Federal Communications Commission DA 08-1039 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petition for Determination of Effective Competition in various Michigan Communities ) ) ) ) ) ) CSR 7420-E, 7488-E, 7498-E, 7545-E MEMORANDUM OPINION AND ORDER Adopted: May 1, 2008 Released: May 2, 2008 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Comcast Cable Communications, LLC, hereinafter referred to as “Petitioner,” has filed with the Commission a petition pursuant to Sections 76.7, 76.905(b)(2), 76.905(b)(1) and 76.907 of the Commission’s rules for a determination 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 system serving the communities listed on Attachment B and hereinafter referred to as Group B Communities 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 because of the competing service provided by two direct broadcast satellite (“DBS”) providers, DirecTV, Inc. (“DirecTV”) and Dish Network (“Dish”).3 Petitioner additionally claims to be exempt from cable rate regulation in the Communities listed on Attachment C and hereinafter referred to as Group C Communities because the Petitioner serves fewer than 30 percent of the households in the franchise area. 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) and 47 C.F.R. § 76.905(b)(1). 3Comcast additionally relies on the subscriber count of cable operator Wide Open West (“WOW”) in the Berkley City, Ferndale, Pleasant Ridge, Rochester, and Rochester Hills Communities. 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 08-1039 2 II. DISCUSSION A. The Competing Provider Test 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 Group B 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 Group B Communities to support their assertion that potential customers in the Group B 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 Group B 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 the Group B Communities.15 Petitioner sought to 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 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 at 4-5. 13See Petition at 5. 14See Petition at 3. 15Id. at 5-6. In the Communities of Berkley City, Ferndale, Pleasant Ridge (CSR 7420-E), Brady, Mottville, Nottawa, Park, Pavilion, Porter, Vandalia (CSR 7488-E), Dayton, Garfield, Holton, Sheridan, Sherman (CSR 7498- E), Franklin, Liberty, and Sandstone (CSR 7545-E) both the Comcast penetration figure and the aggregate DBS (continued....) Federal Communications Commission DA 08-1039 3 determine the competing provider penetration in the Group B 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 Group B Communities on a zip code and zip code plus four basis where necessary.16 7. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,17 as reflected in Attachment B, 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 Group B Communities. Therefore, the second prong of the competing provider test is satisfied for each of the Group B 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 Group B Communities. B. The Low Penetration Test 9. Section 623(l)(1)(A) of the Communications Act provides that a cable operator is subject to effective competition if the Petitioner serves fewer than 30 percent of the households in the franchise area; this test is otherwise referred to as the “low penetration” test.18 Petitioner alleges that it is subject to effective competition under the low penetration effective competition test because it serves less that 30 percent of the households in the franchise area. 10. Based upon the subscriber penetration level calculated by Petitioner, as reflected in Attachment C, we find that Petitioner has demonstrated the percentage of households subscribing to its cable service is less than 30 percent of the households in the Group C Communities. Therefore, the low penetration test is also satisfied as to the Group C Communities. (...continued from previous page) penetration figure clearly exceed 15 percent. Comcast argues that it is subject to effective competition because in addition to DBS penetration exceeding 15 percent of the occupied households, the number of Comcast subscribers also exceed 15 percent and the Commission has recognized that in such cases the second prong of the competing provider test is satisfied. 16Petition at 6-7. 17Petition at 8. 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1039 4 III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Comcast Cable Communications, LLC ARE GRANTED. 12. 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. 13. