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(1) (a) (i) 1) a)D )DDDFrfQq ",tB^ f ^;C]ddCCCdCCCCddddddddddCCdxN`xoCCCddCdoYoYFdo8Co8odooYNCodddYdddd4dddddCddddddddo8dddddYYYYYN8N8N8N8oddddooooddpddddxodddXXddXddXdddddooL8doddNorddo8PdN8ppoddXXdpLoNpLodPDdopoopodXYXodoodddCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCdUUddddddFddddFCCssd44ddzzddd~ooCsdF"dsd9dCCzCddoddCdYds`zUvdddCCCCzozoYNYYYN8YooYdYzzdzddYYzozzzNdzYzzzzCCdddddddzCzdYC\   pxtll\tll@\@\`L2f  ",tB^ f ^;C`ddCCCdCCCCddddddddddCCdxxxsCYoxxdoxxooCCCddCddYdY8dd88Y8ddddLL8dYYYLYdYd4dddddCddddddddd8xdxdxdxdxdYxYxYxYxYC8C8C8C8dddddddddoYxddddoYdxdxdxdxdXXddxxXxdxdxXdddddddD8ddddCdddddp8pHodp8p8dxddddxLxLxddLdLdLddpHp8odddddddodpLpLpLdoddddododxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCd]]ddddddFddddFCCddd88ddzzdddkddCddF"ddd9dCCzCdzdoddCdYds]zUvdYYCCCCzzzozoYzNoYdYC8YooYdYzzdzddoYoYzzozzzzzCdoozYzzzzCCddddzdddooozCsdYC\   pxtll\tll@\@\`L X- FOR RECORD ONLY $//Appeal ORDER, TKR Cable Company, NJ, DA 951179//$ $/76.922 Rates for the basic service tier/$ $/76.923 Rates for equipment and installation/$ $/76.944 Commission Review of Franchising Authority Decisions/$  X- $/76.986 A La Carte Offerings/$  YH-  `*(# DA 951179 ă  X2-2(X01Í ÍX01Í Í Before the W FEDERAL COMMUNICATIONS COMMISSION  X -Washington, D.C. 20554 TP In the Matter of:R)  Y -R)hppHamilton, NJ  Y -TKR CABLE COMPANYR)hppElizabeth, NJ  Y-R)hppWildwood, NJ  Yz-R)hppOld Bridge, NJ  Yc-R)hppRamapo, NJ  YL-Appeal of Rate OrdersR)hppRockland, NJ  Y5-of the State of New JerseyR)hppTriSystem, NJ  Y-Board of Public UtilitiesR)hppWarwick, NJ  Y-}  MEMORANDUM OPINION AND ORDER ă  Y- Adopted : May 30, 1995hh@h Released : June 1, 1995 By the Chief, Cable Services Bureau:  Xh- I.xINTRODUCTION  Y:-x1.` ` On August 31, 1994, TKR Cable Company ("TKR") filed with the Commission a consolidated appeal of a series of eight local rate orders adopted by its franchising authority, the New Jersey Board of Public Utilities, Office of Cable Television  Y-(the "Board"). Yn!-ԍ The rate orders were issued for TKR's Hamilton, Elizabeth, Wildwood, Old Bridge, Ramapo, Rockland, TriSystem and Warwick systems. TKR also filed a petition for stay of the local rate orders at the same time.  Y-We granted the stay on October 6, 1994, pending resolution of the appeal._b Y$-ԍ See TKR Cable Company, 9 FCC Rcd 5811 (1994). _ In its local rate orders, the Board established rates for basic tier service and associated equipment and" 0*0*0*!"  Y-installations and required TKR to refund overcharges to subscribers. Yy-ԍ Under the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") and the Commission's implementing regulations, local franchising authorities  YK-may regulate rates for basic cable service and associated equipment. See Cable Television Consumer Protection and Competition Act, Pub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act, 623(b), 47 U.S.C. 543(b). As part of its decisions setting TKR's basic tier rates, the Board found in each case that an a la carte package offering, created by TKR on the eve of rate regulation, was a regulated tier of service." l 0*0*0*"Ԍ" l 0*0*0*"Ԍ Y -x2.` ` The sole issue raised by TKR in its appeal centers on the proper regulatory" l 0*0*0*"  Y-treatment of these a la carte package offerings.w& Yy-ԍ TKR originally raised another issue in its appeal regarding the inflation adjustment factor used in the calculation of its rates. Subsequent to filing its appeal, on September 14, 1994, TKR filed a partial withdrawal of its appeal regarding this issue, and therefore we need not address the inflation adjustment issue in this Order.w TKR argues that the Board's decision to treat its a la carte packages as regulated tiers of service is contrary to the objectives of the 1992 Cable Act and the Commission's a la carte rules and, therefore, the Board's adverse  Y-ruling on TKR's a la carte offerings should be overturned. In response, the Board asserts that it properly applied the Commission's guidelines on a la carte packages in treating TKR's packages as regulated tiers.  