*Pages 1--6 from Microsoft Word - 54097.doc* Federal Communications Commission DA 05- 3336 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Mediacom Illinois LLC MCC Illinois LLC Nine Petitions for Determination of Effective Competition in Thirty Local Franchise Areas in Illinois ) ) ) ) ) ) ) ) ) ) CSR- 6747- E CSR- 6752- E CSR- 6753- E CSR- 6757- E CSR- 6776- E CSR- 6777- E CSR- 6778- E CSR- 6787- E CSR- 6789- E MEMORANDUM OPINION AND ORDER Adopted: December 28, 2005 Released: December 29, 2005 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers nine petitions filed with the Commission by Mediacom Illinois LLC and MCC Illinois LLC (“ Mediacom”) pursuant to Sections 76. 7, 76.905( b)( 1)&( 2) and 76.907 of the Commission’s rules for a determination that Mediacom’s cable systems serving thirty 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. 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, 2 as that term is defined by Section 623( 1) of the Communications Act, and Section 76.905 of the Commission's rules. 3 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. 4 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 1 47 C. F. R. §§ 76. 7, 76. 905( b)( 2), 76. 907; 47 U. S. C. § 543( a)( 1). 2 47 C. F. R. § 76.906. 3 47 C. F. R. § 76.905. 4 See 47 C. F. R. §§ 76. 906 & 907. 1 Federal Communications Commission DA 05- 3336 2 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. 5 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. 6 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. 7 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. 8 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 areas. 9 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. 10 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. 11 Mediacom asserts that it is the largest MVPD in the majority of the Communities because its subscribership exceeds the aggregate DBS subscribership for those franchise areas. 12 With respect to the Communities of Fairmont City, Washington Park, Belvidere, 13 Hebron, Clear Lake Village, Clear Lake Township, Crawford County, Cortland and Maple Park, Mediacom asserts that it cannot 5 47 U. S. C. § 543( 1)( 1)( B); see also 47 C. F. R. § 76. 905( b)( 2). 6 See MediaOne of Georgia, 12 FCC Rcd 19406 (1997). 7 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). 8 See 47 C. F. R. § 76. 905( g). 9 Mediacom Petitions at 5 and Exhibits B & C. 10 Id. at 3- 4 and Exhibit A. 11 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). 12 Id. at 6. Mediacom states that its subscriber numbers are derived from its billing system using addresses to which Mediacom provides service. Id. at n. 19 (for CSRs 6747- E, 6778- E and 6789- E) and Id. at n. 20 (for CSRs 6757- E, 6776- E and 6777- E) and Id. at n. 21 (for CSRs 6752- E, 6753- E and 6787- E). 13 Mediacom does not provide the aggregate DBS subscriber number for this Community, but does assert that Mediacom is not the largest MVPD in Belvidere and effective competition exists under the low penetration test. 2 Federal Communications Commission DA 05- 3336 3 determine the largest MVPD in that Community because the SBCA aggregates the number of subscribers for the DBS providers and this number is larger than the Mediacom subscribers in these Communities. 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 Communities of Fairmont City, Washington Park, Hebron and Maple Park, 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 Fairmont City, the combined DBS penetration rate is 50.52 percent and Mediacom’s penetration rate is 24.91 percent. 16 In Washington Park, the combined DBS penetration rate is 22.28 percent and Mediacom’s penetration rate is 17.14 percent. 17 In Hebron, the combined DBS penetration rate is 45.90 percent and Mediacom’s penetration rate is 25.64 percent. 18 In Maple Park, the combined DBS penetration rate is 67.50 percent and Mediacom’s penetration rate is 21.78 percent. 19 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. B. Low Penetration Effective Competition 6. 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.” 