Federal Communications Commission DA 07-2807 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Adelphia Cable Communications MCC Georgia LLC Mediacom Arizona LLC Mediacom Southeast LLC Petition for Determination of Effective Competition in various Alabama, Arizona, Florida, Georgia, and Tennessee Communities ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6506-E CSR 6785-E CSR 6815-E & 6820-E CSR 6767-E, 6849-E, 6870-E & 6875-E MEMORANDUM OPINION AND ORDER Adopted: June 22, 2007 Released: June 26, 2007 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers several petitions that Adelphia Cable Communications (“Adelphia”),1 MCC Georgia LLC (“MCC”), Mediacom Arizona LLC (“Mediacom Arizona”), and Mediacom Southeast LLC (“Mediacom Southeast”) (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")2 and the Commission’s implementing rules,3 and are therefore exempt from cable rate regulation in the communities listed in 1Comcast Corporation and Time Warner recently acquired the assets of Adelphia Communications Corporation. In the Matter of Applications for Consent to the Assignment and/or Transfer of Control of Licenses: Adelphia Communications Corporation (and subsidiaries, debtors-in-possession), Asssignors to Time Warner Cable Inc. (subsidiaries), Assignees; Adelphia Communications Corporation (and subsidiaries, debtors-in-possession), Assignors and Transferors to Comcast Corporation (subsidiaries), Assignees and Transferrees; Comcast Corporation, Transferor, to Time Warner, Inc.; Transferree; Time Warner, Inc., Transferor, to Comcast Corporation, Transferree, 21 FCC Rcd 8203 (2006). As part of that proceeding, the parties requested that the Commission’s grant of its consent to the transactions include and accommodate, as appropriate, applications that will have been filed by such licensees relating to such cable systems that are pending at the time of the consummation of the transactions. In this matter, we also will take that to include pending petitions for effective competition. Therefore, the action we take in this proceeding will transfer to the successor-in-interest, either Comcast or Time Warner, as it relates to these franchise areas. 2 See 47 U.S.C. § 543(a)(1). 3 47 C.F.R. § 76.905(b)(4). Federal Communications Commission DA 07-2807 2 Attachment A (the “Communities”). No opposition to any petition was filed.4 Finding that the 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,5 as that term is defined by Section 623(l) of the Communications Act of 1934, as amended, and Section 76.905 of the Commission's rules.6 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.7 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.8 Turning to the first prong of this test, we find that 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.9 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.10 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 4On February 23, 2007, the Commission sent letters to various cable operators, including the above-captioned Mediacom petitions (MCC Georgia CSR 6785-E; Mediacom Arizona CSR 6815-E and 6820-E; and Mediacom Southeast CSRs 6767-E, 6849-E, 6870-E and 6875-E), informing them of a deficiency in their petitions for effective competition. The letter noted that the Satellite Broadcasting and Communications Association (“SBCA”) report submitted listed the number of DBS subscribers in the franchise area but failed to list the corresponding zip codes. The letter explained that the exclusion of the zip codes prevents affected local franchising authorities from ascertaining whether SBCA data accurately reflects the franchise area, and raises questions regarding the accuracy of the number of DBS subscribers in the franchise area. Cable operators were given 30 days to supplement their petition by supplying the missing zip code information. Local franchising authorities were permitted to supplement any existing opposition or file an opposition based on supplemental data within 50 days from the date of the Commission’s letter. The above-captioned cable operator, Mediacom, filed the requested information for the above- captioned petitions. No opposition to Mediacom’s filing has been received by the Commission. 547 C.F.R. § 76.906. 6 See U.S.C. § 543(l) and 47 C.F.R. § 76.905. 7See 47 C.F.R. §§ 76.906 & 907. 847 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 9See MediaOne of Georgia, 12 FCC Rcd 19406 (1997). 10Twelfth Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, FCC 06-11 at ¶¶ 6, 13, 72-73, 21 FCC Rcd 2503 (rel. March 3, 2006). Federal Communications Commission DA 07-2807 3 one non-broadcast channel.11 We further find that the operators have demonstrated that the Communities set forth in Attachment A 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 SBCA that identified the number of subscribers attributable to the DBS providers within the Communities on a zip code basis.12 The Petitioners state that they are the largest MVPD in some instances,13 however, they argue that even in those communities where they are not the largest MVPD or are otherwise unable to determine the largest MVPD because the number of DBS subscribers for DirecTV and Dish are aggregated and exceed the number of the Petitioners’ subscribers, they still satisfy the second prong of the competing provider test.14 In the instances where the Petitioners’ are not able to determine the largest MVPD, we are still able to conclude that the second prong is met by analyzing the data submitted for both the Petitioners’ and DBS providers.15 5. 