Federal Communications Commission DA 08-951 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 Michigan Communities ) ) ) ) ) ) CSR 7457-E, 7464-E, 7467-E, 7635-E MEMORANDUM OPINION AND ORDER Adopted: April 23, 2008 Released: April 24, 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 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. 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 08-951 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 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 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 Petition at 4. 12See Petition at 4-5. 13See Petition at 2-3. 14Id. at 5-6. In the Communities of Charleston (CSR 7464-E), Howell (CSR 7467-E), Saline Township and Sylvan (CSR (7635-E) both the Comcast penetration figure and the aggregate DBS penetration figure clearly exceed 15 percent. Comcast argues that it is subject to effective competition because in addition to DBS penetration exceeding (continued....) Federal Communications Commission DA 08-951 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 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 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) 15 percent of the occupied households, the number of Comcast subscribers also exceed 15 percent and the Commission has recognized that in such cases the second prong of the competing provider test is satisfied. 15Petition at 6-7. 16Petition at 7-8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-951 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 08-951 5 ATTACHMENT A CSR(s) 7457-E, 7464-E, 7467-E, 7635-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(S) CSR 7457-E Brighton City MI0355 Brighton Township MI0207 Genoa MI0244 Green Oak MI0141 Howell MI0142 Oceola MI0420 CSR 7464-E Augusta MI0767 Barry MI0891 Charleston MI0790 Comstock MI0787 Galesburg MI0768 Prairieville MI0890 Richland Township MI0769 Richland Village MI0770 Ross MI0771 CSR 7467-E Hartland MI1758 Howell MI1790 CSR 7635-E Chelsea MI0502 Clinton MI0501 Dexter MI0500 Dundee MI0504 Lima MI1741 Lodi MI1006 Manchester MI0499 Milan MI0503 Saline MI0498 Saline Township MI1740 Sylvan MI1431 Webster MI1387 Ypsilanti MI0334 Ypsilanti Township MI0422 Federal Communications Commission DA 08-951 6 ATTACHMENT B CSR(s) 7457-E, 7464-E, 7467-E, 7635-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers CSR 7457-E Brighton City MI0355 16.85% 3,103 523 Brighton Township MI0207 21.21% 5,950 1,262 Genoa MI0244 26.88% 5,839 1,570 Howell MI0142 38.03% 3,857 1,467 Oceola MI0420 50.40% 2,756 1,389 CSR 7464-E Augusta MI0767 56.52% 368 208 Charleston MI0790 43.74% 679 297 Galesburg MI0768 43.00% 765 329 Richland Township MI0769 31.24% 2,394 748 Richland Village MI0770 31.39% 258 81 Ross MI0771 38.65% 2,031 785 CSR 7467-E Hartland MI1758 42.15% 3,696 1,558 Howell MI1790 61.72% 1,902 1,174 CSR 7635-E Chelsea MI0502 41.52% 1,840 764 Clinton MI0501 40.21% 925 372 Dexter MI0500 38.49% 1,013 390 Dundee MI0504 32.97% 1,389 458 Lodi MI1006 23.11% 1,960 453 Manchester MI0499 64.78% 900 583 Milan MI0503 43.73% 1,923 841 Federal Communications Commission DA 08-951 7 2000 Estimated Census DBS Communities CUID(S) CPR* Household Subscribers Saline City MI0498 28.33% 3,148 892 Saline Township MI1740 30.90% 460 142 Sylvan Township MI1431 16.48% 2,500 412 Ypsilanti City MI0334 15.60% 8,551 1,334 Ypsilanti Township MI0422 15.27% 20,194 3,084 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-951 8 ATTACHMENT C CSR(s) 7457-E, 7464-E, 7635-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7457-E Green Oak MI0141 5,438 786 14.45% CSR 7464-E Barry MI0891 1,265 41 3.24% Comstock MI0787 5,366 190 3.54% Prairieville MI0890 1,223 49 4.01% CSR 7635-E Lima MI1741 1,168 163 13.96% Saline Township MI1740 460 115 25.00% Sylvan MI1431 2,500 376 15.04% Webster MI1387 1,774 246 13.87%