20 Mediacom asserts that it is subject to effective competition in Belvidere, Clear Lake Village, Clear Lake Township, Crawford County and Cortland. 21 The information listed on Attachment A shows that Mediacom’s penetration rate in Belvidere is 2.77 percent; in Clear Lake Village, its penetration rate is 10.58 percent; in Clear Lake Township, its penetration rate is 9.75 percent; in Crawford County, the penetration rate is 3.4 percent; and in Cortland, the penetration rate is 12.70 percent. Accordingly, we conclude that Mediacom has demonstrated the existence of low penetration effective competition in these Communities. 14 Mediacom Petitions (CSR- 6747- E: Fairmont City and Washington Park), (CSR 6752- E: Belvidere and Hebron), (CSR- 6753- E: Clear Lake Village and Clear Lake Township), (CSR- 6776- E: Crawford County) and (CSR- 6787- E: Cortland and Maple Park) at 6. 15 See Time Warner Entertainment Advance/ Newhouse Partnership, et al., 17 FCC Rcd 23587, 23589 (MB 2002). 16 440 DBS subscribers ÷ 871 Fairmont City 2000 Census Households = 50. 52%; 217 Mediacom subscribers ÷ 871 Fairmont City 2000 Census Households = 24. 91%. 17 377 DBS subscribers ÷ 1,692 Washington Park 2000 Census Households = 22. 28%; 290 Mediacom subscribers ÷1, 692 Washington Park 2000 Census Households = 17. 14%. 18 179 DBS subscribers ÷ 390 Hebron 2000 Census Households = 45. 90%; 100 Mediacom subscribers ÷ 390 Hebron 2000 Census Households = 25. 64%. 19 189 DBS subscribers ÷ 280 Maple Park 2000 Census Households = 67. 50%; 61 Mediacom subscribers ÷ 280 Maple Park 2000 Census Households = 21. 78%. 20 47 U. S. C. § 543( 1)( 1)( A). 21 Mediacom Petitions (CSR- 6752- E at 8), (CSR- 6753- E at 7), (CSR- 6776- E at 7) and (CSR- 6787- E at 8). 3 Federal Communications Commission DA 05- 3336 4 III. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the petitions filed by Mediacom Illinois LLC and MCC Illinois LLC for a determination of effective competition in the Communities listed on Attachment A 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 Mediacom Illinois LLC and MCC Illinois LLC in the affected Communities ARE REVOKED. 9. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules. 22 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division Media Bureau 22 47 C. F. R. § 0.283. 4 Federal Communications Commission DA 05- 3336 5 Attachment A Mediacom Cable Systems Subject to Competing Provider Effective Competition CSR- 6747- E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Fairmont City, IL0695 50.52% 871 440 (Village of) Washington Park, IL0694 22.28% 1, 692 377 (Village of) CSR- 6752- E Caledonia Village IL1736 46.48% 71 33 Capron Village IL1084 44.88% 332 149 Hebron Village IL1455 45.90% 390 179 Poplar Grove Township IL1083 47.02% 453 213 Ringwood Village IL1498 39.18% 171 67 Spring Grove Village IL1488 82.16% 1,166 958 CSR- 6753- E Bulpitt Village IL0709 22.92% 96 22 Clear Lake Village IL0935 16.35% 104 17 Clear Lake Township IL1205 17.78% 3,026 538 Edinburg Village IL0707 19.63% 484 95 Jeiseyville Village IL0710 28.57% 49 14 Mount Auburn Village IL0930 16.14% 223 36 New Berlin IL0736 29.67% 428 127 CSR- 6757E Gibson City IL0154 15.66% 1,469 230 CSR- 6776- E Crawford County IL0002 20.91% 7,842 1640 5 Federal Communications Commission DA 05- 3336 6 Oblong Village IL0719 25.84% 681 176 Palestine Village IL0718 23.04% 625 144 Robinson City IL0003 19.37% 2,927 567 CSR- 6777- E Sullivan City IL0825 21.65% 1,820 394 CSR- 6778- E Ashmore Village IL0533 16.61% 307 51 CSR- 6787- E Cortland, Town of IL1453 31.38% 701 220 Gilberts Village IL1646 60.66% 394 239 Hampshire Village IL1092 50.74% 1,015 515 Kirkland Village IL1041 18.37% 430 79 Malta Village IL1086 19.62% 372 73 Maple Park Village IL1454 67.50% 280 189 CSR- 6789- E Brimfield Village IL0781 16.57% 362 60 Mediacom Systems Subject to Low Penetration Effective Competition Communities Census Households Cable Subscribers Penetration Level Belvidere Township 8,953 248 2.77% (Boone County) Clear Lake Village 104 11 10.58% Clear Lake Township 3,026 295 9.75% Crawford County 7,842 271 3.45% Cortland 701 89 12.70% Maple Park 280 61 21.78% CPR = Percent DBS penetration + = See Mediacom Petitions 6