*Pages 1--9 from Microsoft Word - 51904.doc* Federal Communications Commission DA 05- 2511 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Bright House Networks, LLC Charter Communications Coxcom, Inc. d/ b/ a Cox Communications Tucson Cox Southwest Holdings, L. P. MCC Georgia LLC Mediacom Illinois LLC Texas and Kansas City Cable Partners, L. P. d/ b/ a Time Warner Cable Time Warner Entertainment Company, L. P. d/ b/ a Time Warner Cable Twenty Petitions for Determination of Effective Competition in Forty- Seven Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6542- E, 6543- E & 6545- E CSR 6492- E, 6493- E, 6494- E & 6495- E CSR 6393- E CSR 6628- E, 6629- E & 6630- E CSR 6740- E, 6784- E, 6861- E & 6892- E CSR 6780- E CSR 6433- E & 6434- E CSR 6439- E & 6444- E MEMORANDUM OPINION AND ORDER Adopted: September 23, 2005 Released: September 27, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers twenty petitions which cable operators (the “Cable Operators”) have filed with the Commission pursuant to Sections 76.7, 76. 905( b)( 1) & (2) and 76.907 of the Commission’s rules for a determination that such operators 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 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 subject to effective competition, 1 as that term is defined by Section 623( 1) of the Communications Act, and Section 76.905 of the Commission's rules. 2 The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition is present 1 47 C. F. R. § 76.906. 2 See 47 U. S. C. § 543( 1); 47 C. F. R. § 76.905. 1 Federal Communications Commission DA 05- 2511 2 within the relevant franchise area. 3 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. 4 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. 5 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. 6 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. 7 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. 8 The Cable Operators assert that they are the 3 See 47 C. F. R. §§ 76. 906 & 907. 4 47 U. S. C. § 543( 1)( 1)( B); see also 47 C. F. R. § 76. 905( b)( 2). 5 See MediaOne of Georgia, 12 FCC Rcd 19406 (1997). 6 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). 7 See 47 C. F. R. § 76. 905( g). 8 Bright House Petition CSR 6543- E at 7- 9; Bright House Petition CSR 6545- E at 7- 9; Charter Petition CSR 6492- E at 6- 7; Charter Petition CSR 6493- E at 6- 7; Charter Petition CSR 6494- E at 6- 7; Charter Petition CSR 6495- E at 6-7; ; Coxcom Petition CSR 6393- E at 7- 9; Cox Southwest Petition CSR 6628- E at 7- 9; Cox Southwest Petition CSR 6629- E at 7- 9; Cox Southwest Petition CSR 6630- E at 7- 9; MCC Petition CSR 6740- E at 6- 8; MCC Petition CSR 6892- E at 6- 7; Mediacom Illinois Petition CSR 6780- E at 6- 7; Texas and Kansas City Cable Petition CSR 6433- E at 7- 8; Texas and Kansas City Cable Petition CSR 6434- E at 7- 8; Time Warner Entertainment Petition CSR 6439- E at 7- 9; Time Warner Entertainment Petition CSR 6444- E at 8- 10. MCC Petition CSR 6892- E and Mediacom Illinois Petition CSR 6780- E were provided on a zip code plus four basis. The remaining Bright House Petitions CSR 6543- E/ 6545- E, Charter Petitions CSR 6492- E/ CSR 6493- E/ CSR 6494- E/ CSR 6495- E, Coxcom Petition CSR 6393- E, Cox Southwest Petitions CSR 6628- E/ CSR 6629- E/ CSR 6630- E, MCC Petition CSR 6740- E, Texas and Kansas (continued....) 2 Federal Communications Commission DA 05- 2511 3 largest MVPD in the Communities because their subscribership exceeds the aggregate DBS subscribership for those franchise areas. 9 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( 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.” 10 Four Cable Operators listed on Attachment A (Bright House Networks CSR 6542- E, Charter Communications CSR 6492- E, MCC Georgia CSRs 6740- E/ 6784- E/ 6861- E/ 6892- E, and Time Warner Entertainment CSR 6444- E) provided information showing that less than 30 percent of the households within its franchise area subscribe to its cable services. Accordingly, we conclude that that the Cable Operators have demonstrated the existence of low penetration effective competition under our rules. III. ORDERING CLAUSE 6. Accordingly, IT IS ORDERED that the petitions filed by Bright House Networks, LLC, Charter Communications, Coxcom, Inc. d/ b/ a Cox Communications Tucson, Cox Southwest Holdings, L. P., MCC Georgia LLC, Mediacom Illinois LLC, Texas and Kansas City Cable Partners, L. P. d/ b/ a Time Warner Cable, and Time Warner Entertainment Company, L. P. d/ b/ a Time Warner Cable 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 the Cable Operators ARE REVOKED. 8. