Federal Communications Commission DA 08-1285 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-7725-E MEMORANDUM OPINION AND ORDER Adopted: June 12, 2008 Released: June 13, 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.” 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 petition is 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 3. 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. However, Petitioner included the communities Auburn (CUID OH2113), Washington, (CUID OH0473) and Rowesburg (OH2193) in the caption of its petition, but provided no information to support a determination that effective competition exists for these communities. Petitioner also requested a determination of effective 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 08-1285 2 competition for the townships of Ripley and Russell under the low penetration effective competition test, but because these communities were not listed in the caption of the petition and because Petitioner did not provide CUIDs for these communities, some ambiguity exists as to whether these communities were provided adequate notice of the petition. Finally, Petitioner requested a determination of effective competition for Springfield township under both the low penetration and the competing provider tests, but created ambiguity as to whether this is one township or two separate entities by providing only one CUID, but different 2000 household census data for Springfield township in Exhibits A and E. Accordingly, the petition is denied as to the communities specifically named in this paragraph without prejudice (for Springfield township we deny the petition for a determination of effective competition only under the low penetration test); Petitioner may file a petition including the necessary information for these communities. II. DISCUSSION A. The Competing Provider Test 4. 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. 5. 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 6. 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 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 3-5. 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 5-6. Federal Communications Commission DA 08-1285 3 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. 7. 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 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.15 8. 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. 9. 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 10. 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. 11. 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. 12See Petition at 6. 13See Petition at 6. 14Id. at 7-8. In the townships of Berlin, Center, Clarksfield, Hanover, Jefferson, Knox, Monroe, Oxford, Paris, Sandy, and Westfield, as well as Tuscarawas Village, both Time Warner Cable Inc.’s penetration figure and the aggregate DBS penetration figure clearly exceed 15 percent. Petitioner argues that it is subject to effective competition because in 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. 15Petition at 8. 16Petition at 8, n.25. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1285 4 III. ORDERING CLAUSES 12. Accordingly, IT IS ORDERED that, consistent with the terms of this Order, the petition for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc. IS GRANTED IN PART AND DENIED IN PART. 13. 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. 14. 