Federal Communications Commission DA 08-1255 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petition for Determination of Effective Competition in Various Franchise Areas in Ohio ) ) ) ) ) ) CSR-7806-E MEMORANDUM OPINION AND ORDER Adopted: May 29, 2008 Released: May 29, 2008 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Time Warner Cable Inc., 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.”1 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”)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”). 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 petition is 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 petition based on our finding that Petitioner is subject to effective competition in the Communities listed on Attachment A. 1Petitioner included the community Delta in the caption of its petition, but provided no information to support a determination that effective competition exists for this community. Accordingly, the petition is denied as to Delta without prejudice; Petitioner may file a petition including the necessary information for Delta. 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). 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 08-1255 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 2-4. 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 5-6. 13See Petition at 5. 14See Petition at 6. 15Id. at 6-7. In the Communities of Dunkirk, East Liberty (a/k/a Perry Township), Rushville, Thompson, Thorn, Trenton, and West Rushville, both the Time Warner Cable Inc. penetration figure and the aggregate DBS penetration figure clearly exceed 15 percent. Petitioner argues that it is subject to effective competition because in (continued....) Federal Communications Commission DA 08-1255 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 plus four basis.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 satisfied as to the Group C Communities. (...continued from previous page) addition to DBS penetration exceeding 15 percent of the occupied households, the number of Time Warner Cable Inc.’s 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 7-8. 17Petition at 8, n.25. 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1255 4 III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petition/s for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc. IS 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 08-1255 5 ATTACHMENT A CSR-7806-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUID(S) Ada OH0085 Adamsville OH2414 Alexander OH1319 Alexandria OH1378 Alger OH0086 Ashley OH1535 Ashville OH0980 Athens OH0029 Athens OH2283 Baltimore OH0847 Belle Center OH1539 Bennington OH1858 Berkshire OH1687 Berne OH0405 Bowling Green OH2335 Bremen OH0807 Brushcreek OH2181 Bucyrus OH0054 Bucyrus OH0474 Burlington OH2334 Cardington OH0321 Cardington OH2170 Cardington OH2112 Carroll OH1049 Centerburg OH1379 Chesterville OH2173 Circleville OH0311 Circleville OH0446 Claibourne OH1222 Clearcreek OH2282 Clinton OH2317 Crestline OH0032 Crooksville OH0090 Croton OH1758 