Federal Communications Commission DA 07-2282 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: Coxcom, Inc. Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in various Arizona, Georgia, and Illinois Communities ) ) ) ) ) ) ) ) ) ) ) CSR 6924-E, 6991-E CSR 7071-E, 7072-E, 7123-E MEMORANDUM OPINION AND ORDER Adopted: May 31, 2007 Released: June 1, 2007 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers several petitions which Coxcom, Inc. (“Coxcom”) and Comcast Cable Communications, LLC (“Comcast”) (collectively the “Petitioners” or “operators”) 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 Petitioners 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 Petitioners 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. Federal Communications Commission DA 07-2282 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 15 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 was the second largest, and DISH the third largest, MVPD provider during that period.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 relating to the competing provider test 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 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. Petitioners sought to determine the competing provider penetration in the Communities by purchasing 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. Coxcom states that is the largest MVPD in Sierra Vista and Fort Huachuca, Arizona.10 In addition, Coxcom states it is the largest MVPD in Tempe, Guadalupe, Youngtown, and certain unincorporated areas of Maricopa County encompassing its franchise area.11 Comcast asserts that it is the largest MVPD in the communities of Arlington Heights, Des Plaines, Mount Prospect, Prospect Heights, and Skokie, Illinois because its subscribership exceeds the DBS subscribership for those franchise areas.12 With regard to the Communities of Tallapoosa, Waco, Mount 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 Delivery of Video Programming, FCC 06-11 at ¶¶ 6, 13, 72-73, 21 FCC Rcd 2503 (rel. March 3, 2006). 9See 47 C.F.R. § 76.905(g). 10 Coxcom Petition at 6 (CSR 6991-E). 11 Coxcom Petition at 7 (CSR 6924-E). 12 Comcast Petition at 5-6 (CSR 7123-E). Federal Communications Commission DA 07-2282 3 Zion, and Whitesburg, Georgia, Comcast contends that although it is unable to determine the largest MVPD, it has still satisfied the second prong of the competing provider test for these communities.13 Comcast claims to be subject to competing provider competition in these communities because both the Comcast penetration figure and the aggregate DBS penetration figure clearly exceed 15 percent in each of these franchise areas.14 Based upon the aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that Petitioners 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 these communities. Therefore, the second prong of the competing provider test is satisfied. Based on the foregoing, we conclude that Petitioners have submitted sufficient evidence demonstrating that its cable systems serving the communities set forth on Attachment A are subject to effective competition under the competing provider analysis. 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.”15 Comcast provided information showing that less than 30 percent of the households within the Haralson County, Carroll County, and Carrollton franchise areas subscribe to its cable services. Accordingly, we conclude that Comcast has demonstrated the existence of “low penetration” effective competition in Haralson County, Carroll County, and Carrollton franchise areas pursuant to our rules. III. ORDERING CLAUSES 6. Accordingly, IT IS ORDERED that the petitions filed by Comcast Cable Communications, LLC and CoxCom, Inc. listed on Attachment A for a determination of effective competition in the Communities listed thereon ARE GRANTED. 7. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to the local franchising authorities overseeing Comcast Cable Communications, LLC and CoxCom, Inc. ARE REVOKED. 8. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules.16 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 13 Comcast Petition at 6 (CSR 7071-E and 7072-E). 14 Id. 1547 U.S.C § 543(l)(l)(A). 1647 C.F.R. § 0.283. Federal Communications Commission DA 07-2282 4 Attachment A Cable Operator Subject to Competing Provider Effective Competition COXCOM, INC.: CSR 6924-E, 6991-E 2000 DBS Census Communities CUIDS CPR* Subscribers+ Household CSR 6924-E Youngtown AZ0111 23.64% 388 1,641 Guadalupe AZ0321 17.66% 196 1,110 Tempe AZ0036 15.61% 9,926 63,602 Unincorporated AZ0049 28.61% 20,964 73,276 Maricopa County AZ0112 AZ0116 AZ0131 AZ0148 AZ0171 AZ0183 AZ0191 AZ0208 AZ0209 AZ0246 AZ0322 • Cox faces competition in Tempe from TVMAX. The subscribers of MVPDs in the franchise area are aggregated to determine whether the statutory 15 percent standard is satisfied under the second prong of the competing provider test. CSR 6991-E Sierra Vista AZ0018 30.87% 4,089 13,247 Fort Huachuca AZ0094 16.43% 156 949 Federal Communications Commission DA 07-2282 5 COMCAST CABLE COMMUNICATIONS, LLC: CSR 7071-E, 7072-E, 7123-E 2000 DBS Census Communities CUIDS CPR* Subscribers+ Household CSR 7071-E Tallapoosa GA0189 50.36% 598 1,187 Waco GA 0976 65.60% 124 189 CSR 7072-E Mount Zion GA0801 35.94% 156 434 Whitesburg GA0703 70.98% 159 224 CSR 7123-E Arlington Heights IL0554 28.12% 8,651 30,763 Des Plaines IL0556 27.46% 6,142 22,362 Mount Prospect IL0558 22.05% 4,759 21,585 Prospect Heights IL0560 31.63% 2,018 6,379 Skokie IL0657 23.68% 5,500 23,223 • For each of the franchise areas listed pursuant to CSR 7123-E, the DBS Subscribers category combines subscriber base information for DBS providers, Wide Open West, and RCN. DBS subscriber numbers combined with that of competitive providers Wide Open West and RCN in the respective franchise areas exceeds the 15 percent threshold required. Cable Operator Subject to Low Penetration Effective Competition COMCAST CABLE COMMUNICATIONS, LLC: CSR 7071-E, 7072-E Communities CUIDS Franchise Area Cable Penetration Households Subscribers Level CSR 7071-E Haralson County GA0527 6,292 114 1.81% CSR 7072-E Federal Communications Commission DA 07-2282 6 Carroll County GA0704 20,569 2,156 10.48% GA0671 Carrollton GA0974 7,121 37 0.52% *CPR = Percentage of DBS penetration + = See Cable Operator Petitions