Federal Communications Commission DA 08-1908 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in various Franchise Areas in Pennsylvania and Delaware ) ) ) ) ) ) ) ) ) ) ) ) CSR 7905-E CSR 7906-E CSR 7908-E CSR 7909-E CSR 7910-E CSR 7911-E CSR 7913-E CSR 7914-E CSR 7916-E MEMORANDUM OPINION AND ORDER Adopted: August 13, 2008 Released: August 14, 2008 By the Associate Chief, 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 areas. 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 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 08-1908 2 finding that Petitioner is subject to effective competition in the Communities listed on Attachment A. 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. 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 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. . 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 1 (CSRs 7908-E, 7909-E, 7914-E and 7916-E) and Exhibit 2 (CSRs 7905-E, 7906-E, 7910-E, 7911-E and 7913-E). 13See Petitions at 2-3. Federal Communications Commission DA 08-1908 3 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 areas. 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 5-6. Comcast cannot determine the largest MVPD in the following Communities: (CSR 7905-E – East Hannover and Jackson); (CSR 7909-E - Madison); (CSR 7911-E – Granville); and, (CSR 7913-E - Hannover and South Annville). Comcast states that it is immaterial in these Communities which MVPD is the largest because both the DBS and the cable numbers surpass the 15 percent threshold. 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. In addition, with regard to Comcast Petitions CSR 7905-E and CSR 7906-E, we note that the same 28 Communities are listed in both. Two petitions were filed because some of the Communities with different CUIDs numbers are on a separate Comcast cable system and required the filing of a separate filing fee. CSR 7906-E refers to South Annville Township and South Londonderry Township in PSID 005427. The remainder of the Pennsylvania communities associated with PSID 004523 are referred to in CSR 7905-E. 15Petitions at 5-6. 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 6-8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-1908 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.18 FEDERAL COMMUNICATIONS COMMISSION Nancy Murphy Associate Chief, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 08-1908 5 ATTACHMENT A CSR 7905-E, CSR 7906-E, CSR 7908-E, CSR7909-E, CSR 7910-E, CSR 7911-E, CSR 7913-E, CSR 7914-E and CSR 7916-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7905-E Communities CUIDS Annville Township PA1104 Clay Township PA3315 Cleona Borough PA0349 Cornwall Borough PA2132 East Hanover Township PA2805 Elizabeth Township PA3170 Heidelberg Township PA1457 Jackson Township PA2133 Jonestown Borough PA1405 City of Lebanon PA0350 Millcreek Township PA1428 Mount Gretna Borough PA2131 Myerstown Borough PA1252 North Annville PA2803 Township North Cornwall PA1116 Township North Lebanon PA0351 Township Rapho Township PA3197 Richland Borough PA1427 South Annville PA1275 Township South Lebanon PA1158 Township Federal Communications Commission DA 08-1908 6 South Londonderry PA2135 Township Swatara Township PA1431 Union Township PA2136 West Cocalico PA3214 Township West Cornwall PA2137 Township West Lebanon PA0829 Township CSR 7906-E South Annville PA0888 Township South Londonderry PA0887 Township CSR 7908-E Porter Township PA2897 CSR 7909-E Madison Township PA3159 CSR 7910-E Bern Township PA2811 Centerport Borough PA2594 Centre Township PA0305 Greenwich Township PA2809 Hamburg Borough PA0304 Leesport Borough PA1254 Lenhartsville Borough PA2808 Ontelaunee Township PA1836 Perry Township PA1835 Shoemakersville PA0306 Borough Windsor Township PA1551 Federal Communications Commission DA 08-1908 7 CSR 7911-E Burnham Borough PA0016 Derry Township PA0017 Granville Township PA0018 Juanita Terrace PA0019 Borough Lewistown Borough PA0020 CSR 7913-E Conewago Township PA2508 East Hanover Township PA2279 Londonderry Township PA2509 North Londonderry PA0908 Township Palmyra Borough PA0592 South Annville PA0888 Township South Londonderry PA0887 Township