Federal Communications Commission DA 08-959 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 7465-E, 7485-E, 7487-E MEMORANDUM OPINION AND ORDER Adopted: April 24, 2008 Released: April 25, 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”).3 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,4 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.5 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.6 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). 3Comcast additionally relies on the subscriber count of cable operator Wide Open West (“WOW”) in the Eastpointe, Saint Clair Shores, and Harrison Communities. 447 C.F.R. § 76.906. 5See 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905. 6See 47 C.F.R. §§ 76.906 & 907. Federal Communications Commission DA 08-959 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;7 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.8 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.9 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.10 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.11 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 programming12 and is supported in this petition with copies of channel lineups for both DIRECTV and Dish.13 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.14 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.15 Petitioner sought to 747 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 847 C.F.R. § 76.905(b)(2)(i). 9See Petition at 3. 10Mediacom 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). 1147 C.F.R. § 76.905(e)(2). 12See 47 C.F.R. § 76.905(g). See also Petition at 4. 13See Petition at 4-5. 14See Petition at 3. 15Id. at 5-6. In the Communities of Baroda Township, Baroda Village, Berrien, Lake, Casco, Columbus, Memphis, Richmond Township and St. Clair Township 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 (continued....) Federal Communications Commission DA 08-959 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.16 7. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,17 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.18 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) addition to DBS penetration exceeding 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. 16Petition at 6-7. 17Petition at 7-8. 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-959 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.19 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1947 C.F.R. § 0.283. Federal Communications Commission DA 08-959 5 ATTACHMENT A CSR(s) 7465-E, 7485-E, 7487-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(S) CSR 7465-E Eastpointe MI0433 Saint Clair Shores MI0417 CSR 7485-E Bainbridge MI1957 Baroda Village MI0879 Baroda Township MI0884 Benton MI0200 Benton Harbor MI0182 Berrien Township MI1472 Berrien Springs MI0657 Bridgman MI0877 Chikaming MI0883 Coloma Township MI0195 Coloma MI0197 Hagar MI1290 Lake MI0885 Lincoln MI0660 New Buffalo MI0876 New Buffalo Township MI0881 Oronoko MI0658 Royalton MI0659 Shoreham MI1471 Sodus MI1473 St. Joseph City MI0566 St. Joseph Township MI0661 Stevensville MI0880 Three Oaks Village MI0878 Three Oaks Township MI0882 Watervliet MI0196 Watervliet Township MI0243 Weesaw MI0953 CSR 7487-E Algonac MI0545 Armada Township MI1054 Armada Village MI1055 Bruce MI0871 Burtchville MI0105 Casco MI1793 Chesterfield MI0541 China MI0870 Clay MI0544 Clyde MI0539 Columbus MI1601 Cottrellville MI0546 Federal Communications Commission DA 08-959 6 Communities CUID(S) East China MI0548 Fort Gratiot MI0062 Harrison MI0540 Ira MI0543 Kimball MI0538 Lennox MI1053 Marine City MI0547 Marysville MI0063 Memphis MI0626 New Baltimore MI0542 New Haven MI0869 Port Huron City MI0065 Port Huron Township MI0064 Richmond City MI0789 Richmond Township MI1052 Romeo MI0671 Saint Clair City MI0549 Saint Clair Township MI1109 MI1600 Washington MI0872 Federal Communications Commission DA 08-959 7 ATTACHMENT B CSR(s) 7465-E, 7485-E, 7487-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers CSR 7465-E Eastpointe MI0433 44.10% 13,595 5,996* Saint Clair Shores MI0417 40.75% 27,434 11,180* CSR 7485-E Baroda Township MI0884 28.38% 1,117 317 Baroda Village MI0879 43.37% 362 157 Benton MI0200 22.07% 6,485 1,431 Benton Harbor MI0182 22.05% 3,767 831 Berrien MI1472 31.12% 1,664 518 Berrien Springs MI0657 23.77% 732 174 Bridgman MI0877 32.56% 998 325 Chikaming MI0883 35.17% 1,646 579 Coloma MI0197 31.62% 626 198 Coloma Township MI0195 32.73% 2,111 691 Hagar MI1290 28.92% 1,639 474 Lake MI0885 34.75% 1,171 407 Lincoln MI0660 23.48% 5,486 1,288 New Buffalo MI0876 25.24% 947 239 New Buffalo Township MI0881 20.59% 1,093 225 Oronoko MI0658 18.33% 3,295 604 Royalton MI0659 24.25% 1,299 315 Shoreham MI1471 20.80% 423 88 Sodus MI1473 35.18% 884 311 Federal Communications Commission DA 08-959 8 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers St. Joseph City MI0566 24.30% 4,117 1,000 St. Joseph Township MI0661 20.79% 4,094 851 Stevensville MI0880 26.81% 522 140 Three Oaks Village MI0878 34.82% 741 258 Watervliet MI0196 34.63% 719 249 Watervliet Township MI0243 36.13% 1,348 487 CSR 7487-E Algonac MI0545 22.40% 1,871 419 Armada Village MI1055 61.11% 540 330 Bruce MI0871 21.95% 2,806 616 Burtchville MI0105 28.52% 1,616 461 Casco MI1793 32.61% 1,634 533 Chesterfield MI0541 22.87% 13,347 3,052 China MI0870 34.27% 1,106 379 Clay MI0544 22.82% 3,934 898 Clyde MI0539 42.72% 1,931 825 Columbus MI1601 47.55% 1,533 729 Cottrellville MI0546 28.83% 1,384 399 East China MI0548 33.87% 1,467 497 Fort Gratiot MI0062 27.35% 4,076 1,115 Harrison MI0540 33.78% 10,720 3,621* Ira MI0543 22.15% 2,677 593 Kimball MI0538 32.50% 3,120 1,014 Lenox MI1053 25.14% 2,510 631 Marine City MI0547 29.51% 1,860 549 Marysville MI0063 19.58% 4,025 788 Memphis MI0626 65.42% 457 299 Federal Communications Commission DA 08-959 9 2000 Estimated Census DBS & Other MVPD Communities CUID(S) CPR* Household Subscribers New Baltimore MI0542 21.51% 2,942 633 New Haven MI0869 38.53% 1,064 410 Port Huron City MI0065 16.80% 12,961 2,177 Port Huron Township MI0064 16.86% 3,310 558 Richmond City MI0789 32.11% 1,977 635 Richmond Township MI1052 32.74% 1,020 334 Romeo MI0671 29.06% 1,528 444 Saint Clair City MI0549 34.06% 2,322 791 Saint Clair Township MI1109 34.00% 2,266 770 MI1600 Washington MI0872 24.57% 6,991 1,718 *CPR = Percent of competitive DBS penetration rate. *Eastpointe- includes 1,333 DBS subscribers and 4,633 WOW subscribers. *Saint Clair Shores- includes 1,767 DBS subscribers and 9,413 WOW subscribers. *Harrison- includes 899 DBS subscribers and 2,722 WOW subscribers. Federal Communications Commission DA 08-959 10 ATTACHMENT C CSR(s) 7485-E and 7487-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage CSR 7485-E Bainbridge MI1957 1,142 6 0.53% Baroda Township MI0884 1,117 194 17.37% Berrien Township MI1472 1,664 428 25.72% Oronoko MI0658 3,295 716 21.73% Three Oaks Township MI0882 1,181 74 6.27% Weesaw MI0953 798 91 11.40% CSR 7487-E Armada Township MI1054 1,715 62 3.62%