*Pages 1--6 from Microsoft Word - 49905.doc* Federal Communications Commission DA 05- 1924 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Cox Communications Louisiana, LLC Nine Petitions for Determination of Effective Competition in Seventeen Local Franchise Areas in Louisiana ) ) ) ) ) ) ) ) ) CSR- 6603- E CSR- 6604- E CSR- 6605- E CSR- 6606- E CSR- 6607- E CSR- 6608- E CSR- 6609- E CSR- 6610- E CSR- 6611- E MEMORANDUM OPINION AND ORDER Adopted: June 30, 2005 Released: July 1, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers nine petitions filed with the Commission by Cox Communications Louisiana, LLC (“ Cox”) pursuant to Sections 76.7, 76.905( b)( 1) & (2) and 76. 907 of the Commission’s rules for a determination that Cox’s cable systems serving seventeen communities in Louisiana (the “Communities”) are subject to effective competition pursuant to Section 623( a)( 1) of the Communications Act of 1934, as amended (“ Communications Act”) and are therefore exempt from cable rate regulation. 1 The Communities are listed in Attachment A. No opposition to any petition was filed. We grant the petitions finding that the Cox cable systems are subject to effective competition in the listed Communities. 2 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 1 47 C. F. R. §§ 76. 7, 76. 905( b)( 1) & (2), 76. 907; 47 U. S. C. § 543( a)( 1). 2 In an Addendum to its Petitions filed May 10, 2005, Cox clarifies that certain Community Unit Identifications (“ CUIDs”) noted on its Petitions were incorrectly included and should be disregarded. Cox states that CUIDs associated with unincorporated areas adjacent to or connected with the cities of Crowley, DeRidder, Franklin, Patterson and Rayne -- i. e., LA0168, LA0202, LA0125, LA0124 and LA0169, respectively -- should be excluded from the Petitions. Cox asserts that its Petitions are based solely on Census data, zip codes and DBS penetration calculations for Cox’s franchise areas in the cities themselves. Accordingly, Cox notes that for Crowley, DeRidder, Franklin, Patterson and Rayne, the Petitions should reflect only the CUIDs associated with the incorporated areas -- i. e., LA0047, LA0012, LA0066, LA0005 and LA0045, respectively. 3 47 C. F. R. § 76.906. 4 47 C. F. R. § 76.905. 5 See 47 C. F. R. §§ 76. 906 & 907. 1 Federal Communications Commission DA 05- 1924 2 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, the DBS service of DirecTV, Inc. (“ DirecTV”) 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 the communities listed on Attachment A are DBS subscribers, we conclude that the population of those communities 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 Cox cable systems 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 Communities. 10 Cox 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 DBS providers, and that potential subscribers in the Communities have been made reasonably aware of the MVPD services of DirecTV and DISH. 11 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. Cox sought to determine the competing provider penetration in the Communities by purchasing an effective competition tracking report (“ ECTR”) pursuant to an agreement with the Satellite Broadcasting and Communications Association (“ SBCA”) that identified the number of subscribers attributable to the DBS providers within the Communities on a zip code basis. 12 Cox asserts that it is the largest MVPD in each of the Communities, except for Unincorporated St. Martin Parish, Louisiana because its subscribership exceeds the aggregate DBS subscribership in those Communities. 13 Based upon the 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). 10 Cox Petitions at 4 and Exhibit 4. 11 Id. at 5 and Exhibit 5. 12 Id. at 7 and Exhibit 2. Cox states that it allocated the DBS subscribers reported in the ECTR to Cox’s franchise areas using a Commission- approved allocation methodology. See, e. g., Amzak Cable Midwest, Inc., 19 FCC Rcd 6208 (2004); Charter Communications, 19 FCC Rcd 6204 (2004). 13 See Addendum to Cox’s Petition for Determination of Effective Competition at 1 (May 10, 2005). 2 Federal Communications Commission DA 05- 1924 3 aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that the Cox 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. As for St. Martin Parish, Cox asserts that although DBS providers serve more than 25 percent of occupied households in that Community in the aggregate, Cox is unable to determine which MVPD is the largest because SBCA does not provide data for individual DBS providers. 