*Pages 1--5 from Microsoft Word - 7958.doc* Federal Communications Commission DA 01- 808 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Time Warner Entertainment Company, L. P., d/ b/ a Time Warner Communications For Determination of Effective Competition ) ) ) ) ) ) ) ) ) ) ) ) ) CSR- 5600- E Gahanna, Ohio CUID No. OH0522 Westerville, Ohio CUID No. OH0517 Bexley, Ohio CUID No. OH0512 Obetz, Ohio CUID No. OH0878 MEMORANDUM OPINION AND ORDER Adopted: March 29, 2001 Released: April 2, 2001 By the Deputy Chief, Cable Services Bureau: I. INTRODUCTION 1. Time Warner Entertainment Company, L. P., d/ b/ a Time Warner Communications (“ Time Warner”) has filed a Petition for Special Relief seeking a determination of effective competition pursuant to Sections 76.7, 76. 905( b)( 4) and 76.907 of the Commission’s rules. 1 Time Warner asserts that it is subject to local exchange carrier (“ LEC”) 2 effective competition in the above- noted community units (the “Communities”) because of the presence of Ameritech New Media, Inc. ’s (“ Ameritech”) cable services in those Communities. Time Warner also requests that the Commission revoke the certification of the City 1 47 C. F. R. §§ 76. 7, 76. 905( b)( 4) and 76. 907. 2 The Communications Act of 1934, as amended, defines the term “local exchange carrier” as: any person that is engaged in the provision of telephone exchange service or exchange access. Such term does not include a person insofar as such person is engaged in the provision of a commercial mobile service under Section 332( c), except to the extent that the Commission finds that such service should be included in the definition of such term. 47 U. C. S. § 153( 26). 1 Federal Communications Commission DA 01- 808 2 of Westerville, Ohio to regulate Time Warner’s basic cable rates. 3 The petition is unopposed. For the reasons discussed below, the petition is granted. II. BACKGROUND 2. Section 623( a)( 4) of the Communications Act of 1934, as amended (“ Communications Act”) allows franchising authorities to become certified to regulate basic cable service rates of cable operators which are not subject to effective competition. 4 In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition as defined in the Communications Act. 5 The cable operator bears the burden of rebutting the presumption that such effective competition does not exist and so must provide evidence sufficient to demonstrate that effective competition, as defined by Section 76.905 of the Commission’s rules, is present in the franchise area. 6 Section 623( 1)( 1)( D) of the Communications Act provides that a cable operator is subject to effective competition, and therefore exempt from cable rate regulation, if a LEC or its affiliate offers video programming services directly to subscribers by any means (other than direct- to- home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, provided the video programming services thus offered are comparable to the video programming services provided by the unaffiliated cable operator in that area. 7 3. The Commission has stated that an incumbent cable operator could satisfy the “LEC” effective competition test by showing that the LEC is technically and actually able to provide services that substantially overlap the incumbent operator’s service in the franchise area. 8 The incumbent also must show that the LEC intends to build- out its cable system within a reasonable period of time if it has not already done so, that no regulatory, technical or other impediments to household service exist, that the LEC is marketing its service so that potential customers are aware that the LEC’s services may be purchased, that the LEC actually has begun to provide services, the extent of such services, the ease with which service may be expanded and the expected date for completion of construction in the franchise area. 9 3 With regard to this request, Time Warner states that, to the best of its knowledge, the remaining Communities are not certified with the Commission to regulate Time Warner’s basic service tier rates. However, Time Warner states that its pleading is filed so as to address the other remaining Communities in question in order to preserve Commission resources and prevent the filing of future effective competition petitions should the Communities that are not currently certified to regulate basic service rates apply for such certification in the future. Petition at 1, n. 1. Commission records confirm that the Communities of Gahanna, Bexley, and Obetz, Ohio are not certified with the Commission to regulate Time Warner’s basic service tier rates. 4 47 U. S. C. § 543( a)( 4). 5 47 U. S. C. § 543( 1); see also 47 C. F. R. § 76. 906. 6 47 C. F. R. § 76. 905; see also 47 C. F. R. § 76. 906 & 76. 907. 7 Communications Act, § 623( 1)( 1)( D), 47 U. S. C. § 543( 1)( 1)( D); see also 47 C. F. R. § 76. 905( b)( 4). This fourth statutory effective competition test within Section 623( 1) may be referred to as the “LEC” effective competition test. 8 See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 14 FCC Rcd 5296, 5305 (1999) (“ Cable Reform Order”). 9 Id. 2 Federal Communications Commission DA 01- 808 3 III. DISCUSSION 4. Time Warner states that it operates a cable television system serving each of the above-captioned Communities. Time Warner also states that Ameritech New Media operates a franchised cable system that serves each of the same Communities. With regard to the LEC affiliation requirement, Time Warner asserts that Ameritech New Media is a wholly- owned subsidiary of the Ameritech Corporation, a local exchange carrier serving customers in Ohio, Illinois, Indiana, Michigan and Wisconsin. 10 Ameritech Corporation is a LEC as defined by the Communications Act, and Ameritech New Media meets the Commission’s definition of an MVPD. 11 Therefore, as to the first part of the LEC effective competition test, which requires that the alleged competitive service be provided by a LEC or its affiliate (or any multichannel video programming distributor (“ MVPD”) using the facilities of such LEC or its affiliate), Time Warner has provided sufficient evidence demonstrating that Ameritech New Media is an MVPD affiliated with a LEC. Accordingly, we find that Time Warner satisfies the affiliation prong of the LEC effective competition test. We also find that Time Warner is unaffiliated with both Ameritech Corporation and Ameritech New Media. 