Federal Communications Commission DA 08-1218 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 Illinois Communities ) ) ) ) ) ) CSR 7158-E, 7666-E MEMORANDUM OPINION AND ORDER Adopted: May 28, 2008 Released: May 29, 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 Calumet City Community. 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 08-1218 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. 13See Petition at 5. 14See Petition at 3. 15Id. at 6. In the Communities of Beecher, Manteno, Monee (CSR 7158-E) and Otto (CSR 7666-E), both the Comcast penetration figure and the aggregate DBS 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 (continued....) Federal Communications Commission DA 08-1218 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) 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 7. 17Petition at 8. 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1218 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 08-1218 5 ATTACHMENT A CSR(s) 7158-E, 7666-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(S) CSR 7158-E Alsip IL0838 Beecher IL0833 Blue Island IL0461 Burnham IL0356 Calumet City IL0511 Chicago Heights IL0754 Country Club Hills IL0457 Crestwood IL0345 Crete IL0870 Dixmoor IL0389 Dolton IL0545 East Hazel Crest IL0357 Flossmoor IL0682 Ford Heights IL1253 Glenwood IL1255 Harvey IL0672 Hazel Crest IL0683 Hometown IL0605 Lansing IL0684 Lynwood IL1254 Manteno IL0543 Markham IL0673 Matteson IL0685 Merrionette Park IL0406 Midlothian IL0346 Monee IL1361 Oak Forest IL0578 Olympia Fields IL0686 Orland Hills IL0447 Orland Park IL0411 Palos Heights IL0454 Palos Hills IL0339 Park Forest IL0529 Peotone IL0542 Phoenix IL0674 Posen IL0348 Richton Park IL0688 Robbins IL1450 Sauk Village IL0519 South Chicago Heights IL0755 South Holland IL0924 Steger IL0756 IL0757 Thornton IL0689 Tinley Park IL0349 University Park IL0687 Worth IL0351 Federal Communications Commission DA 08-1218 6 Communities CUID(S) CSR 7666-E Aroma IL0040 Bourbonnais IL0042 Kankakee IL0045 Limestone IL0047 Otto IL0048 Federal Communications Commission DA 08-1218 7 ATTACHMENT B CSR(s) 7158-E, 7666-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers CSR 7158-E Alsip IL0838 19.32% 7,536 1,456 Beecher IL0833 55.54% 830 461 Blue Island IL0461 19.14% 8,247 1,579 Burnham IL0356 21.85% 1,449 317 Calumet City IL0511 27.33% 15,139 4,138* Chicago Heights IL0754 20.88% 10,703 2,235 Country Club Hills IL0457 29.64% 5,297 1,570 Crestwood IL0345 18.39% 4,685 862 Crete IL0870 36.40% 2,704 984 Dixmoor IL0389 19.31% 1,372 265 Dolton IL0545 23.40% 8,512 1,991 East Hazel Crest IL0357 25.42% 590 150 Flossmoor IL0682 23.35% 3,331 778 Ford Heights IL1253 21.13% 984 208 Glenwood IL1255 23.66% 3,373 798 Harvey IL0672 19.51% 8,990 1,754 Hazel Crest IL0683 25.08% 5,067 1,271 Hometown IL0605 18.63% 1,895 353 Lansing IL0684 22.19% 11,416 2,533 Lynwood IL1254 21.15% 2,620 554 Manteno IL0543 51.52% 2,578 1,328 Markham IL0673 23.69% 3,842 910 Matteson IL0685 42.64% 4,561 1,945 Merrionette Park IL0406 19.33% 957 185 Midlothian IL0346 18.75% 5,158 967 Monee IL1361 63.53% 1,204 765 Oak Forest IL0578 18.73% 9,785 1,833 Olympia Fields IL0686 27.54% 1,696 467 Orland Hills IL0447 22.94% 2,153 494 Federal Communications Commission DA 08-1218 8 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers Orland Park IL0411 22.06% 18,675 4,119 Palos Heights IL0454 18.48% 4,123 762 Palos Hills IL0339 19.56% 7,320 1,432 Park Forest IL0529 22.41% 9,138 2,048 Peotone IL0542 44.71% 1,268 567 Phoenix IL0674 19.51% 789 154 Posen IL0348 32.88% 1,627 535 Richton Park IL0688 27.10% 4,578 1,241 Sauk Village IL0519 20.50% 3,331 683 South Chicago Heights IL0755 20.82% 1,570 327 South Holland IL0924 21.29% 7,663 1,632 Steger IL0756 22.50% 3,862 869 IL0757 Thorton IL0689 22.32% 1,008 225 Tinley Park IL0349 22.96% 17,478 4,013 University Park IL0687 21.88% 2,253 493 Worth IL0351 18.71% 4,383 820 CSR 7666-E Aroma IL0040 32.96% 1,526 503 Bourbonnais IL0042 30.32% 1,985 602 Kankakee IL0045 23.36% 518 121 Limestone IL0047 27.57% 1,650 455 Otto IL0048 35.09% 701 246 *CPR = Percent of competitive DBS penetration rate. *Calumet City- includes 2,088 DBS subscribers and 2,050 WOW subscribers. Federal Communications Commission DA 08-1218 9 ATTACHMENT C CSR 7158-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7158-E Robbins IL1450 1,985 445 22.42%