Federal Communications Commission DA 08-1658 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC, on Behalf of Its Subsidiaries and Affiliates Petition for Determination of Effective Competition in 65 Communities in New England ) ) ) ) ) ) ) CSR 7389-E CSR 7403-E CSR 7417-E CSR 7433-E CSR 7435-E CSR 7441-E CSR 7463-E MEMORANDUM OPINION AND ORDER Adopted: July 14, 2008 Released: July 15, 2008 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates, 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 systems serving the 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 alternatively claims to be exempt from cable rate regulation in the Communities listed on Attachment B because the Petitioner serves fewer than 30 percent of the households in the franchise area. The petition in CSR 7433-E is opposed by the local franchise authority in one Community, the Town of Epping, New Hampshire (the “Town”).3 In all other respects, 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,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 petitions based on our 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). 3 Opposition to Petition for Special Relief for Determination of Effective Competition (“Epping Opposition”) (dated Sept. 25, 2007). The Epping Opposition was filed pursuant to an Assented to Motion for Extension of Time filed by Epping on August 27, 2007. 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 08-1658 2 finding that Petitioner is subject to effective competition in the Communities listed on Attachments (A and B). 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 (“MVPDs”) 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 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 6. The Town argues that Petitioner has not sustained its burden of showing that households in Epping are reasonably aware that DBS service is available to them.10 The Town is correct that Petitioner has not produced any specific evidence showing that households in Epping are aware of DBS service. We do not require such market-specific evidence, however. We have held that a cable operator may sustain its burden of showing awareness of DBS service in a franchise area by relying on the evidence cited in the preceding paragraph and on the many decisions about effective competition that the Commission has released over many years.11 That evidence and those decisions show real, widespread awareness among American households that DBS service is available to them. We are confident in relying on those materials in this instance. The Town has produced no evidence, and does not allege, that our presumption is incorrect; that is, the Town does not claim that households in Epping are not reasonably aware that DBS service is available to them.12 We see no reason to believe that households of Epping are less informed about DBS service than other American households. Accordingly, we find, consistent with our longstanding presumptions and case law and the evidence cited the preceding paragraph, that households in Epping are reasonably aware that DBS service is available there. 7. The “comparable programming” element of the first prong of the competing provider test is met if a competing MVPD provider offers at least 12 channels of video programming, including at least 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 in CSR 7389-E at 2-4. 10Epping Opposition at 2. 11See, e.g., Mediacom 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). 12Petitioner Reply at 1-3. Federal Communications Commission DA 08-1658 3 one channel of nonbroadcast service programming13 and is supported in this petition with copies of channel lineups for both DIRECTV and Dish.14 Also undisputed is Petitioner’s assertion that both DIRECTV and Dish offer service to at least “50 percent” of the households in the Communities because of their national satellite footprint.15 Accordingly, we find that the first prong of the competing provider test is satisfied. 8. 