Croton OH2114 Danville OH0091 Darby OH2424 Darby OH1240 Derby OH0904 Delaware OH0513 Delaware OH0291 Dover OH2288 Dover OH1142 Federal Communications Commission DA 08-1255 6 Dresden OH0058 Dunkirk OH1391 East Liberty OH2165 Edison OH0545 Etna OH1380 Forest OH1540 Frazeysburg OH0204 Fredericktown OH0092 Fulton OH2172 Fultonham OH1499 Galena OH0672 Galion OH0035 Gambier OH1987 Gilead OH2413 Gratiot OH1386 Green Camp OH1488 Greenfield OH0408 Groveport OH0842 Hale OH1558 Harbor Hills OH2336 Harlem OH1886 Harrisburg OH0907 Harrison OH1381 Harrison OH0981 Hartford OH1815 Hocking OH0406 Howard OH1985 Jackson OH1070 Jackson OH2401 Jackson OH2770 Jefferson OH0873 Jefferson OH2404 Jerome OH1143 Johnstown OH0694 Junction OH0649 Kingston OH1885 Kirkersville OH1191 La Rue OH1541 Lancaster OH0269 Liberty OH0476 Liberty OH1390 Liberty OH2632 Liberty OH2333 Licking OH1986 Licking OH1377 London OH0824 Magnetic Springs OH2434 Marengo OH2171 Marion OH2705 Martinsburg OH2756 Marysville OH0758 McGuffey OH1722 Federal Communications Commission DA 08-1255 7 Milford Center OH1224 Millersport OH0848 Monroe OH2315 Monroe OH2331 Monroe OH1686 Montgomery OH2407 Mount Gilead OH0163 Mount Sterling OH0905 Mount Vernon OH0082 Mount Victory OH1559 New Bloomington OH2168 New Concord OH0104 New Lexington OH0315 North Lewisburg OH1560 North Robinson OH1343 Norwich OH2177 Oak Run OH0830 Orient OH1546 Ostrander OH1898 Paris OH0759 Patterson OH2161 Perry OH2405 Philo OH0096 Pickaway OH0448 Pike OH2338 Plain OH1145 Plainfield OH2243 Pleasant OH2327 Pleasant OH2435 Pleasant OH2291 Pleasantville OH1226 Polk OH0875 Prospect OH1221 Prospect OH1239 Radnor OH2418 Reading OH2339 Richland OH2329 Richland OH2402 Richwood OH1220 Ridgeway OH1220 Ridgeway OH1561 Roseville OH0095 Rush OH1563 Rushcreek OH2403 Rushcreek OH1389 Rushville OH1332 Rushsylvania OH2163 Sandusky OH0876 Somerford OH0829 Somerset OH0829 Sonora OH2176 South Bloomfield OH0982 Federal Communications Commission DA 08-1255 8 Sparta OH2174 Springfield OH0157 Springfield OH1808 St. Albans OH2332 Stoutsville OH1138 Sugar Grove OH0943 Sunbury OH0671 Taylor OH1899 Thompson OH1223 Thorn OH1383 Thornville OH1384 Thurston OH1227 Trenton OH1816 Union OH1225 Union OH2111 Union OH0828 Union OH1851 Unionville Center OH1900 Utica OH1031 Valley Hi OH2164 Vernon OH2470 Waldo OH1489 Walnut OH1605 Walnut OH0983 Washington OH1809 Washington OH0447 Wayne OH2119 Wayne OH0159 Wayne OH2588 West Jefferson OH0825 West Lafayette OH1501 West Mansfield OH1544 West Rushville OH1333 Wharton OH2179 Whetstone OH0477 York OH2182 Zane OH1564 Federal Communications Commission DA 08-1255 9 ATTACHMENT B CSR-7806-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers Ada OH0085 26.32% 1783 469.27 Adamsville OH2414 49.50% 46 22.77 Alexandria OH1378 51.30% 29 14.88 Alger OH0086 32.06% 371 118.96 Ashley OH1535 38.89% 469 182.39 Ashville OH0980 26.87% 1243 334.02 Athens (City) OH0029, 16.02% 6271 1004.86 Baltimore OH0847 28.78% 1159 333.51 Belle Center OH1539 30.19% 326 98.41 Berkshire OH1687 33.97% 806 273.81 Berne OH0405 20.67% 1836 379.55 