Federal Communications Commission DA 08-960 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Time Warner Cable, Inc. Petitions for Determination of Effective Competition in various Franchise Areas in Maine ) ) ) ) ) ) ) ) CSR 7440-E CSR 7558-E CSR 7565-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 and Time Warner Cable, Inc., hereinafter referred to as “Petitioners,” have 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 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 listed on Attachment B and hereinafter referred to as Group B Communities are 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 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”). Petitioners additionally claim to be exempt from cable rate regulation in the Communities listed on Attachment C and hereinafter referred to as Group C Communities because the Petitioners serve 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 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) 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 08-960 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 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 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 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 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 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 Comcast Petition (CSR 7440-E) at 2-3; Time Warner Petitions (CSR 7558-E and CSR 7565-E) at 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 Comcast Petition (CSR 7440-E) at 4; Time Warner Petitions (CSR 7558-E and 7565-E) at 6. 12See Comcast Petition (CSR 7440-E) at 4 and Exhibit 2 and Time Warner Petitions (CSR 7558-E and CSR 7565-E) at 6. As support, Comcast provides copies of channel lineups for both DIRECTV and Dish. Time Warner does not provide channel line-ups, but notes that these channel line-ups can be found at www.directv.com and www.dishnetwork.com and that these websites demonstrate the availability of the requisite programming. 13See Comcast Petition (CSR 7440-E) at 2; Time Warner Petitions (CSR 7558-E and CSR 7565-E) at 3. Federal Communications Commission DA 08-960 3 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 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 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 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 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 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 Time Warner 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 two franchise areas. 10. Based upon the subscriber penetration level calculated by Petitioner Time Warner, 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. 14Comcast Petition (CSR 7440-E) at 5; Time Warner Petition (CSR 7558-E) at 7; Time Warner Petition (CSR 7565- E) at 8. Comcast states that it cannot determine the largest MVPD in Bowdoin. Time Warner in CSR 7558-E states that it cannot determine the largest MVPD in Blue Hill, Burnham, Corinna, Deer Isle, Palmyra, St. Albans, Stockton Springs, Sullivan, Surry and Winterport. Time Warner in CSR 7565-E states that it cannot determine the largest MVPD in Alna, Buckfield, Dresden, Edgecomb, Jefferson, Leeds, South Bristol, Vassalboro and Wales. The Petitioners state that this is because the DBS subscribership data obtained from SBCA is aggregated and does not break down the individual subscribership of each DBS subscriber. With the exception of the Time Warner Communities of Alna and Edgecomb (CSR 7565-E) which qualify under the low penetration test, the Petitioners argue that they are subject to effective competition in the above-noted Communities 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. In the Communities of Alna and Edgecomb, Time Warner’s subscribership is less than 15 percent. 