Federal Communications Commission DA 07-4261 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates Petition for Determination of Effective Competition in various Mississippi Franchise Areas ) ) ) ) ) ) ) ) ) CSR 7196-E MEMORANDUM OPINION AND ORDER Adopted: October 12, 2007 Released: October 16, 2007 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. This Order considers a petition which Comcast Cable Communications, LLC (“Comcast”) 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 Comcast is 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 is therefore exempt from cable rate regulation in the communities listed in Attachment A (the “Communities”). No opposition to the petition was filed. Finding that Comcast is subject to effective competition in the listed Communities, we grant the petition. 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 07-4261 2 II. DISCUSSION 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 this 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 are DBS subscribers, we conclude that the population of the Communities 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 Comcast has 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. 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. Comcast 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. Comcast asserts that it is the largest MVPD in the majority of the Communities because its subscribership exceeds the aggregate DBS subscribership in eight of the 11 Communities.10 5. With regard to the remaining three Communities, Comcast contends that although it cannot demonstrate that it is the largest MVPD in all of these franchise areas because the SBCA aggregates the DBS subscribership figures, it still has satisfied the second prong of the competing provider test for these Communities.11 Comcast claims to be subject to competing provider competition 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). 9 See 47 C.F.R. § 76.905(g). 10 Comcast Petition at 4-5. Comcast states that its subscribership exceeded the aggregate DBS subscribership in eight of 11 franchise areas subject to the competing provider test. These Mississippi communities include Ellisville, Hattiesburg, Heidelberg, Lamar County, Lauderdale County, Meridian, Petal, and Sandersville. 11 Comcast Petition at 5. The three Communities are Forest, Jones, and Purvis, Mississippi. Federal Communications Commission DA 07-4261 3 in these communities because DBS penetration exceeds 15 percent of occupied households, and because the number of Comcast subscribers also exceeds 15 percent of the occupied households.12 Comcast determined the competing provider penetration levels in the franchise areas by accurately segmenting the populations within each zip code to correspond to political boundaries.13 For this purpose, Comcast employed Media Business Corp. (“MBC”), formerly known as SkyTrends, which uses enhanced mapping software to overlay franchise boundaries and the Census Department’s “block group level households,” which are far smaller than zip codes.14 This yielded an estimated numerical DBS penetration in each of the Communities. Comcast then compared that penetration data to the 2000 Census population data for each of the Communities. This produced a percentage estimate of DBS penetration that, in each of the Communities, was above the 15 percent required by the second prong of our competing provider test. 6. Based upon the aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that Comcast 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 the Communities. Therefore, the second prong of the competing provider test is satisfied. Based on the foregoing, we conclude that Comcast has submitted sufficient evidence demonstrating that its cable system serving the Communities set forth on Attachment A is subject to competing provider effective competition. III. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the petition filed by Comcast Cable Communications, LLC for a determination of effective competition in the Communities listed thereon IS GRANTED. 8. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to the local franchising authorities overseeing Comcast Cable Communications, LLC IS REVOKED. 9. This action is taken pursuant to authority delegated under Section 0.283 of the Commission’s rules.15 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Deputy Chief, Policy Division, Media Bureau 12 Id. 13 Id. at 6. 14 Id. 1547 C.F.R. § 0.283. Federal Communications Commission DA 07-4261 4 Attachment A Cable Operator Subject to Competing Provider Effective Competition COMCAST CABLE COMMUNICATIONS, LLC: 7196-E 2000 DBS Census Communities CUIDS CPR* Subscribers+ Household Ellisville MS0236 46.34% 565 1,220 Forrest MS0132 31.05% 2,469 7,953 Hattiesburg MS0052 17.67% 3,056 17,295 Heidelberg MS0335 47.36% 152 320 Jones MS0250 50.34% 7,881 15,656 Lamar County MS0053 41.65% 4,724 11,342 Lauderdale County MS0225 30.89% 4,078 13,202 MS0293 Meridian MS0061 19.08% 3,046 15,966 Petal MS0057 34.54% 1,029 2979 Purvis MS0149 51.43% 404 786 Sandersville MS0219 47.93% 152 317 CPR= Percent DBS penetration + = See Cable Operator Petitions