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 how2ftp. File how2ftp (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ***************************************************************** ******** $//Falcon Holding Group, Inc., San Bernardino, CA, Richlands, NC, and Silverdale, WA, MO&O, DA 95-2051//$ $/76.922 Rates for Cable Programming Service tiers/$ $/benchmark cable rates/$ Before the Federal Communications Commission Washington, D. C. DA 95-2051 In the matter of ) ) Falcon Holding Group, Inc. ) CUID Nos.: ) CA1210 (San Bernardino) ) NC0487 (Richlands) ) WA0313 (Silverdale) Benchmark Filings To Support ) Cable Programming Service Prices ) Memorandum Opinion and Orde r Adopted: September 27, 1995 Released: October 5, 1995 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: Introduction 1. Here we consider complaints about the prices Falcon Holding Group, Inc. ("Operator") was charging for its cable programming service ("CPS") tiers in the communities listed in the above caption (the "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 the subject communities. On May 24, 1995, Operator submitted additional information in support of its claim that rate-regulated CPS tiers did not exist as of September 1, 1993 or during the relevant time period in any of the subject communities. 2. Under the Cable Television Consumer Protection and Competition Act of 1992, 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 obligation on behalf of the cable operator to file a justification of its CPS prices. Under our rules, an operator may attempt to justify its prices through either a benchmark showing or a cost-of-service showing. In either case, the operator has the burden of demonstrating that its CPS prices are not unreasonable. 3. The Commission's original rate regulations took effect on September 1, 1993. The Commission subsequently revised its rate regulations effective May 15, 1994. 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 from the time the complaint was filed through May 14, 1994, and that their prices were in compliance with the revised rules from May 15, 1994 forward. Operators attempting to justify their prices for the period prior to May 15, 1994 through a benchmark showing must complete and file FCC Form 393. Generally, to justify their prices for the period beginning May 15, 1994 through a benchmark showing, operators must use the FCC Form 1200 series. Background 4. The Cable Services Bureau has released orders resolving letters of inquiry ("LOIs") regarding Operator's systems in Port Orchard, Washington and Southern Shores, North Carolina. Relying on the Commission's Going Forward Order, the Bureau's orders addressed the restructured service offerings implemented in these communities beginning September 1, 1993, in which Operator eliminated its CPS tiers and offered instead only a basic service tier and a few a la carte channels. In the Port Orchard Order, the Bureau found that Operator's restructured service offerings do not constitute a clear evasion of our rate rules. Specifically, the Bureau found that Operator did not avoid rate regulation of most of its previous CPS channels because it moved those channels into a rate-regulated basic tier. With regard to the other channels, the Port Orchard Order permits Operator to treat its a la carte package as a new product tier that may be priced at the market level under the Going Forward Order. Relying on the Port Orchard Order, the Commission subsequently issued a separate Memorandum, Report and Order that dismissed complaints about CPS rates filed against numerous communities served by Operator. 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 were no CPS tiers in those communities, as of September 1, 1993, that were subject to rate regulation pursuant to Section 76.922 of our rules. Therefore, the Bureau dismissed all FCC Form 329 complaints filed against Operator in its Port Orchard franchise area for rates that were in effect on September 1, 1993. Discussion 6. The rate cards and channel line-up cards submitted by Operator for each of the subject communities indicate that Operator restructured its service offerings on September 1, 1993 in essentially the same way that it did in the Port Orchard Order. 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. Operator offered two a la carte channels in CUID No. CA1210; five a la carte channels in CUID No. NC0487; and six a la carte channels in CUID No. WA0313. 7. We feel that we have sufficient information regarding Operator's restructured offerings in the subject communities to conclude, in accordance with the Going Forward Order, that they should be treated the same way that we treated Operator's restructured offerings in the Port Orchard Order. As in the Port Orchard franchise area, 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 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 tiers. 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 violate any of the conditions for establishing those tiers outlined in the Going Forward Order. Conclusion 8. Accordingly, IT IS ORDERED that the a la carte packages created by Operator in the communities listed in the caption may be treated as 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 Operator in each of the communities listed in the caption 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. FEDERAL COMMUNICATIONS COMMISSION JoAnn Lucanik Chief, Financial Analysis and Compliance Division Cable Services Bureau