*Pages 1--6 from Microsoft Word - 52698.doc* Federal Communications Commission DA 05- 2854 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: MCC Missouri LLC Mediacom Southeast LLC Three Petitions for Determination of Effective Competition in Seven Local Franchise Areas in Missouri ) ) ) ) ) ) ) ) ) CSR 6722- E CSR 6828- E, 6830- E MEMORANDUM OPINION AND ORDER Adopted: October 28, 2005 Released: October 31, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers three petitions that cable operators, MCC Missouri LLC (“ MCC”) and Mediacom Southeast LLC (“ Mediacom; collectively, 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 1 for a determination that such operators are subject to effective competition pursuant to Section 623( a)( 2) of the Communications Act of 1934, as amended (“ Communications Act”), 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 subject to effective competition, 3 as that term is defined by Section 623( l)( 1) of the Communications Act 4 and Section 76.905 of the Commission's rules. 5 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. 6 1 47 C. F. R. §§ 76. 7, 76.905 (b)( 1, 2), 76. 907. 2 47 U. S. C. § 543( a)( 2). 3 47 C. F. R. § 76. 906. 4 47 U. S. C. § 543( l)( 1). 5 47 C. F. R. § 76. 905. 6 See 47 C. F. R. §§ 76. 906- 07( b). 1 Federal Communications Commission DA 05- 2854 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 (" MVPDs") 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. 7 Turning to the first prong of this test, the direct broadcast satellite (“ 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. 8 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. 9 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 at least one non- broadcast channel. 10 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. 11 The Cable Operators sought to determine the competing provider penetration in the Communities by purchasing subscriber tracking reports that identified the number of subscribers attributable to the DBS providers within the Communities on a nine- digit zip code basis. 12 Mediacom asserts that it is the largest MVPD in the Communities of Diamond, Goodman, Granby, and Sarcoxie because its subscribership exceeds the aggregate DBS subscribership for each of those franchise areas. 13 In these Communities, the DBS providers DirecTV and DISH have a combined subscribership of 26. 02 percent in Diamond, 23.35 percent in Goodman, 28.12 percent in Granby, and 22. 72 percent in Sarcoxie. 14 Based on this record, we 7 47 U. S. C. § 543( 1)( 1)( B); see also 47 C. F. R. § 76. 905( b)( 2). 8 See Bright House Networks, LLC, DA- 05- 2511 at ¶ 3 (rel. Sept. 27, 2005). 9 Eleventh Annual Assessment of the Status of Competition in the Market for Delivery of Video Programming, 20 FCC Rcd 2755, 2792- 93 (2005) ¶¶ 54- 55. 10 See 47 C. F. R. § 76. 905( g). 11 See supra n. 7. 12 MCC Petition CSR 6722- E at 7 & Exhibits E & F (about the unincorporated areas within Boone County, Missouri (‘ unincorporated Boone”)); Mediacom Petition CSR- 6828- E at 7 & Exhibits E & F. We have found the nine- digit (or “Zip+ 4”) method of determining DBS subscribers within a franchise area to be reasonable and sufficiently reliable for purposes of determining the presence of effective competition. Adelphia Cable Commun., 20 FCC Rcd 4979, 4982 (2005) ¶ 10; Mediacom Minnesota LLC, 20 FCC Rcd 4984, 4987 (2005) ¶ 7. 13 Mediacom Petition CSR- 6828- E at 6. 14 Id. at 7. 2 Federal Communications Commission DA 05- 2854 3 find that Mediacom has demonstrated that in each of these Communities the number of households subscribing to programming services offered by MVPDs, other than the largest MVPD, exceeds 15 percent of the households there. Therefore, the second prong of the competing provider test is satisfied in Diamond, Goodman, Granby, and Sarcoxie. 5. It is not certain which company is the largest MVPD in Archie. 15 In Archie, Mediacom has a subscribership of 23.06 percent and the DBS providers DirecTV and DISH have combined subscribership of 50.28 percent. 16 If Mediacom is the largest MVPD in Archie, then the aggregate DBS subscribership surpasses the 15 percent subscribership threshold. Or, if one of the DBS providers is the largest MVPD, then Mediacom’s own subscribership rate surpasses the 15 percent threshold of the second prong of the competing provider test. Based on this record, 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 Archie. Therefore, the second prong of the competing provider test is satisfied in Archie. 