*Pages 1--7 from Microsoft Word - 56104.doc* Federal Communications Commission DA 06- 745 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: Mediacom Minnesota, LLC MCC Iowa, LLC & Mediacom Iowa, LLC Mediacom Iowa, LLC Mediacom Southeast LLC Mediacom Indiana LLC Falcon Cable Systems Company II LP d/ b/ a Charter Communications Time Warner Entertainment Company LP d/ b/ a Time Warner Cable Eight Petitions for Determination of Effective Competition in various Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6855- E CSR 6894- E CSR 6567- E, 6833- E CSR 6832- E CSR 6856- E CSR 6940- E CSR 6650- E MEMORANDUM OPINION AND ORDER Adopted: March 30, 2006 Released: March 31, 2006 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers eight 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 1 47 U. S. C. § 543( 1). 1 Federal Communications Commission DA 06- 745 2 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 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 26.1 million as of June 2005, comprising approximately 27.7 percent of all MVPD subscribers nationwide; DirecTV has become the second largest, and DISH the third 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. 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. 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 Twelfth Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, FCC 06- 11 at ¶¶ 6, 13, 72- 73 (rel. March 3, 2006). 9 See 47 C. F. R. § 76.905( g). 2 Federal Communications Commission DA 06- 745 3 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 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 Operator listed on Attachment A provided information showing that less than 30 percent of the households within the franchise areas subscribe to its cable services. 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. 10 47 U. S. C § 543( l)( l)( A). 3 Federal Communications Commission DA 06- 745 4 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 11 47 C. F. R. § 0.283. 4 Federal Communications Commission DA 06- 745 5 Attachment A Cable Operators Subject to Competing Provider Effective Competition MEDIACOM MINNESOTA, LLC: CSR 6855- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Aurora MN0130 17.61% 812 143 Chisholm MN0137 16.71% 2,178 364 Hoyt Lakes MN0131 17.69% 916 162 Virginia MN0035 16.34% 4,333 708 MCC IOWA, LLC & MEDIACOM IOWA LLC: CSR 6894- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Eldora IA0195 23.64% 1,193 282 Garwin IA0389 24.78% 230 57 Toledo IA0157 17.72% 982 174 MEDIACOM IOWA LLC: CSR 6567- E, 6833- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Clayton IA0497 40.63% 32 13 Guttenberg IA0015 18.04% 837 151 Waukon IA0225 27.99% 1,790 501 Anamosa IA0149 20.40% 1,750 357 5 Federal Communications Commission DA 06- 745 6 MEDIACOM SOUTHEAST LLC: CSR 6832- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Pitcher OK0277 24.80% 621 154 MEDIACOM INDIANA LLC: CSR 6856- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Hicksville OH0870 30.62% 1,476 452 FALCON CABLE SYSTEMS COMPANY II LP d/ b/ a CHARTER COMMUNICATIONS: CSR 6940- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Medford OR0117 16.9% 25,093 4,251 TIME WARNER ENTERTAINMENT COMPANY LP d/ b/ a TIME WARNER CABLE: CSR 6650- E 2000 Census DBS Communities CUIDS CPR* Households + Subscribers + Covington OH0555 22.42% 1,011 227 Sidney OH0051 17.03% 7,981 1,359 Urbana OH0607 22.42% 4,859 1,089 West Milton OH0808 16.27% 1,875 305 6 Federal Communications Commission DA 06- 745 7 Cable Operator Subject to Low Penetration Effective Competition MCC IOWA, LLC and MEDIACOM IOWA, LLC: CSR 6894- E Communities Franchise Area Cable Penetration Households Subscribers Level Grundy Center 1,103 209 18.95% CPR= Percent DBS penetration + = See Cable Operator Petitions 7