CSR 7914-E Lower Mahanoy PA1500 Township CSR 7916-E Town of Elsmere DE0010 City of New Castle DE0043 Town of Newport DE0022 Federal Communications Commission DA 08-1908 8 ATTACHMENT B CSR 7905-E, CSR 7906-E, CSR 7908-E, CSR 7909-E, CSR 7910-E, CSR 7911-E, CSR 7913-E, CSR 7914-E and CSR 7916-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LCC CSR 7905-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Annville Township PA1104 23.14% 1,452 336 Cleona Borough PA3315 22.30% 879 196 Cornwall Borough PA2132 22.64% 1,210 274 East Hanover Township PA2805 25.43% 1,034 263 Heidelberg Township PA1457 22.51% 1,346 303 Jackson Township PA2133 23.03% 2,397 552 Jonestown Borough PA1405 43.28% 402 174 City of Lebanon PA0350 24.42% 10,266 2,507 Millcreek Township PA1428 18.90% 582 110 Mount Gretna Borough PA2131 22.22% 117 26 Myerstown Borough PA1252 23.56% 1,265 298 North Annville PA2803 23.43% 828 194 Township North Cornwall PA1116 22.58% 2,467 557 Township North Lebanon PA0351 25.86% 4,072 1,053 Township Richland Borough PA1427 18.90% 582 110 South Lebanon PA1158 22.57% 2,920 659 Township Swatara Township PA1431 35.89% 1,432 514 Union Township PA2136 41.79% 1,017 425 West Cornwall PA2137 21.55% 789 170 Township Federal Communications Commission DA 08-1908 9 West Lebanon PA0829 24.32% 333 81 Township CSR 7906-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers South Annville PA0888 22.83% 1,095 250 Township South Londonderry PA0887 18.57% 2,062 383 Township CSR 7908-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Porter Township PA2879 21.50% 851 183 CSR 7909-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Madison Township PA3159 37.08% 925 343 CSR 7910-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Bern Township PA2811 24.75% 1,903 471 Centerport Borough PA2594 34.11% 129 44 Hamberg Borough PA0304 30.98% 1,824 565 Leesport Borough PA1254 26.33% 695 183 Lenhartsville Borough PA2808 48.72% 78 38 Ontelaunee Township PA1836 25.58% 516 132 Perry Township PA1835 40.80% 973 397 Shoemakersville PA0306 26.32% 604 159 Borough Federal Communications Commission DA 08-1908 10 Windsor Township PA1551 35.51% 842 299 CSR 7911-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Burnham Borough PA0016 32.97% 919 303 Derry Township PA0017 30.58% 2,946 901 Granville Township PA0018 30.39% 1,971 599 Juanita Terrace PA0019 29.60% 223 66 Borough Lewistown Borough PA0020 29.70% 4,023 1,195 CSR 7913-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Conewago Township PA2508 15.70% 1,019 160 East Hanover Township PA2279 25.53% 1,034 264 Londonderry Township PA2509 16.12% 2,004 323 North Londonderry PA0908 18.67% 2,716 507 Township Palmyra Borough PA0592 17.75% 3,200 568 South Annville PA0888 22.83% 1,095 250 Township South Londonderry PA0887 18.57% 2,062 383 Township CSR 7914-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Lower Mahanoy PA1500 41.64% 634 264 Township Federal Communications Commission DA 08-1908 11 CSR 7916-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Town of Elsmere DE0010 18.66% 2,299 429 City of New Castle DE0043 20.08% 2,012 404 Town of Newport DE0022 17.98% 456 82 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-1908 12 ATTACHMENT C CSR 7905-E, CSR 7909-E, CSR 7910-E, CSR 7911-E, CSR 7913-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7005-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Clay Township PA3315 1,759 8 0.45% East Hanover Township PA2805 1,034 225 21.76% Elizabeth Township PA3170 1,303 63 4.83% Jackson Township PA2133 2,397 398 16.60% Rapho Township PA3197 3,075 10 0.33% West Cocalico PA3214 2,298 32 1.39% Township CSR 7909-E Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage Madison Township PA3159 925 224 24.22% CSR 7910-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Centre Township PA0305 1,359 175 12.88% Greenwich Township PA2809 1,245 52 4.18% CSR 7911-E Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage Granville Township PA0018 1,971 314 15.93% Federal Communications Commission DA 08-1908 13 CSR 7913-E Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage East Hanover PA2279 1,034 187 18.09% Township South Annville PA0888 1,095 250 22.83% Township