NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file pnmc5021. File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** FOR RECORD ONLY $//ORDER GRANTING STAY IN BEVERLY HILLS, CA, DA 95-1135//$ $/76.922 Rates for basic service tier/$ $/76.923 Rates for equipment and installation/$ $/76.942 Refunds/$ $/76.986 A La Carte Offerings $/1.45 (d) Request for Stay/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-1135 In the Matter of: ) ) CENTURY SOUTHWEST CABLE TV ) BEVERLY HILLS, CALIFORNIA ) ) Appeal of Local ) Rate Order of City of ) Beverly Hills, California ) ORDER Adopted: May 19, 1995 Released: May 23, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On April 8, 1994, Century Southwest Cable Television Corporation ("Century") filed with the Commission a Petition for Review of Rate Order ("appeal") of the local rate order ("local order") adopted on March 8, 1994 by the City of Beverly Hills, California (the "City"). In its local order, the City established Century'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 Century'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 City incorporated into its local order the findings of an independent consulting firm and an independent certified public accounting firm hired by the City to review Century's Form 393 submission. In its local order, the City ordered Century to make refunds to subscribers for all payments made in excess of the rates set forth in the local order since September 1, 1993. 2. Also on April 8, 1994, in addition to its appeal of the local order, Century filed an Emergency Petition for a Stay of Enforcement Pending Review. We granted the petition for stay pending resolution of the proper regulatory treatment to be accorded Century's a la carte package. Subsequently, on our own motion, we amended that decision to stay the local order pending our resolution of Century's appeal. 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. In its appeal, Century challenges the local order on two grounds. First, Century alleges that the City has erroneously prescribed a rate for a third type of converter which Century claimed it did not offer to subscribers. In its Reply, Century remains critical of the rate established for the third converter by the City but offers to accept it until such time as Century files its revised FCC Form 1205. Because Century now accepts the rate prescribed by the City for the third converter, this issue is no longer in controversy. 5. Second, Century argues that the City exceeded its authority in determining that its a la carte services should be treated as regulated channels. Century argues that the City applied the wrong legal standard when it relied on the 15 interpretive guidelines announced by the Commission in March 1994 to determine the regulatory status of Century's a la carte channels and unfairly gave "retroactive effect" to these guidelines. The City responds that it properly applied the Commission's guidelines on a la carte packages and concluded that Century's package should be treated as a regulated tier. 6. The Century a la carte services at issue were first offered to subscribers on September 1, 1993, when Century restructured the service offerings on its Beverly Hills system. Century's restructuring involved offering twelve channels, two from the basic service tier and ten from the cable programming services tier, on an individual basis and also as a package that Century alleges is not subject to rate regulation. 7. The facts presented in this appeal are the same as the facts presented in one of our letter of inquiry orders, Century Southwest Cable TV, Beverly Hills and Los Angeles, California, LOI-93-17, (Cab. Serv. Bur., released December 22, 1994) ("Century Southwest"), in which we resolved the regulatory status of Century's a la carte services in this franchise area. In Century Southwest, we found that Century's retiering on its Beverly Hills system constituted an evasion of rate regulation. We therefore found that Century's a la carte package must be treated as a rate-regulated cable programming services tier and that the channels composing it must be counted as rate-regulated channels for purposes of rate justification as of September 1, 1993. Our findings in Century Southwest are consistent with the City's conclusion that the channels in Century's a la carte package must be included as regulated channels. Accordingly, Century's appeal with respect to this issue is denied. 8. On January 23, 1995, Century filed an Application for Review ("Application") with the Commission of our letter of inquiry decision in Century Southwest. Since Century's Application is pending and since the exact issue addressed in this Order is the subject of that Application, we have decided to issue, on our own motion, a stay of the effective date of this Order until the Commission releases a decision on Century's Application in Century Southwest regarding the treatment of its a la carte packages in Beverly Hills and Los Angeles. In addition, we are amending, also on our own motion, the stay we had previously issued in this proceeding. That stay is hereby extended until the Commission releases a decision on Century's Application in Century Southwest. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that Century's appeal of the local order of the City of Beverly Hills, with respect to the regulatory status of Century's a la carte package, is DENIED. 10. IT IS FURTHER ORDERED, on our own motion, that the effective date of this Order is STAYED pending resolution of Century's Application for Review of the Bureau's letter of inquiry decision in Century Southwest Cable TV, Beverly Hills and Los Angeles, California, LOI-93-17 (Cab. Serv. Bur., released December 22, 1994). 11. IT IS FURTHER ORDERED, on our own motion, that the stay of the local rate order which we granted in Century Southwest Cable Corp. (Beverly Hills, CA), DA 94- 463 (Cab. Serv. Bur., released November 22, 1994), is hereby EXTENDED until the Commission releases a decision on Century's Application for Review in Century Southwest Cable TV, Beverly Hills and Los Angeles, California, LOI-93-17 (Cab. Serv. Bur., released December 22, 1994). 12. 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