Federal Communications Commission DA 08-896 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 Pennsylvania Communities ) ) ) ) ) ) ) CSR- 7486-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 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”). 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 petition is 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 Petition 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). 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 08-896 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;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 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 Petition 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 Petition at 5. 12See Petition at 5 and Exhibit 2. 13See Petition at 3. Federal Communications Commission DA 08-896 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 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. 14Id. at 6. Comcast is the largest MVPD in the Communities of Bedford (Borough), Bedford (Township), Berlin, Boswell, Central City, Everett, Hooversville, Hyndman, Indian Lake, Jenner, Jennerstown, Manns Choice, New Paris, Pleasantville, Rainsburg, Rockwood, Schellsburg, Shade, Snake Spring, Somerset (Borough), Somerset (Township), and Stoystown. However, Comcast is unable to determine which MVPD is the largest in the Communities of Brothersvalley, Casselman, Colerain, East Providence, East St. Clair, Harrison, Hopewell, Milford, Napier, Stonycreek, and West Providence because the DBS subscribership data obtained from SBCA is aggregated and does not break down the individual subscibership of each DBS provider. 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. 15Petition 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). 16Petition at 6-8 and Exhibit 6. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-896 4 III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petition for a determination of effective competition filed in the captioned proceeding by Comcast Cable Communications, LLC IS 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 08-896 5 ATTACHMENT A CSR 7486-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUIDS Allegheny PA3390 Bedford Borough PA1451 Bedford Township PA1637 Berlin PA1684 Black PA3110 Boswell PA2105 Brothersvalley PA2109 Casselman PA2761 Central City PA1301 Colerain PA1638 East Providence PA1717 East St. Clair PA1639 Everett PA0281 Harrison PA2609 Hooversville PA1302 Hopewell PA1716 Hyndman PA1317 Indian Lake PA2238 Jenner PA2106 Jennerstown PA2107 Lincoln PA3143 (Bedford Township) Lincoln PA2231 (Somerset Township) Londonderry PA2434 Federal Communications Commission DA 08-896 6 Manns Choice PA2610 Milford PA2233 PA3111 Napier PA1640 New Paris PA2101 Pleasantville PA2098 Quemahoning PA2232 Rainsburg PA2415 Rockwood PA1801 Schellsburg PA2102 Shade PA1304 Snake Spring PA1641 Somerset Borough PA0348 Somerset Township PA2280 Stonycreek PA2240 Stoystown PA1303 Upper Turkey Foot PA3272 West Providence PA1715 Federal Communications Commission DA 08-896 7 ATTACHMENT B CSR 7486-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Bedford Borough PA1451 38.00% 1,536 583 Bedford Township PA1637 37.60% 2,144 806 Berlin PA1684 37.70% 881 332 Boswell PA2105 30.92% 608 188 Brothersvalley PA2109 39.20% 862 338 Casselman PA2761 50.00% 40 20 Central City PA1301 32.50% 538 175 Colerain PA1638 38.40% 435 167 East Providence PA1717 65.40% 742 485 East St. Clair PA1639 44.90% 1,198 538 Everett PA0281 47.70% 876 418 Harrison PA2609 52.70% 385 203 Hooversville PA1302 42.40% 335 142 Hopewell PA1716 38.60% 746 288 Hyndman PA1317 47.22% 413 195 Indian Lake PA2238 45.10% 206 93 Jenner PA2106 31.20% 1,598 499 Jennerstown PA2107 31.50% 302 95 Manns Choice PA2610 32.80% 116 38 Milford PA2233 38.20% 602 230 PA3111 Napier PA1640 54.40% 843 459 New Paris PA2101 45.60% 79 36 Federal Communications Commission DA 08-896 8 Pleasantville PA2098 49.40% 83 41 Rainsburg PA2415 38.60% 57 22 Rockwood PA1801 49.50% 406 201 Schellsburg PA2102 51.90% 129 67 Shade PA1304 37.32% 1,171 437 Snake Spring PA1641 46.99% 552 254 Somerset Borough PA0348 28.50% 3,035 865 Somerset Township PA2280 54.90% 552 254 Stonycreek PA2240 31.70% 820 260 Stoystown PA1303 36.40% 184 67 West Providence PA1715 50.50% 1,339 676 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-896 9 ATTACHMENT C CSR 7486-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Allegheny PA3390 250 9 3.6% Black PA3110 364 22 6.04% Lincoln PA3143 142 21 14.8% (Bedford Township) Lincoln PA2231 642 89 13.9% (Somerset Township) Londonberry PA2434 685 77 11.2% Quemahoning PA2232 827 119 14.4% Upper Turkeyfoot PA3272 450 31 6.9%