Federal Communications Commission DA 08-782 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC, on behalf of its Subsidiaries and Affiliates Petitions for Determination of Effective Competition in Maryland and Virginia Communities ) ) ) ) ) ) ) ) CSR 7063-E 7067-E 7073-E 7102-E 7103-E 7122-E 7678-E MEMORANDUM OPINION AND ORDER Adopted: April 1, 2008 Released: April 2, 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 seven petitions pursuant to Sections 76.7, 76.905(b)(1), 76.905(b)(2), 76.905(b)(4) 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 those 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 those Communities because of the competing service provided by two direct broadcast satellite (“DBS”) providers, DirecTV, Inc. (“DirecTV”) and Dish Network (“Dish”). Petitioner also claims to be exempt from cable rate regulation in the Communities listed on Attachment B because of the Petitioner serves fewer than 30 percent of the households in the franchise area. Petitioner finally claims that it is exempt from cable rate regulation in the Communities listed on Attachment C because of the competing service provided by Verizon, hereinafter referred to as “Competitor.” 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 Attachments A, B, 1See 47 U.S.C. § 543(a)(1). 247 C.F.R. § 76.905(b)(2). 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 08-782 2 and C. 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;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 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 Communities to support its assertion that potential customers in the Communities listed in Attachment A 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 these 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 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, e.g., Petition in CSR 7102-E 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, e.g., Petition in CSR 7073-E at 4-5. 12See, e.g., Petition in CSR 7063-E at Exh. 2. 13See, e.g., Petition in CSR 7102-E at 2-3. Federal Communications Commission DA 08-782 3 area. Petitioner asserts that it is the largest MVPD in all but five of the Communities.14 Petitioner sought to determine the competing provider penetration in the Communities by purchasing subscriber tracking reports 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 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 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. 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 Communities listed on Attachment A. 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 than 30 percent of the households in the franchise areas listed in Attachment B. 10. 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 those Communities. C. The LEC Test 11. Section 623(l)(1)(D) of the Communications Act provides that a cable operator is subject to effective competition if a local exchange carrier (“LEC”), or its affiliate, offers video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services offered in that area are comparable to the video programming services provided by the competing unaffiliated cable operator18; this test is otherwise referred to as the “LEC” test. 14Petition in CSR 7063-E at 5; Petition in CSR 7073-E at 6; Petition in CSR 7102-E at 5; Petition in CSR 7103-E at 5-6. In circumstances where the largest MVPD is unable to be identified, the Commission is able to determine that the second prong is met by making 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. See Attachment A. 15See, e.g., Petition in CSR 7122-E at 5-8. 16See, e.g., Petition in CSR 7103-E at 8. 1747 U.S.C. § 543(l)(1)(A). 18See 47 U.S.C. § 543(l)(1)(D). Federal Communications Commission DA 08-782 4 12. The Commission has stated that the incumbent cable operator must show that the LEC intends to build-out its cable system within a reasonable period of time if it has not completed its build- out; that no regulatory, technical or other impediments to household service exist; that the LEC is marketing its services so that potential customers are aware that the LEC’s services may be purchased; that the LEC has actually begun to provide services; the extent of such services; the ease with which service may be expanded; and the expected date for completion of construction in the franchise area.19 It is undisputed that the Communities on Attachment C are served by both Petitioner and Competitor, a local exchange carrier, and that these two MVPD providers are unaffiliated. 