Y_-x3.` ` Under our rules, rate orders made by local franchising authorities may be  YH-appealed to the Commission.QH4& Y--ԍ See 47 C.F.R.  76.944 (1994).Q In ruling on appeals of local rate orders, the Commission will  Y1-not conduct a de novo review, but instead will sustain the franchising authority's decision as  Y -long as there is a reasonable basis for that decision.e| & Y-ԍ See Implementation of Sections of the Cable Television Consumer Protection and  Y-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,  YE-9 FCC Rcd 4316, 4346 (1994) ("Third Recon. Order").e The Commission will reverse a franchising authority's decision only if it is determined that the franchising authority acted  Y -unreasonably in applying the Commission's rules in rendering its local rate order.3 + & Y-ԍ Id.3 If the  Y -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. & Y8-ԍ Rate Order, 8 FCC Rcd at 5732; Third Recon. 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  Yd-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  Y-package] in question."* & Ya%-ԍ Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Second Order on Reconsideration, MM Docket  Y3'-No. 92266, 9 FCC Rcd 4119, 4217 (1994) ("Second Recon. Order").*" 0*(("Ԍ X-ԙ II.xDISCUSSION  Y-x4.` ` TKR objects to the Board's findings in the local orders that the a la carte packages at issue are rate regulated offerings and therefore the channels comprising the packages must be treated as regulated channels in calculating TKR's permissible rates. TKR  Y-argues that each of its a la carte packages on all eight systems comply with the Commission's  Yv-a la carte rules in effect at the time the packages were created( v& Y-ԍ 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, MM Docket No. 92266, 9 FCC Rcd 1164, 118485 (1993).( and that the Board's reliance upon the 15 interpretive guidelines announced by the Commission in March 1994 to determine the regulatory status of TKR's a la carte channels constituted "retroactive  Y1-ratemaking." 1M& Y/-#Xw PE37=XP#э In the Second Recon. Order, the Commission set out 15 guidelines "that local authorities and the Commission should consider in assessing in an individual case whether an a la carte package enhances consumer choice and does not constitute an evasion of rate  Y-regulation."  Second Recon. Order at 4214.  Y -x5.` ` The a la carte packages at issue were first offered to TKR's subscribers on August 31, 1993, when TKR restructured the service offerings on its Hamilton, Wildwood, Elizabeth, Old Bridge, Ramapo, Rockland, TriSystem and Warwick systems. TKR states that each restructuring involved removing certain channels from the basic service tier or a cable programming services tier and then offering these particular channels on an individual  Y-basis and also as the package that TKR alleges is not subject to rate regulation.F _& Y-ԍ The Board's rate orders indicate that some of the channels placed in TKR's a la carte packages were removed from the basic service tier. However, according to TKR, all of TKR's a la carte offerings on each of its systems were removed from cable programming services tiers with the exception of WTBS on its TriSystem, Old Bridge and Elizabeth systems. Because this fact, in and of itself, is not dispositive with regard to determining the regulatory status of the individual a la carte packages, we do not need to resolve the discrepancy.F The packages at issue in this appeal are very similar and consist of between three and five channels. On its Hamilton system, TKR offered a four channel a la carte package consisting of American Movie Classics (AMC), the Discovery Channel, Turner Network Television (TNT), and CNBC/Madison Square Garden Network (MSG) (shared channel). On its Elizabeth system, TKR offered a three channel a la carte package