WPCOe 2BJ Z Courier3|x'BoldTimes New Roman@`7X@HP LaserJet 4_230_1HPLAS4.PRS 4x  @\_)^X@2 6F : 3|x'CourierCourier Bold"i~'K2^$(8<><q*"xxxxWWxxxWWkkxxx$$#%Q%Heading 2Underlined Heading Flush Left14 Heading 1Centered Headingcal Style 4G Y * Ã  Bullet ListIndented Bullet List*M0 Y XX` ` (#` CourierCourier BoldTimes New RomanTimes New Roman BoldCG TimesCG Times Bold?xxx,)x `7X7jC:,Xj\  P6G;XP7nC:,%4Xn4  pG;Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd2;K)(Ct*K*f 0"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdCourierCourier BoldTimes New RomanTimes New Roman BoldCG TimesCG Times BoldCG Times Italic"i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd7jC:,Xj\  P6G;XP X- #o\  PCXP#FOR FCC RECORD ONLY $/ORDER remanding local rate order of Litchfield, CT DA 95378/$ $/76.922 Basic Tier Rates/$ $/76.942 Refunds/$ $/76.944 Commission Review of Franchising Authority Rate Decisions/$  X-$/76.986 A La Carte Offerings/$hhC  ?v<#x6X@K2X@#  X>-  f(X01Í ÍX01Í Í #Xw PE37XP#Before the W FEDERAL COMMUNICATIONS COMMISSION  X-6Washington, D.C. 20554 Đ\  X -` `  hhCqpp DA 95378  Y -In the Matter of:)  Yo-)  YX-TIME WARNER ENTERTAINMENTq)ppLitchfield, CTxxX  YA-COMPANY, L.P.,  hhCq)ppMorris, CT  Y*- d/b/a LAUREL CABLEVISION)ppThomaston, CT  Y- ` `  hhCq) ppTorrington, CT  Y-Appeal of Local)ppWarren, CT  Y-Rate Order of State of Connecticut q)ppWatertown, CT  Y-Department of Public Utility Control )  Y- )  Y-n ORDER ă  Y\- Adopted : February 28, 1995hhCq ppReleased : March 1, 1995 By the Chief, Cable Services Bureau:  X- I.INTRODUCTION  Y-1.` ` On September 23, 1994, Time Warner Entertainment Company, L.P., d/b/a Laurel Cablevision ("Laurel"), filed with the Commission a Petition for Review of Rate Order ("Petition") adopted by the State of Connecticut Department of Public Utility Control ("the State") on August 24, 1994. On September 23, 1994, Laurel also filed an Emergency Petition for a Stay of Enforcement Pending Review of the local rate order. The State did not file an opposition to the stay petition. On October 6, 1994, the Commission granted Laurel's stay petition which stayed the effectiveness of the local rate order pending the resolution of  Y2%-Laurel's appeal.2%ܞ Y'-#Xw PE37XP#эSee Time Warner Entertainment Co., 9 FCC Rcd 5815 (1994). Other filings in this proceeding include an Opposition to Petition for Review filed by the State on October 6,"(0*0*0*("  Y-1994 and a Reply to Opposition filed by Laurel on October 18, 1994.  ) In its local order, the State established Laurel's rates for basic cable"2%y0*0*0*&" service, equipment, installations and hourly service charges in the Towns of Litchfield,  Y-Morris, Thomaston, Torrington, Warren, and Watertown, Connecticut.y.` Y-#Xw PE37=9XP#эxSee Petition, Exhibit A, DPUC Review of Basic Cable Rates and Equipment of Laurel Cablevision, Inc., Docket No. 931213, (August 24, 1994). As part of this decision setting the basic tier rates, the State found Laurel's collective or package offering of certain individually offered ("a la carte") channels to be a regulated tier of service and, therefore, included those channels as regulated channels for purposes of the local order. The State ordered Laurel to make refunds or to credit subscribers for all payments made in excess  Yv-of the rates set forth in the local order for the period September 1, 1993 to July 14, 1994.v.` Y% -#Xw PE37=9XP#эxUnder the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102385, 106 Stat. 1460 (1992), Communications Act of 1934,  623(b), 47 U.S.C.  543(b), and the Commission's implementing regulations, local franchising authorities may  Y-regulate rates for basic cable service and associated equipment.Ļ  YH-2.` ` In its appeal, Laurel challenges the local order on the grounds that the State did not have the authority to make determinations regarding the status of the a la carte package and that, even if the State did have such authority, the State'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 and the objectives of the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"). The State 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 Laurel's package should be treated as regulated channels.  