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 programming20 and is supported in the Petitions with copies of channel lineups for Competitor.21 Finally, Petitioner has demonstrated that the Competitor has commenced providing video programming service within the Communities on Attachment C, has marketed its services in a manner that makes potential subscribers reasonably aware of its services, and otherwise satisfied the LEC effective competition test consistent with the evidentiary requirements set forth in the Cable Reform Order.22 13. Based on the foregoing, we conclude that Petitioner has submitted sufficient evidence demonstrating that its cable systems serving the Communities on Attachment C have met the LEC test and are subject to effective competition. III. ORDERING CLAUSES 14. 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. 15. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to any of the Communities set forth on Attachments A, B, and C ARE REVOKED. 16. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.23 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 19See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 14 FCC Rcd 5296, 5305-06, ¶¶ 13-16 (1999) (“Cable Reform Order”). 20See 47 C.F.R. § 76.905(g). See also Petition in CSR 7678-E at 10. 21See Petition in CSR 7067-E at Exh. 13. 22See Cable Reform Order, 14 FCC Rcd at 5305-06, ¶¶ 13-16. See also Petition in CSR 7067-E at 4-10. 2347 C.F.R. § 0.283. Federal Communications Commission DA 08-782 5 ATTACHMENT A CSR 7102-E, CSR 7103-E, CSR 7063-E, CSR 7073-E, CSR 7122-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC, ITS SIBSIDIARIES AND AFFILIATES 2000 Estimated Census DBS Communities CUID(S) CPR* Households Subscribers CSR 7063-E Indian Head MD0177 38.04% 1,222 465 La Plata MD0176 38.30% 2,223 851 CSR 7073-E Dumfries VA0280 41.89% 1,573 659 Manassas VA0362 38.58% 11,757 4,536 VA0398 Manassas VA0315 47.03% 3,254 1,530 Park Occoquan VA0377 28.91% 418 121 Remainder of VA0019 37.29% 90,574 33,778 Prince William VA0241 County VA0287 VA0316 VA0329 VA0432 VA0595 VA0596 VA0597 VA0616 VA0617 CSR 7102-E Bowie MD0200 36.66% 18,188 6,668 Brentwood MD0220 31.05% 905 281 Capitol Heights MD0183 28.80% 1,441 415 Cheverly MD0174 24.27% 2,558 548 Federal Communications Commission DA 08-782 6 2000 Estimated Census DBS Communities CUID(S) CPR* Households Subscribers CSR 7102-E (continued) Colmar Manor MD0221 34.37% 384 132 Cottage City MD0144 34.41% 465 160 District Heights MD0165 27.49% 2,070 569 Fairmount Heights MD0182 28.92% 498 144 Forest Heights MD0185 20.96% 897 188 Glenarden MD0146 28.25% 2,078 587 Landover Hills MD0147 32.88% 514 169 Laurel MD0201 24.84% 8,931 2,218 New Carrollton MD0171 31.17% 4,568 1,424 North Brentwood MD0149 36.08% 158 57 Prince George’s County MD1063 MD0172 32.38% 206,931 66,997 Riverdale Park MD0150 24.54% 2,172 533 Seat Pleasant MD0181 28.93% 1,697 491 Upper Marlboro MD0167 53.77% 292 157 CSR 7103-E Cambridge MD0053 21.67 4,629 1,003 Denton MD0131 35.83% 1,140 409 Federalsburg MD0132 38.93% 1,045 407 Goldsboro MD0302 58.98% 77 45 Greensboro MD0130 41.52% 616 256 Henderson MD0326 60.61% 42 25 Hurlock MD0187 35.31% 710 251 Marydel MD0305 71.84% 47 34 Preston MD0188 39.98% 225 90 Queen Anne MD0323 53.74% 67 36 Federal Communications Commission DA 08-782 7 2000 Estimated Census DBS Communities CUID(S) CPR* Households Subscribers CSR 7103-E (continued) Ridgely MD0193 43.03% 513 221 CSR 7122-E Calvert County MD0250 29.70% 23,428 6,959 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-782 8 ATTACHMENT B CSR 7103-E, CSR 7122-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC, ITS SIBSIDIARIES AND AFFILIATES Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7103-E Henderson MD0326 42 11 26.19% Secretary MD0312 197 51 25.89% CSR 7122-E St. Mary’s County MD0279 30,044 1,280 4.26% Federal Communications Commission DA 08-782 9 ATTACHMENT C CSR 7067-E, CSR 7678-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC, ITS SIBSIDIARIES AND AFFILIATES Communities CUID(S) Annapolis MD MD0054 Howard County MD MD0077, MD0156, MD0157, MD0299, MD0300, MD0301