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules. 11 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau (... continued from previous page) City Cable Petitions CSR 6433- E/ 6434- E, and Time Warner Entertainment Petitions CSR 6439- E/ 6444- E reported DBS subscribership on a five digit zip code basis that was adjusted based upon an allocation methodology previously approved by the Commission. See, e. g., In re Petition for Determination of Effective Competition in San Luis Obispo County, California, 17 FCC Rcd 4617 (2002); Fibervision, Inc. Petition for Determination of Effective Competition in Laurel, MT and Park City, MT, 17 FCC Rcd 16313 (2002). 9 Id. 10 47 U. S. C. § 543( 1)( 1)( A). 11 47 C. F. R. § 0.283. 3 Federal Communications Commission DA 05- 2511 4 Attachment A Cable Operators Subject to Competing Provider Effective Competition Bright House Networks: CSR 6543- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Brooksville FL0241 23.7% 3220 763 FL0663 Bright House Networks: CSR 6545- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Dade City FL0715 45.6% 2399 1094 Zephyrhills FL0679 28.9% 4944 1430 Charter Communications: CSR 6492- E & 6495- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Gainesville GA0017 22.6% 8537 1932 Hall County GA0104 26.2% 36323 9522 Buford GA0662 31.8% 3794 1207 GA0274 Sugar Hill GA0328 31.7% 4004 1269 Charter Communications: CSR 6493- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Comer GA0464 40.2% 391 157 4 Federal Communications Commission DA 05- 2511 5 Charter Communications: CSR 6494- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Baldwin GA0206 19% 10003 1902 CoxCom, Inc. d/ b/ a Cox Communications Tucson: CSR 6393- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Tucson AZ0159 16.8% 192891 32448 Town of Sahuarita AZ0345 25.6% 1155 296 Cox Southwest Holdings, L. P.: CSR 6628- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Town of Como TX2361 68% 216 147 City of Sulphur Springs TX0135 40.5% 5780 2342 Cox Southwest Holdings, L. P.: CSR 6629- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Gainesville TX0031 31.7% 5969 1889 Cox Southwest Holdings, L. P.: CSR 6630- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Hearne TX0072 37.8% 1710 646 5 Federal Communications Commission DA 05- 2511 6 MCC Georgia LLC: CSR 6740- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Edison GA0362 27.9% 512 143 Fort Gaines GA0363 34.3% 429 147 Richland GA0360 53.4% 624 333 MCC Georgia LLC: CSR 6892- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Lee GA0728 15.7% 7163 1123 Terrell GA0727 28% 1805 505 GA0900 Mediacom Illinois LLC: CSR 6780- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Arcola IL0889 30.7% 1031 316 Arthur IL0893 26.1% 915 239 Camargo IL1592 15.5% 187 29 Tuscola IL1191 21.2% 1885 399 Villa Grove IL1623 21% 1033 217 Texas and Kansas City Cable Partners, L. P.: CSR 6433- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Uvalde TX0164 16.4% 4796 784 6 Federal Communications Commission DA 05- 2511 7 Texas and Kansas City Cable Partners, L. P.: CSR 6434- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Town of South Padre TX0358 24.9% 1211 302 Island Time Warner Entertainment Company, L. P.: CSR 6439- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Village of Belcher LA0520 27.3% 99 27 Village of Gilliam LA0518 22.5% 71 16 Village of Hosston LA0517 34.2% 152 52 Time Warner Entertainment Company, L. P.: CSR 6444- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Parish of Caddo LA0236 18.8% 14911 2796 Town of Greenwood LA0341 27.6% 964 266 City of Shreveport LA0082 16.3% 78662 12792 Town of Stonewall LA0458 29.6% 642 190 City of Waskom TX1148 31.9% 790 252 7 Federal Communications Commission DA 05- 2511 8 Cable Operator Subject to Low Penetration Effective Competition Bright House Networks, LLC: CSR 6542- E Franchise Area Cable Penetration Communities Households Subscribers Level Bowling Green 815 65 8% Charter Communications: CSR 6492- E Franchise Area Cable Penetration Communities Households Subscribers Level Gwinnett County 156438 24021 15.4% Oakwood 1031 223 21.6% MCC Georgia LLC: CSR 6740- E Franchise Area Cable Penetration Communities Households Subscribers Level Arlington 573 145 25.3% Lumpkin 552 133 24.1% MCC Georgia LLC: CSR 6784- E Franchise Area Cable Penetration Communities Households Subscribers Level Grady 5153 669 13% Thomas 7888 1402 17.8% MCC Georgia LLC: CSR 6861- E Franchise Area Cable Penetration Communities Households Subscribers Level Randolph 1076 104 9.7% 8 Federal Communications Commission DA 05- 2511 9 MCC Georgia LLC: CSR 6892- E Franchise Area Cable Penetration Communities Households Subscribers Level Camilla 1994 346 17.4% Mitchell 4188 206 4.9% Worth 5320 578 10.9% Time Warner Entertainment Company, L. P.: CSR 6444- E Franchise Area Cable Penetration Communities Households Subscribers Level Parish of DeSoto 5837 481 8.2% CPR = Percent DBS penetration + = See Cable Operator Petitions 9