Federal Communications Commission DA 08-894 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 Pennsylvania Communities ) ) ) ) ) ) CSR 7549-E CSR 7550-E MEMORANDUM OPINION AND ORDER Adopted: April 16, 2008 Released: April 17, 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 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 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. II. DISCUSSION A. The Competing Provider Test 3. Section 623(l)(1)(B) of the Communications Act provides that a cable operator is subject 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 08-894 2 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 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 3-4. 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 Petitions at 5. 12See Petitions at 5 and Exhibit 2. 13See Petitions at 3. 14Id. at 6. Comcast is the largest MVPD in the Communities of Adams, Applewold, Armagh, Blacklick, Blairsville, Bolivar, Burrell, Cambria, Carrollton, Clymer, Croyle, Delmont, East Carroll, East Conemaugh, East Franklin, Edensburg, Ehrenfeld, Elder, Ernest, Export, Ford City, Ford Cliff, Freeport, Hastings, Homer City, Kittanning (borough), Latrobe, Laurel Mountain, Ligonier (Borough), Ligonier (Township), Murrysville, Nanty-Glo, New Florence, Northern Cambria, Paint (Borough), Paint (Township), Patton, Plum, Portage (Borough), Portage (Township), Scalp Level, South Fork, Summerhill (Borough), Summerhill (Township), Susquehanna, Vintondale, West Carroll, West Kittanning, West Wheatfield, White, Wilmore, Windber, Worthington, and Youngstown. However, Comcast is unable to determine which MVPD is the largest in the Communities of Barr, Black Lick, (continued....) Federal Communications Commission DA 08-894 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 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 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. (...continued from previous page) Burnside, Center, Cherry Tree, Cherryhill, Creekside, East Wheatfield, Fairfield, Glen Campbell, Green, Marion Center, Montgomery, Pine, and Rayne because the DBS subscribership data obtained from SBCA is aggregated and does not break down the individual subscribership of each DBS subscriber. Nevertheless, 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 exceeds 15 percent and the Commission has recognized that in such cases the second prong of the competing provider test is satisfied. Additionally, CSR-7550-E only pertains to Burnside (PA3335) which exists on a separate Comcast cable system and therefore required the filing of a separate petition with a separate filing fee. Burnside (PA2407) is included in the list of Communities in CSR-7549-E, along with all of the other Communities at issue in this Memorandum Opinion and Order. 15Petitions at 7. Comcast states that because five digit zip codes do not perfectly align with franchise boundaries, it has reduced the reported number of DBS subscribers in each zip code by an allocation ratio (the number of households in the franchise area over the number of households in the zip area). Id. 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 8 and Exhibit 6. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-894 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 Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 08-894 5 ATTACHMENT A CSR 7549-E and CSR-7550-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR-7549-E Communities CUIDS Adams PA0036 Allegheny PA3506 Applewold PA0577 Armagh PA2203 Banks PA3334 Barr PA1557 Black Lick Township PA2895 (Indiana County) PA3333 Blacklick Township PA2299 (Cambria County) Blairsville PA0938 Bolivar PA2282 Buffington PA3240 Burnside PA2407 Burrell PA0946 Cambria PA0816 Carrolltown PA0121 Center PA0942 PA2968 Cherry Tree PA1615 Cherryhill PA2864 Clearfield PA1560 Clymer PA0205 Creekside PA2640 Federal Communications Commission DA 08-894 6 Croyle PA0037 PA2404 Delmont PA1436 East Carroll PA0122 East Conemaugh PA0788 East Franklin PA1981 East Wheatfield PA2204 Ebensburg PA0813 Ehrenfeld PA0339 Elder PA1559 Ernest PA1958 Export PA1437 Fairfield PA2281 PA2592 Ford City PA0584 Ford Cliff PA1976 Freeport PA0202 Glen Campbell PA2958 Green PA2527 Hastings PA0123 HomerCity