Yy-3.` ` Under our rules, rate orders made by local franchising authorities may be  Yb-appealed to the Commission.nbj .` Y}-#Xw PE37=9XP#эx47 C.F.R.  76.944.n In ruling on appeals of local rate orders, the Commission will  YK-not conduct a de novo review, but instead will sustain the franchising authority's decision as  Y6-long as there is a reasonable basis for that decision.t|6 .` Y -#Xw PE37=9XP#э See Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Report and Order, MM Docket No. 92266, 8  Y!-FCC Rcd 5631, 5731 (1993) ("Rate Order"); and Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, BuyThrough Prohibition, Third Order on Reconsideration, MM Docket Nos. 92266 and 92262,  Y$-9 FCC Rcd 4316, 4346 (1994) ("Third Reconsideration Order").t Therefore, the Commission will reverse a franchising authority's decision only if it determines that the franchising authority"_0*(("  Y-acted unreasonably in applying the Commission's rules in rendering its local rate order.Z.` Yy-#Xw PE37=9XP#э Id.Z 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  Y-resolve the case consistent with the Commission's decision on appeal.{.` Y-#Xw PE37=9XP#э Rate Order, 8 FCC Rcd at 5732; Third Reconsideration Order, 9 FCC Rcd at 4346. 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  Y1-package] in question."1..` Y-#Xw PE37=9XP#эImplementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Second Order on Reconsideration and Fourth  Y-Report and Order, MM Docket No. 92266, 9 FCC Rcd 4119, 4217 (1994) ("Second  Y-Reconsideration Order").  Y -  X - II.DISCUSSION  Y -  Y - 4.` ` Laurel objects to the State's finding in the local order that the channels comprising the Customer Choice a la carte package at issue in this appeal (WTBS and  Y-WWOR) must be included as regulated channels. .` Y-#Xw PE37=9XP#э #Xw PE37=9XP#See Petition, Exhibit A at 12. Laurel contends that the State lacks the  Yy-authority to make determinations regarding the status of the a la carte package.h yQ .` Y{-#Xw PE37=9XP#эPetition at 45.h Laurel further argues that its a la carte package complies with the provisions of the 1992 Cable Act, which it contends encourage cable operators to unbundle programming services from  Y4-regulated tiers and offer them on a perchannel basis. 4 .` Y-#Xw PE37=9XP#эPetition at 8; Petition, Exhibit B at 89. Laurel maintains that its a la carte package fully complies with Commission rules for unregulated treatment existing at the time  Y-the package was created.  .` Yj#-#Xw PE37=9XP#эPetition at 910;  See Rate Order, 8 FCC Rcd at 58365838; Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, First Order on Reconsideration and Second Report and Order, MM Docket 92 Y'&-266, 9 FCC Rcd 1164, 1184 (1993).ģ In addition, Laurel contends that the State erred in retroactively  Y-applying the 15 guidelines set forth in the Second Reconsideration Order and that, even under"! 0*((" the 15 guidelines, the State erred in treating Laurel's a la carte services as regulated  Y-channels. .` Yb-#Xw PE37=9XP#э Petition at 59 and 1015; See Second Reconsideration Order, 9 FCC Rcd at 42144216.  Y-5.` ` The a la carte package at issue was first offered to subscribers on September 1, 1993, when Laurel restructured the service offerings on its system serving the Towns of Litchfield, Morris, Thomaston, Torrington, Warren, and Watertown, Connecticut. Laurel states that its September 1, 1993 restructuring involved offering two channels from its former cable programming service tier on an individual basis and also as a package that Laurel alleges is not subject to rate regulation.  Y -6.