15Comcast Petition (CSR 7440-E) at 5-6; Time Warner Petition (CSR-7558-E) at 8-9; Time Warner Petition (CSR- 7565-E) at 9. 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 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). 16Comcast Petition (CSR 7440-E) at 7 and Exhibit 6; Time Warner Petition (CSR 7558-E) at 8-9 and Exhibits E and F; Time Warner Petition (CSR 7565-E) at 9 and Exhibits E and F. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 08-960 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 and Time Warner Cable, Inc. ARE GRANTED. 12. IT IS FURTHER ORDERED that the certifications 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 08-960 5 ATTACHMENT A CSR 7440-E, CSR 7558-E & CSR 7565-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR-7440-E Communities CUIDS Bath ME0083 Bowdoin ME0259 Bowdoinham ME0258 Durham ME0363 Harpswell ME0362 Phippsburg ME0338 West Bath ME0076 Wollwich ME0285 COMMUNITIES SERVED BY TIME WARNER CABLE, INC. CSR-7558-E Communities CUIDS Bar Harbor ME0123 Belfast ME0107 Blue Hill ME0247 Bucksport ME0124 Burnham ME0291 Cannan ME0324 Carmel ME0304 Corinna ME0137 Corinth ME0298 Deer Isle ME0246 Denmark ME0355 Federal Communications Commission DA 08-960 6 Detroit ME0332 Dexter ME0032 Dover- ME0131 Foxcroft Ellsworth ME0122 Franklin ME0268 Hampden ME0067 Hancock ME0295 Hartland ME0128 Holden ME0180 Kenduskeag ME0299 Lamoine ME0293 Levant ME0351 Milford ME0037 Desert ME0244 Mount Newport ME0125 Old Town ME0027 Orrington ME0153 Palmyra ME0350 Penobscot ME0150 Indian Island Reservation Pittsfield ME0127 Searsport ME0108 Sorrento ME0267 Southwest ME0155 Harbor St. Albans ME0187 Stockton ME0249 Springs Stonington ME0245 Sullivan ME0294 Federal Communications Commission DA 08-960 7 Surry ME0248 Thorndike ME0290 Tremont ME0156 Trenton ME0353 Unity ME0283 Verona ME0185 Winterport ME0184 CSR 7565-E Communities CUIDS Albion ME0256 Alna ME0165 Andover ME0301 Auburn ME0002 Augusta ME0013 Belgrade ME0251 Benton ME0102 Boothbay ME0174 Boothbay ME0175 Harbor Bristol ME0250 Buckfield ME0297 Canton ME0266 Chelsea ME0167 China ME0213 Clinton ME0129 Cushing ME0292 Damariscotta ME0163 Dresden ME0278 Eddington ME0179 Federal Communications Commission DA 08-960 8 Edgecomb ME0279 Farmingdale ME0014 Friendship ME0276 Gardiner ME0015 Greene ME0241 Hanover ME0261 Jay ME0018 Jefferson ME0328 Leeds ME0325 Lewiston ME0003 Lisbon ME0075 Litchfield ME0306 Livermore ME0020 Livermore ME0019 Falls Manchester ME0120 Mechanic ME0135 Falls Mexico ME0010 Minot ME0308 Monmouth ME0181 Mount Vernon ME0253 Newcastle ME0166 Nobleboro ME0280 Owls Head ME0074 Peru ME0082 Pittston ME0169 Randolph ME0022 Readfield ME0252 Roxbury ME0262 Federal Communications Commission DA 08-960 9 Rumford ME0021 Sabattus ME0134 Sidney ME0330 South Bristol ME0296 South ME0302 Thomaston Southport ME0349 St. George ME0303 Turner ME0307 Union ME0275 Vassalboro ME0106 Waldoboro ME0281 Wales ME0336 Warren ME0177 Wayne ME0263 West ME0168 Gardiner Westport ME0282 Whitefield ME0318 Windsor ME0316 Winthrop ME0121 Wiscasset ME0164 Federal Communications Commission DA 08-960 10 ATTACHMENT B CSR 7440-E, CSR 7558-E & CSR 7565-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7440-E 2000 Estimated