PA0943 Jackson PA2663 Kittanning Borough PA0587 Kittanning Township PA2972 Latrobe PA0947 Laurel Mtn Park PA2858 Ligonier Borough PA1026 Ligonier Township PA1027 Marion Center PA2959 Montgomery PA3122 PA3330 Federal Communications Commission DA 08-894 7 Murrysville PA0513 Nanty Glo PA0787 New Florence PA2205 Northern Cambria PA3388 Borough Ogle PA2665 Paint Township PA0786 Paint Borough PA0796 Patton PA0124 Pine PA2664 Indiana County Plum PA1391 Portage Township PA0448 Portage Borough PA0449 Rayne PA2503 Scalp Level PA0795 South Buffalo PA3220 South Fork PA0340 Summerhill Borough PA0341 Summerhill Township PA1412 PA2862 Susquehanna PA1558 Vintondale PA2301 Washington PA3156 (Cambria County) Washington PA2354 Westmoreland County) PA3155 West Carroll PA0126 West Kittanning PA0597 West Wheatfield PA1424 PA2208 White PA2408 Federal Communications Commission DA 08-894 8 Wilmore PA1904 Windber PA0794 Worthington PA1977 Youngstown PA0940 CSR-7550-E Burnside PA3335 Federal Communications Commission DA 08-894 9 ATTACHMENT B CSR 7549-E and CSR 7550-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIIONS, LLC CSR 7549-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Adams PA0036 20.20% 2,521 510 Applewold PA0577 34.30% 143 49 Armagh PA2203 61.11% 54 33 Barr PA1557 37.58% 753 283 Black Lick PA2895 37.09% 515 191 (Indiana County) PA3333 Blacklick PA2299 29.17% 833 243 (Cambria County) Blairsville PA0938 35.62% 1,631 581 Bolivar PA2282 42.50% 200 85 Burnside PA2407 37.74% 424 160 Burrell PA0946 33.31% 1,495 498 Cambria PA0816 28.78% 2,015 580 Carrolltown PA0121 24.57% 407 100 Center PA0942 40.51% 2,024 820 PA2968 Cherry Tree PA1615 62.68% 142 89 Cherryhill PA2864 43.89% 998 438 Clymer PA0205 35.49% 679 241 Creekside PA2640 73.65% 148 109 Croyle PA0037 17.39% 811 141 PA2404 Delmont PA1436 15.33% 1,070 164 Federal Communications Commission DA 08-894 10 East Carroll PA0122 30.85% 632 195 East Conemaugh PA0788 22.79% 588 134 East Franklin PA1981 33.57% 1,546 519 East Wheatfield PA2204 44.54% 1,026 457 Ebensburg PA0813 29.55% 1,357 401 Ehrenfeld PA0339 25.56% 90 23 Elder PA1559 33.07% 375 124 Ernest PA1958 28.85% 208 60 Export PA1437 23.96% 455 109 Fairfield PA2281 43.26% 950 411 PA2592 Ford City PA0584 27.53% 1,580 435 Ford Cliff PA1976 27.07% 181 49 Freeport PA0202 27.11% 878 238 Glen Campbell PA2958 40.37% 109 44 Green PA2527 47.94% 1,431 686 Hastings PA0123 33.93% 557 189 Homer City PA0943 42.73% 805 344 Kittanning Borough PA0587 32.58% 2,032 662 Latrobe PA0947 17.32% 3,966 687 Laurel Mtn Park PA2858 42.31% 78 33 Ligonier Borough PA1026 36.64% 827 303 Ligonier Township PA1027 35.72% 2, 914 1,041 Marion Center PA2959 58.38% 173 101 Montgomery PA3122 60.03% 608 365 PA3330 Murrysville PA0513 19.20% 7,083 1,360 Nanty Glo PA0787 20.75% 1,272 264 New Florence PA2205 45.32% 331 150 Northern Cambria PA3388 31.71% 1,763 559 Federal Communications Commission DA 08-894 11 Borough Paint Township PA0786 25.55% 1,323 338 Paint Borough PA0796 22.67% 397 90 Patton PA0124 34.54% 886 306 Pine (Indiana County) PA2664 41.23% 815 336 Plum PA1391 18.54% 10,270 1,904 Portage Township PA0448 29.30% 1,232 361 Portage Borough PA0449 29.22% 1,458 426 Scalp Level PA0795 24.50% 347 85 South Fork PA0340 24.80% 452 112 Summerhill Borough PA0341 31.82% 220 70 Summerhill Township PA1412 23.98% 1,009 242 PA2862 Susquehanna PA1558 36.79% 829 305 Vintondale PA2301 30.48% 210 64 West Carroll PA0126 21.54% 534 115 West Kittanning PA0597 32.54% 544 177 West Wheatfield PA1424 41.53% 903 375 PA2208 White PA2408 28.61% 6,025 1,724 Wilmore PA1904 30.34% 89 27 Windber PA0794 23.12% 2,019 468 Worthington PA1977 41.37% 307 127 Youngstown PA0940 17.51% 31 177 CSR 7550-E Burnside PA3335 37.74% 424 160 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-894 12 ATTACHMENT C CSR 7549-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Allegheny PA3506 3,053 4 0.13% Banks PA3334 368 2 0.54% Buffington PA3240 469 12 2.56% Clearfield PA1560 571 19 3.3% Jackson PA2663 1,940 94 4.85% (Cambria County) Kittanning Township PA2972 871 129 14.81% Ogle PA2665 217 19 8.76% Rayne PA2503 1,220 112 9.18% South Buffalo PA3220 1,013 13 1.28% Washington PA3156 351 25 7.1% (Cambria County) Washington PA2354 2,809 381 13.6% (Westmoreland County) PA3155