WPC 2BJ Z Courier#|x]BoldTimes New Roman@`7X@HP LaserJet 4_230_1HPLAS4.PRS 4x  @\oeX@26Fv#|x]CourierCourier BoldLPT1tional)HL4MPCAD.PRSx  @\<]X@  ЂX` hp x (#%'0*,.8135@8:><q*"xxxxWWxxxWWkkxxxprepi !3s4ddd,\'d `7            2^f p f {^oZ",tB^ f ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYd4dddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddCdoddd|8|H~d<|8dtddddHHdlLlLlLkd|H|8~ddddddddXXXd~ddkd~ddxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCYQQddddddFddddFCChhd44ddzzdddvooChdF"dhd9dCCzCddoddCdYds]zUvdYYCCCCz~ozoY~NYdYC8YooYdYzsdzdd~YYzozzz~CdzYzzzzCCdddddddzCsdYC\   pxtll\tll@\@\`L",tB^ f ^;C]ddCCCdCCCCddddddddddCCdxN`xoCCCddCdoYoYFdo8Co8odooYNCodddYdddd4dddddCddddddddo8dddddYYYYYN8N8N8N8oddddooooddpddddxodddXXddXddXdddddooL8doddNorddo8PdN8ppoddXXdpLoNpLodPDdopoopodXYXodoodddCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCdUUddddddFddddFCCssd44ddzzddd~ooCsdF"dsd9dCCzCddoddCdYds`zUvdddCCCCzozoYNYYYN8YooYdYzzdzddYYzozzzNdzYzzzzCCdddddddzCzdYC\   pxtll\tll@\@\`L2 s4- #d6X@`7Oe@#FOR FCC RECORD ONLY  r5- $//Falcon Holding Group, Inc., Los Angeles, California, MO&O, DA 95857//$ $/76.922 Rates for Cable Programming Service tier/$  r5-$/Benchmark cable rates/$ #x6X@`72X@#  ad<#Xj\  P6G;XP#  Њ # PE37ܼP#Before the l DFederal Communications Commission  ax<LWashington, D.C.#Xw PE37XP# ă  X- DA 95857 Đ2(#m  Y= -In the matter of G)hh}AL0060  Y& -` `  G)hh}AR0048, AR0231, AR0234, AR0376  Y -Falcon Holding  G)hh}CA0065, CA0073, CA0101, CA0152, $$CA0229,  Y -Group, Inc.` `  G)hh}CA0249, CA0450, CA0582, CA0622, $$CA0626,   Y -` `  G)hh}CA0680, CA0708, CA0778, CA0844, $$CA0850,  Y - ` `  G)hh}CA0890, CA0903, CA0959, CA1048, $$CA1049, S S S S S S S S  Y-Order Dismissing  G)hh}CA1118, CA1187, CA1189, CA1190, $$CA1209,  Y- Compaints` `  G)hh}CA1274, CA1401  Y-` `  G)hh}GA0036, GA0317  Yn-` `  G)hh}KY0017, KY0062, KY0067, KY0078, KY0529, KY0636  YW-` `  G)hh}MD0004  Y@-` `  G)hh}MI0696  Y)-` `  G)hh}MO0019, MO0020, MO0024, MO0057, MO0750  Y-` `  G)hh}NC0105, NC0119, NC0151, NC0152, NC0428, NC0965  Y-` `  G)hh}OR0015, OR0045, OR0058, OR0071, OR0081, OR0180,  Y-` `  G)hh}OR0181, OR0199, OR0342, OR0359  Y-` `  G)hh}TX0669  Y-` `  G)hh}VA0025, VA0182  Y-` `  G)hh}WA0168, WA0229, WA0321  Xq-c Memorandum Opinion and Order Đm 2Adopted: April 17, 1995 Released: April 18, 1995 By the Chief, Cable Services Bureau:  X!- Introduction  1. Here we consider complaints about the prices Falcon Holding Group, Inc. ("Operator") charges for its cable programming service ("CPS") tiers in numerous communities designated by the Community Unit Identification ("CUID") numbers referenced above. The attached Appendix contains a list of the communities which are the subject of this Order ("subject communities"). Rather than attempting to justify its prices through a benchmark or cost of service showing, Operator responded to the complaints by stating that it has no CPS tier in those systems. On March 28, 1995, Operator submitted additional")0*0*0*/+" information in support of its claim that rateregulated CPS tiers did not exist as of September  Y-1, 1993, and still do not exist, in any of the subject communities.6 Yb-#x6X@`72X@##Xw PE37XP#э Operator also asserts that it was not served with complaints in some of the subject communities, and that in other communities the complaints address only its charges for the basic service tier. In light of our disposition of the complaints in this Order, we need not address those arguments. In addition, Operator provided an affidavit, signed by the Corporate Officer in charge of Operations, in support of its claims that in the communities covered by this Order Operator offers a la carte packages  Y-of six channels or fewer and no other CPS tiers.42 Y -#Xw PE37XP#э See letter dated April 5, 1995 from Matthew D. Emmer, Esq. of Fleischman and Walsh, L. L. P., AttorneyofRecord for Falcon Holding Group, Inc., to David O. Ward, Esq. of the FCC which included the attached Affidavit of Joe A. Johnson, Senior Vice President, Operations for Falcon Cable TV dated April 4, 1995.  