*Pages 1--4 from Microsoft Word - 25195.doc* Federal Communications Commission DA 03- 474 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Century- TCI California, L. P. Adelphia Cablevision of Orange County II L. L. C. Adelphia California Cablevision L. L. C. Adelphia Cablevision of Santa Ana L. L. C. Petition for Determination of Effective Competition in Various California Communities ) ) ) ) ) ) ) ) ) ) ) ) CSR 5902- E MEMORANDUM OPINION AND ORDER Adopted: February 14, 2003 Released: February 21, 2003 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. Century- TCI California, L. P., Adelphia Cablevision of Orange County II L. L. C., Adelphia California Cablevision L. L. C., and Adelphia Cablevision of Santa Ana L. L. C. d/ b/ a Adelphia Cable Communications (“ Adelphia”) has filed with the Commission a petition pursuant to Section 623( a)( 1) of the Communications Act of 1934, as amended (" Communications Act") and Sections 76.7( a)( 1) and 76.905( b)( 1) of the Commission's rules for a determination of effective competition in thirteen California communities (the “Communities”). 1 Adelphia alleges that its cable systems serving the Communities are subject to effective competition and therefore exempt from cable rate regulation because of competing services provided by two direct broadcast satellite (" DBS") providers, DirecTV, Inc. (“ DirecTV”) and DISH Network (“ DISH”). No opposition to the petition was filed. II. DISCUSSION 2. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition, 2 as that term is defined by Section 76. 905 of the Commission's rules. 3 The cable operator bears the burden of rebutting the presumption that effective competition does not exist 1 See 47 U. S. C. § 543( a)( 1); 47 C. F. R. §§ 76. 7( a)( 1) and 76. 905( b)( 1). The Communities are Anaheim, Baldwin Park, Brea, Buena Park, El Monte, La Habra, La Habra Heights, La Puente, Placentia, Pico Rivera, Santa Ana, Villa Park, and Yorba Linda. The cities of Anaheim, Baldwin Park, Brea, Buena Park, La Habra, La Puente, Pico Rivera, Villa Park, and Yorba Linda are certified to regulate basic cable service rates. 2 47 C. F. R. § 76.906. 3 47 C. F. R. § 76.905. 1 Federal Communications Commission DA 03- 474 2 with evidence that effective competition is present within the relevant franchise area. 4 Based on the record in this proceeding, Adelphia has met this burden. 3. Section 623( l)( 1)( B) of the Communications Act provides that a cable operator is subject to effective competition if the franchise area is (a) served by at least two unaffiliated multi- channel video programming distributors (“ MVPD”) each of which offers comparable video programming to at least 50 percent of the households in the franchise area; and (b) the number of households subscribing to programming services offered by MVPDs other than the largest MVPD exceeds fifteen percent of the households in the franchise area. 5 4. Turning to the first prong of the competing provider test, DBS service is presumed to be technically available due to its nationwide satellite footprint, and presumed to be actually available if households in a franchise area are made reasonably aware that the service is available. 6 Adelphia has provided evidence of the advertising of DBS service in the news media serving the Communities. 7 With respect to the issue of program comparability, we find that the programming of the DBS providers satisfies the Commission's program comparability criterion because the DBS providers offer at least 12 channels of video programming, including at least one non- broadcast channel. 