Federal Communications Commission DA 08-1639 `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 Communities ) ) ) ) ) ) CSR 7776-E, 7783-E, 7784-E, 7785-E, 7788-E MEMORANDUM OPINION AND ORDER Adopted: July 10, 2008 Released: July 11, 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 08-1639 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 determine the competing provider penetration in the Group B Communities by purchasing a subscriber 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 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 5-6. 13See Petition at 6-7. 14Id. Federal Communications Commission DA 08-1639 3 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. 15Petition at 7. 16Petition at 7-8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1639 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 08-1639 5 ATTACHMENT A CSR(s) 7776-E, 7783-E, 7784-E, 7785-E, 7788-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUID(S) CSR 7776-E Bloom OH1018 Clay OH0999 Harrison OH1021 Porter OH0998 Valley OH1019 Vernon OH1017 Washington OH1020 CSR 7783-E Black Creek OH2409 Dublin OH2411 Duchouquet OH2445 OH2438 Franklin OH2408 Goshen OH2399 Logan OH2442 Mendon OH1325 Moulton OH2443 OH2439 Noble OH2440 Richland OH2493 Rockford OH1324 Stokes OH1542 Union OH2412 Wayne OH2400 Waynesfiled OH1543 Willshire OH1548 Wren OH2178 CSR 7784-E Adams OH0670 Belle Valley OH0114 Caldwell OH0115 Cambridge City OH0129 Cambridge Township OH0669 Center OH2537 Kimbolton OH2547 Liberty OH2548 Monroe OH2539 Wheeling OH2549 CSR 7785-E Butler OH0382 Chickasaw OH1729 Coldwater OH0331 Federal Communications Commission DA 08-1639 6 Cynthian OH2492 Fort Loramie OH0356 Franklin OH2384 German OH2629 Granville OH1336 Hoaglin OH2385 Hopewell OH2386 Jackson OH2746 Jefferson OH0932 Kettlersville OH1730 Liberty OH2388 Loramie OH2619 Marion OH2620 Mclean OH2621 Montezuma OH0391 New Bremen OH0358 New Knoxville OH2623 North Star OH1739 Ohio City OH1671 Osgood OH1736 Patterson OH2786 Ridge OH2389 Russia OH1737 St. Henry OH0364 Union OH2391 Van Buren OH2776 Van Wert OH0355 Versailles OH0392 Wabash OH2788 Wayne OH2789 Yorkshire OH1738 CSR 7788-E Brown OH1934 Canaan OH1442 Darby OH2128 Fairfield OH2130 Jefferson OH2129 Jerome OH2132 Millcreek OH2131 Monroe OH2659 Norwich OH2133 Pike OH2660 Pleasant OH2134 Washington OH1933 Federal Communications Commission DA 08-1639 7 ATTACHMENT B CSR(s) 7776-E, 7783-E, 7784-E, 7785-E, 7788-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7776-E Clay OH0999 20.58% 1,516 312 Porter OH0998 18.88% 3,871 731 Washington OH1020 21.90% 2,362 517 CSR 7783-E Mendon OH1325 33.58% 262 88 Rockford OH1324 32.23% 453 146 Stokes OH1542 22.92% 2,360 541 Waynesfield OH1543 21.82% 307 67 Wren OH2178 40.47% 84 34 CSR 7784-E Adams OH0670 29.20% 719 210 Belle Valley OH0114 28.84% 104 30 Caldwell OH0115 28.41% 831 236 Cambridge City OH0129 28.04% 4,924 1,381 Kimbolton OH2547 58.05% 57 33 Liberty OH2548 31.22% 410 128 CSR 7785-E Chickasaw OH1729 22.79% 136 31 Coldwater OH0331 17.23% 1,636 282 Cynthian OH2492 22.83% 657 150 Fort Loramie OH0356 19.79% 480 95 Franklin OH2384 20.28% 932 189 Kettlersville OH1730 30.32% 60 18 Federal Communications Commission DA 08-1639 8 Marion OH2620 22.07% 888 196 Montezuma OH0391 22.53% 71 16 North Star OH1739 45.45% 77 35 Ohio City OH1671 40.77% 312 127 Osgood OH1736 40.77% 103 42 Russia OH1737 46.52% 197 87 St. Henry OH0364 30.81% 727 224 Van Wert OH0355 28.18% 4,556 1,284 Versailles OH0392 40.15% 1,061 426 Yorkshire OH1738 40.54% 37 15 CSR 7788-E Jerome OH2132 29.24% 1,402 410 Pleasant OH2134 16.00% 2,556 409 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1639 9 ATTACHMENT C CSR(s) 7776-E, 7783-E, 7784-E, 7785-E, 7788-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7776-E Bloom OH1018 1,221 289 23.67% Harrison OH1021 1,677 115 6.86% Valley OH1019 1,031 194 18.82% Vernon OH1017 696 199 28.59% CSR 7783-E Black Creek OH2409 220 6 2.73% Dublin OH2411 812 8 0.99% Duchoquet OH2445 5,629 579 10.29% OH2438 Franklin OH2408 932 46 4.94% Goshen OH2399 187 34 18.18% Logan OH2442 429 62 14.45% Moulton OH2443 592 5 0.84% OH2439 Noble OH2440 499 6 1.20% Richland OH2493 2,036 10 0.49% Union OH2412 680 1 0.15% Wayne OH2400 589 3 0.51% Willshire OH1548 651 94 14.44% CSR 7784-E Cambridge Township OH0669 6,525 1,059 16.23% Center OH2537 709 154 21.72% Monroe OH2539 237 22 9.28% Wheeling OH2549 294 24 8.16% Federal Communications Commission DA 08-1639 10 CSR 7785-E Butler OH0382 2,246 105 4.67% German OH2629 1,366 13 0.95% Granville OH1336 1,201 64 5.33% Hoaglin OH2385 225 9 4.00% Hopewell OH2386 359 55 15.32% Jackson OH2746 1,238 89 7.19% Jefferson OH0932 5,309 575 10.83% Liberty OH2388 669 58 8.67% Loramie OH2619 805 102 12.67% Mclean OH2621 1,117 218 19.52% New Bremen OH0358 1,073 181 16.87% New Knoxville OH2623 348 11 3.16% Patterson OH2786 430 48 11.16% Ridge OH2389 1,215 42 3.46% Union OH2391 370 11 2.97% Van Buren OH2776 543 76 14.00% Wabash OH2788 306 26 8.50% Wayne OH2789 1,620 93 5.74% CSR 7788-E Brown OH1934 692 192 27.75% Canaan OH1442 890 140 15.73% Darby OH2128 1,083 73 6.74% Fairfield OH2130 479 94 19.62% Jefferson OH2129 2,616 492 18.81% Millcreek OH2131 459 72 15.69% Monroe OH2659 600 65 10.83% Norwich OH2133 9,768 1,203 12.32% Pike OH2660 130 5 3.85% Washington OH1933 630 22 3.49%