Federal Communications Commission DA 08-1099 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in various Franchise Areas in Pennsylvania ) ) ) ) ) ) ) ) ) ) CSR 7460-E CSR 7461-E CSR 7469-E CSR 7472-E CSR 7473-E CSR 7474-E CSR 7476-E CSR 7513-E MEMORANDUM OPINION AND ORDER Adopted: May 8, 2008 Released: May 9, 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 petitions 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 systems serving the communities listed on Attachment B and hereinafter referred to as Group B Communities are 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 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”). 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,3 as that term is defined by Section 623(l) of the Communications Act 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 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). 347 C.F.R. § 76.906. 4See 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905. 5See 47 C.F.R. §§ 76.906 & 907. Federal Communications Commission DA 08-1099 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;6 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.7 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.8 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.9 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.10 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 programming11 and is supported in this petition with copies of channel lineups for both DIRECTV and Dish.12 Also undisputed is Petitioners 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.13 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.14 Petitioner sought to 647 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 747 C.F.R. § 76.905(b)(2)(i). 8See Petitions at 3. 9Mediacom 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). 1047 C.F.R. § 76.905(e)(2). 11See 47 C.F.R. § 76.905(g). See also Petitions at 4. 12See Petitions at 4-5 and Exhibit 1. 13See Petitions at 2-3. 14Id.at 5-6. Comcast states that it cannot determine the largest MVPD in the following Communities: (CSR 7460-E – North Beaver); (CSR 7469-E – Oakland and Sugarcreek); (CSR 7472-E – Hamlin and Mount Jewett); (CSR 7473- E – Eldred, Foster, Keating, Otto and Smethport); (CSR 7474-E – Clarion and Monroe); (CSR 7476-E – Summit); (continued....) Federal Communications Commission DA 08-1099 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 five digit zip code basis.15 7. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,16 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.17 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) (CSR 7513-E – Henry Clay, Lower Turkeyfoot, Markleysburg and Ohiopyle). With the exception of the Communities of Oakland, Sugarcreek, Eldred and Foster which qualify under the low penetration test, Comcast asserts that in the remaining Communities both the Comcast and DBS penetration figures exceed 15 percent. In cases where both DBS and cable penetration exceed 15 percent of the occupied households, the Commission has recognized that the second prong of the competing provider test is satisfied. In the Communities of Oakland, Sugarcreek, Eldred and Foster that qualify under the low penetration test, Comcast’s subscribership is less than 15 percent. While the Communities of North Beaver, Henry Clay and Lower Turkeyfoot also qualify under the low penetration test, these Communities additionally qualify under the competing provider test because Comcast subscribership in those Communities exceeds 15 percent. 15Petitions at 6-8. Comcast states that the Commission has previously approved the five digit zip code allocation formula to calculate the DBS providers’ subscribership. See, e.g., Comcast of Dallas L.P., 20 FCC Rcd 17968, 17969-70 (MB 2005) (approving a cable operator’s use of a Media Business Corporation “allocation factor, which reflects the portion of a five digit postal zip code that lies within the border of the City,” to determine DBS subscribership for that franchise area. 16Petitions at 6-8 and Exhibit 5. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1099 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 certifications to regulate basic cable service rates granted to any of the Communities set forth on Attachment A ARE REVOKED. 13. 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 1847 C.F.R. § 0.283. Federal Communications Commission DA 08-1099 5 ATTACHMENT A CSR 7460-E, CSR 7461-E, CSR 7469-E, CSR 7472-E, CSR 7473-E, CSR 7474-E, CSR 7476-E, and CSR 7513-E ________ COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LCC CSR 7460-E Communities CUIDS Bessemer PA2250 Mahoning PA2251 North Beaver PA2252 CSR 7461-E Communities CUIDS Braddock PA0614 East McKeesport PA0616 Monroeville PA1775 North Braddock PA0511 North Versailles PA0591 Rankin PA0625 CSR 7469-E Communities CUIDS Cornplanter PA0410 Cranberry PA0411 Oakland PA1000 Oil City PA0412 Rouseville PA1445 Sugarcreek PA1507 Federal Communications Commission DA 08-1099 6 CSR 7472-E Communities CUIDS Hamlin PA1763 Kane PA0152 Mount Jewett PA1762 Wetmore PA0175 CSR 7473-E Communities CUIDS Eldred PA2116 Foster PA2724 Keating PA1768 Otto PA1769 Smethport PA1707 CSR 7474-E Communities CUIDS Clarion Borough PA0138 Clarion Township PA0140 Monroe PA2635 Strattanville PA2268 CSR 7476-E Communities CUIDS Garrett PA0342 Meyersdale PA0343 Salisbury PA1661 Summit PA2631 Federal Communications Commission DA 08-1099 7 CSR 7513-E Confluence PA1297 Henry Clay PA1316 Lower Turkeyfoot PA1296 Markleysburg PA1618 Ohiopyle PA3350 Ursina PA1298 Federal Communications Commission DA 08-1099 8 ATTACHMENT B CSR 7460-E, CSR 7461-E, CSR 7469-E, CSR 7472-E, CSR 7473-E, CSR 7474-E, CSR 7476-E, and 7513-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7460-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Bessemer PA2250 24.37% 480 117 Mahoning PA2251 26.15% 1373 359 North Beaver PA2252 34.15% 1502 513 CSR 7461-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Braddock PA0614 15.85% 1161 184 East McKeesport PA0616 16.88% 1078 182 Monroeville PA1775 17.32% 12376 2,143 North Braddock PA0511 15.58% 2631 410 North Versailles PA0691 15.57% 4933 768 Rankin PA0625 15.77% 1002 158 Federal Communications Commission DA 08-1099 9 CSR 7469-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Cornplanter PA0410 19.92% 1034 206 Cranberry PA0411 34.72% 2843 987 Oil City PA0412 20.10% 4762 957 Rouseville PA1445 20.10% 204 41 CSR 7472-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Hamlin PA1763 53.58% 349 187 Kane PA0152 29.56% 1766 522 Mount Jewett PA1762 57.88% 444 257 Wetmore PA0175 31.03% 709 220 CSR 7473-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Keating PA1768 57.57% 1110 639 Otto PA1769 57.23% 678 388 Smethport PA1707 52.62% 686 361 Federal Communications Commission DA 08-1099 10 CSR 7474-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Clarion Borough PA0138 31.75% 2000 635 Clarion Township PA0140 41.12% 1386 570 Monroe PA2635 41.01% 595 244 Strattanville PA2268 67.08% 243 163 CSR 7476-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Garrett PA0342 55.36% 168 93 Meyersdale PA0343 40.23% 1019 410 Salisbury PA1661 29.14% 350 102 Summit PA2631 43.87% 864 379 CSR 7513-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Confluence PA1297 40.69% 349 142 Henry Clay PA1316 45.96% 742 341 Lower Turkeyfoot PA1296 39.00% 259 101 Markleysburg PA1618 45.55% 90 41 Ohioplyle PA3350 85.29% 29 34 Ursina PA1298 41.07% 112 46 CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1099 11 ATTACHMENT C CSR 7460-E, CSR 7469-E, CSR 7473-E, CSR7513-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7460-E Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage North Beaver PA2252 1,502 418 27.83% CSR 7469-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Oakland PA1000 575 40 6.96% Sugarcreek PA1507 2,093 68 3.25% CSR 7473-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Eldred PA2116 686 58 8.45% Foster PA2724 1,829 43 2.35% CSR 7513-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Henry Clay PA1316 742 215 28.98% Lower Turkeyfoot PA1296 259 66 25.48%