Federal Communications Commission DA 08-1032 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 California Communities ) ) ) ) ) ) ) CSR 7772-E 7774-E 7807-E 7808-E 7810-E 7811-E MEMORANDUM OPINION AND ORDER Adopted: April 30, 2008 Released: May 1, 2008 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates, hereinafter referred to as “Petitioner,” has filed with the Commission petitions pursuant to Sections 76.7, 76.905(b)(2) and 76.907 of the Commission’s rules for determinations that Petitioner is subject to effective competition in those communities listed on Attachment A and hereinafter referred to as “Communities.” Petitioner alleges that its cable systems serving the Communities are subject to effective competition pursuant to Section 623(1)(1)(B) 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 because of the competing service provided by two direct broadcast satellite (“DBS”) providers, DirecTV, Inc. (“DirecTV”) and Dish Network (“Dish”) and, in some Communities, other providers.3 The petitions are unopposed. 2. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition,4 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.5 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.6 For the reasons set forth below, we grant the petitions based on our finding that Petitioner is subject to effective competition in the Communities listed on Attachment A. 1See 47 U.S.C. § 543(a)(1). 247 C.F.R. § 76.905(b)(2). 3The other providers are, in CSR 7772-E and 7774-E, Astound Broadband, LLC; and, in CSR 7810-E and 7811-E, Alameda Power & Telecom. See, e.g., Petition in CSR 7772-E at 2 n.7, 7, & Exhs. 5-6; Petition in CSR 7810-E at 2 n.6, 7, & Exhs. 4-5. 447 C.F.R. § 76.906. 5See 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905. 6See 47 C.F.R. §§ 76.906 & 907. Federal Communications Commission DA 08-1032 2 II. DISCUSSION 3. Section 623(l)(1)(B) of the Communications Act provides that a cable operator is subject to effective competition if the 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.7 This test is otherwise referred to as the “competing provider” test. 4. The first prong of this test has three elements: the franchise area must be “served by” at least two unaffiliated MVPDs who offer “comparable programming” to at least “50 percent” of the households in the franchise area.8 5. Turning to the first prong of this test, it is undisputed that these Communities are “served by” both DBS providers, DIRECTV and Dish, and that these two MVPD providers are unaffiliated with Petitioner or with each other. A franchise area is considered “served by” an MVPD if that MVPD’s service is both technically and actually available in the franchise area. DBS service is presumed to be technically available due to its nationwide satellite footprint, and presumed to be actually available if households in the franchise area are made reasonably aware of the service's availability.9 The Commission has held that a party may use evidence of penetration rates in the franchise area (the second prong of the competing provider test discussed below) coupled with the ubiquity of DBS services to show that consumers are reasonably aware of the availability of DBS service.10 We further find that Petitioner has provided sufficient evidence of DBS advertising in local, regional, and national media that serve the Communities to support their assertion that potential customers in the Communities are reasonably aware that they may purchase the service of these MVPD providers.11 The “comparable programming” element is met if a competing MVPD provider offers at least 12 channels of video programming, including at least one channel of nonbroadcast service programming12 and is supported in this petition with copies of channel lineups for both DIRECTV and Dish.13 Also undisputed is Petitioner’s assertion that both DIRECTV and Dish offer service to at least “50 percent” of the households in the Communities because of their national satellite footprint.14 Accordingly, we find that the first prong of the competing provider test is satisfied. 6. 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. Petitioner asserts that it is the largest MVPD in all but one of the Communities.15 Petitioner sought 747 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 847 C.F.R. § 76.905(b)(2)(i). 9See Petition in CSR 7772-E at 3. 10Mediacom Illinois LLC et al., Eleven Petitions for Determination of Effective Competition in Twenty-Two Local Franchise Areas in Illinois and Michigan, 21 FCC Rcd 1175 (2006). 1147 C.F.R. § 76.905(e)(2). 12See 47 C.F.R. § 76.905(g). See also Petition in CSR 7774-E at 4. 13See Petition in CSR 7807-E at Exh. 1. 14See Petition in CSR 7808-E at 2-3. 15In circumstances where the largest MVPD is unable to be identified (Petition in CSR 7808-E at 5), the Commission is able to determine that the second prong is met by making dual assumptions. First, we assume that Petitioner is the largest MVPD provider in the Community and determine that the combined DBS subscribership is greater than 15 percent; we then assume that one of the DBS providers is the largest MVPD in the Community and (continued....) Federal Communications Commission DA 08-1032 3 to determine the penetration of DIRECTV and Dish 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 and zip code plus four basis where necessary.16 7. Based upon the aggregate DBS and other competitor subscriber penetration levels that were calculated using Census 2000 household data,17 as reflected in Attachment A, we find that Petitioner 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 for each of the Communities. 8. Based on the foregoing, we conclude that Petitioner has submitted sufficient evidence demonstrating that both prongs of the competing provider test are satisfied and Petitioner is subject to effective competition in the Communities listed on Attachment A. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates ARE GRANTED. 10. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to any of the Communities set forth on Attachment A IS REVOKED. 11. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.18 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau (...continued from previous page) determine that Petitioner’s subscribership is greater than 15 percent. When both determinations can be made, then the second prong of the competing provider test is met. See Attachment A. 16Petition in CSR 7810-E at 5-6. A zip code plus four analysis allocates DBS subscribers to a franchise area using zip code plus four information that generally reflects franchise area boundaries in a more accurate fashion than standard five digit zip code information. 17Petition in CSR 7811-E at 7. 1847 C.F.R. § 0.283. Federal Communications Commission DA 08-1032 4 ATTACHMENT A CSR 7772-E, 7774-E, 7807-E, 7808-E, 7810-E, 7811-E COMMUNITIES SERVED BY SUBSIDIARIES AND AFFILIATES OF COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census Competitors Communities CUID(s) CPR* Household Subscribers CSR 7772-E Brisbane CA0440 16.23% 1620 263 Broadmoor CA0575 15.67% 1275 200 Dale City CA0280 20.37% 30075 6269 CA1337 Pacifica CA0197 19.17% 13994 2683 South San CA0282 27.73% 19677 5456 Francisco CSR 7774-E Belmont CA0007 16.26% 10418 1694 CA1370 Millbrae CA0578 16.47% 7956 1310 Redwood City CA0205 26.56% 28060 7452 CA1569 San Carlos CA0207 20.08% 11455 2300 CA1470 San Mateo City CA0206 26.59% 37338 9926 CA1374 San Mateo County CA0074 26.17% 20562 5381 CA0925 CA0967 CA1501 CA0573 CSR 7807-E Gustine CA0624 49.89% 1683 840 Federal Communications Commission DA 08-1032 5 2000 Estimated Census Competitors Communities CUID(s) CPR* Household Subscribers CSR 7808-E Newman CA0657 74.90% 2079 1557 CA1655 CSR 7810-E and 7811-E Alameda CA1616 42.29% 30226 12782** CA1684 *CPR = Percent of competitors’ penetration rate. ** Comcast operates two cable systems in Alameda County California and therefore each has its own CSR number herein, 7810-E and 7811-E. The two systems operate pursuant to one franchise, however, and therefore Comcast reports a common set of numbers for both of them.