Federal Communications Commission DA 08-1216 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 Communities in Arkansas, Mississippi and Tennessee ) ) ) ) ) ) ) ) CSR 7503-E & CSR 7505-E CSR 7502-E, CSR 7504-E, CSR 7506-E & CSR 7507-E1 MEMORANDUM OPINION AND ORDER Adopted: May 28, 2008 Released: May 28, 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 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 is subject to effective competition pursuant to Section 623(1) of the Communications Act of 1934, as amended (“Communications Act”)2 and the Commission’s implementing rules,3 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”).4 Petitioner additionally claims to be exempt from cable rate regulation in the Communities listed on Attachment B because the Petitioner serves fewer than 30 percent of the households in the franchise area. One of the petitions (CSR 7505-E) is opposed by the City of West Memphis, Arkansas (“City” or “West Memphis”). 2. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition,5 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.6 The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition is present 1Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates, filed a letter supplement dated April 18, 2008 to its petitions, correcting the community unit identification numbers (“CUID”) associated with various CSRs. As a result of this letter, the corrected CUIDS for specific communities associated with CSRs 7502- E, 7504-E, 7506-E and 7507-E will be considered in petition CSR 7505-E. We will therefore dismiss petitions CSRs 7502-E, 7504-E, 7506-E, and 7507-E as moot. 2See 47 U.S.C. § 543(a)(1). 347 C.F.R. § 76.905(b)(2) and 47 C.F.R. § 76.905(b)(1). 4Dish is a registered trademark of EchoStar Communications Corporation. 547 C.F.R. § 76.906. 6See 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905. Federal Communications Commission DA 08-1216 2 within the relevant franchise area.7 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 Attachments (A and B). 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;8 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.9 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.10 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.11 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.12 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 programming13 and is supported in this petition with copies of channel lineups for both DIRECTV and Dish.14 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.15 Accordingly, we find that the first prong of the competing provider test is satisfied. 7See 47 C.F.R. §§ 76.906 & 907. 847 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 947 C.F.R. § 76.905(b)(2)(i). 10See Petition CSR 7503-E at 3-4; Petition CSR 7505-E at 3-4. 11Mediacom 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). 1247 C.F.R. § 76.905(e)(2). 13See 47 C.F.R. § 76.905(g). See also Petition CSR 7503 at 4-5; Petition CSR 7505-E at 4-5. 14See Petition CSR 7503-E at 4-5 and Exhibits 2 and 3; Petition CSR 7505-E at 4-5 and Exhibits 2 and 3. 15See Petition CSR 7503-E at 3; Petition CSR 7505-E at 3. Federal Communications Commission DA 08-1216 3 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 Communities.16 Petitioner sought to determine the competing provider penetration 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 plus four basis.17 7. In opposition, the City argues that Comcast has not satisfied its burden of proof that the City is subject to effective competition because the evidence is conflicting.18 Initially, the City argues that there is no correlation between the zip codes used by the U.S. Postal Service that Comcast relies upon and the U.S. Census Bureau geography.19 The City contends that the Census Bureau created the Zip Code Tabulation Area (“ZCTA”) for the 2000 Census and compiled the ZCTA data for specific places such as West Memphis, which provides more reliable data than the inexact methodology used by Comcast and Media Business Corporation.20 Thus, based upon the Census Bureau ZCTA for 2000, there are 11,022 households within the City rather than the 10,051 alleged by Comcast.21 Moreover, the 11,022 households within the franchise area are actually only 11,005 when adjusted for a rate of occupancy using the same rate used by Comcast in its petition.22 In addition, the City argues that Comcast’s DBS subscribership figure of 1,671, which has no supporting documentation, should be reduced by two percent, which would result in a DBS subscribership figure of 1,637 within the franchise area.23 Thus, Comcast’s penetration percentage is only 14.87 percent, less than the required 15 percent.24 Finally, the City argues that because the Census Bureau ZCTA data is available and more reliable than the numbers used by Comcast’s methodology, it should be used, and this information clearly shows a DBS penetration figure of less than 15 percent.25 The City asserts that Comcast has therefore failed to establish that it is subject to effective competition in West Memphis, Arkansas. 8. In reply, Comcast argues that the City is erroneously using the total housing unit figure of 11,022 from the 2000 Census rather than the total number of occupied households (10,051), which is the correct figure on which to rely in determining effective competition.26 Thus, there is no basis for the City to recalculate the 2000 Census occupied households since the number has been provided in the Census 16Petition CSR 7503-E at 6; Petition CSR 7505-E at 6. Comcast is unable to determine which MVPD is the largest in the Communities of Coldwater, MS, Como, MS, Crittenden County, AR, DeSoto County, MS, Fayette County, TN, Gallaway, TN, La Grange, TN, Lakeland, TN, Oakland, TN, Saulsbury, TN, Sledge, MS, Stanton, TN, Sunset, AR, Tunica County, MS, Whiteville, TN, and Williston, TN, because the DBS subscribership data obtained from SBCA is aggregated and does not break down the individual subscribership of each DBS provider. Nevertheless, 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. 