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 in Attachment A are subject to effective competition under the competing provider analysis. B. Low Penetration Effective Competition 6. 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.”16 Mediacom Arizona and Mediacom Southeast provided information showing that less than 30 percent of the households within the franchise areas set forth in Attachment B subscribe to their cable services.17 Accordingly, we conclude that Mediacom Arizona and Mediacom Southeast have demonstrated the existence of “low penetration” effective competition in the franchise areas set forth in Attachment B pursuant to our rules. 11See 47 C.F.R. § 76.905(g). 12The Petitioners provided SBCA zip code plus four reports in support of their petitions, except for Adelphia Petition CSR 6506-E, which provided a five digit zip code report from Media Business Corp. 13Adelphia Petition at 6 (CSR 6506-E); Mediacom Arizona Petition at 6 (CSR 6815-E); Mediacom Southeast Petition at 6 (CSR 6767-E) (Greensboro); 13 Mediacom Southeast Petition at 6–7 (CSR 6849-E) (Ardmore, TN); Mediacom Southeast Petition at 6 (CSR 6870-E) (Bonifay, Vernon, Walton). 14MCC Petition at 6 (CSR 6785-E); Mediacom Arizona Petition at 6 (CSR 6820-E); Mediacom Southeast Petition at 6 (CSR 6767-E) (Hale); 14 Mediacom Southeast Petition at 6-7 (CSR 6849-E) (Ardmore, AL, Elton, TN, Lincoln, TN); Mediacom Southeast Petition at 6 (CSR 6870-E) (Holmes). 15If the subscriber penetration for both the cable operator and the aggregate DBS information each exceed 15 percent in the franchise area, the second prong of the competing provider test is satisfied. See Time Warner Entertainment Advance/Newhouse Partnership, et al., 17 FCC Rcd 23587, 23559 (MB 2002). 1647 U.S.C. § 543(l)(1)(A). 17Mediacom Arizona Petitions CSR 6815-E and 6820-E and Mediacom Southeast Petition CSR 6875-E. Federal Communications Commission DA 07-2807 4 III. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the petitions filed by Adelphia Cable Communications, MCC Georgia LLC, Mediacom Arizona LLC, and Mediacom Southeast LLC listed on Attachments A and B for a determination of effective competition in the Communities listed thereon ARE GRANTED. 8. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to the local franchising authorities overseeing Adelphia Cable Communications, MCC Georgia LLC, Mediacom Arizona LLC, and Mediacom Southeast LLC ARE REVOKED. 9. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules.18 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 07-2807 5 Attachment A COMMUNITIES SERVED BY ADELPHIA CABLE COMMUNICATIONS CSR 6506-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ Friendsville TN0325 20.72% 362 75 COMMUNITIES SERVED BY MCC GEORIGA LLC CSR 6785-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ Cataula GA0770 29.23% 7804 2281 Ellerslie GA0772 Forston GA0773 Mulberry Grove GA0771 Shenandoah GA0774 Harris County GA0823 COMMUNITIES SERVED BY MEDIACOM ARIZONA LLC CSR 6815-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Nogales AZ0010 20.15% 5985 1206 CSR 6820-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ City of Apache AZ0210 43.38% 13775 5976 Junction Federal Communications Commission DA 07-2807 6 COMMUNITIES SERVED BY MEDIACOM SOUTHEAST LLC CSR 6767-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ Greensboro AL0121 30.21% 1026 310 Hale AL0335 31.69% 6415 2033 CSR 6849-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ Lincoln County TN0313 32.50% 12503 4064 Ardmore TN0264 Ardmore County TN0265 31.37% 11713 3674 Elkton TN0268 Ardmore TN0276 20.50% 24688 5062 Town of Ardmore AL0275 24.13% 460 111 City of Ardmore TN0266 22.95% 427 98 CSR 6870-E 2000 Estimated Census DBS Communities CUIDS CPR* Households+ Subscribers+ Bonifay FL0524 17.81% 1095 195 Holmes FL1138 17.89% 6921 1238 Vernon FL0811 21.96% 296 65 Walton FL0647 27.12% 16548 4487 *CPR = Percent of DBS penetration rate. + = See Cable Operator Petitions Federal Communications Commission DA 07-2807 7 Attachment B COMMUNITIES SERVED BY MEDIACOM ARIZONA LLC CSR 6815-E 2000 Census Cable Communities CUIDS CPR* Households+ Subscribers+ Rio Rico AZ0037 11.88% 11809 1403 Santa Cruz AZ0052 CSR 6820-E 2000 Census Cable Communities CUIDS CPR* Households+ Subscribers+ Pinal AZ0276 6.21% 61364 3809 Gold Canyon AZ0325 Queen Valley AZ0326 COMMUNITIES SERVED BY MEDIACOM SOUTHEAST LLC CSR 6875-E 2000 Census Cable Communities CUIDS CPR* Households+ Subscribers+ Madison AL0345 12.56% 109955 13807 Harvest AL0373 Limestone AL0414 0.54% 24688 134