Federal Communications Commission DA 08-1883 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petition for Determination of Effective Competition in various Washington Communities ) ) ) ) ) ) CSR 7731-E, 7734-E, 7759-E MEMORANDUM OPINION AND ORDER Adopted: August 8, 2008 Released: August 8, 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 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”).3 Petitioner additionally claims to be exempt from cable rate regulation in the Community listed on Attachment C and hereinafter referred to as Group C Community 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,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 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). 3Comcast additionally relies on the subscriber count of MVPD operator Click! Network (“Click!”) in the Fife, Fircrest, Pierce County, Tacoma, and University Place Communities (CSR 7731-E). 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 08-1883 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;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 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.9 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.10 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.11 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 programming12 and is supported in this petition with copies of channel lineups for both DIRECTV and Dish.13 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.14 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.15 Petitioner sought to 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 at 3. 10Mediacom 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). 1147 C.F.R. § 76.905(e)(2). 12See 47 C.F.R. § 76.905(g). See also Petition at 4. 13See Petition at 4-5. 14See Petition at 3. 15Id. at 5. In the Community of Winlock (CSR 7734-E), both the Comcast penetration figure and the aggregate DBS figure clearly exceed 15 percent. Comcast argues that it is subject to effective competition because in addition to DBS penetration exceeding 15 percent of the occupied households, the number of Comcast subscribers also exceed (continued....) Federal Communications Commission DA 08-1883 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.16 7. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,17 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.18 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.19 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 Community. Therefore, the low penetration test is also satisfied as to the Group C Community. (...continued from previous page) 15 percent and the Commission has recognized that in such cases the second prong of the competing provider test is satisfied. 16Petition at 5-6. 17Petition at 7. 18Comcast’s data combines subscriber count information for DBS providers and MVPD operator Click! 1947 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1883 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 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.20 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 2047 C.F.R. § 0.283. Federal Communications Commission DA 08-1883 5 ATTACHMENT A CSR(s) 7731-E, 7734-E, 7759-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(S) CSR 7731-E Bonney Lake WA0308 WA0552 Buckley WA0056 Carbonado WA0423 DuPont WA0403 Eatonville WA0258 Fife WA0040 Fircrest WA0041 Orting WA0060 Pierce County WA0180 WA0062 WA0420 Roy WA0406 South Prairie WA0408 Sumner WA0050 Tacoma WA0187 WA0262 University Place WA0573 Wilkeson WA0383 CSR 7734-E Winlock WA0179 CSR7759-E Bremerton WA0003 Federal Communications Commission DA 08-1883 6 ATTACHMENT B CSR(s) 7731-E, 7734-E, 7759-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7731-E Bonney Lake WA0308 18.03% 3,266 589 WA0552 Buckley WA0056 30.66% 1,396 428 Carbonado WA0423 46.50% 200 93 DuPont WA0403 30.66% 936 287 Fife WA0040 24.20% 2,111 511* Fircrest WA0041 24.47% 2,505 613* Orting WA0060 49.19% 1,318 648 Pierce County WA0180 23.72% 108,093 25,640* WA0062 WA0420 Roy WA0406 78.43% 102 80 South Prairie WA0408 30.44% 125 38 Sumner WA0050 29.97% 3,517 1,054 Tacoma WA0187 34.92% 76,152 26,593* University Place WA0573 19.28% 12,149 2,342* Wilkeson WA0383 25.71% 140 36 CSR 7734-E Winlock WA0179 76.19% 420 320 CSR 7759-E Bremerton WA0003 16.51% 15,096 2,492 *CPR = Percent of competitive DBS penetration rate. *Fife - includes 390 DBS subscribers and 121 Click! subscribers. Federal Communications Commission DA 08-1883 7 *Fircrest - includes 101 DBS subscribers and 512 Click! subscribers. *Pierce County - includes 25,468 DBS subscribers and 172 Click! subscribers. *Tacoma - includes 5,026 DBS subscribers and 21,567 Click! subscribers. *University Place - includes 549 DBS subscribers and 1,793 Click! subscribers. Federal Communications Commission DA 08-1883 8 ATTACHMENT C CSR 7731-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7731-E Eatonville WA0258 748 106 14.17%