Bremen OH0807 42.46% 483 205.09 Bucyrus (City) OH0054 18.46% 5559 1026.45 Bucyrus (Township) OH0474 18.46% 317 58.53 Cardington OH2170, 43.62% 754 328.93 OH2112 Carroll OH1049 32.48% 189 61.39 Centerburg OH1379 52.22% 504 263.20 Chesterville OH2173 36.50% 57 20.81 Circleville (City) OH0311 22.07% 5378 1187.17 Circleville (Township) OH0446 22.07% 917 202.42 Crestline OH0032 20.81% 2070 430.80 Crooksville OH0090 27.93% 968 270.32 Danville OH0091 42.32% 442 187.08 Darby (Pickaway) OH2424 36.04% 1259 453.78 Darby (Union) OH1240 27.60% 685 189.07 Delaware OH0513, 15.38% 9520 1463.83 OH0291 Federal Communications Commission DA 08-1255 10 Dover (Union) OH2288 25.72% 800 205.75 Dresden OH0058 30.94% 609 188.41 Dunkirk OH1391 48.30% 361 174.35 Edison OH0545 49.35% 165 81.43 Forest OH1540 43.88% 591 259.33 Frazeysburg OH0204 48.99% 489 239.58 Fredericktown OH0092 36.50% 1021 372.67 Fulton OH2172 27.56% 94 25.91 Fultonham OH1499 36.25% 57 20.66 Galena OH0672 33.66% 122 41.07 Galion OH0035 16.68% 4791 799.01 Gambier OH1987 20.62% 278 57.32 Gratiot OH1386 35.01% 77 26.96 Green Camp OH1488 25.72% 133 34.21 Greenfield OH0408 21.26% 1811 385.08 Groveport OH0842 15.64% 1575 246.32 Harrisburg OH0907 31.60% 134 42.34 Harrison (Licking) OH1381 23.18% 2227 516.18 Hartford OH1815 47.06% 149 70.12 Hocking OH0406 19.46% 1140 221.89 Howard OH1985 37.46% 1682 630.15 Jefferson (Crawford) OH0873 17.84% 659 117.55 Jefferson (Logan) OH2404 29.63% 1075 319.12 Jerome OH1143 29.25% 1402 410.12 Johnstown OH0694 36.19% 1396 505.25 Junction OH0649 48.38% 295 142.73 Kirkersville OH1191 22.79% 177 40.33 La Rue OH1541 51.94% 308 159.97 Lancaster OH0269 19.46% 14852 2890.80 Liberty (Crawford) OH0476 19.84% 543 107.71 Licking OH1986 30.63% 575 176/12 Licking OH1377 35.98% 779 280.28 London OH0824 25.21% 3590 904.90 Magnetic Springs OH2434 25.72% 120 30.86 Marengo OH2171 42.80% 114 48.80 Martinsburg OH2756 31.50% 76 23.94 Federal Communications Commission DA 08-1255 11 Marysville OH0758 25.72% 5563 1430.71 McGuffey OH1722 32.06% 207 66.37 Milford Center OH1224 46.51% 232 107.89 Millersport OH0848 23.52% 403 94.77 Mount Gilead OH0163 44.62% 1291 576.06 Mount Sterling OH0905 42.11% 780 328.49 Mount Vernon OH0082 24.99% 6187 1546 Mount Victory OH1559 42.04% 245 103.01 New Bloomington OH2168 46.19% 190 87.77 New Concord OH0104 34.65% 672 232.84 New Lexington OH0315 26.90% 1836 493.89 North Lewisburg OH1560 32.16% 598 192.30 North Robinson OH1343 19.10% 82 15.66 Norwich OH2177 49.11% 40 19.64 Orient OH1546 31.60% 95 30.02 Ostrander OH1898 50.17% 148 74.25 Patterson OH2161 43.88% 54 23.70 Perry (f/k/a East Liberty) OH2165 49.79% 377 187.71 Philo OH0096 34.54% 284 98.09 Plain OH1145 29.25% 1128 329.97 Plainfield OH2243 23.01% 66 15.19 Pleasant (Fairfield) OH2327 19.91% 2046 407.42 OH2291 Pleasantville OH1226 32.24% 310 99.95 Polk OH0875 16.68% 954 159.10 Prospect (Crawford) OH1221 39.25% 469 184.06 Radnor OH2418 18.84% 489 92.12 Richwood OH1220 46.20% 849 392.25 Ridgeway OH1220, 48.40% 123 59.53 OH1561 Roseville OH0095 26.08% 729 190.09 Rushville OH1332 53.37% 90 