14 Cox, however, asserts that it is subject to effective competition in St. Martin Parish because the number of Cox subscribers (2,370) is more than fifteen percent of the occupied households as reported by the 2000 Census (11,403). 15 The Commission has previously recognized that if the subscriber penetration for both the cable operator and the aggregate DBS information each exceed 15 percent in the franchise area, the second prong of the competing provider test is satisfied. 16 Based on the foregoing, we conclude that Cox has 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( 1)( 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.” 17 Cox asserts that it is subject to effective competition in St. Martin Parish under the low penetration effective competition test. Cox submitted information listed on Attachment A showing that its penetration rate in St. Martin Parish is 20.78 percent. Accordingly, we conclude that that Cox has demonstrated the existence of low penetration effective competition under our rules in St. Martin Parish. 14 Id. at 2. 15 Id., see also Cox Petitions at 9, n. 26 and Exhibits 1, 3 (calculating net (unincorporated) Census data for St. Martin Parish). 16 See Time Warner Entertainment Advance/ Newhouse Partnership, et al, 17 FCC Rcd 23587, 23589 (MB 2002). 2,914 DBS subscribers ÷ 11, 403 St. Martin Parish 2000 Census Households = 25. 55%; 2,370 Cox subscribers ÷ 11, 403 St. Martin Parish 2000 Census Households = 20. 78%. 17 47 U. S. C. § 543( 1)( 1)( A). 3 Federal Communications Commission DA 05- 1924 4 III. ORDERING CLAUSES 6. Accordingly, IT IS ORDERED that the petitions filed by Cox Communications Louisiana, LLC for a determination of effective competition in the Communities listed on Attachment A ARE GRANTED. 7. IT IS FURTHER ORDERED that the certifications to regulate basic cable service rates granted to any of the local franchising authorities overseeing Cox Communications Louisiana, LLC in the affected named Communities ARE REVOKED. 8. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules. 18 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division Media Bureau 18 47 C. F. R. § 0.283. 4 Federal Communications Commission DA 05- 1924 5 Attachment A Cox Communications Louisiana, LLC (“ Cox”) Cable Systems Subject to Competing Provider Effective Competition CSR- 6603- E through CSR- 6611- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Bastrop, City LA0025 16.87% 4,723 797 Breaux Bridge, City LA0097 23.09% 2,512 580 Crowley, City LA0047 18.79% 5,294 995 DeRidder, City LA0012 38.51% 3,819 1,471 Franklin, City LA0066 19.93% 3,026 603 Henderson, City LA0183 23.08% 546 126 Lake Charles, City LA0022 15.45% 27,974 4,322 Mer Rouge, Village LA0386 44.32% 264 117 Minden, City LA0110 29.65% 5,166 1,532 New Iberia, City LA0023 19.44% 11,756 2,285 Parks, Village LA0181 20.29% 207 42 Patterson, City LA0005 15.28% 1,852 283 Rayne, City LA0045 26.95% 3,183 858 Ruston, City LA0024 18.46% 7,621 1,407 Parish of St. Martin LA0182 25.55% 11,403 19 2,914 (Unincorporated) St. Martinville, City LA0170 20.43% 2,496 510 19 Cox states that the 2000 Census reported 17, 164 occupied households in St. Martin Parish, including the occupied households in the City of Breaux Bridge, the City of Henderson, the Village of Parks and the City of St. Martinville, According to Cox, for purposes of determining DBS penetration accurately in Cox’s St. Martin Parish franchise area, occupied households in these incorporated areas were subtracted from the total occupied households in the Parish because Cox holds separate franchises in these areas (17,164- 2, 512) [Breaux Bridge] – 546 [Henderson] – 207 [Parks] – 2,496 [St. Martinville] = 11, 403. 5 Federal Communications Commission DA 05- 1924 6 Sulphur, City LA0064 15.79% 7,901 1,248 Cox Communications Louisiana, LLC (“ Cox”) Cable Systems Subject to Low Penetration Effective Competition CSR- 6607- E Franchise Area Cable Penetration Communities Households+ Subscribers+ Level Parish of St. Martin 11,403 2,370 20.78% (Unincorporated) CPR = Percent DBS penetration + = See Cox Petitions and Addendum 6