Federal Communications Commission DA 08-1152 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 7566-E CSR 7569-E CSR 7667-E MEMORANDUM OPINION AND ORDER Adopted: May 14, 2008 Released: May 15, 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 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 08-1152 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 the petitions with copies of channel lineups for both DIRECTV and Dish.12 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.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 4-5. 12See Petitions at 4-5 and Exhibit 2. 13See Petitions at 3. 14Id. 5-6. Comcast cannot determine the largest MVPD in the following Communities: (CSR 7566-E – Rimersburg and Toby): (CSR 7569-E – Hookstown, Independence and Potter). Comcast states that it is immaterial in these Communities which MVPD is the largest because both the DBS and the cable numbers surpass the 15 percent (continued....) Federal Communications Commission DA 08-1152 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) threshold. 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 addition to satisfying the competing provider test, the Communities of Toby, Independence and Potter also satisfy the low penetration test. 15Petitions at 6-7. 16Petitions at 6-7 and Exhibit 5 (CSR 7569-E) and Exhibit 6 (CSR 7566-E and CSR 7667-E). 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1152 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 08-1152 5 ATTACHMENT A CSR 7566-E, CSR 7569-E and CSR 7667-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7566-E Communities CUIDS Emlenton PA0516 Hovey PA1015 Madison PA3075 Parker PA0518 Perry PA1014 Piney PA2634 Richland PA2358 Calrion County Richland PA3173 Venango County Rimersburg PA1396 Sligo PA1395 Toby PA1601 CSR 7569-E Communities CUIDS Georgetown PA2267 Hanover PA2476 Hookstown PA2266 Independence PA2891 Potter PA2890 Raccoon PA2264 Federal Communications Commission DA 08-1152 6 CSR 7667-E Communities CUIDS Hickory PA2781 Mahoning PA2871 Neshannock PA2871 Plain Grove PA3123 Scott PA2847 Shenango PA0802 South New Castle PA1182 Union PA0803 Washington PA2992 Wayne PA3076 Wilmington PA2971 Federal Communications Commission DA 08-1152 7 ATTACHMENT B CSR 7566-E, CSR 7569-E and CSR 7667-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7566-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Emlenton PA0516 54.04% 322 174 Hovey PA1015 52.63% 38 20 Parker PA0518 55.02% 309 170 Rimersburg PA1396 55.93% 447 250 Sligo PA1395 5179% 280 145 Toby PA1601 53.72% 443 238 CSR 7569-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Georgetown PA2267 40.30% 67 27 Hookstown PA2476 60.61% 66 40 Independence PA2891 27.61% 1007 278 Potter PA2890 23.33% 210 49 Raccoon PA2264 21.50% 1186 255 Federal Communications Commission DA 08-1152 8 CSR 7667-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Hickory PA2781 18.81% 925 174 Neshannock PA2026 16.88% 3810 643 Plain Grove PA3123 27.85% 316 88 Scott PA2847 22.85% 814 186 Shenango PA0802 18.82% 2854 537 South New Castle PA1182 23.62% 309 73 Union PA0803 19.33% 2121 410 Washington PA2992 37.66% 259 96 Wilmington PA2971 24.13% 949 229 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1152 9 ATTACHMENT C CSR 7566-E, CSR 7569-E and CSR 7667-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7566-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Madison PA3075 562 71 12.63% Perry PA1014 409 46 11.25% Piney PA2634 142 12 8.45% Richland PA2358 213 24 11.27% Clarion County Richland PA3173 291 11 3.78% Venago County Toby PA1601 443 99 22.35% CSR 7569-E Hanover PA2476 1,288 185 14.36% Independence PA2891 1,007 214 21.25% Potter PA2890 210 33 15.71% CSR 7667-E Mahoning PA2871 1373 168 12.24% Wayne PA3076 894 35 3.91%