*Pages 1--8 from Microsoft Word - 48650.doc* Federal Communications Commission DA 05- 1394 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Cable One, Inc. MCC Iowa, LLC MCC Iowa, LLC & Mediacom Iowa, LLC Mediacom Iowa, LLC MCC Iowa, LLC & MCC Illinois, LLC Twenty- Four Unopposed Petitions for Determination of Effective Competition in 85 Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6366- E, 6367- E, 6368- E, 6369- E CSR 6435- E, 6437- E, 6450- E, 6479- E, 6483- E, 6638- E, 6641- E, 6644- E, 6645- E, 6646- E, 6655- E, 6659- E CSR 6436- E, 6642- E, 6643- E, 6649- E CSR 6590- E, 6647- E, 6648- E CSR 6601- E MEMORANDUM OPINION AND ORDER Adopted: May 18, 2005 Released: May 19, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers twenty- four 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 operators are subject to effective competition pursuant to Section 623( 1) 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 opposition to any petition was filed. Finding that the Cable Operators are subject to effective competition in the listed Communities, we grant the petitions. 2. In the absence of a demonstration to the contrary, cable systems are presumed not to be 1 47 U. S. C. § 543( 1). 2 47 C. F. R. § 76.905( b)( 4). 1 Federal Communications Commission DA 05- 1394 2 subject to effective competition, 3 as that term is defined by Section 623( 1) of the Communications Act of 1934, as amended, and 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 II. DISCUSSION A. Competing Provider Effective Competition 3. Section 623( l)( 1)( B) of the Communications Act provides that a cable operator is subject to effective competition if its 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. 6 Turning to the first prong of this test, we find that the DBS service of DirecTV Inc. (“ DirectTV”) and DISH Network (“ Dish”) 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 two DBS providers’ subscriber growth reached approximately 23.16 million as of June 30, 2004, comprising approximately 23 percent of all MVPD subscribers nationwide; DirecTV has become the second largest, and DISH the fourth largest, MVPD provider. 8 In view of this DBS growth data, and the data discussed below showing that more than 15 percent of the households in each of the communities listed on Attachment A are DBS subscribers, we conclude that the population of the communities at issue here may be deemed 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 programming of the DBS providers satisfies the Commission's program comparability criterion because the DBS providers offer substantially more than 12 channels of video programming, including more than one non- broadcast channel. 9 We further find that the Cable Operators have 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. Therefore, 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 sought to determine the competing provider penetration in the Communities by purchasing a subscriber tracking report that identified the number of subscribers attributable to the DBS providers within the Communities on a zip code basis. The Cable Operators assert that they are the largest MVPD in the Communities because their subscribership exceeds the aggregate DBS 3 47 C. F. R. § 76.906. 4 See 47 U. S. C. § 543( 1) and 47 C. F. R. § 76. 905. 5 See 47 C. F. R. §§ 76.906 & 907. 6 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 Eleventh Annual Assessment of the Status of Competition in the Market for Delivery of Video Programming, FCC 05- 13, at ¶¶ 54- 55 (rel. Feb. 4, 2005). 9 See 47 C. F. R. § 76.905( g). 2 Federal Communications Commission DA 05- 1394 3 subscribership for those franchise areas. Based upon the aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that the Cable Operator’s have 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. Based on the foregoing, we conclude that the Cable Operators have submitted sufficient evidence demonstrating that their cable systems serving the Communities set forth on Attachment A are subject to competing provider effective competition. B. Low Penetration Effective Competition 5. Section 623( l)( 1)( A) of the Communications Act provides that a cable operator is subject to effective competition, and therefore exempt from cable rate regulation, if “fewer than 30 percent of the households in the franchise area subscribe to the cable service of the cable system.” 10 The Cable Operator listed on Attachment A provided information showing that less than 30 percent of the households within the franchise areas subscribe to its cable services. Accordingly, we conclude that the Cable Operator has demonstrated the existence of low penetration effective competition under our rules. 