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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of: ) ) ML MEDIA PARTNERS, L.P., ) Calistoga, CA trading as MULTIVISION CABLE TV ) Cotati, CA ) Rohnert Park, CA Appeal of Local Rate Order ) Sebastopol, CA of the Cable Telecommunications ) Sonoma, CA Joint Powers Agency ) St. Helena, CA MEMORANDUM OPINION AND ORDER Adopted: August 5, 1996 Released: August 14, 1996 By the Chief, Cable Services Bureau: INTRODUCTION 1. On September 21, 1994, ML Media Partners, L.P., trading as MultiVision Cable TV ("MultiVision"), filed with the Commission an appeal of the local rate order adopted on August 22, 1994 by its local franchising authority, the Cable Telecommunications Joint Powers Agency ("the JPA"), which serves the cities of Calistoga, Cotati, Rohnert Park, St. Helena, Sebastopol, and Sonoma, California ("the Cities"). The local rate order establishes a new rate schedule for MultiVision's basic service tier and directs MultiVision to implement certain rate reductions and to issue refunds to subscribers for the period September 1, 1993 to July 13, 1994. 2. MultiVision raises two issues in its appeal. First, MultiVision argues that the JPA erred by treating the operator's a la carte package as a regulated tier of service contrary to the objectives of the 1992 Cable Act and the Commission's a la carte rules and that this ruling constituted "retroactive rulemaking." Second, MultiVision argues that the JPA is incorrect in asserting that MultiVision instituted its a la carte package as a negative option in violation of FCC regulations. 3. In response, the JPA asserts that it properly applied the Commission's guidelines on a la carte packages in treating MultiVision's package as a regulated tier. Alternatively, if the Commission deems MultiVision's package as unregulated, the JPA contends that MultiVision instituted its package as a negative option in violation of FCC regulations. 4. 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 is determined 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." DISCUSSION A. MultiVision's A La Carte Offerings 5. MultiVision objects to the JPA's finding in the local rate order that the channels comprising its Basic Plus Package and a la carte offerings must be treated as regulated channels. MultiVision argues that its a la carte package complies with the Commission's a la carte rules in effect at the time the package was created and that the JPA's reliance upon the 15 interpretive guidelines announced by the Commission in March 1994 to determine the regulatory status of MultiVision's a la carte channels constituted "retroactive rulemaking." 6. The a la carte package at issue was first offered to MultiVision's subscribers on September 1, 1993, when MultiVision restructured the service offerings on its system serving the cities of Calistoga, Cotati, Rohnert Park, Sebastopol, Sonoma, and St. Helena, California. According to MultiVision, its restructuring involved offering five channels, WTBS, TNT, TNN, the Discovery Channel, and the Sci-Fi Channel, on a pay-per-channel basis and also as a package that MultiVision alleges is not subject to rate regulation. MultiVision states that the four channels, WTBS, TNT, TNN, and the Discovery Channel, were included in its cable programming service tier before September 1, 1993. The Sci-Fi channel is a new channel that was not available to any of the subscribers in the Cities before September 1, 1993, but was added to MultiVision's package on September 1, 1993 and has been available to all subscribers in the Cities since that date. 7. The facts presented in this appeal closely resemble the facts presented in one of our letter of inquiry orders on a la carte packages, CableVision Industries, Long Beach, California, 10 FCC Rcd 618 (Cab. Serv. Bur. 1994) ("CableVision Industries"), in which we resolved the regulatory status of an a la carte package offered by CableVision on its Long Beach, California system that is essentially the same as the a la carte package at issue in this appeal. Specifically, the a la carte package at issue in CableVision Industries was a five-channel package, made up of channels formerly available on the operator's cable programming service tier, which was offered as part of a restructuring. In that case, we found we could not say that it was clear that the a la carte package at issue was not a permissible non-rate-regulated offering under our rules. We further concluded that in light of the prior confusion over what constituted a permissible non-rate-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 could be treated as a new product tier under the Commission's Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Sixth Order on Reconsideration and Fifth Report and Order, MM Docket Nos. 92- 266 and 93-215, 10 FCC Rcd 1226 (1994) ("Going Forward Order"). 8. We find that the JPA's determination that MultiVision's a la carte package is a regulated tier is inconsistent with the action taken in the letter of inquiry orders, and in particular, in CableVision Industries. We further find that, in accordance with CableVision Industries, MultiVision's a la carte package should not be treated as a rate-regulated tier of service. Accordingly, we are remanding this issue to the JPA so that it can enter an order consistent with our findings in CableVision Industries. B. Negative Option Billing 9. The JPA argues in the alternative that MultiVision instituted its a la carte package as a negative option in violation of FCC regulations. The JPA, however, in its Opposition, does not state any facts in support of its contention. MultiVision denies that it violated the prohibition against negative option billing. Instead, MultiVision asserts that all subscribers were notified on or about September 1, 1993 of MultiVision's restructuring, including its optional a la carte offerings, in a subscriber mailing that was sent to all subscribers in compliance with the FCC's rate regulation transition rules. MultiVision points out that our rules indicate that the restructuring of tiers and equipment will not bring the negative option billing provision into play where subscribers continue to receive the same number of channels and the same equipment. MultiVision asserts that customers who had the a la carte services prior to September 1, 1993 continued to have them, and customers who did not have them prior to September 1, 1993 continued not to have them. MultiVision maintains that no one was given a service they did not already receive. 10. Negative option billing is the practice of giving customers a service that was not previously provided and then charging them for the service unless they specifically decline it. We explained in the Report and Order that the prohibition against negative option billing applies to "additions of a new tier of service or a new single channel of service without the affirmative assent of a subscriber." We further explained, however, the negative option billing provision would not apply to "a change in the mix of channels in a tier, including the additions or deletions of channels" provided that the operator did not change the fundamental nature of the of the tier. We also clarified that the prohibition does not apply to rate increases unless the price change is accompanied by a fundamental change in service, such as the addition of a new tier. Further, the restructuring of tiers and equipment will not bring the prohibition into play if subscribers continue to receive the same number of channels and the same equipment unless the restructuring effects a fundamental change in the nature of the service. 11. In this instance, after the restructuring, subscribers received the same number of channels they had originally ordered and the same exact programming services. Customers who had received MultiVision's cable programming service tier ("Full Basic Service"), which already included all four a la carte channels available before September 1, 1993, continued to receive those channels after the restructuring at no additional charge. Whereas, customers who had subscribed to the basic service tier ("Universal Service"), which did not include any of the a la carte channels, were not subscribed to the a la carte channels upon restructuring. We find that MultiVision's subscribers did not receive any channel not affirmatively requested. Therefore, we conclude that MultiVision did not violate the negative option billing provisions of our rules. ORDERING CLAUSES 12. Accordingly, IT IS ORDERED that the appeal filed by ML Media Partners, L.P., trading as MultiVision Cable TV, is GRANTED to the extent discussed herein. 13. IT IS FURTHER ORDERED that the appeal filed by ML Media Partners, L.P., trading as MultiVision Cable TV regarding the issue of MultiVision's advertisement of rates is dismissed as MOOT. 14. IT IS FURTHER ORDERED that the appeal filed by ML Media Partners, L.P., trading as MultiVision Cable TV regarding the issue of the accuracy of MultiVision's home wiring maintenance service charge, and field downgrade and disconnect charges is dismissed as MOOT. 15. IT IS FURTHER ORDERED that the appeal filed by ML Media Partners, L.P., trading as MultiVision Cable TV regarding the issue of the Cable Telecommunications Joint Powers Agency 's calculation of MultiVision's franchise fee obligations is dismissed as MOOT. 16. 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