consisting of TNT, WTBS and MSG/CNBC (shared channel). On its Warwick system, TKR offered a four channel a la carte package consisting of AMC, TNT, WTBS and MSG. On its Wildwood system, TKR offered a four channel a la carte package consisting of AMC, the Discovery Channel, TNT and Disney. On its Old Bridge system, TKR offered a five channel a la carte package consisting of AMC, the Discovery Channel, TNT, WTBS and MSG. On its Ramapo system," 0*((" TKR offered a five channel a la carte package consisting of AMC, the Discovery Channel, TNT, WTBS and MSG/CNBC (shared channel). On its Rockland system, TKR offered a five channel a la carte package consisting of AMC, the Discovery Channel, TNT, WTBS and CNBC. Finally, on its TriSystem system, TKR offered a five channel a la carte package consisting of CNN, the Discovery Channel, TNT, WTBS and MSG.  Yv-x6.` ` The facts presented in this appeal with respect to TKR's Hamilton, Wildwood, Elizabeth, Old Bridge, Ramapo, Rockland, TriSystem and Warwick systems are similar to the facts presented in our letter of inquiry ("LOI") orders where we ruled that certain a la  Y1-carte packages may be treated as new product tiers. 1& Y -ԍ See, e.g., Cablevision Industries, Long Beach, CA, LOI-93-40, DA 941424 (Cab. Serv. Bur., released December 12, 1994) In the case of TKR's Hamilton system  Y -the facts are identical to those presented in TKR Cable of Hamilton. d& Y/-ԍ In TKR Cable of Hamilton, Hamilton, New Jersey, LOI9331, DA 941312 (Cab. Serv. Bur., released November 25, 1994), we resolved the regulatory status of the a la carte package offered by TKR on its Hamilton, New Jersey system. The a la carte package at  Y-issue in TKR Cable of Hamilton was a four channel package, comprised of channels formerly available on two cable programming services tiers. In TKR Cable of  Y -Hamilton and the other LOI orders, we found that 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  Wf-Implementation of Sections of the Cable Television Consumer Protection and Competition Act  YO-of 1992: Rate Regulation, Sixth Order on Reconsideration and Fifth Report and Order, MM  Y:-Docket Nos.   92266 and 93215, 10 FCC Rcd 1226 (994) ("Going Forward Order"). :& Y-ԍ New 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  Y5!-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.  Y-x7.` ` We find that the Board's determination, that TKR's a la carte packages at issue"0*(("  Y-in this appeal are regulated tiers, is inconsistent with the action taken in TKR Cable of  Y-Hamilton and our other LOI orders. We further find that, in accordance with these orders, TKR's a la carte packages provided by its Hamilton, Wildwood, Elizabeth, Old Bridge, Ramapo, Rockland, TriSystem and Warwick systems should not be treated as rate regulated tiers of service. Accordingly, we are remanding this issue to the Board so that it can enter  Y-orders consistent with our findings in TKR Cable of Hamilton and our other LOI orders.n& Y -#Xw PE37=XP#э We need not address TKR's argument with respect to the "retroactive" application by  Y-the Board of the 15 guidelines set forth in the Second Recon. Order, in light of the fact that we grant TKR's appeal on the a la carte issue and remand this case to the Board.n  Xe- III.xORDERING CLAUSES  Y7-x8.` ` Accordingly, IT IS ORDERED that the appeal of the local rate orders, with respect to the issue of the regulatory status of TKR's a la carte packages on its Hamilton, Wildwood, Elizabeth, Old Bridge, Ramapo, Rockland, TriSystem and Warwick systems, is  Y - REMANDED to the Board for resolution in accordance with the terms of this Order.  Y -x9.` ` IT IS FURTHER ORDERED that our stay of the local orders which was  Y -granted pending the resolution of this appeal is hereby VACATED .  Y-x10.` ` 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. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhMeredith J. Jones  Y-x` `  hhChief, Cable Services Bureau