Federal Communications Commission DA 07-933 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Cox Southwest Holdings, LP d/b/a Cox Communications West Texas Ten Unopposed Petitions for Determination of Effective Competition in 17 Local Franchise Areas ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 6877-E CSR 6878-E CSR 6879-E CSR 6880-E CSR 6881-E CSR 6882-E CSR 6883-E CSR 6884-E CSR 6885-E CSR 6886-E MEMORANDUM OPINION AND ORDER Adopted: February 28, 2007 Released: March 2, 2007 By the Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION 1. Cox Southwest Holdings, LP (“Cox”) has filed ten unopposed petitions with the Commission pursuant to Sections 76.7, 76.905(b)(2) and 76.907 of the Commission's rules for a determination that Cox 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 any petition was filed. We grant the petitions finding that the Cox systems are subject to effective competition in the Communities listed in Attachment A, and deny with respect to two franchising areas, the City of Tye, Texas and the Village of Lake Tanglewood, Texas. 1 47 U.S.C. § 543(1). 2 47 C.F.R. § 76.905(b)(2). Federal Communications Commission DA 07-933 2 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. (“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.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 EchoStar has become 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 in 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 Cox 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 area.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. Cox sought to determine the competing provider penetration in the Communities by purchasing a 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). 8See Twelfth Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, FCC 06-11, 21 FCC Rcd 2503 at ¶¶ 6, 13, 72-73 (rel. March 3, 2006). 9See 47 C.F.R. § 76.905(g). 10 Cox Petition at Exhibit 4. Federal Communications Commission DA 07-933 3 subscriber tracking report that identified the number of subscribers attributable to the DBS providers within the Communities on a zip code basis. Cox asserts that it is the largest MVPD in the Communities because their subscribership exceeds the aggregate DBS subscribership for those franchise areas.11 Based upon the aggregate DBS subscriber penetration levels as reflected in Attachment A, calculated using 2000 Census household data, we find that Cox 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 listed in Attachment A. Therefore, the second prong of the competing provider test is satisfied with respect to these Communities. Based on the foregoing, we conclude Cox has submitted sufficient evidence demonstrating that their cable systems serving the Communities set forth on Attachment A are subject to competing provider effective competition.12 5. With respect to the City of Tye, Texas and Village of Lake Tanglewood, Texas, however, we reach a different conclusion. Cox provides the requisite 2000 Census total community occupied households information for these communities, and provides numbers relating to occupied households by zip code, but it does not indicate which zip codes pertain to which communities.13 Further, the 2000 Census information is significantly lower than the unidentified zip code information in these communities.14 Given this discrepancy, and Cox’s failure to indicate which zip codes correspond to which communities, it is it is impossible for the Commission to accurately calculate whether effective competition is present in the relevant areas. For this reason, we find that the second prong of the competing provider test is not met with regard to Tye and Lake Tanglewood. In reaching this conclusion, we do not suggest that the calculations provided for Tye and Lake Tanglewood are incorrect. Rather, Cox has not provided sufficient information to confirm their analysis. Accordingly, we deny the Petition with respect to those franchise areas. Our denial with respect to Tye and Lake Tanglewood is without prejudice to refiling should Cox later choose to provide additional or corrected information. 11 In the Petitions involving Shallowater, Wolfforth and Lubbock, Cox was not able to determine the largest MVPD because the DBS providers’ aggregated subscriber counts were larger than Cox’s subscriber count, and because of the presence of additional MVPDs. In those instances, Cox was able to establish that the competing provider test was met because the penetration rate of both the DBS providers and Cox exceeded the 15 percent rate required by the competing provider test. 12 Given that these Communities are subject to effective competition under the competing provider standard, it is not necessary to address Cox’s arguments regarding LEC effective competition. 13 In fact, Cox does not provide corresponding zip code information for any community in its petition. See Cox Petition, Exhibits 1, 3. Yet, the Commission was able to independently verify the corresponding zip code information for all communities, except Lake Tanglewood and Tye. 14 Cox Petition, Exhibits 1, 3. The 2000 Census information indicates that there are 342 total community occupied households in Lake Tanglewood, while the total zip code occupied households is listed as 4,466. In Tye, the 2000 Census information on total community occupied households is 426, whereas the the total zip code occupied households is listed as 9,100. Federal Communications Commission DA 07-933 4 III. ORDERING CLAUSES 6. Accordingly, IT IS ORDERED that the petitions filed by Cox for a determination of effective competition in the Franchise Areas IS GRANTED IN PART AND DENIED IN PART. 7. IT IS FURTHER ORDERED that the certifications to regulate basic cable service rates granted to any of the local franchising authorities in Attachment A overseeing Cox ARE REVOKED. 8. 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 1547 C.F.R. § 0.283. Federal Communications Commission DA 07-933 5 Attachment A Communities Subject to Competing Provider Effective Competition CSR-6877-E, CSR-6878-E, CSR-6879-E, CSR-6880-E, CSR-6881-E, CSR-6882-E, CSR-6883-E, CSR- 6884-E, CSR-6885-E, CSR-6886-E 2000 Census DBS Communities CUIDS CPR* Households+ Subscribers+ Clovis NM0015 27.08% 12,458 3374 Texico NM0048 38.41% 381 146 Farwell TX0005 37.33% 499 186 Lubbock TX0004 19.46% 77,527 15,090 Shallowater TX2277 32.34% 745 241 Wolfforth TX2278 40.00% 900 360 Floydada TX0447 26.47% 1,304 345 Abilene TX0139 23.72% 41,570 9,860 Snyder TX0129 27.77% 4,068 1,130 Sweetwater TX0136 26.10% 4,545 1,186 Amarillo TX0152 21.75% 67,699 14,727 Canyon TX0371 28.88% 4,802 1,387 Andrews TX0218 15.12% 3,478 526 Big Spring TX0012 17.61% 8,155 1,436 Plainview TX0111 19.54% 7,626 1,490 CPR= Percent DBS penetration + = See Cox Petitions, Exhibit 3.