6. Based on the foregoing, we conclude that the Cable Operators listed on Attachment A have submitted sufficient evidence to demonstrate that their cable systems are subject to effective competition. III. ORDERING CLAUSES 7. 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 GRANTED. 8. IT IS FURTHER ORDERED that the certifications to regulate basic cable service rates granted to any of the local franchising authorities overseeing the Cable Operators ARE REVOKED. 9. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules. 11 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 10 47 U. S. C § 543( l)( l)( A). 11 47 C. F. R. § 0.283. 3 Federal Communications Commission DA 05- 1394 4 Attachment A Cable Operators Subject to Competing Provider Effective Competition CABLE ONE, INC.: CSR 6366- E, 6367- E, 6368- E & 6369- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Chanute KS0003 15.03% 3,864 581 Independence KS0004 19.08% 4,149 792 Neodesha KS0005 21.71% 1,142 248 Montgomery County KS0359 21.10% 3,739 789 Emporia KS0001 15.37% 10,253 1,576 Emporia (uninc. Lyon) KS 0626 43.43% 2,321 1,008 Parsons KS0006 15.50% 4,738 734 MCC IOWA, LLC: CSR 6435- E, 6437- E, 6450- E, 6479- E, 6483- E, 6638- E, 6641- E, 6644- E, 6645- E, 6646- E, 6655- E, 6659- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Denison IA0016 25.02% 2,674 669 Red Oak IA0038 15.58% 2,670 416 Villisca IA0484 18.75% 576 108 Altoona IA0124 26.47% 3,850 1,019 Bondurant IA0196 25.04% 659 165 Carlisle IA0122 22.20% 1,338 297 IA0963 Clive IA0039 19.99% 4,752 950 IA0964 Des Moines IA0036 15.82% 80,504 12,738 Grimes IA0394 32.06% 1,887 605 Indianola IA0105 16.76% 4,748 796 Johnston IA0123 23.97% 3,216 771 4 Federal Communications Commission DA 05- 1394 5 Norwalk IA0126 23.42% 2,344 549 Pleasant Hill IA0125 24.16% 1,900 459 Urbandale IA0032 19.64% 11,484 2,255 IA0968 W. Des Moines IA0041 15.45% 19,826 3,064 IA0966 Nevada IA0143 20.14% 2716 547 Camanche IA0062 15.78% 1,781 281 Dewitt IA0101 17.14% 2.071 355 Erie IA0333 19.05% 630 120 Lyndon IA1054 21.19% 236 50 Prophetstown IA0332 22.13% 809 179 Lisbon IA0200 25.82% 728 188 Mount Vernon IA0199 19.13% 1,129 216 North Liberty IA0383 20.85% 2,259 471 Solon IA0384 21.01% 457 96 Swisher IA0444 15.36% 306 47 Tiffin IA0679 20.45% 440 90 West Branch IA0244 17.26% 840 145 West Liberty IA0167 28.52% 1,150 328 Barnum IA0719 41.79% 67 28 Clare IA0720 34.18% 79 27 Dakota City IA0063 21.07% 356 75 Humboldt IA0043 27.23% 1,965 535 Lake City IA0359 30.81% 779 240 Manson IA0168 26.41% 814 215 Rockwell City IA0363 28.12% 818 230 5 Federal Communications Commission DA 05- 1394 6 Sac City IA0017 17.84% 1,082 193 Webster City IA0072 22.42% 3,502 785 Dallas Ctr IA0511 26.90% 591 159 DeSoto IA0508 17.11% 374 64 Earlham IA0358 20.57% 491 101 Granger IA0402 15.10% 245 37 Perry IA0089 31.90% 2,831 903 Van Meter IA0516 22.09% 326 72 Boone IA0077 21.49% 5,313 1,142 Polk City IA0361 36.68% 826 303 Columbus Jctn IA0230 42.84% 691 296 Morning Sun IA0382 17.46% 338 59 Wapello IA0249 27.87% 836 233 Hartford IA0610 24.72% 271 67 Ottumwa IA0022 18.14% 10,383 1,883 Agency IA0197 33.09% 272 90 MCC IOWA, LLC & MEDIACOM IOWA LLC: CSR 6436- E, 6642- E, 6643- E, 6649- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Edgewood IA0314 25.55% 364 93 IA0315 Fairbank IA0272 26.79% 418 112 IA0273 Maynard IA0439 17.57% 222 39 Oelwein IA0131 22.08% 2,808 620 6 Federal Communications Commission DA 05- 1394 7 Strawberry Pt IA0192 16.95% 531 90 Vinton IA0138 34.12% 2,116 722 Newhall IA0345 44.17% 360 159 Hampton IA0368 26.67% 1,766 471 Rockwell IA0335 19.95% 371 74 Sheffield IA0333 20.87% 369 77 Dike IA0387 19.53% 379 74 Parkersburg IA0505 18.13% 811 147 MEDIACOM IOWA LLC: CSR 6590- E, 6647- E, 6648- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + New Sharon IA0767 24.44% 540 132 Keota IA0542 24.19% 430 104 Sigourney IA0191 23.70% 903 214 What Cheer IA0347 16.61% 307 51 North English IA0217 30.15% 408 123 IA0218 Williamsburg IA0193 30.22% 1,072 324 7 Federal Communications Commission DA 05- 1394 8 MCC IOWA, LLC & MCC ILLINOIS, LLC: CSR 6601- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Le Claire IA0160 22.74% 1,104 251 Cleveland IL1116 23.40% 94 22 Coal Valley IL0353 22.36% 1,373 307 Colona IL0410 22.83% 1,936 442 Milan IL0182 17.27% 2,310 399 Orion IL0409 18.85% 695 131 Cable Operator Subject to Low Penetration Effective Competition MCC IOWA, LLC: CSR- 6645- E, 6646- E Communities Franchise Area Cable Penetration Households Subscribers Level Woodward 290 139 28.37% Fredonia 87 25 28.74% CPR= Percent DBS penetration + = See Cable Operator Petitions 8