428 Rushsylvania OH2163 42.73% 200 85.36 Somerford OH0829 28.64% 1096 313.94 Somerset OH0829 48.40% 613 296.70 South Bloomfield OH0982 26.87% 473 127.10 Federal Communications Commission DA 08-1255 12 Sparta OH2174 42.80% 70 29.96 Stoutsville OH1138 46.02% 214 98.48 Sugar Grove OH0943 48.67% 162 78.84 Sunbury OH0671 34.20% 1016 347.45 Thompson OH1223 48.83% 202 98.64 Thorn OH1383 35.61% 1451 516.73 Thornville OH1384 36.43% 282 1334 Thurston OH1227 28.78% 203 58.42 Trenton OH1816 33.97% 746 253.43 Union OH0828 25.21% 514 129.56 Unionville Center OH1900 29.25% 110 32.18 Utica OH1031 41.93% 822 344.62 Valley Hi OH2164 48.19% 97 46.74 Waldo OH1489 50.00% 144 72 Walnut (f/k/a Fairfield Beach) OH2328 32.39% 470 152.23 Walnut (Fairfield) OH1605 31.14% 2525 786.40 Washington (Pickaway) OH0447 24.64% 1051 258.97 Wayne OH2119, 27.50% 326 89.66 OH0159, OH2588 West Jefferson OH0825 26.84% 1631 437.74 West Lafayette OH1501 26.42% 909 240.12 West Mansfield OH1544 52.86% 276 145.89 West Rushville OH1333 53.37% 49 26.15 Wharton OH2179 39.06% 145 56.64 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1255 13 ATTACHMENT C CSR-7806-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage Alexander OH1319 1081 198 18.32% Athens (Township) OH2283 8831 1101 12.47% Bennington OH1858 974 92 9.45% Bowling Green OH2335 598 155 25.92% Brushcreek OH2181 484 112 23.14% Burlington OH2334 402 85 21.14% Cardington OH0321 1096 106 9.67% Claibourne OH1222 1288 62 4.81% Clearcreek OH2282 1197 254 21.22% Clinton OH2317 2028 169 8.33% Derby OH904 1083 72 6.65% Dover (Athens) OH1142 1545 143 9.26% Etna OH1380 1991 370 18.58% Gilead OH2413 2282 243 10.65% Hale OH1558 560 9 1.61% Harlem OH1886 1339 30 2.24% Harrison (Pickaway) OH0981 2470 85 3.44% Jackson (Allen) OH2770 1074 180 16.76% Jackson (Crawford) OH1070 2223 179 8.05% Jackson (Hardin) OH2401 844 15 1.78% Kingston OH1885 537 125 23.28% Liberty (Fairfield) OH1390 2697 198 7.34% Liberty (Hardin) OH2632 2392 138 5.77% Liberty (Licking) OH2333 623 85 13.64% Marion (Licking) OH2705 961 1 0.10% Monroe (Knox) OH2315 748 157 20.99% OH2331 Monroe (Licking) OH1686 2144 110 5.13% Federal Communications Commission DA 08-1255 14 Montgomery OH2407 899 80 8.90% Oak Run OH0830 160 14 8.75% Paris OH0759 6051 220 3.64% Perry (Logan) OH2405 867 12 1.38% Pickaway OH0448 672 160 23.81% Pike OH2338 2472 142 5.74% Pleasant (Hardin) OH2435 3519 270 7.67% Prospect OH1239 835 151 18.08% Reading OH2339 1467 69 4.70% Richland (Fairfield) OH2329 667 147 22.04% Richland (Logan) OH2402 967 10 1.03% Rush OH1563 994 14 1.41% Rushcreek (Logan) OH2403 764 53 6.94% Rushcreek (Fairfield) OH1389 1295 37 2.86% Sandusky OH0876 320 69 21.56% Springfield OH0157, 3845 17 0.44% OH1808 St. Albans OH2332 747 126 16.87% Taylor OH1899 489 94 19.22% Union (Knox) OH2111 907 51 7.71% Union (Muskingum) OH1851 1282 21 1.64% Union (Union) OH1225 571 44 7.71% Vernon OH2470 292 24 8.22% Walnut (Pickaway) OH0983 865 247 28.55% Washington (Morrow) OH1809 445 131 29.44% Whetstone OH0477 873 140 16.04% York OH2182 349 91 26.07% Zane OH1564 354 15 4.24%