*Pages 1--6 from Microsoft Word - 54044.doc* Federal Communications Commission DA 05- 3331 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Mediacom Minnesota LLC MCC Iowa LLC Mediacom Iowa LLC Twelve Petitions for Determination of Effective Competition in various Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6721- E, 6724- E, 6737- E, 6739- E, 6758- E CSR 6887- E CSR 6709- E, 6728- E, 6748- E, 6800- E, 6803- E, 6888- 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 twelve 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 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. 1 Federal Communications Commission DA 05- 3331 2 competition is present within the relevant franchise area. 5 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 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 5 See 47 C. F. R. §§ 76.906 & 907. 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- 3331 3 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( 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 Operators listed on Attachment A provided information showing that less than 30 percent of the households within the franchise areas subscribe to their cable services. Accordingly, we conclude that the Cable Operators have 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- 3331 4 Attachment A Cable Operators Subject to Competing Provider Effective Competition MEDIACOM MINNESOTA LLC: CSR 6721- E, 6724- E, 6737- E, 6739- E, 6758- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Olivia MN0252 18.14% 1,075 195 Dawson MN0101 21.86% 677 148 Madison MN0099 21.17% 789 167 Wheaton MN0148 24.50% 747 183 Hamburg MN0493 15.05% 206 31 Maple Plain MN0665 17.53% 770 135 Mound MN0325 18.46% 3,982 735 Norwood/ MN0415 20.07% 1,171 235 Young America MN0471 Waconia MN0666 29.75% 2,568 764 Dakota MN0779 16.92% 130 22 Peterson MN0177 21.43% 98 21 Spring Grove MN0426 15.49% 581 90 Carlton MN0213 15.36% 306 47 Hermantown MN0548 37.31% 2,726 1,017 Proctor MN0250 20.23% 1,196 242 Silver Bay MN0184 21.56% 844 182 Two Harbors MN0216 25.54% 1,523 389 4 Federal Communications Commission DA 05- 3331 5 MEDIACOM IOWA LLC: CSR 6709- E, 6728- E, 6748- E, 6800- E, 6803- E, 6888- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Tipton IA0187 30.28% 1,334 404 Colfax IA0180 23.18% 837 194 Grinnell IA0144 17.52% 3,498 613 Lambs Grove IA0506 21.25% 80 17 Mitchellville IA0483 25.85% 650 168 Pella IA0488 27.51% 3,497 962 Prairie City IA0486 20.61% 553 114 Sully IA0319 29.31% 348 102 Elgin IA0176 20.49% 327 67 Fredericksburg IA0275 24.08% 407 98 New Hampton IA0396 31.07% 1,545 480 Ossian IA0292 15.45% 330 51 Sumner IA0210 23.42% 888 208 West Union IA0175 20.05% 1,107 222 Estherville IA0007 16.16% 2,729 441 Keokuk IA0019 15.59% 4,773 744 Montrose IA0234 20.05% 374 75 Dysart IA0357 22.87% 529 121 Traer IA0365 29.74% 686 204 La Porte City IA0190 37.07% 936 347 5 Federal Communications Commission DA 05- 3331 6 Cable Operator Subject to Low Penetration Effective Competition MEDIACOM MINNESOTA LLC: CSR 6758- E Communities Franchise Area Cable Penetration Households Subscribers Level Midway 495 19 3.84% Thomson 64 11 17.19% MCC IOWA, LLC: CSR 6887- E Communities Franchise Area Cable Penetration Households Subscribers Level Independence 2,432 141 5.80% MEDIACOM IOWA LLC: CSR 6888- E Communities Franchise Area Cable Penetration Households Subscribers Level Reinbeck 730 177 24.25% CPR= Percent DBS penetration + = See Cable Operator Petitions 6