` ` The facts presented in this appeal closely resemble the facts presented in one  Y -of our recently issued letter of inquiry orders on a la carte packages, Paragon Cable, Irving, Texas, LOI9325, DA 941315 (Cab. Serv. Bur., released Nov. 25, 1994), in which we resolved the regulatory status of an la carte package offered by Paragon Cable that is essentially the same as the a la carte package at issue in this appeal. Specifically, the a la  Y -carte package at issue in the Paragon Cable order was a twochannel package that was  Y-offered as part of a restructuring and was created by moving two channels from the basic  Y}-service tier. In the Paragon Cable case, we found we could not say that it was clear that the a la carte package at issue was not a permissible nonrate regulated offering under our rules. We further concluded that in light of the prior confusion over what constituted a permissible nonrate regulated a la carte offering, it would be inequitable to subject the operator to refund liability or to require the operator to restructure its tiers so as to return the channels offered in the a la carte package to regulated tiers. Instead, we found that the a la carte package at issue may be treated as a new product tier under the Commission's  W-Implementation of Sections of the Cable Television Consumer Protection and Competition Act  Y-of 1992: Rate Regulation, Sixth Order on Reconsideration and Fifth Report and Order, MM  Y-Docket Nos. 92266 and 93215, FCC 94286 (released November 18, 1994) ("Going  Y-Forward Order"). d.` Y-#Xw PE37=9XP#эNew product tiers are cable programming services that, subject to certain conditions,  Y-are not rate regulated. Going Forward Order at  1637. In the Going Forward Order, the Commission reconsidered its regulatory treatment of collective offerings of a la carte channels. Specifically, the Commission determined that such packages are cable programming service tiers within the meaning of Section 3(1)(2) of the 1992 Cable Act and  YA"-therefore will be subject to our general rate regulation rules. Id. at  51. However, the Commission also stated that with respect to packages created between April 1, 1993 and September 30, 1994, where it is not clear that a particular package was not a permissible offering under the a la carte rules in effect at the time it was created, the package may be  Y%-treated as a new product tier. Id. "L 0*((^"Ԍ Y-7.` ` We find that the State's determination that Laurel's a la carte package is a regulated tier is inconsistent with the action taken in the letter of inquiry orders, and in  Y-particular, in Paragon Cable.5.` YK-#Xw PE37=9XP#э Laurel's argument that the State has no authority to determine the regulatory status of a la carte service offerings is without merit. The State's rate order was adopted on August  Y-24, 1994. In the Second Reconsideration Order, effective May 15, 1994, the Commission provided that "local authorities may make any necessary a la carte determination as part of  Y-their final decision setting rates for the basic tier. Id. at 4217. Contrary to Laurel's  Y-contention, this provision does not delegate the Commission's jurisdiction over cable  Y -programming service tier rates to local authorities. Rather, it allows local authorities to make an initial determination concerning the number of regulated channels that is necessary to accomplish their review of basic service tier rates.  We further find that, in accordance with Paragon Cable, Laurel's a la carte package should not be treated as a rate regulated tier of service. Accordingly, we are remanding this issue to the State so that it can enter an order consistent  Y-with our findings in Paragon Cable. .` Y-#Xw PE37=9XP#э We need not address Laurel's arguments with respect to the "retroactive" application  Y-by the State of the 15 guidelines set forth in the Second Reconsideration Order in light of the fact that we grant Laurel's appeal on the a la carte issue and remand this case to the State.   XL- III.ORDERING CLAUSES  Y -8.` ` Accordingly, IT IS ORDERED that the appeal of the local order, with respect  Y -to the issue of the regulatory status of Laurel's a la carte package, is REMANDED to the State for resolution in accordance with the terms of this Order.  Y -9.` ` IT IS FURTHER ORDERED that our stay of the local order which was  Y -granted pending the resolution of this appeal is hereby VACATED .  Y-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  Y-` `  Chief, Cable Services Bureau