Federal Communications Commission DA 08-897 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Time Warner Entertainment- Advance/Newhouse Partnership Petitions for Determination of Effective Competition in various Franchise Areas in Maine ) ) ) ) ) ) ) ) ) CSR 7515-E CSR 7516-E CSR 7517-E CSR 7518-E CSR 7519-E CSR 7521-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. Time Warner Cable Inc. and Time Warner Entertainment-Advance/Newhouse Partnership, hereinafter referred to as “Petitioners,” have filed with the Commission petitions pursuant to Sections 76.7, 76.905(b)(2) and 76.907 of the Commission’s rules for a determination that Petitioners are subject to effective competition in those communities listed on Attachment A and hereinafter referred to as “Communities.” Petitioners allege that their cable systems serving the Communities are subject to effective competition pursuant to Section 623(1)(1)(B) 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”). 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 Petitioners are 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). 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 08-897 2 II. DISCUSSION 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 Communities are “served by” both DBS providers, DIRECTV and Dish, and that these two MVPD providers are unaffiliated with Petitioners 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 Petitioners have provided sufficient evidence of DBS advertising in local, regional, and national media that serve the Communities to support their assertion that potential customers in the 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 this is supported by the petitions.12 Also undisputed is Petitioners’ 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 area. Petitioners assert that they are the largest MVPDs in the Communities.14 Petitioners 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 Petition 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 5-6. 12See Petitions at 5-6. While channel line-ups are not included, Petitioners assert that the programming offered by DirecTV and Dish Network are available at www.directv.com and www.dishnetwork.com and the programming includes many of the same popular nonbroadcast and broadcast programming services available on Petitioners’ systems. The Petitioners assert that the DBS programming lineups amply demonstrate that at least twelve channels of video programming are offered, including at least one channel of nonbroadcast service. Id. We agree. 13See Petitions at 6-7. 14Id. at 7 and Exhibits A, E. Petitioners state that they cannot determine the largest MVPD in Princeton, Oxford, Blaine, and New Sweden because the DBS subscribership data obtained from SBCA is aggregated and does not (continued....) Federal Communications Commission DA 08-897 3 determine the competing provider penetration in the 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 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 A, we find that Petitioners have 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 Petitioners have submitted sufficient evidence demonstrating that both prongs of the competing provider test are satisfied and Petitioners are subject to effective competition in the Communities listed on Attachment A. (...continued from previous page) break down the individual subscribership of each DBS subscriber. Nevertheless, Petitioners argue that they are subject to effective competition because in addition to DBS penetration exceeding 15 percent of the occupied households, the number of Petitioners’ subscribers also exceeds 15 percent and the Commission has recognized that in such cases the second prong of the competing provider test is satisfied. 15Petitions at 7 and Exhibits E and F. The Petitioners state that the Commission has previously approved the five digit zip code allocation formula to calculate the DBS providers’ subscribership. 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 7 and Exhibits E and F. Federal Communications Commission DA 08-897 4 III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Time Warner Cable, Inc. and Time Warner Entertainment – Advance/Newhouse Partnership ARE GRANTED. 10. IT IS FURTHER ORDERED that the certifications to regulate basic cable service rates granted to any of the Communities set forth on Attachment A ARE REVOKED. 11. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.17 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1747 C.F.R. § 0.283. Federal Communications Commission DA 08-897 5 ATTACHMENT A COMMUNITIES SERVED BY TIME WARNER CABLE INC. CSR-7515-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Ashland ME0113 40.90% 629 257.25 Mapleton ME0056 48.68% 749 364.60 CSR 7516-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Brownsville ME0197 35.21% 555 195.39 Milo ME0152 32.31% 1,021 329.86 CSR 7517-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Baileyville ME0058 43.43% 726 315.29 Baring ME0182 43.43% 113 49.07 Calais ME059 18.20% 1,486 270.52 Princeton ME0183 48.95% 370 181.12 CSR-7518-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Oakland ME0066 23.60% 2,352 555 Oxford ME0136 37.96% 1,487 564.40 Poland ME0240 32.92% 1,845 607.42 Federal Communications Commission DA 08-897 6 Richmond ME0196 30.40% 1,290 392.11 Waterville ME0023 18.70% 6,218 1,162.66 Winslow ME0025 21.84% 3,268 713.66 CSR-7521-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Blaine ME0054 31.56% 313 98.78 Caswell ME0356 17.30% 135 23.35 Easton ME0112 29.65% 524 155.35 Fort Fairfield ME0043 25.78% 1,523 392.56 Limestone ME0045 22.66% 801 181.53 Mars Hill ME0053 27.41% 614 168.29 New Sweden ME0357 39.93% 247 98.62 Portage Lake ME0171 40.90% 183 74.84 Presque Island ME0042 15.52% 3,963 615.25 Washburn ME0052 35.20% 692 243.59 Woodland ME0335 16.25% 528 85.82 COMMUNITIES SERVED BY TIME WARNER ENTERTAINMENT-ADVANCE/NEWHOUSE PARTNERSHIP CSR-7519-E 2000 Estimated Census DBS Communities CUIDs CPR* Household Subscribers Casco ME0225 20.82% 1,327 276.26 Gorham ME0109 15.26% 4,875 743.74 Raymond ME0224 19.00% 1,616 307.10 *CPR = Percent of competitive DBS penetration rate.