Y- 2. Under the Cable Television Consumer Protection and Competition Act of 1992, 2 Y-#Xw PE37XP#э Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act,  623(c), as  Y-amended, 47 U.S.C.  543(c) (1993). and our rules implementing it, 47 C.F.R. Part 76, Subpart N, the Commission must review CPS prices upon the filing of a valid complaint. The filing of a valid complaint triggers an  YH-obligation on behalf of the cable operator to file a justification of its CPS prices.gH@ 2 Y9-#Xw PE37XP#э 47 C.F.R.  76.956.g Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a  Y -costofservice showing.j 2 Y-#Xw PE37XP#э 47 C.F.R.  76.956(b).j In either case, the operator has the burden of demonstrating that its  Y -CPS prices are not unreasonable.Z 2 YV-#Xw PE37XP#э  Id.Z  Y -3. The Commission's original rate regulations took effect on September 1, 1993. U2 Y-#Xw PE37XP#э  Order in MM Docket No. 92266, Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, FCC 93372, 58 Fed. Reg. 41042 (Aug. 2, 1993).  Y -The Commission subsequently revised its rate regulations effective May 15, 1994.Q 2 YG#-#Xw PE37XP#э See Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119 (1994)  Y%-(Second Order on Reconsideration); 47 C.F.R.  76.922(b).Q Operators with valid CPS complaints filed against them prior to May 15, 1994 must demonstrate that their CPS prices were in compliance with the Commission's initial rules"_0*((x" from the time the complaint was filed through May 14, 1994, and that their prices were in  Y-compliance with the revised rules from May 15, 1994 forward. 2 Yb-#Xw PE37XP#э See Second Order on Reconsideration at 4190, paras. 150152. Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark showing must  Y-complete and file FCC Form 393.Z {2 Y-#Xw PE37XP#э Id.Z Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form  Y_-1200 series. _.2 Y> -#Xw PE37XP#э 47 C.F.R.  76.922(b)(6); see also Second Order on Reconsideration at 4189 n.195.  X1-  Background   Y -4. When Operator restructured its rates and tiers as of September 1, 1993 to conform to the Commission Regulations, it eliminated its CPS tiers in each of the subject communities and put those channels into either the basic tier or an a la carte package. We subsequently issued letters of inquiry ("LOIs") to Operator to determine whether similar restructuring in two communities Port Orchard, Washington and Southern Shores, North Carolina constituted an evasion of rate regulation. On December 22, 1994, we released two Orders  Yy-resolving these LOIs. y2 Y -#Xw PE37XP#э  See Falcon Cable TV, Port Orchard, Washington, LOI9350, DA 941548 (Cab.  Y-Serv. Bur., released Dec. 22, 1994) (Port Orchard Order) and Falcon Cable TV, Southern Shores, North Carolina, LOI942, DA 941551 (Cab. Serv. Bur., released Dec. 2, 1994)  Y-(Southern Shores Order). We found that Operator's systems in both communities were similar in that each no longer had a traditional CPS tier after restructuring on September 1, 1993, but instead had a larger regulated basic tier and a new a la carte tier. We further found that in each case Operator automatically subscribed its previous CPS customers to its a la carte package, and in each case the evidence showed that very few subscribers viewed the option of accepting individual a la carte channels as a realistic service option. The most significant difference was that in the case of Port Orchard the new a la carte package had six channels, all of which were migrated from previously regulated tiers, but in the case of Southern Shores the new a la carte package had ten channels, nine of which were migrated from previously regulated tiers. In both cases, we found that Operator's restructuring may have had the effect of evading rate regulation. However, on applying the twopart test set forth in  Y|-the Rate Order? |S U Y%-#Xw PE37XP#э Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket 92266, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd 5631 (1993), at  32728. ? and the 15 interpretive guidelines set forth in the Second Reconsideration"| 0*((|"  Y-Order,2 Yy-#Xw PE37XP#э Second Order on Reconsideration, supra, at  196. we reached substantially different conclusions regarding whether the restructuring clearly evaded the Commission's Rules in effect at the time of the restructuring:  Y-Xa.