*Pages 1--6 from Microsoft Word - 37497* Federal Communications Commission DA 04- 1029 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Cablevision of Raritan Valley, Inc. Cablevision of New Jersey Cablevision of Monmouth Petitions for Determination of Effective Competition ) ) ) ) ) ) ) ) CSR 6108- E CSR 6169- E CSR 6176- E MEMORANDUM OPINION AND ORDER Adopted: April 15, 2004 Released: April 15, 2004 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. Cablevision Systems Corporation, through its various subsidiaries, has filed with the Commission three separate petitions pursuant to Section 76.7 of the Commission's rules for determinations of effective competition in several New Jersey communities (“ Communities”). 1 Cablevision alleges that its cable systems serving the Communities are subject to effective competition pursuant to Section 623( a) of the Communications Act of 1934, as amended (" Communications Act"), and Section 76.905( b)( 2) of the Commission's rules, and seeks revocation of the certifications of the local 1 47 C. F. R. § 76. 7. The communities listed in Cablevision’s Raritan Valley Petition are as follows: (1) Aberdeen (NJ0400); (2) Bound Brook (NJ0238); (3) Green Brook (NJ0234); (4) Old Bridge (NJ0398); (5) Raritan (NJ0291); South Bound Brook (NJ0235); (6) Sayreville (NJ0364); and Warren (NJ0236). The communities listed in Cablevision’s Bergen Petition are as follows: (1) Closter (NJ0374); (2) Cresskill (NJ0216); (3) Old Tappan (NJ0425); (4) River Vale (NJ0420); (5) Rockleigh (NJ0585); (6) Saddle River (NJ0584); (7) Woodcliff Lake (NJ0426); (8) Bogota (NJ0201); (9) Franklin Lakes (NJ0532); (10) Garfield (NJ0245); (11) Rochelle Park (NJ0315); (12) South Hackensack (NJ0276); (13) Upper Saddle River (NJ0458); (14) Kinnelon (NJ0171); (15) Haledon (NJ0318); (16) North Caldwell (NJ0181); (17) Prospect Park (NJ0333); (18) West Paterson (0180); (19) Wood- Ridge (NJ0326); and (20) South Orange (NJ0582). The communities listed in Cablevision’s Monmouth Petition are as follows: (1) Avon- by- the- Sea (NJ0277); (2) Brielle (NJ0280); (3) Colts Neck (NJ0556); (4) Englishtown (NJ0429); (5) Freehold (NJ0428); (6) Howell (NJ0531); (7) Interlaken (NJ0456); (8) Manalpan (NJ0430); (9) Manasquan (NJ0281) (10) Marlboro (NJ0557); (11) Millstone (NJ0617) (12) Neptune (NJ0283); (13) Ocean (NJ0161); (14) Sea Girt (NJ0284); (15) Spring Lake (NJ0286); (16) Upper Freehold (NJ0618); (17) Wall (NJ0288); (18) Jackson (NJ0346); (19) Washington (NJ0588); (20) Manville (NJ0290); and (21) Union Beach (NJ0401). 1 Federal Communications Commission DA 04- 1029 2 franchising authorities in the Communities to regulate basic cable service rates. 2 Cablevision claims the presence of effective competition in the Communities stems from the competing services provided by two direct broadcast satellite (" DBS") providers, DirecTV, Inc. and EchoStar Communications Corporation (“ EchoStar”). The Division of the Ratepayer Advocate for the State of New Jersey (“ Ratepayer Advocate”) filed comments in response to each of the three Petitions and Wall Township filed comments in response to Cablevision’s Monmouth Petition. Cablevision filed replies to the comments submitted. II. DISCUSSION 2. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition, 3 as that term is defined by Section 76.905 of the Commission's rules. 4 The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition is present within the relevant franchise area. Based on the record in this proceeding, Cablevision 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 Cablevision has provided evidence of the advertising of DBS service in news media serving the Communities. 7 We find that the programming of the DBS providers satisfies the Commission's program comparability criterion because the DBS providers offer more than 12 channels of video programming, including more than one non- broadcast channel. 8 Cablevision 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 areas. Cablevision has 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 EchoStar. 9 Therefore, the first prong of the competing provider test is satisfied. 2 47 U. S. C. § 543( a); 47 C. F. R. § 76. 905( b)( 2). 3 47 C. F. R. § 76.906. 4 47 C. F. R. § 76.905. 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 Petitions at 4 and Exhibit 1. 8 See 47 C. F. R. § 76.905( g). See also Petition at 4- 5. 9 Petitions at 2- 5. 2 Federal Communications Commission DA 04- 1029 3 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. Cablevision sought to determine the competing provider penetration in its franchise area by purchasing a report from SkyTrends that identified the number of subscribers attributable to the DBS providers within Communities on a franchise- specific zip code plus four basis. 10 In its opposition, the Ratepayer Advocate states that Cablevision’s pleading mixes data from different dates, and does not present complete counts, thus making it difficult to determine if competition exists. 11 The Ratepayer Advocate specifically states that Cablevision uses data from the 2000 Census to determine the number of households, but the SkyTrends data is from a survey conducted in 2002. The Ratepayer Advocate argues that the two year differential impacts the case because some of the Communities are very close to 15 percent. 12 The Ratepayer advocate asserts that if new household data were used, certain communities, such as Aberdeen, Sayreville, and Bound Brook would fall below 15 percent. 13 In its Opposition, Wall Township asserts that the general information provided by Cablevision in its petition does not enable it to verify the accuracy of the percentages submitted by the operator. 