17Petition CSR 7503-E at 5-8; Petition CSR 7505-E at 5-8. 18Opposition at 2-3. 19Id. at 3. 20Id. at 4. 21Id. 22Id. at 5. 23Id. 24Id. at 6. 25Id. at 6-7. 26Reply to Opposition at 2. Federal Communications Commission DA 08-1216 4 report.27 Furthermore, Comcast argues that the City mistakenly assumed that the zip code allocator was related to the 2000 Census household figure, when in fact, it reflected the portion of five digit postal zip codes within the franchise area for DBS subscribers, which Comcast used to determine the number of DBS subscribers in the actual franchise area.28 Finally, Comcast argues that Satellite Broadcasting and Communications Association (“SBCA”) data, unlike previous data from SkyTrends, does not require any adjustments and therefore percentage reductions for DBS subscribership figures have been eliminated.29 Consequently, Comcast argues that it has satisfied its burden of proof that it is subject to the competing provider test for effective competition in the West Memphis franchise area. 9. We find that the City’s arguments lack merit. We reject the City’s argument that Comcast did not use the correct 2000 Census data. Comcast correctly used occupied household data from the 2000 Census while the City attempted to use total housing units. For purposes of satisfying the effective competition test, the appropriate household figure is occupied households rather than total households.30 Thus, Comcast used the most reliable household data available. With regard to the DBS subscribership data, Comcast provided the City with a copy of the SBCA Report identifying the total number of DBS subscribers located within the franchise area, as well as a copy of the methodology detailing how SBCA calculated this result.31 If the City believed that other data would provide more accurate DBS subscriber counts, the burden to present such evidence for the record was the City’s. Finally, while adjustments for DBS subscribership figures were made in the past, those were based upon the recommendation of SkyTrends.32 Currently, the SBCA does not recommend reductions to its DBS subscribership figures. Accordingly, we will accept the number of West Memphis DBS subscribers indicated in Comcast’s petition. 10. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,33 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. 11. 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. B. The Low Penetration Test 12. 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.34 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. 27Id. at 2-3. 28Id. at 2-3.. 29Id. at 4-5. 30CoxCom, Inc. d/b/a Cox Communications Tuson, 22 FCC Rcd 4663, 4665 (2007). 31Petition at 5-8 and Exhibit 4. 32Adelphia Cable Communications, 20 FCC Rcd 20487, 20491 (2005). 33Petition CSR 7503-E at 8 and Exhibit 7; Petition CSR 7505-E at 8 and Exhibit 7. 3447 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1216 5 13. Based upon the subscriber penetration level calculated by Petitioner, as reflected in Attachment B, 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 Communities listed on Attachment B. Therefore, the low penetration test is also satisfied as to the Communities. III. ORDERING CLAUSES 14. 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. 15. 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. 16. IT IS FURTHER ORDERED that petitions CSR 7502-E, CSR 7504-E, CSR 7506-E, and CSR 7507-E are DISMISSED. 17. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.35 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 3547 C.F.R. § 0.283. Federal Communications Commission DA 08-1216 6 ATTACHMENT A CSRs 7503-E & 7505-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC, ON BEHALF OF ITS SUBSIDIARIES AND AFFILIATES CSR 7503-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Earle City AR0262 26.26% 1074 282 Parkin City AR0263 24.88% 603 150 CSR 7505-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Arlington TN0556 76.07% 794 604 Bartlett TN0339 36.60% 13773 5041 Byhalia MS0252 62.55% 275 172 Coldwater MS0233 69.06% 598 413 Collierville TN0340 41.63% 10368 4316 Como MS0189 61.61% 461 284 Crenshaw MS0246 32.15% 339 109 Hernando MS0186 70.55% 2482 1751 Horn Lake MS0164 53.73% 4934 2651 Crittenden County AR0267 40.50% 2805 1136 DeSoto County MS0486 56.03% 12796 7170 Fayette County TN0557 58.91% 6856 4039 Gallaway TN0559 77.02% 235 181 Germantown TN0237 24.87% 13220 3288 Federal Communications Commission DA 08-1216 7 Grand Junction TN0549 47.20% 125 59 LaGrange TN0632 64.41% 59 38 Lakeland TN0445 76.67% 2748 2107 Marion AR0265 30.70% 3254 999 Mason TN0560 48.57% 210 102 Memphis TN0063 20.25% 250721 50770 TN0064 Memphis Village MS0545 70.37% 27 19 Middleton TN0418 61.00% 259 158 Moscow TN0552 52.91% 172 91 Oakland TN0554 79.22% 510 404 Olive Branch MS0255 50.78% 7546 3832 Piperton TN0553 40.54% 259 105 Rossville TN0551 48.17% 164 79 Saulsbury TN0633 62.80% 43 27 Senatobia MS0165 50.30% 2137 1075 Shelby County TN0444 41.04% 43109 17690 Sledge MS0267 43.53% 170 74 Somerville TN0272 49.11% 1006 494 Southhaven MS0163 49.90% 11007 5488 Stanton TN0550 47.24% 254 120 Sunset AR0266 40.74% 135 55 Tunica Town MS0227 60.06% 2296 1379 Tunica County MS0228 39.11% 537 210 Walnut MS0274 46.08% 319 147 West Memphis AR0148 16.63% 10051 1671 Whiteville TN0290 53.17% 457 243 Federal Communications Commission DA 08-1216 8 Williston TN0555 103% 122 126 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1216 9 ATTACHMENT B CSR 7505-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC, ON BEHALF OF ITS SUBSIDIARIES AND AFFILIATES Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage Alcorn County MS0504 6998 9 0.13% Braden TN0558 104 8 7.69% Crittenden County AR0267 2805 577 20.57% Gallaway TN0559 235 59 25.11% Hardeman County TN0548 6050 110 1.82% Haywood County TN0584 3199 19 0.59% Marshall County MS0430 9286 499 5.37% Sunset AR0266 135 27 20.00% Tate County MS0234 6115 374 6.12% Tippah County MS0405 5108 198 3.88% Tipton County TN0634 10862 17 0.16%