*Pages 1--5 from Microsoft Word - 54043.doc* Federal Communications Commission DA 05- 3329 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Charter Communications Service Electric Company Thirteen Petitions for Determination of Effective Competition in various Local Franchise Areas ) ) ) ) ) ) ) ) ) CSR 6422- E, 6423- E, 6454- E, 6496- E, 6497- E, 6498- E, 6559- E, 6560- E, 6561- E, 6562- E, 6563- E, 6564- E CSR 6405- E MEMORANDUM OPINION AND ORDER Adopted: December 27, 2005 Released: December 28, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers thirteen petitions which cable operators (the “Cable Operators”) have filed with the Commission pursuant to Sections 76.7, 76.905( b)( 2) and 76.907 of the Commission's rules for a determination that such operators are subject to effective competition pursuant to Section 623( 1) of the Communications Act of 1934, as amended (" Communications Act"), 1 and the Commission's implementing rules, 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( 1) of the Communications Act of 1934, as amended, 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 U. S. C. § 543( 1). 2 47 C. F. R. § 76.905( b)( 4). 3 47 C. F. R. § 76.906. 4 See 47 U. S. C. § 543( 1) and 47 C. F. R. § 76. 905. 5 See 47 C. F. R. §§ 76.906 & 907. 1 Federal Communications Commission DA 05- 3329 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, we find that the DBS service of DirecTV Inc. (“ DirectTV”) 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 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 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. The Cable Operators assert that they are the largest MVPD in the Communities because their subscribership exceeds the aggregate DBS subscribership for those franchise areas. Based upon the aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that the Cable Operators 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 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, 20 FCC Rcd 2755, 2793 (2005). 9 See 47 C. F. R. § 76.905( g). 2 Federal Communications Commission DA 05- 3329 3 competition. B. Low Penetration Effective Competition 5. 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 the cable system.” 10 The Cable Operator listed on Attachment A provided information showing that less than 30 percent of the households within the franchise areas subscribe to the cable service. Accordingly, we conclude that the Cable Operator has demonstrated the existence of low penetration effective competition under our rules. 6. Based on the foregoing, we conclude that the Cable Operators listed on Attachment A have submitted sufficient evidence to demonstrate that their cable systems are subject to effective competition. III. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the petitions filed by the Cable Operators listed on Attachment A for a determination of effective competition in the Communities listed thereon ARE GRANTED. 8. 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. 9. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules. 11 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 10 47 U. S. C § 543( l)( l)( A). 11 47 C. F. R. § 0.283. 3 Federal Communications Commission DA 05- 3329 4 Attachment A Cable Operators Subject to Competing Provider Effective Competition CHARTER COMMUNICATIONS: CSR 6422- E, 6423- E, 6454- E, 6496- E, 6497- E, 6498- E, 6559- E, 6560- E, 6561- E, 6562- E, 6563- E, 6564- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Wahoo NE0093 21.6% 1,583 342 Waverly NE0086 28.3% 836 237 Beaver Dam WI0150 15.9% 6,349 1,011 Brunswick WI0956 34.9% 630 220 Benton Cty KY0008 35.25% 1,767 623 Calvert Cty KY0529 26.90% 1,141 307 Mayfield Cty KY0004 34.80% 4,358 1,517 Madisonville KY0002 16.70% 8,077 1,346 Somerset Cty KY0483 21.90% 4,831 1,058 Crossville TN0116 32.35% 3,795 1,228 Sparta TN0044 41.3% 1,952 806 Pulaski TN0039 34.96% 3,455 1,208 Paris TN0034 27.6% 4,394 1,213 Tullahome TN0015 21.6% 7,336 1,582 Blount TN0270 21.7% 41,056 8,893 TN0271 TN0269 TN0674 Madisonville TN0166 37.6% 1,671 628 Sweetwater TN0106 34.2% 2,315 792 4 Federal Communications Commission DA 05- 3329 5 SERVICE ELECTRIC COMPANY: CSR 6405- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Luzerne Cnty See below 12 15.65% 60,039 9,395 Cable Operator Subject to Low Penetration Effective Competition CHARTER COMMUNICATIONS: CSR 6564- E Communities CUIDS Franchise Area Cable Penetration Households Subscribers Level Roane County TN0511 11,455 749 6.5% Hamilton County TN0613 21,915 763 3.5% CPR= Percent DBS penetration + = See Cable Operator Petitions 12 The CUID numbers for the portions of Luzerne County included in the franchise area are: PA1242, PA0521, PA0843, PA0844, PA0845, PA0846, PA0847, PA0848, PA0849, PA0850, PA0851, PA1516, PA1722, PA2317, PA2520, PA3247. 5