Federal Communications Commission DA 08-1515 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 Ohio and Indiana Communities ) ) ) ) ) ) CSR 7706-E, 7779-E, 7780-E, 7781-E MEMORANDUM OPINION AND ORDER Adopted: June 26, 2008 Released: June 26, 2008 By the Associate Chief, 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 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 08-1515 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 3-4. 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. 12See Petition at 6. 13See Petition at 6-7. 14Id. at 7. In the Communities of Elizabeth, Gettysburg, Johnson, Pike, Rossburg, Union (CSR 7706-E), Coolville (CSR 7780-E), and Amanda Village (CSR 7781-E), both the Time Warner penetration figure and the aggregate DBS penetration figure clearly exceed 15 percent. Time Warner argues that it is subject to effective competition because (continued....) Federal Communications Commission DA 08-1515 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) in addition to DBS penetration exceeding 15 percent of the occupied households, the number of Time Warner 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 7-8. 16Id. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1515 4 III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc. 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 Nancy Murphy Associate Chief, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 08-1515 5 ATTACHMENT A CSR(s) 7706-E, 7779-E, 7780-E, 7781-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUID(S) CSR 7706-E Adams OH0857 OH2347 Allen OH2359 Anna OH1165 Ansonia OH0855 Arcanum OH0915 Botkins OH1166 Bradford OH0698 Brookville OH0687 Brown OH0861 Butler OH1423 Camden OH0684 Casstown OH1025 Castine OH1753 Christiansburg OH1655 College Corner OH1330 Concord OH2378 Degraff OH1168 Eaton OH0685 Eldorado OH1552 Elizabeth OH1026 OH2361 Farmersville OH1551 Franklin OH2371 OH1173 German OH1177 OH1278 Gettysburg OH0853 Gordon OH1755 Gratis OH0975 Green OH1114 OH2372 Greenville OH0494 OH0856 OH2352 Harrison OH1000 Hollansburg OH2353 Ithaca OH1754 Jackson OH1052 OH2433 OH1172 Jackson Center OH1167 Jefferson OH1305 Johnson OH1053 OH2349 Laura OH1424 Lewisburg OH0680 Liberty OH2354 Federal Communications Commission DA 08-1515 6 OH2365 Lockington OH2368 Logan OH2054 Lost Creek OH1027 OH2362 Ludlow Falls OH1425 Mad River OH1064 Madison OH1331 Mechanicsburg OH0635 Monroe OH0647 OH0833 Moorefield OH1115 Mutual OH2055 Neave OH0859 New Lebanon OH0686 New Madison OH0854 New Paris OH0683 Newberry OH0554 Newton OH1055 OH2363 North Hampton OH1058 Oxford OH0914 OH1284 Palestine OH2356 Phillipsburg OH0688 Pike OH1116 Pitsburg OH1283 Pleasant Hill OH0753 Potsdam OH1426 Quincy OH1169 Richland OH1001 Rossburg OH2357 Sidney OH0051 Springfield OH1063 St. Paris OH0700 Staunton OH2364 OH1028 Tipp OH0832 Tremont City OH1059 Troy OH0646 Union Township OH0812 OH2367 Union City OH0052 IN0047 Van Buren OH0858 Verona OH0682 Wayne Lakes OH0979 West Alexandria OH0681 West College Corner IN0541 West Elkton OH1752 West Manchester OH1553 Woodstock OH1896 CSR 7779-E Archbold OH0207 Brady OH2393 Bryan OH0336 Center OH0387 Federal Communications Commission DA 08-1515 7 Edgerton OH0508 German OH0783 Jefferson OH0386 Montpelier OH0411 Pulaski OH0354 Springfield OH2394 St. Joseph OH0933 Stryker OH0208 Superior OH2395 Tiffin OH2390 West Unity OH0371 CSR 7780-E Belpre OH0660 Beverly OH0105 Bloom OH1133 Chester OH1709 Coolville OH1708 Malta OH1842 McConnelsville OH0014 Olive OH1710 Stockport OH1748 Waterford OH0081 CSR 7781-E Amanda Village OH1675 Amanda Township OH1676 Circleville OH1919 Clearcreek OH1678 Hocking OH1679 Pickaway OH1682 Salt Creek OH1683 Tarlton OH1681 Walnut OH1684 Washington OH1685 Federal Communications Commission DA 08-1515 8 ATTACHMENT B CSR(s) 7706-E, 7779-E, 7780-E, 7781-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7706-E Anna OH1165 34.38% 474 163 Ansonia OH0855 36.36% 451 164 Arcanum OH0915 35.99% 853 307 Botkins OH1166 24.17% 463 112 Bradford OH0698 37.80% 693 262 Brookville OH0687 28.45% 2,204 627 Butler OH1423 16.13% 3,298 532 Camden OH0684 36.80% 897 330 Casstown OH1025 40.15% 