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 08-1285 5 ATTACHMENT A CSR-7725-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUID(S) Alliance OH0763 Atwater OH1845 Bailey Lakes OH1503 Barberton OH0217 Barberton OH2143 Barnhill OH0196 Bazetta OH1094 Beach City OH0256 Bellville OH0088 Beloit OH0393 Berlin OH2049 Bethlehem OH1200 Bolivar OH0627 Boston OH2694 Braceville OH1674 Braceville OH1977 Bristol OH1608 Brookfield OH0400 Brookfield OH2063 Brown OH0573 Brown OH2320 Burbank OH1500 Butler OH0089 Butler OH0561 Butler OH1946 Canton OH0579 Carrollton OH0148 Cass OH2009 Center OH0617 Champion OH0216 Charlestown OH2077 Chatam OH2140 Clarksfield OH2472 Clinton OH1097 Coitsville OH2148 Congress OH1395 Copley OH2716 Coventry OH0950 Creston OH0205 Deerfield OH1847 Dellroy OH1126 Dennison OH0117 Dover OH0118 Dover OH2793 East Canton OH0351 East Sparta OH0347 Edinburg OH1846 Fairfield OH1254 Federal Communications Commission DA 08-1285 6 Farmington OH1980 Fitchville OH2693 Franklin OH0469 Franklin OH0565 Franklin OH0951 Fredericksburg OH1554 Girard OH0395 Glenmont OH0060 Gnadenhutten OH0120 Goshen OH0562 Goshen OH1936 Green OH0952 Green OH1947 Greenfield OH2057 Greenwich OH1251 Guillford OH1507 Hanover OH1948 Hanoverton OH1949 Harrison OH2706 Hartford OH2145 Hartland OH2005 Hartville OH0788 Holmesville OH1555 Hubbard OH0310 Hubbard OH0598 Hubbard OH1439 Jefferson OH2122 Jeromesville OH1083 Johnston OH1610 Killbuck OH0078 Knox OH0560 Lake OH1096 Lake OH1308 Lakemore OH0529 Lawrence OH2245 Lexington OH0467 Lexington OH0789 Limaville OH2271 Lisbon OH0070 Lodi OH0071 Louisville OH0063 Lowellville OH1498 Lucas OH0605 Malvern OH0326 Malvern OH0348 Marlboro OH1622 Midvale OH0299 Mifflin OH0471 Mifflin OH2101 Mifflin OH2187 Milan OH0191 Milan OH0872 Millersburg OH0079 Milton OH1492 Mineral City OH0349 Minerva OH0168 Mogadore OH0773 Monroe OH1127 Federal Communications Commission DA 08-1285 7 Monroe OH2188 Monroeville OH0036 Nashville OH2194 New Franklin OH2599 New Haven OH0037 New London OH0206 New London OH2428 New Philadelphia OH0123 Newcomerstown OH0124 Newton OH2228 Newton Falls OH0413 Nimishillin OH0429 North Fairfield OH1253 Norton OH0771 Norwich OH2011 Orangeville OH2144 Osnaburg OH0577 Oxford (Eric Co.) OH2006 Oxford (Tuscarawas Co.) OH2791 Palmyra OH1950 Palmyra OH2234 Paris OH2203 Paris OH2319 Parral OH0195 Perry (Richland Co.) OH2185 Perry (Richland Co.) OH2186 Perry (Ashland Co.) OH2242 Perry (Columbiana Co.) OH0616 Perrysville OH0008 Peru OH2007 Pike OH0572 Plymouth OH0039 Plymouth OH0465 Plymouth OH0881 Poland OH1827 Polk OH1394 Port Washington OH2574 Randolph OH1848 Ravenna OH0327 Ravenna OH0576 Richmond OH2010 Rootstown OH0965 Roswell OH2578 Salem OH0103 Salem OH1937 Sandusky OH1888 Sandy OH0574 Sandy OH0578 Savannah OH1504 Sebring OH0276 Seville OH1086 Sharon OH0466 Shelby OH0056 Sherrodsville OH1128 Shiloh OH0762 Shreve OH0198 Smith OH0558 Smith OH2235 Federal Communications Commission DA 08-1285 8 Southington OH1612 Spencer OH1462 Springfield OH0947 Strasburg OH0137 Streetsboro OH0425 Struthers OH0363 Suffield OH1279 Sugarcreek OH0125 Tallmadge OH0242 Troy OH0472 Tuscarawas OH0541 Tuscarawas OH2062 Uhrichsville OH0126 Walnut Creek OH2048 Washington (Stark Co.) OH2561 Washington (Richland Co.)OH1623 Washington (Richland Co.)OH2189 Waynesburg OH0350 Weathersfield OH0211 West OH2321 West Farmington OH1979 West Salem OH1132 Westfield OH1508 Wilmot OH0257 Windham OH0368 Windham OH2238 Yankee Lake