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 sought to determine the competing provider penetration in the 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 Communities on a zip code plus four basis.16 9. Petitioner alleges, and there is no reason to doubt, that it is the largest MVPD in 50 of the Communities (the “50 Communities”).17 In twelve of the Communities (collectively the “12 Communities”), it is uncertain which MVPD is the largest. In circumstances where the largest MVPD is unable to be identified, the Commission is able to determine that the second prong is met when it can make dual assumptions. First, we assume that Petitioner is the largest MVPD provider in the Community and determine that the combined DBS subscribership is greater than 15 percent; we then assume that one of the DBS providers is the largest MVPD in the Community and determine that Petitioner’s subscribership is greater than 15 percent. When both determinations can be made, then the second prong of the competing provider test is met. Petitioner’s data about its subscribership, along with data about DBS subscribership set forth in Attachment A, show that both these determinations can be made for the 12 Communities.18 10. The Town of Epping challenges some of the evidence by which Petitioner attempts to show that more than 15 percent of the households in Epping subscribe to DBS service. The Town accepts Petitioner’s showing of 343 DBS subscribers in Epping as of April 30, 2007.19 Petitioner reaches the number 343 by starting with there being, as reported by SBCA, 350 households in all of Zip Code 03042. Part of that Zip Code contains all of Epping, and Petitioner reduced 350 by the allocation factor of 1.87 percent to reflect the fact that Epping is only part of that Zip Code.20 In addition, the Town obtained its own, more recent report from SBCA showing 356 DBS subscribers in the Zip Code as of July 31, 2007.21 If that number were reduced by the 1.87 percent allocation factor, there would be 349 DBS subscribers in Epping. Consistent with our past decisions, we choose 349 as the relevant number of DBS subscribers in Epping and the numerator in the ratio called for by the second part of the competing provider test. We 13See 47 C.F.R. § 76.905(g). See also Petition in CSR 7403-E at 4. 14See Petition in CSR 7417-E at Exh. 2. 15See Petition in CSR 7441-E at 2-3. 16Petition in CSR 7463-E at 5. 17See, e.g., Petition in CSR 7441-E at 5-6 & attached Declaration of Peter H. Feinberg, Associate General Counsel, Comcast, dated July 18, 2007, at ¶ 3. The 50 Communities are all of the 62 Communities except for Alstead, Antrim, Canaan, Cornish, Danbury, Deering, Gilsum, Hancock, Hill, Langdon, Plainfield, and Temple, all in New Hampshire. 18Petition in CSR 7417-E at 5; Petition in CSR 7435-E at 6; Petition in 7441-E at 6; Petition in CSR 7463-E at 6; and attached Affidavits of Mr. Feinberg, dated July 17 or 18, 2007, at ¶ 3. 19Epping Opposition at 4; Petition in CSR 7433-E, Exhs. 4-5. 20Petition in CSR 7433-E, Exh. 5. 21Epping Opposition, Exh. D. Federal Communications Commission DA 08-1658 4 choose 349 because it is the most recent available data from SBCA, reduced by an appropriate allocation factor.22 11. Concerning the denominator in the ratio called for by the competing provider test, the Town challenges the 2000 Census data that Petitioner uses and that shows 2,047 households in Epping.23 The Town argues that data from 2000 is too old to be used seven or more years later.24 The Town presents instead, two other numbers. The first is from a report titled “2005 Household Estimates for New Hampshire Cities and Towns,” published in late 2006 by the New Hampshire Office of Energy & Planning (“NHOE&P”). The Report estimates that Epping grew between 2000 and 2005 from 2,047 households to an estimated 2,254.25 Second, the Town presents its own 2006 Annual Report, which states that (evidently in that year) there were 2,499 housing units in Epping.26 If we used the first estimate presented by the Town, we would conclude that DBS subscribership (2,254 divided by 349) was 15.48 percent, more than the minimum “in excess of 15 percent” required by the second part of the competing provider test. If we used the Town’s second estimate, we would conclude that DBS subscribership (2,499 divided by 349) is 13.97 percent, which is less than the statutory minimum. 