ $/76.986 A La Carte Offerings//$ $/76.944 Commission Review of Franchising Authority Decisions/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-123 In the Matter of: ) ) CENTURY SOUTHWEST CABLE TELEVISION ) SANTA MONICA, CALIFORNIA ) ) Appeal of Local ) Rate Order of City of ) Santa Monica, California ) ORDER Adopted: January 30, 1995 Released: January 31, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On August 18, 1994, Century Southwest Cable Television Corporation of Santa Monica, California ("Century Southwest") filed with the Commission a Petition for Review of Rate Order ("appeal") of the local rate order ("local order") adopted by the City of Santa Monica, California (the "City"). In its local order, the City established Century Southwest's rates for basic cable service, equipment, installations and hourly service charges. As part of this decision setting the basic tier rates, the City found that the channels contained in Century Southwest's "Century Select" package must be included as regulated channels for purposes of the local order. The City ordered Century Southwest to make refunds or to credit subscribers for all payments made in excess of the rates for basic service and equipment and installations set forth in the local order for the period September 1, 1993 through July 14, 1994. 2. In its appeal, Century Southwest challenges the local order on the grounds that the City did not have authority to make determinations regarding the status of a la carte packages and that, even if the City did have such authority, the City's decision to treat the channels in the a la carte package as regulated channels is contrary to the Commission's a la carte rules. The City responds that, pursuant to authority granted by the Commission, it properly applied the Commission's guidelines on a la carte packages and concluded that the channels in Century Southwest's package should be treated as regulated channels. 3. Under our 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. With respect to a determination made by a franchising authority on the regulatory status of an a la carte package as part of its final decision setting rates for the basic service tier, the Commission has stated that "the Commission will defer to the local authority's findings of fact if there is a reasonable basis for the local findings," and the Commission "will then apply FCC rules and precedent to those facts to determine the appropriate regulatory status of the [a la carte package] in question." II. DISCUSSION 4. Century Southwest objects to the City's finding in the local order that the channels comprising Century Southwest's a la carte services at issue in this appeal must be included as regulated channels. Century Southwest argues that its a la carte package complies with the Commission's a la carte rules in effect at the time the package was created and that the City erred in "retroactively applying the 15 interpretive guidelines announced by the Commission in March 1994 to determine the regulatory status" of Century Southwest's a la carte channels. Century Southwest further argues that the City has no authority to determine the regulatory status of a la carte service offerings because its jurisdiction under the 1992 Cable Act is limited to the regulation of basic service and equipment rates. 5. The Century Southwest a la carte services at issue were first offered to subscribers on September 1, 1993, when Century Southwest restructured the service offerings on its Santa Monica system. Century Southwest states that its September 1, 1993 restructuring involved eliminating its 14 channel cable programming service tier and offering 12 channels (nine from its former cable programming service tier, two from its basic service tier, and one new channel) on an individual basis and also as a 12 channel package or two six channel packages that Century Southwest alleges are not subject to rate regulation. 6. The facts presented in this appeal closely resemble the facts presented in one of our letter of inquiry orders, Century Southwest Cable TV, Beverly Hills and Los Angeles, California, LOI-93-17, DA 94-1553 (Cab. Serv. Bur. released Dec. 22, 1994), in which we resolved the regulatory status of an la carte package offered by Century Southwest on its Los Angeles system that is essentially the same as the a la carte package at issue in this appeal. Specifically, Century Southwest's Los Angeles a la carte package at issue in the Century Southwest Cable TV order was a 12-channel package (or two-six channel packages) that was part of a service restructuring that involved the elimination of the cable programming services tier. In the Century Southwest Cable TV case, we found that Century Southwest's retiering on its Los Angeles system constituted an evasion of rate regulation. We therefore found that Century Southwest's Los Angeles a la carte package must be treated as a rate- regulated cable programming service tier and that the channels composing it must be counted as rate-regulated channels for purposes of rate justification as of September 1, 1993. 7. Century Southwest's Santa Monica a la carte package closely resembles its Los Angeles a la carte package that was the subject of our order in Century Southwest Cable TV. Accordingly, the regulatory status of Century Southwest's Santa Monica package at issue in this appeal should be the same. We find that the City's conclusion that the channels in Century Southwest's a la carte package must be included as regulated channels is consistent with the Commission's letter of inquiry orders, and in particular in Century Southwest Cable TV. Therefore, we hereby deny Century Southwest's appeal. III. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that the appeal of the local order, with respect to the issue of the regulatory status of Century Southwest's a la carte package, is DENIED. 9. 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