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.19 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1947 C.F.R. § 0.283. Federal Communications Commission DA 08-1039 5 ATTACHMENT A CSR(s) 7420-E, 7488-E, 7498-E, 7545-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(S) CSR 7420-E Auburn Hills MI0833 Berkley City MI0827 Ferndale MI0829 Oakland MI0831 Pleasant Ridge MI0832 Rochester MI0834 Rochester Hills MI0826 CSR 7488-E Brady MI1277 Calvin MI1528 Centerville MI1278 Constantine Village MI0161 Constantine Township MI1284 Fabius MI1279 Flowerfield MI1591 Lockport MI1280 Marcellus MI1894 Mendon MI1281 Mottville MI1285 Newberg MI1529 Nottawa MI1385 Park MI1282 Pavillion MI1283 Penn MI1526 Porter MI1525 MI1002 Prairie Ronde MI1939 Schoolcraft Village MI0360 Schoolcraft Township MI0361 Sherman MI1386 Three Rivers MI0246 Vandalia MI1527 Vicksburg MI0362 Volinia MI1895 White Pigeon Township MI0160 White Pigeon Village MI1286 CSR 7498-E Brooks MI1533 Cedar Creek MI1260 Dalton MI0511 Dayton MI1491 Egelston MI0506 Fremont MI0510 Federal Communications Commission DA 08-1039 6 Communities CUID(S) Fruitland MI1261 Fruitport MI0271 Garfield MI1489 Holton MI1488 Laketon MI0270 Muskegon MI0056 Muskegon Township MI0025 Muskegon Heights MI0158 North Muskegon MI0057 Norton Shores MI0193 Sheridan MI0644 Sherman MI1490 Spring Lake MI1262 Sullivan MI0775 CSR 7545-E Blackman MI0037 Brooklyn MI0694 Cambridge MI1391 Cement City MI1390 Columbia MI0695 Franklin MI1388 Jackson MI0038 Leoni MI0068 Liberty MI1468 Napoleon MI0563 Norvell MI1138 Onsted MI1389 Rives MI1978 Sandstone MI1552 Somerset MI1392 Spring Arbor MI0240 Summit MI0069 Federal Communications Commission DA 08-1039 7 ATTACHMENT B CSR(s) 7420-E, 7488-E, 7498-E, 7545-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers CSR 7420-E Auburn Hills MI0833 18.47% 8,064 1,490 Berkley City MI0827 48.65% 6,678 3,249* Ferndale MI0829 44.47% 9,872 4,390* Oakland MI0831 25.73% 4,341 1,117 Pleasant Ridge MI0832 47.66% 1,110 529* Rochester City MI0834 41.00% 4,667 1,913* Rochester Hills MI0826 42.58% 26,315 11,206* CSR 7488-E Brady MI1277 36.94% 1,554 574 Centerville Village MI1278 44.89% 490 220 Constantine Village MI0161 41.02% 763 313 Fabius MI1279 35.04% 1,304 457 Lockport MI1280 35.21% 1,451 511 Mottville MI1285 41.23% 570 235 Nottawa MI1385 27.55% 1,325 365 Park MI1282 36.74% 996 366 Pavilion MI1283 40.50% 2,114 856 Porter MI1525 41.76% 1,523 636 MI1002 Schoolcraft Township MI0361 23.05% 2,781 641 Schoolcraft Village MI0360 51.86% 615 319 Three Rivers City MI0246 34.84% 2,910 1,014 Vandalia MI1527 36.22% 127 46 Federal Communications Commission DA 08-1039 8 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers Vicksburg MI0362 44.20% 908 401 White Pigeon Township MI0160 23.98% 1,505 361 White Pigeon Village MI1286 42.03% 602 253 CSR 7498-E Cedar Creek MI1260 40.76% 1,180 481 Dalton MI0511 29.12% 2,871 836 Dayton MI1491 39.01% 687 268 Egelston MI0506 18.91% 3,458 654 Fremont MI0510 38.37% 1,788 686 Fruitland MI1261 26.30% 1,859 489 Fruitport MI0271 18.33% 4,446 815 Garfield MI1489 45.37% 844 383 Holton MI1488 48.50% 903 438 Laketon MI0270 24.90% 2,682 668 Muskegon MI0056 15.60% 14,569 2,273 Muskegon Heights MI0158 16.26% 4,507 733 Muskegon Township MI0025 20.30% 6,581 1,336 North Muskegon MI0057 25.03% 1,610 403 Norton Shores MI0193 15.05% 8,996 1,354 Sheridan MI0644 38.36% 842 323 Sherman MI1490 43.00% 749 322 Sullivan MI0775 36.30% 887 322 CSR 7545-E Blackman MI0037 20.72% 6,658 1,380 Brooklyn MI0694 37.86% 507 192 Cambridge MI1391 40.50% 1,996 808 Cement City MI1390 32.71% 162 53 Federal Communications Commission DA 08-1039 9 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers Columbia MI0695 34.24% 2,894 991 Franklin MI1388 51.91% 1,071 556 Jackson MI0038 16.96% 14,210 2,411 Leoni MI0068 26.03% 5,240 1,364 Liberty MI1468 42.96% 1,073 461 Napoleon MI0563 28.82% 2,592 747 Norvell MI1138 43.08% 1,135 489 Onsted MI1389 46.10% 321 148 Sandstone MI1552 34.44% 1,321 455 Somerset MI1392 41.55% 1,687 701 Spring Arbor MI0240 30.62% 2,570 787 Summit MI0069 17.03% 8,690 1,480 *CPR = Percent of competitive DBS penetration rate. *Berkley City- includes 497 DBS subscribers and 2,752 WOW subscribers. *Ferndale- includes 853 DBS subscribers and 3,537 WOW subscribers. *Pleasant Ridge- includes 75 DBS subscribers and 454 WOW subscribers. *Rochester- includes 616 DBS subscribers and 1,297 WOW subscribers. *Rochester Hills- includes 3,896 DBS subscribers and 7,310 subscribers. Federal Communications Commission DA 08-1039 10 ATTACHMENT C CSR(s) 7488-E, 7498-E, 7545-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7488-E Brady MI1277 1,554 456 29.34% Calvin MI1528 784 23 2.93% Constantine Township MI1284 1,560 141 9.04 Flowerfield MI1591 571 58 10.16% Marcellus MI1894 1,021 28 2.74 Mendon MI1281 1,062 132 12.43% Mottville MI1285 570 137 24.04% Newberg MI1529 648 65 10.03% Nottawa MI1385 1,325 218 16.45% Pavillion MI1283 2,114 486 22.99% Penn MI1526 747 161 21.55% Prairie Ronde MI1939 707 55 7.78% Schoolcraft Township MI0361 2,781 692 24.88% Sherman MI1386 1,175 109 9.28% Vandalia MI1527 127 36 28.35% Volinia MI1895 426 36 8.45% White Pigeon MI1286 1,505 164 10.90% CSR 7498-E Brooks MI1533 1,441 26 1.80% Dayton MI1491 687 168 24.45% Fruitland MI1261 1,859 522 28.08% Garfield MI1489 844 167 19.79% Sheridan MI0644 842 220 26.13% Federal Communications Commission DA 08-1039 11 Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage Sherman MI1490 749 197 26.30% Spring Lake MI1262 5,237 27 0.52% CSR 7545-E Liberty MI1468 1,073 312 29.08% Rives MI1978 1,677 82 4.89% Sandstone MI1552 1,321 226 17.11%