Federal Communications Commission DA 08-1304 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in 25 Pennsylvania Franchise Areas ) ) ) ) ) ) CSR 7570-E CSR 7571-E MEMORANDUM OPINION AND ORDER Adopted: June 2, 2008 Released: June 3, 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 petitions 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 systems serving the communities listed on Attachment B and hereinafter referred to as Group B Communities are 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 are 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 08-1304 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 the petitions 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. 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 Petitions at 3. Two petitions (CSR 7570-E and CSR 7571-E) were filed by Comcast because even though the same Communities are listed in both, some of the Communities with different CUID numbers are on a separate Comcast cable system and required the filing of a separate petition with a separate filing fee. However, Comcast reports a common set of numbers for those Communities with multiple CUIDs indicating that the two systems operate pursuant to one franchise. 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 Petitions at 4-5. 12See Petitions at 4-5 and Exhibit 2. 13See Petitions at 3. Federal Communications Commission DA 08-1304 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 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 five digit zip code basis.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. 14Id. at 6. Comcast asserts that it is the largest MVPD in seven of the 20 Communities subject to the competing provider test. In the remaining 13 Communities that qualify under the competing provider test, Comcast asserts that both the Comcast penetration figure and the aggregate DBS penetration figure exceed 15 percent. Id. and Exhibit 6 and Declaration of Peter H. Feinberg, Associate General Counsel for Comcast Cable Communications, LLC. In cases where both DBS and cable penetration exceed 15 percent of the occupied households, the Commission has recognized that the second prong of the competing provider test is satisfied. 15Petitions at 6-8. Comcast states that because five digit zip codes do not perfectly align with franchise boundaries, it has reduced the reported number of DBS subscribers in each zip code by an allocation ration (the number of households in the franchise area over the number of households in the zip area). Id. See, e.g., Comcast of Dallas, L.P., 20 FCC Rcd 17968, 17969-70 (MB 2005) (approving of a cable operator’s use of a Media Business Corporation “allocation factor, which reflects the portion of a five digit postal zip code that lies within the border of the City,” to determine DBS subscribership for that franchise area). 16Petitions at 7-8 and Exhibit 6. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1304 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 certifications to regulate basic cable service rates granted to any of the Communities set forth on Attachment A ARE 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 08-1304 5 ATTACHMENT CSR 7570-E and CSR 7571-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LCC CSR 7570-E Communities CUIDS Armstrong PA2863 Mahoning PA3331 Manor PA1979 North Buffalo PA3223 Valley PA2974 Young PA2970 CSR 7571-E Armstrong PA2319 PA3345 Bethel PA2831 Boggs PA2883 Burrell PA3066 Cowanshannock PA2403 Dayton PA1794 East Franklin PA2885 Elderton PA2320 Gilpin PA3251 Madison PA3248 Mahoning PA2413 Manor PA2828 North Buffalo PA3068 Parks PA2827 Pine PA2312 Federal Communications Commission DA 08-1304 6 Plumcreek PA2321 Plumville PA2401 Rayburn PA2887 Rural Valley PA1821 Shelocta PA2318 South Buffalo PA3067 Sugarcreek PA2886 Valley PA2888 Washington PA2884 Young PA3344 Federal Communications Commission DA 08-1304 7 ATTACHMENT B CSR 7570-E and CSR 7571-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Armstrong PA2863 35.52% 1160 412 PA2319 PA3345 Bethel PA2831 26.95% 501 135 Boggs PA2883 38.51% 348 134 Cowanshannock PA2403 39.70% 1121 445 Dayton PA1794 62.44% 229 143 Elderton PA2320 44.14% 145 64 Gilpin PA3251 24.95% 1034 258 Madison PA3248 71.55% 362 259 Mahoning PA3331 49.59% 607 301 PA2413 Manor PA1979 28.71% 1752 503 PA2828 North Buffalo PA3223 32.93% 1151 379 PA3068 Parks PA2827 18.86% 1108 209 Pine PA2312 76.24% 202 154 Plumville PA2401 41.46% 123 51 Rural Valley PA1821 34.03% 382 130 Shelocta PA2318 41.51% 53 22 South Buffalo PA3067 26.55% 1013 269 Valley PA2974 34.35% 262 90 PA2888 Washington PA2884 59.64% 389 232 Federal Communications Commission DA 08-1304 8 Young PA2970 43.99% 741 326 PA3344 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1304 9 ATTACHMENT C CSR 7570-E and CSR 7571-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7570-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Armstrong PA2863 1160 203 17.50% Valley PA2974 262 63 24.05% Young PA2970 741 205 27.67% CSR 7571-E Armstrong PA2319 1160 203 17.50% PA3345 Boggs PA2883 348 88 25.29% Burrell PA3066 299 36 12.04% East Franklin PA2885 1546 162 10.48% Madison PA3248 362 97 26.80% Plumcreek PA2321 877 96 10.95% Rayburn PA2887 694 78 11.24% South Buffalo PA3067 1013 249 24.58% Sugarcreek PA2886 523 71 13.58% Valley PA262 262 63 24.05% Young PA3344 741 205 27.67%