*Pages 1--8 from Microsoft Word - 37302* Federal Communications Commission DA 04- 948 Before the Federal Communications Commission Washington, D. C. 20554 In the Matters of: The Helicon Group, L. P. d/ b/ a Charter Communications Comcast Cablevision of Lompoc, LLC MCC Missouri, LLC and Mediacom Southeast, LLC Mediacom Minnesota, LLC Charter Communications VI, LLC d/ b/ a Charter CoxCom, Inc. d/ b/ a Cox Communications of West Texas MCC Iowa, LLC Marcus Cable of Alabama, LLC Texas Cable Partners, LP d/ b/ a Time Warner Cable CC Michigan, LLC d/ b/ a Charter Communications CC VIII, LLC d/ b/ a Charter Nineteen Unopposed Petitions for Determination of Effective Competition in Forty Seven Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) File Nos. CSR 6016- E File No. CSR 6247- E File No. CSR 6253- E File Nos. CSR 6013- E & 6014- E File Nos. CSR 6045- E & 6046- E File No. CSR 6170- E File Nos. 6160- E, 6161- E, 6162- E, 6215- E, 6217- E, 6218- E & 6221- E File No. CSR 6171- E File No. CSR 6102- E File No. CSR 6137- E File No. CSR 6099- E MEMORANDUM OPINION AND ORDER Adopted: April 2, 2004 Released: April 6, 2004 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers nineteen unopposed petitions which cable operators (the “Cable Operators”) have filed with the Commission pursuant to Sections 76.7, 76.905( b)( 2) and 76.907 of the Commission's rules for a determination that such cable operators are subject to effective competition 1 Federal Communications Commission DA 04- 948 2 pursuant to Section 623( a)( 2) of the Communications Act of 1934, as amended (" Communications Act"), 1 and the Commission's implementing rules, 2 and are therefore exempt from cable rate regulation in the communities listed in Attachment A (the “Communities”). No oppositions to the petitions were filed. Finding that the Cable Operators are subject to effective competition in the listed Communities, we grant the petitions. II. DISCUSSION A. The “Competing Provider” Effective Competition Test 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. 5 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 multichannel video programming distributors (“ MVPDs”), 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. 6 3. In each of the petitions, the Cable Operators claim that 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, and in some instances by another unaffiliated MVPD. Turning to the first prong of the competing provider test, we find that the programming of the DBS providers, DirecTV and EchoStar, and of the other MVPDs, satisfies the Commission's programming comparability criterion. 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. 7 The Cable Operators provided evidence of the advertising of DBS service in local and national media serving the franchise areas. 8 Moreover, the two DBS providers’ subscriber growth reached approximately 20.4 million as of June 30, 2003, comprising approximately 20% of all MVPD subscribers nationwide; DirecTV has become the second largest, and EchoStar the fourth largest, MVPD provider as of June 2003. 9 We therefore conclude that the population of the Communities is reasonably aware of the availability of DBS services for purposes of the first prong of the competing provider test. With respect to the issue of program comparability, we find that the 1 47 U. S. C. §§ 543( a)( 2) & (l)( i)-( iv). 2 47 C. F. R. § 76.905( b)( 2). 3 47 C. F. R. § 76.906. 4 47 C. F. R. § 76.905. 5 See 47 C. F. R. §§ 76.906 & 907. 6 Section 623( 1)( 1)( B) of the Communications Act sets forth the “competing provider” test. See 47 U. S. C. § 543( 1)( 1)( B); see also 47 C. F. R. § 76.905( b)( 2). 7 See MediaOne of Georgia, 12 FCC Rcd 19406 (1997). 8 See e. g., Comcast Petition at 4 & Exhibit 1; Mediacom Petition at 3- 4 & Exhibit 1. 9 Tenth Annual Assessment of the Status of Competition in the Market for Delivery of Video Programming, FCC 04-5 at ¶ 65- 67 (rel. Jan. 28, 2004). 