OH2146 Zoar OH0628 Federal Communications Commission DA 08-1285 9 ATTACHMENT B CSR-7725-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers Alliance OH0763 17.91% 8908 1595.85 Atwater OH1845 23.24% 993 230.77 Bailey Lakes OH1503 15.53% 153 23.76 Barberton OH0217, 15.47% 11523 1782.84 OH2143 Barnhill OH0196 22.26% 134 29.83 Beach City OH0256 36.96% 456 168.52 Bellville OH0088 39.38% 751 295.76 Beloit OH0393 40.63% 426 173.06 Berlin OH2049 29.41% 1062 312.33 Bolivar OH0627 28.48% 375 106.82 Braceville OH1674, 20.58% 1079 222.11 Braceville OH1977 Bristol OH1608 25.84% 1120 289.46 Burbank OH1500 49.68% 103 51.17 Butler OH1946 36.23% 388 140.57 Canton OH0579 15.11% 558 839.71 Carrollton OH0148 51.51% 1428 735.63 Center OH0617 37.88% 2434 921.99 Charlestown OH2077 17.74% 750 133.06 Clarksfield OH2472 39.03% 538 209.99 Clinton OH1097 23.23% 496 115.23 Copley OH2716 15.69% 5140 806.55 Coventry OH0950 15.44% 4633 715.33 Creston OH0205 21.50% 828 178.01 Deerfield OH1847 25.05% 1199 300.34 Dellroy OH1126 48.72% 121 58.95 Dennison OH0117 31.33% 1132 354.70 Dover OH2793 21.15% 4996 1056.85 East Canton OH0351 30.52% 664 202.66 Federal Communications Commission DA 08-1285 10 East Sparta OH0347 36.60% 315 115.31 Edinburg OH1846 18.80% 791 148.71 Franklin OH0951, 15.78% 8375 1321.30 OH0565, OH0469 Fredericksburg OH1554 15.25% 184 28.06 Glenmont OH0060 53.86% 115 61.94 Gnadenhutten OH0120 31.65% 513 162.38 Green OH1947 16.01% 8742 1399.34 Greenfield OH2057 26.44% 518 136.96 Greenwich OH1251 34.59% 579 200.27 Hanover OH1948 39.76% 1448 575.73 Hanoverton OH1949 35.90% 157 56.36 Hartford OH2145 22.34% 785 175.40 Hartville OH0788 19.05% 863 164.39 Holmesville OH1555 30.89% 151 46.65 Hubbard (City) OH0598 18.47% 3456 638.46 Jefferson OH2122 41.81% 1812 757.59 Jeromesville OH1083 44.36% 202 89.62 Johnston OH1610 19.28% 739 142.46 Killbuck OH0078 48.33% 358 173.02 Knox OH0560 21.58% 1785 385.17 Lake OH1308 15.36% 9166 1408.22 OH1096 Lakemore OH0529 16.41% 969 158.99 Lawrence OH2245 22.78% 2018 459.77 Lexington (Township) OH0467 17.91% 2047 366.72 Lexington (Village) OH0789 17.12% 1626 278.33 Limaville OH2271 17.91% 71 12.72 Lisbon OH0070 36.88% 1133 417.83 Lodi OH0071 15.67% 1274 199.69 Louisville OH0063 19.81% 3444 682.15 Lowellville OH1498 28.01% 520 145.64 Lucas OH0605 50.33% 246 123.81 Malvern OH0326, 23.28% 530 123.40 OH0348 OH0326 Marlboro OH1622 18.57% 1452 269.69 Midvale OH0299 23.63% 213 50.33 Mifflin OH2187 17.28% 429 74.13 Federal Communications Commission DA 08-1285 11 Mifflin OH2101 32.39% 64 20.73 Milan OH0191 15.15% 1321 200.14 Milan OH0872 24.14% 540 130.37 Millersburg OH0079 29.41% 1213 356.74 Milton OH1492 26.34% 1606 423.07 Mineral City OH0349 44.55% 306 136.32 Minerva OH0168 45.64% 1603 731.62 Mogadore OH0773 21.38% 1485 317.46 Monroe OH2188 34.91% 1776 620.05 Monroeville OH0036 39.74% 523 207.85 Nashville OH2194 50.24% 68 34.16 New Franklin OH2599 19.16% 867 166.13 New Haven OH0037 23.46% 1073 251.68 New London OH0206 36.26% 1030 373.52 New Philadelphia OH0123 22.26% 7338 1633.40 Newcomerstown OH0124 39.72% 1654 657.01 Newton Falls OH0413 20.41% 2171 443.02 Nimishillin OH0429 18.08% 3270 591.25 North Fairfield OH1253 43.97% 178 78.26 Norton OH0771 15.90% 4343 690.57 Norwich OH2011 22.20% 360 79.92 Orangeville OH2144 34.04% 76 25.87 Osnaburg OH0577 22.86% 2253 515.04 Oxford (Erie Co.) OH2006 15.09% 383 57.79 Oxford (Tuscarawas Co.) OH2791 44.47% 2104 935.70 Palmyra OH1950, 19.37% 972 188.28 OH2234 