14 In reply, Cablevision asserts that the Commission’s rules permit it to rely upon the most recent Census data to measure homes passed in the Communities. 15 Cablevision additionally states that it has presented sufficient evidence and analyses showing that competing MVPDs serve 15 percent of the households in the Communities. 6. We find that the Ratepayer Advocate’s arguments are without merit. The Commission has held that 2000 Census data is sufficiently reliable for effective competition determinations. 16 The use of such data is consistent with precedent and permissible under our rules. Moreover, the Census 2000 data plus Certificate of Occupancy (“ CO”) and the tax records plus CO approach suggested by the Ratepayer Advocate is not demonstrably more reliable than the data submitted by Cablevision. As noted by Cablevision, COs are not necessarily a reliable indicator of an increase in the number of households in a community. First, COs do not automatically indicate that a residence is occupied. Second, a CO may actually be a re- issuance of a lost certificate. Finally, the issuance of a CO may indicate a diminution of the number of households in a franchise area -- such as when a small apartment building is demolished and replaced with a single family home. Likewise, the number of taxable residential properties in a franchise area is also unreliable because property is taxed whether or not it is occupied. To the extent that Wall Township has expressed concerns regarding the accuracy of SkyTrends’ data, we believe that the information provided in response by Cablevision and SkyTrends addresses those concerns. 17 As shown by Cablevision, the zip code plus four mapping and allocation process used by SkyTrends eliminates from its DBS subscriber total any residents associated with zip code plus four extensions outside of the Communities, as well as any multiple receiver data and subscribers with general delivery and non-deliverable zip code plus four extensions. 18 On this basis, we believe that Cablevision has provided 10 Id. at 6. 11 Ratepayer Advocate Opposition at 3 or 5 or 7- 10. 12 Id. 13 Ratepayer Advocate Opposition to Raritan Valley Petition at 4. 14 Wall Township Opposition to Monmouth Petition at 2. 15 Replies at 3. 16 See, e. g., Texas Cable Partners, 17 FCC Rcd 6373 (2002); Falcon Cable Systems, 17 FCC Rcd 4648 (2002). 17 Cablevision Reply at 10- 11. 18 See Petitions at Exhibit 7. 3 Federal Communications Commission DA 04- 1029 4 sufficient information to verify the accuracy of the SkyTrends mapping process. 7. Cablevision asserts that it is the largest MVPD in the Communities because its subscribership exceeds the aggregate DBS subscribership for the franchise area. 19 Based upon the aggregate DBS subscriber penetration level, calculated using 2000 Census household data, 20 we find that Cablevision 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. 21 Therefore, the second prong of the competing provider test is satisfied. Based on the foregoing, we conclude that Cablevision has submitted sufficient evidence demonstrating that its cable systems serving the Communities are subject to effective competition. III. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed by Cablevision Systems Corporation, Inc. ARE GRANTED. 9. IT IS FURTHER ORDERED that the certification to regulate basic cable service in the above- referenced New Jersey communities IS REVOKED. 10. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules. 22 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 19 See Petitions at 5- 6. 20 See id. According to Cablevision and SkyTrends, DBS penetration ranges from 15.02 percent in Old Tappan to 28.89 percent in Saddle River. See Exhibit 7 attached to Petitions. 21 The precise penetration rate for each franchise area is set forth on Attachment A. 22 47 C. F. R. § 0.283. 4 Federal Communications Commission DA 04- 1029 5 Attachment A Cablevision of Raritan Valley CSR 6108- E Franchise Area Households DBS Subs 23 Penetration Aberdeen 6421 1061 16.52% Bound Brook 3615 576 15.93% Green Brook 1893 418 22.08% Old Bridge 21438 3797 17.71% Raritan 2556 432 16.90% S. Bound Brook 1632 253 15.50% Sayreville 14955 2464 16.48% Warren 4629 885 19.12% Cablevision of New Jersey CSR 6169- E Franchise Area Households DBS Subs Penetration Closter 2789 447 16.03% Cresskill 2630 409 15.55% Old Tappan 1178 267 15.02% River Vale 3275 578 17.65% Rockleigh 74 17 22.97% Saddle River 1118 323 28.89% Woodcliff Lake 1824 281 15.41% Bogota 2874 448 15.59% Franklin Lakes 3322 734 22.10% Garfield 11250 1756 15.61% Rochelle Park 2061 331 16.06% South Hackensack 811 151 18.62% Upper Saddle River 2497 461 18.46% North Caldwell 2070 324 15.65% Kinnelon 3062 461 15.06% Haledon 2820 440 15.60% Prospect Park 1822 357 19.59% West Paterson 4397 738 16.78% Wood Ridge 3024 493 16.30% South Orange Village 5522 1050 19.01% 23 See Cablevision Reply at 7. 5 Federal Communications Commission DA 04- 1029 6 Cablevision of Monmouth CSR 6176- E Franchise Area Households DBS Subs Penetration Avon- by- the- Sea 1043 171 16.40% Brielle 1938 315 16.25% Colts Neck 3513 754 21.46% Englishtown 643 98 15.24% Freehold 10814 1867 17.26% Howell 16063 2949 18.36% Interlaken 386 58 15.03% Manalapan 10781 1949 18.08% Manasquan 2600 397 15.27% Marlboro 11478 2542 22.15% Millstone 2708 642 23.71% Neptune 10907 1729 15.85% Ocean 10254 1791 17.47% Sea Girt 942 182 19.32% Spring Lake 1463 256 17.50% Upper Freehold 1437 407 28.32% Wall 9437 1648 17.46% Jackson 14176 2419 17.06% Washington 4074 619 15.19% Manville 4115 624 15.16% Union Beach 2143 416 19.41% 6