*Pages 1--9 from Microsoft Word - 52043* Federal Communications Commission DA 05- 2544 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Bright House Networks, LLC Cox Southwest Holdings, L. P. Mediacom Illinois LLC Mediacom Southeast LLC Eighteen Petitions for Determination of Effective Competition in Thirty- Seven Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6857- E CSR 6631- E, 6632- E, 6633- E, 6634- E, 6635- E & 6636- E CSR 6781- E, 6782- E & 6783- E, CSR 6598- E, 6734- E, 6743- E, 6796- E, 6802- E, 6807- E, 6825- E & 6889- E MEMORANDUM OPINION AND ORDER Adopted: September 28, 2005 Released: September 30, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers eighteen 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 within the relevant franchise area. 3 1 47 C. F. R. § 76.906. 2 See 47 U. S. C. § 543( 1); 47 C. F. R. § 76.905. 3 See 47 C. F. R. §§ 76. 906 & 907. 1 Federal Communications Commission DA 05- 2544 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. 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 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 Networks Petition CSR 6857- E at 7- 10; Cox Southwest Petition CSR at 6631- E at 7- 9; Cox Southwest Petition CSR 6632- E at 7- 9; Cox Southwest Petition CSR 6633- E at 7- 9; Cox Southwest Petition CSR 6634- E at 7- 9; Cox Southwest Petition CSR 6635- E at 7- 9; Cox Southwest Petition CSR 6636- E at 7- 9; Mediacom Illinois Petition CSR 6781- E at 6- 7; Mediacom Illinois Petition CSR 6782- E at 6- 7; Mediacom Illinois Petition CSR 6783- E at 6; Mediacom Southeast Petition CSR 6598- E at 6; Mediacom Southeast Petition CSR 6734- E at 6- 7; Mediacom Southeast Petition CSR 6743- E at 6- 7; Mediacom Southeast Petition CSR 6807- E at 6; Mediacom Southeast Petition CSR 6889- E at 6- 7. Mediacom Illinois Petitions CSR 6781- E/ 6782- E/ 6783- E and Mediacom Southeast Petitions CSR 6598- E/ 6734- E/ 6743- E/ 6807- E/ 6889- E were provided on a zip code plus four basis. The remaining Bright House Networks Petition CSR 6857- E and Cox Southwest Petitions CSR 6631- E/ 6632- E/ 6633-E/ 6634- E/ 6635- E/ 6636- 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). 2 Federal Communications Commission DA 05- 2544 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 Two Cable Operators listed on Attachment A (Bright House Networks CSR 6857- E and Mediacom Southeast CSRs 6734- E/ 6796- E/ 6802- E/ 6825- E/ 6889- 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 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, Cox Southwest Holdings, L. P., Mediacom Illinois LLC, and Mediacom Southeast 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 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 9 Id. In certain instances, the Cable Operator was not able to determine the largest MVPD because the DBS providers’ aggregated subscriber counts were larger than the Cable Operator’s subscriber count. In those instances, the Cable Operators were able to establish that the competing provider test was met because the penetration rate of both the DBS providers and the Cable Operator exceeded the 15 percent rate required by the competing provider test. 10 47 U. S. C. § 543( 1)( 1)( A). 11 47 C. F. R. § 0.283. 3 Federal Communications Commission DA 05- 2544 4 Attachment A Cable Operators Subject to Competing Provider Effective Competition Bright House Networks, LLC: CSR 6857- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Bessemer AL0172 23% 11537 2642 Birmingham AL0125 15.9% 98782 15690 Brighton AL0194 15.9% 1413 225 Irondale AL0269 15.3% 4019 615 Jefferson County AL0273 23.6% 43809 10329 AL0268 AL0269 Lipscomb AL0192 15.9% 901 143 Cox Southwest Holdings, L. P.: CSR 6631- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Huntsville TX0003 33.3% 10266 3416 Cox Southwest Holdings, L. P.: CSR 6632- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Jacksonville TX0143 38.7% 4882 1891 Cox Southwest Holdings, L. P.: CSR 6633- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Livingston TX0095 57.8% 2048 1184 4 Federal Communications Commission DA 05- 2544 5 Cox Southwest Holdings, L. P.: CSR 6634- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Mineral Wells TX0002 26.4% 5707 1506 Cox Southwest Holdings, L. P.: CSR 6635- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Paris TX0098 30.5% 10570 3222 Cox Southwest Holdings, L. P.: CSR 6636- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Tyler TX0146 26% 32525 8471 Mediacom Illinois LLC: CSR 6781- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Nauvoo IL0692 21.8% 403 88 Pontoosuc IL1228 24.3% 74 18 Roseville IL1065 17.6% 438 77 Mediacom Illinois LLC: CSR 6782- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Wyoming IL0811 21% 629 132 5 Federal Communications Commission DA 05- 2544 6 Mediacom Illinois LLC: CSR 6783- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Victoria IL1158 17.7% 158 28 Mediacom Southeast LLC: CSR 6598- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Waveland MS0135 16.3% 2731 446 Mediacom Southeast LLC: CSR 6734- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Gretna FL0874 19.7% 503 99 Havana FL0514 22.9% 700 160 Mediacom Southeast LLC: CSR 6743- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Bayou La Batre AL0356 19.4% 769 149 Citronelle AL0216 43.4% 1318 572 Creola AL0242 36.4% 718 261 Mount Vernon AL0344 26.1% 333 87 Satsuma AL0219 28.2% 2017 569 6 Federal Communications Commission DA 05- 2544 7 Mediacom Southeast LLC: CSR 6807- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Huntland TN0314 34.9% 364 127 Mediacom Southeast LLC: CSR 6889- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Colerain NC0689 18.5% 103 19 7 Federal Communications Commission DA 05- 2544 8 Cable Operator Subject to Low Penetration Effective Competition Bright House Networks, LLC: CSR 6857- E Franchise Area Cable Penetration Communities Households Subscribers Level Hoover 25191 330 1.3% Hueytown 6155 430 7.0% Mediacom Southeast LLC: CSR 6734- E Franchise Area Cable Penetration Communities Households Subscribers Level Gadsden 14457 1046 7.2% Mediacom Southeast LLC: CSR 6796- E Franchise Area Cable Penetration Communities Households Subscribers Level Hancock 16897 899 5.3% Wiggins 4747 283 6.0% Mediacom Southeast LLC: CSR 6802- E Franchise Area Cable Penetration Communities Households Subscribers Level Gulf 4931 774 15.7% Port Saint Joe 1402 59 4.2% Mediacom Southeast LLC: CSR 6825- E Franchise Area Cable Penetration Communities Households Subscribers Level Bay 59597 2074 3.5% 8 Federal Communications Commission DA 05- 2544 9 Mediacom Southeast LLC: CSR 6889- E Franchise Area Cable Penetration Communities Households Subscribers Level Merryhill 7743 654 8.4% Tyrell 1537 89 5.8% CPR = Percent DBS penetration + = See Cable Operator Petitions 9