` ` In the Port Orchard Order, we found that Operator's elimination of its CPS tiers and their replacement by a larger basic tier and an a la carte package of six channels was not a clear evasion of the Commission's Rules because most of the rateregulated CPS tier channels were merely transferred to the rateregulated basic tier, and only six of those previously regulated channels were treated as an unregulated  YL-collective offering of a la carte channels.}L{2 Yx -#Xw PE37XP#э Port Orchard Order, supra, at  20.} We held that given the small number of previously regulated CPS channels moved into the new a la carte package, Operator  Y -may treat the package as a nonregulated new product tierz .2 Y-#Xw PE37XP#э See Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Sixth Order on Reconsideration, Fifth Report and Order, and Seventh Notice of Proposed Rulemaking, MM Docket Nos. 92266 and 93215, FCC 94286,  51 (adopted November 10, 1994).z that may be priced at  Y -market levels under the Going Forward Order.{ 2 YT-#Xw PE37XP#э Port Orchard Order at  21.{ (#  Y -Xb.` ` However, in the Southern Shores Order, we found that Operator had not sufficiently justified its elimination of the regulated CPS tiers because it used nine of those channels to create a purportedly nonregulated, 10channel a la carte tier on the eve of regulation, and it automatically subscribed its customers to the offerings that  Y-previously had been part of its Tier 1 and Tier 2 CPS packages.O 2 Y-#Xw PE37XP#э Southern Shores Order, supra, at  14 and 15. Consequently, we  Yj-ordered Operator to treat the tenchannel a la carte tier as a rateregulated CPS tier.mj 2 Y-#Xw PE37XP#э Id., at  22.m (#  Y<-5. Since the Port Orchard Order found that Operator's restructuring of its CPS tier into the basic tier and an a la carte tier of six channels did not constitute an evasion of rate regulation, and that those channels not placed on the basic service tier could be treated as a new product tier, there was no CPS tier in that community, as of September 1, 1993, that was subject to rate regulation pursuant to Section 76.922 of our rules. Therefore, the Bureau's action effectively dismissed all FCC Form 329 complaints filed against Operator in  Y-its Port Orchard franchise area for rates that were in effect on September 1, 1993. 2 Y'-#Xw PE37XP#э See Falcon Cable TV, Port Orchard, Washington, supra, at n.1."h0*(("Ԍ X-ԙ Discussion  6. In each of the subject communities, Operator has demonstrated that it restructured its service offerings on September 1, 1993 in essentially the same way that it did in the Port  Y-Orchard community where an LOI order has been issued.[2 Y-#Xw PE37XP#э Letter dated March 28, 1995 from Falcon Holding Group, Inc.'s AttorneyofRecord, Matthew D. Emmer, Esq. of Fleischman and Walsh, L.L.P., to David O. Ward, Esq., of  Y-the FCC in response to a Staff ex parte request for additional information.[ Specifically, Operator has shown that it discontinued its CPS offerings and placed all of its channels into a single basic service tier, except for a few channels which it offered on an a la carte basis. In the subject communities, Operator offered two to six a la carte channels in its unregulated a la carte package. 7. We feel that we have sufficient information regarding Operator's restructured  Y -offerings in the subject communities to conclude, in accordance with the Going Forward  Y -Order, that they should be treated the same way that we treated Operator's restructured  Y -offerings in the Port Orchard Order. M2 Y-#Xw PE37XP#э This finding is based solely on the representations of Operator described herein. Should information come to our attention that these representations were materially inaccurate, we reserve the right to take appropriate action. This Order is not to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made by any party to this proceeding not specifically addressed herein. As in the Port Orchard community, although the instant restructuring resulted in the elimination of Operator's CPS tiers, the small number of channels that were offered in the a la carte package did not constitute an evasion of our then  Y-existing rules. Therefore, consistent with the action taken in the Port Orchard