2 Federal Communications Commission DA 04- 948 3 programming of the competing MVPDs satisfies the Commission's program comparability criterion because each offer more than 12 channels of video programming, including more than one non- broadcast channel. 10 We find that the Cable Operators have demonstrated that the Communities are served by at least two unaffiliated MVPDs each of which offers comparable video programming to at least 50 percent of the households in their franchise areas. 11 Accordingly, we conclude that the first prong of the competing provider test is satisfied. 4. 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. The Cable Operators provided SkyTrends Effective Competition Tracking Reports utilizing U. S Postal Zip Code data. The SkyTrends reports provide the number of DBS subscribers within the Communities. 12 The number of DBS subscribers is compared with the number of 2000 Census households in the Communities to demonstrate that the DBS MVPDs collectively have attained MVPD subscriber penetration levels ranging from 16.01 percent in Berlin Township, Minnesota to 47.54 percent in the City of West Branch Minnesota as more fully set forth on Attachment A. 5. In some instances where Zip Codes encompassed areas beyond the cable operators’ franchise area, SkyTrends utilized Zip Code+ 4 data. Zip Code+ 4 data permits SkyTrends to more accurately determine whether DBS customers are located within the franchise area at issue. Using this information, SkyTrends removed from each Zip Code identified by the Cable Operators those DBS subscribers not located within the franchise area boundaries. The number of DBS subscribers actually located within the Communities were then compared with the number of 2000 Census franchise area households. In each case, the information provided by the Cable Operators established a sufficient basis for finding that the second prong of the competing provider test is met in the Communities. B. The “Low Penetration” Effective Competition Test 6. Another test by which a cable system will be deemed subject to effective competition is if fewer than 30 percent of the households in the systems' franchise area subscribe to the system's service. 13 The two Cable Operators listed on Attachment A provided information showing that less than 30 percent of the households within their franchise areas subscribe to their cable services. The Cable Operators’ household data were taken from the 2000 Census. Therefore, we find that the two Cable Operators listed on Attachment A are subject to effective competition pursuant to the “low penetration” effective competition test in their franchise areas. 7. Based on the foregoing, we conclude that nineteen Cable Operators listed on Attachment A have submitted sufficient evidence to demonstrate that their cable systems are subject to effective competition. 10 47 C. F. R. § 76.905( g); see e. g., Mediacom Petition at 4- 5 & Exhibits 2 & 3; Comcast Petition at 4- 5 & Exhibits B & D. 11 Evidence with respect to the other MVPDs was comparable, in all essential respects to that provided with respect to the DBS providers. 12 See e. g., Comcast Petition at 5- 7 & Exhibits 4, 5 & 6; Mediacom Petition at 6- 8 & Exhibits G & F.. 13 See 47 U. S. C § 543( I)( I)( A) & 47 C. F. R. § 76.905( b)( l) (the “low penetration” effective competition test). 3 Federal Communications Commission DA 04- 948 4 III. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that the petitions filed by the Cable Operators listed on Attachment A for a determination of effective competition in the Communities listed thereon ARE HEREBY GRANTED. 9. IT IS FURTHER ORDERED that any certification to regulate basic cable services granted to any of the franchising authorities overseeing the Cable Operators IS HEREBY REVOKED. 10. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules. 14 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division Media Bureau 14 47 C. F. R. § 0.283. 