12. Petitioner responds, and is correct, that the Commission has long been willing to accept data more recent than Census data, but only if it is also a reliable statement of the actual number of households in the franchise area.27 The first number presented by Epping, from NHOE&P, is an estimate, not an actual number such as can be drawn from the 2000 Census. The Town’s estimate does not satisfy our requirements. (Also, even if we used it, Petitioner would show DBS subscribership in excess of 15 percent.) The second number presented by the City, assuming it is a precise count like the 2000 Census, shows the number of housing units in Epping, both those that are occupied and those that are unoccupied. A “household,” however, which the plain language of Section 623(l)(1)(B)(ii)28 requires us to use, is an occupied housing unit.29 A count of all housing units does not satisfy the statutory requirement because it includes unoccupied housing units as well as occupied ones. Therefore, we reject the second number presented by the Town. An additional, although relatively minor, reason we will not use either of the numbers presented by the Town – 2,254 households estimated in 2005 and 2,499 housing units in 2006 – is that, although they differ by only a year in time, they show an increase from one year to another of more than 10 percent. This is far above usual annual growth, and makes both numbers open to doubt. 13. Accordingly, we will use the number 2,047 that Petitioner drew from the 2000 Census for the number of households in Epping.30 Therefore, the ratio called for by the second part of the competing 22For cases in which we have approved the use of reliable allocation factors to account for partial Zip Codes, see Adelphia Cable Commun., 22 FCC Rcd 4423, 4425, ¶ 7 (2007); Service Electric Cable TV of New Jersey, Inc., 20 FCC Rcd 20532, 20534, ¶ 8 & n.23 (2005); Comcast of Dallas, L.P., 20 FCC Rcd 17968, 17969-70, ¶ 5 (2005). 23Petition in CSR 7433-E, Exh. 6 at 2. 24Epping Opposition at 2-3. 25Id., Exh. A at 6. 26Id., Exh. B at 3. 27Adelphia Cable Commun., Memorandum Opinion & Order, 22 FCC Rcd 4458, 4462-63, ¶ 14 (2007); Bright House Networks, LLC, 22 FCC Rcd 4390, 4393-94, ¶ 11; Bright House Networks, LLC, 22 FCC Rcd 4161, 4165, ¶ 11 (2007). 2847 U.S.C. § 543(l)(1)(B)(ii). 29Cablevision of Rockland/Ramapo Inc., Memorandum Opinion & Order, 22 FCC Rcd 11487, 11491, ¶ 11 & n.43, 11493, ¶ 15, 11494, ¶ 17 (2007) application for review pending; Bright House Networks, LLC, 22 FCC Rcd at 4165, ¶ 11 (2007); CoxCom, Inc., Memorandum Opinion & Order, 22 FCC Rcd 4533, 4539, ¶ 13, 4540, ¶16 (2007). 30The Commission has long accepted showings of competing provider effective competition using Census data that is several years old. See, e.g., Cablevision of Rockland/Ramapo Inc., 22 FCC Rcd at 11493, ¶ 16 (2007); (continued....) Federal Communications Commission DA 08-1658 5 provider test for Epping is 349 over 2,047, which is 17.05 percent. That is higher than the statutory minimum of ‘in excess of 15 percent.’31 14. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,32 as reflected in Attachment A, 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 Communities. Therefore, the second prong of the competing provider test is satisfied for each of the Communities. 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 Communities listed on Attachment A. B. The Low Penetration Test 15. 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.33 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. 