8 We find that Adelphia has demonstrated that the Communities are served by at least two unaffiliated MVPDs, namely the two DBS providers, each of which offers comparable video programming to at least 50 percent of the households in the franchise area. Adelphia also demonstrated that the two DBS providers are physically able to offer MVPD service to subscribers in the Communities, that there exists no regulatory, technical, or other impediments to households within the Communities taking the services of the DBS providers, and that potential subscribers in the Communities have been made reasonably aware of the MVPD services of DirecTV and DISH. 9 Therefore, the first prong of the competing provider test is satisfied. 5. The second prong of the competing provider test requires that the number of households subscribing to MVPDs, other than the largest MVPD, exceed 15 percent of the households in a franchise area. Adelphia sought to determine the competing provider penetration in the Communities by purchasing a report from SkyTrends that identified the number of subscribers attributable to the DBS providers in the Communities on a five- digit zip code basis. 10 Adelphia asserts that it is the largest MVPD in the Communities because Adelphia’s subscribership exceeds the aggregate DBS subscribership for those franchise areas. 11 Based upon the aggregate DBS subscriber penetration levels, as reflected in Attachment A, calculated using Census 2000 household data, 12 we find that Adelphia has demonstrated that the number of households subscribing to programming services offered by MVPDs, other than the largest MVPD, exceeds 15 percent of the households in the Communities. Therefore, the second prong of the competing provider test is satisfied as to the Communities. Based on the foregoing, we conclude that 4 See 47 C. F. R. §§ 76. 906 and 907. 5 47 U. S. C. §543( 1)( 1)( B); see also 47 C. F. R. §76.905( b)( 2). 6 See MediaOne of Georgia, 12 FCC Rcd 19406 (1997). 7 See Adelphia Petition at 4- 5 and Exhibit A. 8 See 47 C. F. R. §76.905( g); see also Adelphia Petition at 6- 7 and Exhibits B, C, and D. 9 See Adelphia Petition at 4. 10 Id. and Exhibit F. 11 Id. at 7 and Exhibit E. 12 Id. at 7- 14 and Exhibit G. 2 Federal Communications Commission DA 03- 474 3 Adelphia has submitted sufficient evidence demonstrating that its cable systems serving the Communities are subject to effective competition. III. ORDERING CLAUSES 6. Accordingly, IT IS ORDERED that the petition for a determination of effective competition filed in the captioned proceeding by Century- TCI California, L. P., Adelphia Cablevision of Orange County II L. L. C., Adelphia California Cablevision L. L. C., and Adelphia Cablevision of Santa Ana L. L. C. d/ b/ a Adelphia Cable Communications IS GRANTED. 7. IT IS FURTHER ORDERED that the certifications of Anaheim, Baldwin Park, Brea, Buena Park, La Habra, La Puente, Pico Rivera, Villa Park, and Yorba Linda to regulate cable service rates are revoked. 8. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules. 13 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 13 47 C. F. R. § 0.283. 3 Federal Communications Commission DA 03- 474 4 ATTACHMENT A CSR- 5902- E COMMUNITIES SERVED BY CENTURY- TCI CALIFORNIA, L. P., ADELPHIA CABLEVISION OF ORANGE COUNTY II L. L. C., ADELPHIA CALIFORNIA CABLEVISION L. L. C, AND ADELPHIA CABLEVISION OF SANTA ANA L. L. C. D/ B/ A ADELPHIA CABLE COMMUNICATIONS 2000 Estimated Census DBS Adelphia Communities CUIDS CPR* Households + Subscribers + Subscribers + Anaheim CA0813 19. 3% 96, 969 18, 754 38, 428 Baldwin Park CA1313 19. 6% 16, 961 3, 326 3,778 Brea CA0016 21. 8% 13, 067 2, 844 7, 205 Buena Park CA0895 19. 4% 23, 332 4, 531 10, 193 El Monte CA1021 17. 4% 27, 034 4, 697 7, 430 La Habra CA0018 19. 0% 18, 947 3, 591 8, 904 La Habra Heights CA0802 27. 0% 1,887 509 1,107 La Puente CA1172 18. 1% 9,461 1,709 3,050 Placentia CA1179 19.6% 15,037 2,945 8,292 Pico Rivera CA1176 20. 4% 16, 468 3, 364 4, 813 Santa Ana CA0957 17. 6% 73, 002 12, 837 22, 370 Villa Park CA0913 27. 2% 1, 950 530 1, 384 Yorba Linda CA0772 23. 4% 19, 252 4, 510 13, 441 *CPR = Percent of competitive DBS penetration rate. + See Petition at 7- 14 and Exhibits G, F, and E. 4