4 Federal Communications Commission DA 04- 948 5 ATTACHMENT A Cable Operators Subject to “Competing Carrier” Effective Competition Franchise Areas DBS Households DBS Penetration Subscribers Levels Comcast Cablevision of Lompoc, LLC; CSR 6247- E Lompoc, CA 2,474 13,059 18.94% Buellton, CA 308 1,433 21.49% Santa Maria, CA 4,829 22,146 21.81% Solvang, CA 353 2,185 16.16% MCC Missouri LLC and Mediacom Southeast LLC; CSR 6253- E Battlefield, MO 286 857 33.37% Strafford, MO 222 683 32.50% Walnut Grove, MO 50 264 18.94% Willard, MO 396 1,154 34.32% Greene County, MO* 7,870 25,492 30.87% *Unincorporated portion of county. Mediacom Minnesota LLC; CSR 6013- E Cloquet, MN 1,079 4,636 23.27% The Helicon Group, LP d/ b/ a Charter Communications; CSR 6016- E Haverhill/ Woodsville, NH 15 657 2,212 29.7% Charter Communications VI, LLC d/ b/ a Charter CSR 6045- E Jennings, LA 1,419 6,838 20.75% CoxCom, Inc. d/ b/ a Cox Communications of West Texas; CSR 6170- E 16 Midland, TX 6,041 35,674 16.93% Mediacom Minnesota LLC; CSR 6014- E Savage, MN 1,624 6,807 23.86% Marcus Cable of Alabama, LLC; CSR 6171- E Selma, AL 1,586 8,196 19.35% 15 The franchise area consists of both Haverhill and Woodsville, NH. See Supplement to Petition at 1- 7. 16 Because we find that CoxCom is subject to competing provider effective competition in its Midland, TX franchise area, we need not address its arguments related to “LEC” effective competition. 5 Federal Communications Commission DA 04- 948 6 ATTACHMENT A (Cont’D) Cable Operators Subject to “Competing Carrier” Effective Competition Franchise Areas DBS Households DBS Penetration Subscribers Levels MCC Iowa LLC CSR 6160- E; CSR 6161- E; CSR 6162- E; CSR 6215- E; CSR 6217- E; CSR 6218- E; & CSR 6221- E Ankeny, Iowa 1,828 10,339 17.68% Belmond, Iowa 17 327 1,119 29.22% Clarion, Iowa 323 1,255 25.74% Dyersville, Iowa 356 1,578 22.56% Monticello, Iowa 441 1,538 28.67% Story City, Iowa 18 244 1,321 18.47% Sumner, Iowa 183 888 20.61% Texas Cable Partners, L. P. d/ b/ a Time Warner Cable; CSR 6102- E Cureo, TX 1,181 4,295 27.50% Kerrville, TX 3,262 14,921 21.86% 17 The city of Belmond filed a letter simply opposing the petition, but provided no argument to support denial of MCC Iowa’s petition. 18 Story City filed a letter simply opposing the petition, but provided no argument to support denial of MCC Iowa’s petition. 6 Federal Communications Commission DA 04- 948 7 ATTACHMENT A (Cont’d) Cable Operators Subject to “Competing Carrier” Effective Competition Application of ZIP CODE+ 4 Data DBS DBS Penetration Franchise Areas Subscribers 19 Households Levels CC Michigan, LLC d/ b/ a Charter Communications: CSR 6137- E Berlin Township, MI 402 2,511 16.01% Village of Byron, MI 92 218 42.20% Village of Caro, MI 512 1,738 29.46% Cass City, MI 307 1,100 27.91% Village of Colon, MI 128 521 24.57% City of Durand, MI 361 1,481 24.38% City of Gladwin , MI 339 1,234 27.47% Grayling Township, MI 670 2,420 27.69% Huron Township, MI 788 4,745 16.61% City of Lapeer, MI 847 3,443 24.60% Mayfield Township, MI 661 2,685 24.62% Mills Township , MI 395 1,705 23.17% City of Sturgis, MI 802 4,293 18.68% Sturgis Township, MI 157 841 18.67% City of West Branch, MI 396 833 47.54% CC VIII, LLC d/ b/ a Charter; CSR 6099- E Chippewa Falls, WI 1,027 5,638 18.22% Eagle Point, WI 178 978 18.20% Hallie, WI 307 1,690 18.17% Seymour, WI 301 1,108 27.17% Tilden, WI 72 399 18.05% Charter Communications VI, LLC d/ b/ a Charter; CSR 6046- E Oakdale, LA 387 2,246 17. 23% 19 As determined using Zip Code+ 4 data. 7 Federal Communications Commission DA 04- 948 8 ATTACHMENT A (Cont’d) Cable Operators Subject to “Low Penetration” Effective Competition Franchise Areas Franchise Area Cable Penetration Households Subscribers Level Charter Communications VI, LLC d/ b/ a Charter; CSR 6045- E Livingston Parish, LA 32,639 5,033 15.42% Charter Communications VI, LLC d/ b/ a Charter; CSR 6046- E Cameron Parish, LA 3,592 822 22.88% 8