16. Based upon the subscriber penetration level calculated by Petitioner, as reflected in Attachment B, 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 Communities listed on Attachment B. Therefore, the low penetration test is also satisfied as to the Communities. (...continued from previous page) Cablevision of Raritan Valley, Inc., 19 FCC Rcd 6966, 6968, ¶ 6 (2004) (“We find that the Ratepayer Advocate's arguments are without merit. The Commission has held that 2000 Census data is sufficiently reliable for effective competition determinations.”); Jones Intercable, Inc.,, 15 FCC Rcd 7254, 7256, n.12, ¶ 5 (2000) (using 1990 Census despite the fact that it was nearly a decade old); Tel-Com, Inc.,11 FCC Rcd 9153, 9158-59, n.36, ¶ 11 (1996) (1996 decision using 1990 Census data). 31If we used Petitioner’s original number of DBS subscribers, 343, DBS subscribership (2,047 divided by 343) would be 16.76%, also above the statutory minimum. 32Petition in CSR 7389-E at 7. 3347 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1658 6 III. ORDERING CLAUSES 17. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates, ARE GRANTED. 18. 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. 19. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.34 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 3447 C.F.R. § 0.283. Federal Communications Commission DA 08-1658 7 ATTACHMENT A CSR 7389-E, CSR 7403-E, CSR 7417-E, CSR 7433-E, CSR 7435-E, CSR 7441-E, CSR 7463-E COMMUNITIES SERVED BY SUBSIDIARIES AND AFFILIATES OF COMPCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7389-E Colchester VT0149 18.49% 6144 1136 Georgia VT0194 20.34% 1484 625 Milton VT0148 30.10% 3333 1003 CSR 7403-E Ansonia CT0002 29.05% 7507 2181 Beacon Falls CT0063 36.63% 2032 744 Bethany CT0096 27.65% 1755 485 Derby CT0001 27.07% 5252 1422 Middlebury CT0010 22.64% 2398 543 Naugatuck CT0061 22.91% 11829 2710 Oxford CT0062 36.13% 3343 1208 Plymouth CT0011 28.19% 4453 1255 Prospect CT0005 28.31% 3020 855 Seymour CT0003 29.48% 6155 1815 Shelton CT0060 26.14% 14190 3709 Waterbury CT0009 35.62% 42622 15182 Wolcott CT0007 28.08% 5414 1520 CSR 7417-E Amherst NH0198 21.55% 3590 774 Bennington NH0133 41.85% 552 231 Danville NH0080 24.00% 1428 343 Francestown NH0199 35.26% 552 195 Hancock NH0139 47.63% 706 336 Jaffrey NH0032 42.88% 2120 909 Kingston NH0130 19.74% 2122 419 Milford NH0025 20.78% 5201 1081 Mont Vernon NH0140 29.15% 693 202 New Boston NH0078 36.37% 1434 522 New Ipswich NH0033 46.24% 1350 624 Newton NH0230 27.44% 1518 417 Peterborough NH0147 31.73% 2346 744 Temple NH0027 47.31% 440 208 Wilton NH0004 26.88% 1410 379 Federal Communications Commission DA 08-1658 8 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7433-E Epping NH0113 17.05% 2047 349 Hampton Falls NH0095 16.19% 704 114 CSR 7435-E Andover NH0222 28.20% 823 232 Canaan NH0052 56.52% 1279 723 Charlestown NH0111 38.41% 1920 737 Claremont NH0065 19.52% 5685 1109 Cornish NH0229 48.81% 645 315 Danbury NH0208 75.19% 435 327 Enfield NH0089 28.16% 1975 556 Grantham NH0242 31.75% 924 293 Hanover NH0114 20.85% 2832 591 Hill NH0077 59.03% 382 225 Lebanon NH0137 17.71% 5500 974 New London NH0228 23.63% 1574 372 Newport NH0165 38.89% 2473 962 Plainfield NH0113 43.48% 844 367 Sunapee NH 0095 31.25% 1294 404 Wilmot NH0168 40.21% 459 185 CSR 7441-E Antrim NH0111 51.08% 932 476 Boscawen NH0065 22.08% 1260 278 Canterbury NH0229 36.65% 749 274 Chichester NH0208 16.28% 823 134 Deering NH0089 43.71% 713 312 Henniker NH0114 29.59% 1585 469 Hillsborough NH0077 43.32% 1922 833 Loudon NH0228 28.25% 1611 455 CSR 7463-E Alstead NH0079 48.98% 771 378 NH0198 NH0199 Hinsdale NH0032 28.88% 1622 468 Langdon NH0081 49.17% 237 117 Walpole NH0025 40.80% 1490 608 NH0078 Winchester NH0033 42.65% 1557 664 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1658 9 ATTACHMENT B CSR 7435-E, 7441-E, 7463-E COMMUNITIES SERVED BY SUBSIDIARIES AND AFFILIATES OF COMPCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7435-E Cornish NH0229 645 172 26.67% Danbury NH0028 435 127 29.90% CSR 7441-E Epsom NH0242 1491 60 4.02% CSR 7463-E Chesterfield NH0133 1366 32 2.34% Gilsum NH0139 310 85 27.42%