6. In unincorporated Boone and Newtonia, the Cable Operator has subscribership of less than 15 percent, 17 which makes it impossible to determine with certainty whether the second prong of the competing provider test is satisfied there. We need not speculate whether, despite these shortcomings, the second prong of the competing operator test is satisfied in these two communities, however, because we conclude below that the low penetration effective competition test is satisfied in both of them. 7. Based on the foregoing, we conclude that Mediacom in Diamond, Goodman, Granby, Sarcoxie, and Archie has submitted sufficient evidence demonstrating that its cable systems serving those Communities are subject to competing provider effective competition. Data underlying our conclusions under the competing provider test is set forth in Attachment A. I. B. Low Penetration Effective Competition 8. 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 a cable system." 18 MCC has provided data showing that less than 30 percent of the households in its unincorporated Boone franchise area subscribe to its cable services, 19 and Mediacom has provided data making the same showing for its Newtonia and Archie franchise areas. 20 Accordingly, we conclude that the Cable Operators have demonstrated the existence of low penetration effective competition under our rules for unincorporated Boone, Newtonia, and Archie. Data underlying our conclusions under the low penetration test is set forth in Attachment A. II. 15 See Mediacom Petition CSR- 6830- E at 6. 16 Mediacom Petition CDR- 6830- E at 6. Mediacom calculates its subscribership at 23. 08% but, by our calculations, its 83 residential subscribers amount to 23. 06% of 360 occupied households. Id. at 7. 17 See MCC Petition CSR- 6722- E at 6- 7 (in unincorporated Boone, 19, 405 households and 2, 884 MCC residential subscribers yields an MCC subscribership of 14. 86%); Mediacom Petition CSR- 6828- E at 7 (in Newtonia, 89 households and 7 Mediacom residential subscribers yields a Mediacom subscribership of 7.87%). 18 47 U. S. C. § 543( l)( 1)( A). 19 MCC Petition CSR 6722- E at 7- 8 (14.86% cable subscribership). 20 Mediacom Petition CSR- 6828- E at 7- 8 (7. 86% cable subscribership in Newtonia); Mediacom Petition CSR- 6830- E at 8 (23.06% cable subscribership in Archie). 3 Federal Communications Commission DA 05- 2854 4 III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions filed by MCC Missouri LLC and Mediacom Southeast LLC for a determination of effective competition in the communities listed on Attachment A ARE GRANTED. 10. 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. 11. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules. 21 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 21 47 C. F. R. § 0.283. 4 Federal Communications Commission DA 05- 2854 5 Attachment A I. Cable Operators Subject to Competing Provider Effective Competition Mediacom Southeast LLC: CSR 6828- E 2000 Census DBS Community CUID CPR* Households+ Subscribers+ Diamond MO0539 26.02% 319 83 Goodman MO0295 23.35% 454 106 Granby MO0394 28.12% 850 239 Sarcoxie MO0477 22.72% 559 127 Mediacom Southeast LLC: CSR 6830- E 2000 Census DBS Community CUID CPR* Households+ Subscribers+ Archie MO0601 50.28% 360 181 In two Communities in which competing provider effective competition is impossible to determine with certainty, DBS subscribership is as follows: in unincorporated Boone, 32.89%; in Newtonia, 19.1%. II. Cable Operators Subject to Low Penetration Effective Competition MCC Missouri LLC: CSR- 6722- E 2000 Cable Census Cable Community CUID Subscribership+ Households+ Subscribers+ Unincorporated Boone MO0156 14.86% 19405 2884 5 Federal Communications Commission DA 05- 2854 6 Mediacom Southeast LLC: CSR 6828- E 2000 Cable Census Cable Community CUID Subscribership+ Households+ Subscribers+ Newtonia MO1122 7.87% 89 7 Mediacom Southeast LLC: CSR 6830- E 2000 Cable Census Cable Communities CUID Subscribership Households+ Subscribers+ Archie MO0601 23.06% 360 83 CPR = Percent DBS penetration or subscribership + = See Cable Operator Petitions 6