Paris OH2319 41.70% 2315 965.39 Parral OH0195 21.15% 106 22.42 Perry (Richland Co.) OH2185, 39.38%] 449 176.83 OH2186 Perry (Ashland Co.) OH2242 41.17% 697 286.93 Perry (Columbiana Co.) OH0616 21.28% 7068 1504.41 Perrysville OH0008 54.59% 329 179.61 Pike OH0572 20.88% 1604 334.97 Plymouth (Township) OH0039, 17.99% 789 141.98 OH0881 Plymouth (Village) OH0465 27.70% 678 187.83 Polk OH1394 42.51% 124 52.72 Federal Communications Commission DA 08-1285 12 Port Washington OH2574 51.95% 204 105.98 Randolph OH1848 20.96% 1958 410.35 Ravenna OH0327 17.74% 4980 883.53 Ravenna OH0576 17.74% 3739 663.35 Richmond OH2010 23.88% 398 95.03 Rootstown OH0965 15.68% 2624 411.48 Roswell OH2578 22.26% 91 20.26 Salem OH1937 21.28% 5146 1095.32 Sandusky OH1888 17.94% 320 57.40 Sandy OH0578 33.86% 2713 918.54 Savannah OH1504 17.28% 134 23.15 Sebring OH0276 15.86% 2088 331.17 Seville OH1086 21.05% 808 170.12 Sharon OH0466 17.54% 3911 686.11 Shelby OH0056 15.71% 4073 639.79 Sherrodsville OH1128 40.86% 122 49.85 Shiloh OH0762 38.90% 246 95.71 Shreve OH0198 37.49% 650 243.67 Southington OH1612 20.52% 1408 288.96 Spencer OH1462 47.39% 285 135.07 Springfield OH0947 16.68% 5970 995.74 Strasburg OH0137 27.26% 947 258.17 Streetsboro OH0425 19.39% 4908 951.71 Struthers OH0363 17.07% 4704 803.10 Suffield OH1279 20.39 2411 491.65 Sugarcreek OH0125 24.77% 873 216.28 Tallmadge OH0242 15.07% 6273 945.35 Troy OH0472 15.18% 2441 370.52 Tuscarawas OH0541, 32.01% 373 85.84 OH2062 Uhrichsville OH0126 32.04% 2254 722.29 Washington (Stark) OH2561 15.63% 2514 393.03 Washington (Richland) OH1623 24.39% 1766 430.80 OH2189 Waynesburg OH0350 27.38% 391 107.06 West Farmington OH1979 26.22% 188 49.29 West Salem OH1132 39.60% 573 226.90 Westfield OH1508 20.93% 1492 312.29 Wilmot OH0257 38.11% 124 47.25 Federal Communications Commission DA 08-1285 13 Windham OH2238 34.31% 959 329.05 Yankee Lake OH2146 18.02% 40 7.21 Zoar OH0628 28.48% 79 22.50 Federal Communications Commission DA 08-1285 14 ATTACHMENT C CSR-7725-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage Bazetta OH1094 2627 17 0.65% Berlin OH2049 1062 188 17.7% Bethlehem OH1200 2346 336 14.32% Boston OH2694 703 92 13.09% Brookfield OH0400 4078 55 1.35% OH2063 Brown OH0573 3226 323 10.01% OH2320 Butler OH0089, 1245 27 2.17% OH0561 Cass OH2009 547 12 2.19% Center OH0617 2434 537 22.06% Champion OH0216 3692 35 0.95% Chatham OH2140 739 54 7.31% Clarksfield OH2472 538 129 23.98% Coitsville OH2148 646 17 2.63% Congress OH1395 64 7 10.94% Dover OH0118 1749 1 0.06% Fairfield OH1254 445 9 2.02% Farmington OH1980 739 103 13.94% Fitchville OH2693 366 18 4.92% Girard OH0395 4631 778 16.80% Goshen OH0562, 1240 73 5.89% OH1936 Green OH0952 8742 30 0.34% Guilford OH1507 1954 467 23.90% Harrison OH2706 914 48 5.25% Hartland OH2005 343 29 8.45% Hubbard (Township) OH0310, 5783 674 11.65% OH1439 Knox H0560 1785 373 20.90% Mifflin OH0471 429 30 6.99% Federal Communications Commission DA 08-1285 15 Monroe OH1127 1776 233 13.12% New London OH2428 1289 16 1.24% Newton OH2228 3803 197 5.18% Oxford OH2006 383 61 15.93% OH2791 Paris OH2203 2315 458 19.78% Peru OH2007 351 28 7.98% Poland OH1827 5471 329 6.01% Salem OH0103 2082 287 13.78% Sandy OH0574 2713 626 23.07% Smith OH0558 1923 245 12.74% OH2235 Walnut Creek OH2048 877 78 2.03% Westfield OH1508 1492 254 17.02% Weathersfield OH0211 11338 548 4.83% West OH2321 1166 167 14.32% Windham OH0368 742 94 12.67% *CPR = Percent of competitive DBS penetration rate.