5. With regard to the requirement that the LEC competitor offer video programming service in the unaffiliated cable operator’s franchise area, Time Warner asserts that Ameritech is now providing such service to the subscribers in the relevant Communities. To substantiate its claim, Time Warner has submitted maps to indicate that Ameritech has already completed construction in the Communities and is therefore physically able to deliver service to potential subscribers. 12 As further support, Time Warner has submitted Ameritech’s marketing materials targeted to the Communities, as well as newspaper articles relating to Ameritech’s service, in order to demonstrate that Ameritech is currently offering service to the Communities. 13 In addition, Time Warner also has provided, with the exception of the Village of Obetz, the cover letter accompanying Ameritech’s most recent franchise fee payment in each Community. 14 Time Warner asserts that because franchise fees are calculated based on revenues from subscribers in any given community, such payment of franchise fees is direct evidence of Ameritech’s service to subscribers in the Communities. 15 While franchise fee information was not available for the Village of Obetz, Time Warner states that a Time Warner representative called Ameritech to inquire whether Ameritech is presently offering cable service to subscribers in the Village of Obetz and an Ameritech representative indicated that such service was available in Obetz. 16 Moreover, as Time Warner 10 Time Warner Petition at 4. Time Warner also notes that the Cable Services Bureau previously found that Time Warner has provided sufficient evidence in the past demonstrating that Ameritech New Media is a multichannel video programming distributor (“ MVPD”) wholly owned by a LEC. See Time Warner Entertainment Co., L. P., d/ b/ a Warner Cable (Columbus, OH), 11 FCC Rcd 17298, 17302 (1996); Time Warner Entertainment Co., L. P., d/ b/ a Warner Cable (Upper Arlington, OH), 11 FCC Rcd 17393, 17396 (1996). 11 See 47 C. F. R. § 76. 905( d). 12 Time Warner’s exhibits are attached in one binder (the “Exhibit Binder”). Tab 1 of the Exhibit Binder contains a map indicating Ameritech’s overlap in all Time Warner communities in the Columbus, Ohio metropolitan area, including the Communities that are the subject of this petition. Tab 2 in the Exhibit Binder contains a specific map pertaining to Bexley, Ohio; Tab 3 contains a map pertaining to Gahanna, Ohio; Tab 4 contains a map relating to Westerville, Ohio; and Tab 5 includes a map pertaining to Obetz, Ohio. 13 Time Warner Exhibit Binder, Tab 1. 14 Time Warner Exhibit Binder, Tabs 2, 3 & 4. 15 Time Warner Petition at 6. 16 Id., attached Affidavit from Kimberly Charles, Time Warner’s Manager of Government Relations. 3 Federal Communications Commission DA 01- 808 4 has stated, the steps taken by Ameritech pursuant to its franchises, coupled with Ameritech’s actual franchised service to subscribers in the Communities for only a minimal additional investment, prove that there are no regulatory, technical or other impediments to the receipt of Ameritech’s service by residents of the Communities. 17 6. Time Warner also demonstrated that potential subscribers in the Communities are reasonably aware that they may purchase the services of Ameritech. Time Warner has submitted exhibits to illustrate that Ameritech has engaged in extensive marketing efforts and has submitted newspaper articles in order to show that residents in each Community are reasonably aware that they may purchase Ameritech’s service. 18 As noted by Time Warner, because subscribers in the Communities already have signed up for of Ameritech’s service, it must be assumed that other residents throughout the Communities are reasonably aware of Ameritech’s cable service offerings. 19 Based on all of the information before us, we find that Ameritech is offering service in the relevant Communities sufficient to demonstrate the presence of effective competition. 7. We also find that Time Warner has submitted sufficient evidence to demonstrate that the programming of Ameritech is comparable to that which it provides. The channel lineup for Ameritech submitted by Time Warner establishes that Ameritech offers over 80 channels, including nonbroadcast programming services such as ESPN, Home Box Office (“ HBO”) and CNN, as well as several local broadcast channels. 20 This channel lineup compares closely with the programming available on Time Warner’s systems serving the Communities. 21 Accordingly, we find that Time Warner has satisfied the Commission’s programming comparability criterion. 8. Finally, Time Warner asserts that residents of the Communities have benefited from its competitive response to competition presented from Ameritech. Specifically, Time Warner states that it has upgraded its cable plant to 750MHz and introduced Road Runner, its high- speed online service. 22 Time Warner also notes that it has introduced digital cable to its customers in the Communities and is providing new channels for enhanced subscriber choice. 23 Additionally, Time Warner states that it moved the Disney Channel to its expanded basic package, added e- mail customer service, added a customer service website, and shortened its appointment window to two hours. 24 In conclusion, as Time Warner has submitted evidence sufficient to demonstrate that its cable system serving the Communities is subject to LEC effective competition from Ameritech, its petition is granted, and the certification of the City of Westerville, Ohio, is revoked. 17 Time Warner Petition at 7. 18 Time Warner Exhibit Binder, Tab 1. 19 Time Warner Petition at 9. 20 Id. at 10, Exhibit Binder at Tabs 2, 3, 4, and 5. 21 Id. 22 Time Warner Petition at 10. 23 Id. 24 Id. 4 Federal Communications Commission DA 01- 808 5 IV. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the Petition for Special Relief filed by Time Warner Entertainment Company, L. P., d/ b/ a Time Warner Communications seeking a determination that its cable television system serving Gahanna, Westerville, Bexley, and Obetz, Ohio is subject to effective competition IS GRANTED. 10. IT IS FURTHER ORDERED that the certification of Westerville, Ohio to regulate the basic cable rates of Westerville, Ohio IS REVOKED. 11. This action is taken pursuant to delegated authority under Section 0.321 of the Commission’s rules, as amended. 25 FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief Cable Services Bureau 25 47 C. F. R. § 0. 321. 5