Order, we will allow Operator to treat its a la carte packages in the subject communities as new product  Yj-tiers even though they would not qualify as new product tiers under the Going Forward  YU-Order because one of the conditions for a new product tier is that channels may not be removed from a basic service tier or a CPS tier. Thus, we need not rule on the FCC Form 329 complaints filed against Operator in the subject communities because there were no CPS tiers subject to rate regulation pursuant to Section 76.922 of our rules as of September 1, 1993. In addition, nothing in these complaints indicate that Operator's new product tiers  Y-violate any of the conditions for establishing those tiers outlined in the Going Forward  Y-Order.w 2 Y""-#Xw PE37XP#э We have excused one violation, i.e., migrating channels from rateregulated tiers, in only those situations where, as here, the new product tier is established as an outgrowth of  Y#-our change in our a la carte policy. See Going Forward Order at Para. 51. w  X- Conclusion  ") 0*((m"Ԍ8. Accordingly, IT IS ORDERED that the a la carte packages created by Falcon Holding Group, Inc. in the communities listed in the attached Appendix may be treated as  Y-new product tiers under our Going Forward Order. 9. IT IS FURTHER ORDERED that all FCC Form 329 complaints pending against the CPS rates of Falcon Holding Group, Inc. each of the communities listed in the attached Appendix are DISMISSED. 10. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321. ` `  Ghh}FEDERAL COMMUNICATIONS COMMISSION ` `  Ghh}Meredith J. Jones ` `  Ghh}Chief, Cable Services Bureau"M0*(("  Y-   APPENDIX   Y-  T ddx !ddxdF  T      "CUID}"~COMMUNITY}"z:# A LA CARTE CHANNELS  q  w $J .,*, AL0060w Scottsboro, ALw"6q q } ww $CAR0048_w Cherokee Village, AR_w"3q q  ww $CAR0231w Shannon Hills, ARw"5q q _$CAR0234A w Saline County, ARA w"5q q $CAR0376 w Maumelle, AR w"5q q A $?CA0065# w Big Bear Lake, CA# w"3q q  $?CA0073w Los Angeles County, CAw"2q q # $?CA0101w Gilroy, CAw"2q q $?CA0152vw San Bernardino County, CAvw"2q q $?CA0229w San Bernardino County, CAw"2q q v$?CA0249Xw Malibu, CAXw"4q q $?CA0450w Pasadena, CAw"5q q X$?CA0582:w Soledad, CA:w"4q q $?CA0622w Monterey County, CAw"3q q :$?CA0626w Pasadena, CAw"4q q $?CA0680w Los Osos, CAw"4q q $?CA0708w Los Osos, CAw"4q q $?CA0778ow Atascadero, CAow"4q q $?CA0844w Monterey County, CAw"3q q o$?CA0850Q!w Thousand Oaks, CAQ!w"5q q $?CA0890"w Monterey County, CA"w"3q q Q!$?CA09033$w Pasadena, CA3$w"5q q "$?CA0959%w Salinas, CA%w"4q q 3$$?CA1048'w Monterey County, CA'w"3q q %$?CA1049(w Monterey County, CA(w"3q q '$?CA1118)w Monterey County, CA)w"3")0*0*0*)1)"q q ($?CA1187qw Agoura Hills, CAqw"4q q $?CA1189w Salinas, CAw"4q q q$?CA1190Sw Monterey County, CASw"3q q $?CA1209w Los Angeles, CAw"4q q S$?CA12745w Running Springs, CA5w"3q q  ww $?CA1401w San Bernardino County, CAw"2q q 5 ww $8GA0036 w Habersham, GA w"2q q  ww $8GA0317 w Whitfield County, GA w"6q q   ww $;KY0017 w Burnside, KY w"5q q   ww $;KY0062jw Monticello, KYjw"5q q  $;KY0067w Mt. Vernon, KYw"4q q j ww $;KY0078Lw Corbin, KYLw"4q q  ww $;KY0529w Calvert City, KYw"3q q L ww $;KY0636.w Bell County, KY.w"4q q  ww $MD0004w Crisfield, MDw"4q q . ww $`MI0696w Au Gres, MIw"4q q  ww $MO0019w West Plains, MOw"6q q $MO0020w El Dorado, MOw"3q q $MO0024cw Warrensburg, MOcw"4q q $MO0057w Eldon, MOw"4q q c$MO0750Ew Sunrise Beach, MOEw"4q q $;NC0105w Wilkes County, NCw"3q q E$;NC0119'!w Kure Beach, NC'!w"6q q $;NC0151"w Carolina Beach, NC"w"6q q '!$;NC0152 $w New Hanover County, NC $w"6q q "$;NC0428z%w Pender County, NCz%w"4"$0*&&qq&%$"q q  $$;NC0965qw N. Topsail Beach, NCqw"4q q $COR0015w Warrenton, ORw"6q q q$COR0045Sw Gold Beach, ORSw"5q q $COR0058w Florence,ORw"5q q S$COR00715w Lincoln City, OR5w"6q q $COR0081w Dallas, ORw"4q q 5$COR0180 w Sutherlin, OR w"6q q $COR0181 w Brookings, OR w"6q q  $COR0199 w Florence, OR w"5q q  $COR0342jw Silverton,ORjw"5q q  $COR0359w Lincoln City, ORw"6q q j$JTX0669Lw Port Aransas, TXLw"4q q $8VA0025w Chincoteague, VAw"3q q L$8VA0182.w Chincoteague, VA.w"3q q  ww $ WA0168w Port Orchard, WAw"6q q . ww $ WA0229w Bremerton, WAw"6q    w $ WA0321 Kitsap County, WA"6  E  K:x *,*, ` hX` hp x (#%'0*,.8135@8: