Federal Communications Commission DA 08-1219 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 7375-E, 7423-E, 7434-E, 7436-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”). 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 08-1219 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 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 Petition 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 Petition at 4. 12See Petition at 4-5. 13See Petition at 3. 14Id. at 5-6. In the Communities of Groveland (CSR 7375-E), Britton, Fairfield, Hudson, Woodstock (CSR 7423-E), Cassopolis, Penn, Pokagon, Silver Creek, and Wayne (CSR 7436), both the Comcast penetration figure and the aggregate DBS penetration figure clearly exceed 15 percent. Comcast argues that it is subject to effective (continued....) Federal Communications Commission DA 08-1219 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.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) 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. 15Petition at 6-7. 16Petition at 7-8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1219 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.18 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 08-1219 5 ATTACHMENT A CSR(s) 7375-E, 7423-E, 7434-E, 7436-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(S) CSR 7375-E Commerce MI0896 Groveland MI1788 Highland MI0897 Independence MI0924 Lake Angelus MI1458 Lake Orion MI0987 Lyon MI0899 Milford Village MI0892 Milford Township MI0898 Orion MI0988 Pontiac MI0996 Springfield MI1588 Walled Lake MI0893 Waterford MI0560 White Lake MI0900 Wixom MI0894 Wolverine Lake MI0895 CSR 7423-E Addison MI0776 Adrian City MI0041 Adrian Township MI0777 Britton MI1213 Dover MI1500 Fairfield MI1496 Hudson MI1499 Madison MI0778 Palmyra MI1498 Raisin MI0779 Ridgeway MI1497 Rollin MI0780 Tecumseh City MI0043 Tecumseh Township MI0781 Woodstock MI0782 CSR 7434-E Lathrup Village MI0628 Oak Park MI0650 Royal Oak Township MI1160 CSR 7436-E Calvin MI0802 Cassopolis MI0760 Dowagiac MI0204 Jefferson MI0803 La Grange MI0804 MI1940 Federal Communications Commission DA 08-1219 6 Communities CUID(S) Penn MI0805 Pipestone MI1938 Pokagon MI1289 Silver Creek MI1288 Wayne MI1287 Federal Communications Commission DA 08-1219 7 ATTACHMENT B CSR(s) 7375-E, 7423-E, 7434-E, 7436-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7375-E Commerce MI0896 22.07% 12,379 2,732 Groveland MI1788 38.17% 2,106 804 Highland MI0897 28.16% 6,786 1,911 Independence MI0924 25.20% 11,765 2,964 Lake Angelus MI1458 18.18% 132 24 Lake Orion MI0987 25.40% 1,198 304 Lyon MI0899 31.77% 3,887 1,235 Milford Township MI0898 16.40% 5,470 897 Milford Village MI0892 23.28% 2,427 565 Orion MI0988 23.04% 12,246 2,821 Pontiac MI0996 20.40% 24,234 4,944 Springfield MI1588 32.10% 4,619 1,483 Walled Lake MI0893 25.36% 3,158 801 Waterford MI0560 20.21% 29,387 5,940 White Lake MI0900 25.88% 10,092 2,612 Wixom MI0894 19.66% 5,889 1,158 Wolverine Lake MI0895 25.19% 1,671 421 CSR 7423-E Addison MI0776 48.98% 247 121 Adrian City MI0041 25.89% 7,908 2,047 Adrian Township MI0777 26.73% 2,147 574 Britton MI1213 54.40% 261 142 Dover MI1500 46.46% 650 302 Fairfield MI1496 45.24% 621 281 Hudson MI1499 39.86% 597 238 Madison MI0778 35.73% 2,191 783 Palmyra MI1498 36.31% 793 288 Raisin MI0779 31.30% 2,265 709 Federal Communications Commission DA 08-1219 8 2000 Estimate Census DBS Communities CUID(S) CPR* Household Subscribers Ridgeway MI1497 28.12% 576 162 Rollin MI0780 40.35% 1,296 523 Tecumseh City MI0043 31.15% 3,499 1,090 Tecumseh Township MI0871 31.10% 672 209 Woodstock MI0782 35.49% 1,344 477 CSR 7434-E Lathrup Village MI0628 17.27% 1,621 280 Oak Park MI0650 18.98% 11,104 2,108 CSR 7436-E Calvin MI0802 48.59% 784 381 Cassopolis MI0760 51.77% 703 364 Dowagiac MI0204 37.42% 2,421 906 Jefferson MI0803 42.77% 872 373 La Grange MI0804 25.46% 1,351 344 MI1940 Penn MI0805 38.01% 747 284 Pipestone MI1938 48.45% 842 408 Pokagon MI1289 35.57% 818 291 Silver Creek MI1288 38.57% 1,299 501 Wayne MI1287 38.03% 1,007 383 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1219 9 ATTACHMENT C CSR(s) 7423-E, 7434-E, 7436-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7423-E Dover MI1500 650 63 9.69% Fairfield MI1496 621 122 19.65% Hudson MI1499 597 105 17.59% Palmyra MI1498 793 83 10.47% Ridgeway MI1497 576 30 5.21% Woodstock MI0782 1,344 281 20.91% CSR 7434-E Royal Oak Township MI1160 2,511 468 18.64% CSR 7436-E Calvin MI0802 784 43 5.48% Jefferson MI0803 872 50 5.73% La Grange MI0804 1,351 184 13.62% MI1940 Penn MI0805 747 205 27.44% Pipestone MI1938 842 5 0.59% Pokagon MI1289 818 170 20.78% Silver Creek MI1288 1,299 280 21.56% Wayne MI1287 1,007 226 22.44%