127 51 Castine OH1753 34.88% 43 15 Christiansburg OH1655 37.50% 216 81 College Corner OH1330 31.03% 203 63 Degraff OH1168 44.25% 479 212 Eaton OH0685 26.29% 3,274 861 Eldorado OH1552 32.54% 212 69 Elizabeth OH1026 19.96% 586 117 OH2361 Farmersville OH1551 49.71% 354 176 German OH1177 22.97% 3,095 711 OH1278 Gettysburg OH0853 37.96% 187 71 Gordon OH1755 36.48% 74 27 Gratis OH0975 29.79% 349 104 Federal Communications Commission DA 08-1515 9 Green OH1114 20.99% 1,067 224 OH2372 Greenville OH0494 23.04% 5,649 1,302 OH0856 OH2352 Hollansburg OH2353 38.37% 86 33 Ithaca OH1754 36.11% 36 13 Jackson OH1052 30.67% 903 277 OH2433 OH1172 Jackson Center OH1167 29.02% 541 157 Jefferson OH1305 22.07% 2,714 599 Johnson OH1053 38.93% 1,297 505 OH2349 Laura OH1424 40.57% 175 71 Lewisburg OH0680 35.39% 678 240 Lockington OH2368 17.56% 74 13 Ludlow Falls OH1425 33.33% 81 27 Mad River OH1064 15.95% 4,545 725 Mechanicsburg OH0635 40.99% 705 289 Monroe OH0647 21.74% 5,923 1,288 OH0833 Moorefield OH1115 17.82% 4,618 823 Mutual OH2055 47.05% 51 24 New Lebanon OH0686 22.23% 1,574 350 New Madison OH0854 41.27% 344 142 New Paris OH0683 34.39% 692 238 North Hampton OH1058 23.70% 135 32 Oxford OH0914 15.88% 5,870 932 OH1284 Palestine OH2356 22.80% 57 13 Phillipsburg OH0688 28.45% 250 71 Pike OH1116 31.33% 1,452 455 Federal Communications Commission DA 08-1515 10 Pitsburg OH1283 36.29% 135 49 Pleasant Hill OH0753 30.96% 423 131 Potsdam OH1426 40.90% 66 27 Quincy OH1169 42.60% 256 109 Rossburg OH2357 46.51% 86 40 Sidney OH0051 20.29% 7,981 1,619 Springfield OH1063 16.10% 26,254 4,226 St. Paris OH0700 37.00% 781 289 Staunton OH2364 17.29% 746 129 OH1028 Tipp OH0832 18.69% 2,060 385 Tremont City OH1059 25.37% 134 34 Troy OH0646 16.67% 8,920 1,487 Union City OH0052 31.88% 690 220 IN0047 Union Township OH0812 21.89% 4,017 879 OH2367 Van Buren OH0858 33.67% 591 199 Verona OH0682 35.44% 158 56 Wayne Lakes OH0979 22.96% 283 65 West Alexandria OH0681 32.29% 576 186 West Elkton OH1752 38.02% 71 27 West Manchester OH1553 35.71% 168 60 Woodstock OH1896 47.52% 101 48 CSR 7779-E Archbold OH0207 19.34% 1,717 332 Bryan OH0336 15.36% 3,528 542 Center OH0387 18.97% 1,128 214 Edgerton OH0508 35.47% 812 288 Montpelier OH0411 32.70% 1,751 572 Pulaski OH0354 17.21% 1,104 190 Federal Communications Commission DA 08-1515 11 Stryker OH0208 28.41% 542 154 West Unity OH0371 26.87% 733 197 CSR 7780-E Belpre OH0660 23.59% 1,585 374 Beverly OH0105 36.23% 552 200 Bloom OH1133 52.54% 432 227 Coolville OH1708 56.33% 213 120 McConnelsville OH0014 52.54% 805 423 CSR 7781-E Amanda Village OH1675 53.51% 256 137 Circleville OH1919 22.03% 917 202 Hocking OH1679 19.47% 1,140 222 Talton OH1681 47.05% 102 48 Washington OH1685 24.64% 1,051 259 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1515 12 ATTACHMENT C CSR(s) 7706-E, 7779-E, 7780-E, 7781-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7706-E Adams OH0857 1,266 137 10.82% OH2347 Allen OH2359 409 4 0.98% Brown OH0861 775 69 8.90% Butler OH1423 572 31 5.42% Concord OH2378 10,858 1,555 14.32% Franklin OH2371 1,021 92 9.01% OH1173 German OH1177 2,965 268 9.04% OH1278 Green OH1114 326 24 7.36% OH2372 Greenville OH0494 7,516 842 11.20% OH0856 OH2352 Harrison OH1000 1,087 25 2.30% Jackson OH1052 2,125 184 8.66% OH2433 OH1172 Liberty OH2354 1,526 142 9.31% OH2365 Lost Creek OH1027 600 77 12.83% OH2362 Neave OH0859 762 113 14.83% Newberry OH0554 2,438 221 9.06% Newton OH1055 1,211 41 3.39% OH2363 Oxford OH0914 6,738 40 0.59% OH1284 Federal Communications Commission DA 08-1515 13 Richland OH1001 314 18 5.73% Union Township OH0812 6,028 532 8.83% OH2367 CSR 7779-E Brady OH2393 1,094 75 6.86% German OH0783 2,426 65 2.68% Jefferson OH0386 716 167 23.32% Springfield OH2394 988 84 8.50% St. Joseph OH0933 1,114 66 5.92% Superior OH2395 2,289 71 3.10% Tiffin OH2390 633 125 19.75% CSR 7780-E Chester OH1709 899 68 7.56% Malta OH1842 283 6 2.12% Olive OH1710 736 35 4.76% Stockport OH1748 227 5 2.20% Waterford OH0081 1,476 5 0.34% CSR 7781-E Amanda Township OH1676 872 38 4.36% Clearcreek OH1678 1,197 254 21.22% Pickaway OH1682 672 160 23.81% Salt Creek OH1683 8,884 42 0.47% Walnut OH1684 865 247 28.55%