*Pages 1--5 from Microsoft Word - 51919* Federal Communications Commission DA 05- 2532 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Mediacom Southeast LLC Mediacom Illinois LLC Six Petitions for Determination of Effective Competition in Twenty- Seven Local Franchise Areas in Illinois ) ) ) ) ) ) ) ) ) CSR- 6705- E CSR- 6731- E, 6732- E, 6733- E, 6735- E & 6746- E MEMORANDUM OPINION AND ORDER Adopted: September 23, 2005 Released: September 28, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers six petitions filed with the Commission by Mediacom Southeast LLC and Mediacom Illinois LLC (“ Mediacom”) pursuant to Sections 76.7, 76. 905( b)( 2) and 76.907 of the Commission’s rules for a determination that Mediacom’s cable systems serving twenty- seven Illinois communities (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. 2 No opposition to any petition was filed. We grant the petitions finding that the Mediacom cable systems are subject to effective competition in the listed Communities. 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 623( 1) of the Communications Act, 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 1 47 C. F. R. §§ 76. 7, 76. 905( b)( 2), 76. 907; 47 U. S. C. § 543( a)( 1). 2 Mediacom Illinois LCC filed an amendment on June 24, 2005 stating that it inadvertently included the City of Marseilles, Illinois in its effective competition petition (CSR- 6731- E). Mediacom Illinois LLC states that the Commission previously determined that effective competition exists in Marseilles pursuant to a Memorandum Opinion and Order issued June 30, 2004 in conjunction with another petition Mediacom filed and identified as CSR-6239- E. 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- 2532 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 has become 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 Mediacom 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 franchise area. 10 Mediacom 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. Mediacom sought to determine the competing provider penetration in the Communities by using a subscriber tracking report from 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 Mediacom asserts that it is the largest MVPD in the majority of the Communities 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 Mediacom Petitions at 5 and Exhibits B & C. 11 Id. at 3- 4 and Exhibit A. 12 Id. at 6. The Commission has previously approved the zip code plus four methodology. See, e. g., Marcus Cable Associates, LLC d/ b/ a Charter Communications, Inc., 17 FCC Rcd 16652 (2002), aff’d 18 FCC Rcd 9649 (2003); Vicksburg Video, Inc., 17 FCC Rcd 16659 (2002); Kilgore Video, Inc., 17 FCC Rcd 16662 (2002). 2 Federal Communications Commission DA 05- 2532 3 because its subscribership exceeds the aggregate DBS subscribership for those franchise areas. 13 With respect to the Community of Godley, Mediacom asserts that it cannot determine the largest MVPD in that Community because the SBCA aggregates the number of subscribers for the DBS providers (76) and this number is larger than the Mediacom subscribers (52) in Godley. 14 5. Based upon the aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that Mediacom 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 those noted Communities. With regard to the Community of Godley, we are able to conclude that this portion of the test is met by analyzing the data submitted for both Mediacom and the DBS providers. If the subscriber penetration for both Mediacom and the aggregate DBS information each exceed 15 percent in the franchise area, the second prong of the competing provider test in satisfied. 15 In Godley, the combined DBS penetration rate is 38 percent and Mediacom’s penetration rate is 26 percent. 16 Therefore, the second prong of the competing provider test is satisfied. Based on the foregoing, we conclude that Mediacom has submitted sufficient evidence demonstrating that their cable systems serving the Communities set forth on Attachment A are subject to competing provider effective competition. III. ORDERING CLAUSES 6. Accordingly, IT IS ORDERED that the petitions filed by Mediacom Southeast LLC and Mediacom Illinois 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 Mediacom Southeast LLC and Mediacom Illinois LLC in the affected Communities ARE REVOKED. 8. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules. 17 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division Media Bureau 13 Id. at 6. Mediacom states that its subscriber numbers are an estimate derived from its billing system using addresses to which Mediacom provides service. Id. at n. 20. 14 Mediacom Petition (CSR- 6735- E) at 6. 15 See Time Warner Entertainment Advance/ Newhouse Partnership, et al., 17 FCC Rcd 23587, 23589 (MB 2002). 16 76 DBS subscribers ÷ 200 Godley 2000 Census Households = 38%; 52 Mediacom subscribers ÷ 200 Godley 2000 Census Households = 26%. 17 47 C. F. R. § 0.283. 3 Federal Communications Commission DA 05- 2532 4 Attachment A Mediacom Cable Systems Subject to Competing Provider Effective Competition CSR- 6705- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Bush, Village IL0658 23.64% 110 26 Cobden, Village IL0815 26.13% 421 110 Elkville, Village IL0646 19.50% 400 78 Mound City, City IL0642 32.62% 279 91 Mounds City IL0641 20.39% 407 83 Royalton, Village IL0648 16.86% 516 87 Zeigler, City IL0649 24.02% 712 171 CSR- 6731- E Dayton, Township IL1572 32.27% 629 203 Naplate, Village IL0053 18.45% 233 43 Ottawa, City IL0054 24.26% 7,510 1,822 CSR- 6732- E Stewardson, Village IL1171 20.98% 305 64 Windsor, City IL0828 22.32% 466 104 CSR- 6733- E Kangley, Village IL0953 17.39% 115 20 Reading, Township IL0076 15.62% 960 150 Streator , City IL0077 16.97% 5,746 975 CSR- 6735- E Dwight, Village IL0023 16.44% 1,667 274 Essex, Village IL1277 25.63% 199 51 Godley, Village IL1279 38.00% 200 76 Odell, Village IL0801 15.93% 408 65 4 Federal Communications Commission DA 05- 2532 5 CSR- 6746- E El Paso, City IL0654 20.71% 980 203 Germantown Hills IL0731 17.82% 696 124 Goodfield, Village IL0792 15.72% 229 36 Hudson, Village IL0796 26.43% 507 134 Lacon, City IL0588 21.33% 797 170 Lexington, City IL0797 20.26% 760 154 Minonk, City IL0157 17.95% 841 151 Varna, Village IL0949 22.60% 177 40 CPR = Percent DBS penetration + = See Mediacom Petitions 5