Census DBS Communities CUIDS CPR* Households Subscribers Bath ME0083 16.03% 4,042 648 Bowdoin ME0259 67.38% 987 665 Bowdoinham ME0258 34.47% 1,027 354 Durham ME0363 29.61% 1,226 363 Harpswell ME0362 20.81% 2,340 487 Phippsburg ME0338 29.34% 859 252 West Bath ME0076 15.33% 750 115 Wollwich ME0285 28.52% 1,101 314 COMMUNITIES SERVED BY TIME WARNER CABLE, INC. CSR 7558-E 2000 Estimated Census DBS Communities CUIDS CPR* Households Subsrcibers Bar Harbor ME0123 26.25% 2,142 562.19 Belfast ME0107 24.23% 2,765 669.92 Blue Hill ME0247 40.18% 1,074 431.56 Bucksport ME0124 26.25% 2,049 537.86 Burnham ME0291 40.68% 442 180.23 Cannan ME0324 23.78% 777 184.78 Carmel ME0304 28.04% 932 261.35 Corinna ME0137 42.39% 842 356.89 Federal Communications Commission DA 08-960 11 Corinth ME0298 26.24% 959 251.63 Deer Isle ME0246 32.54% 781 254.15 Denmark ME0355 23.87% 328 78.28 Detroit ME0332 32.75% 1,615 528.92 Dexter ME0032 35.70% 1,658 591.83 Dover- ME0131 37.66% 825 310.70 Foxcroft Ellsworth ME0122 36.56% 2,755 1007.09 Franklin ME0268 36.74% 579 212.71 Hampden ME0067 27.99% 2,433 681.05 Hancock ME0295 35.82% 927 332.10 Hartland ME0128 20.21% 707 142.89 Holden ME0180 39.38% 1,153 454.06 Kenduskeag ME0299 26.47% 470 124.39 Lamoine ME0293 35.31% 605 213.60 Levant ME0351 29.27% 784 229.50 Milford ME0037 27.36% 1,180 322.79 Desert ME0244 26.25% 962 252.49 Mount Newport ME0125 35.26% 1,269 447.40 City of Old Town ME0027 18.53% 3,426 634.98 Orrington ME0153 26.71% 1,396 372.92 Palmyra ME0350 36.27% 768 278.52 Penobscot Indian ME0150 22.52% 214 48.19 Island Reservation Pittsfield ME0127 18.01% 1,627 293.07 Searsport ME0108 25.30% 1,130 285.85 Sorrento ME0267 21.45% 128 27.46 Southwest ME0155 28.67% 899 257.76 Harbor St. Albans ME0187 32.42% 718 232.75 Federal Communications Commission DA 08-960 12 Stockton ME0249 42.97% 628 269.87 Springs Stonington ME0245 26.43% 502 132.68 Sullivan ME0294 48.04% 480 230.61 Surry ME0248 46.00% 551 253.49 Thorndike ME0290 37.02% 279 103.27 Tremont ME0156 37.88% 662 250.75 Trenton ME0353 35.31% 574 202.66 Unity ME0283 37.66% 713 268.49 Verona ME0185 26.25% 223 58.54 Winterport ME0184 37.65% 1,379 519.16 CSR 7565-E 2000 Estimated Census DBS Communities CUIDS CPR* Households Subsrcibers Albion ME0256 19.57% 719 140.74 Andover ME0301 40.14% 359 144.09 Auburn ME0002 16.38% 9,764 1599.50 Augusta ME0013 22.87% 8,565 1958.74 Belgrade ME0251 23.66% 1,178 278.73 Benton ME0102 20.95% 1,013 212.18 Boothbay ME0174 23.83% 1,261 300.55 Boothbay ME0175 20.09% 1,097 220.36 Harbor Bristol ME0250 27.88% 1,203 335.43 Buckfield ME0297 34.96% 668 233.55 Canton ME0266 27.90% 400 111.59 Chelsea ME0167 20.99% 959 201.27 China ME0213 40.61% 1,549 628.98 Clinton ME0129 20.27% 1,278 259.05 Cushing ME0292 31.37% 541 169.71 Federal Communications Commission DA 08-960 13 Damariscotta ME0163 16.90% 942 159.16 Dresden ME0278 40.21% 642 258.17 Eddington ME0179 37.66% 825 310.70 Farmingdale ME0014 19.67% 1,202 236.39 Friendship ME0276 31.15% 508 158.25 Gardiner ME0015 23.41% 2,510 587.71 Greene ME0241 34.38% 1,494 513.62 Hanover ME0261 18.88% 106 20.01 Jay ME0018 26.26% 2,019 530.19 Jefferson ME0328 49.01% 945 463.15 Leeds ME0325 44.50% 736 327.49 Lewiston ME0003 17.74% 15,290 2712.61 Lisbon ME0075 18.23% 3,608 657.74 Litchfield ME0306 25.62% 1,190 304.84 Livermore ME0020 31.55% 842 265.61 Livermore ME0019 24.58% 1,322 324.93 Falls Manchester ME0120 22.18% 977 216.74 Mechanic ME0135 27.59% 1,163 320.92 Falls Mexico ME0010 22.99% 1,298 298.39 Minot ME0308 19.37% 794 153.78 Monmouth ME0181 25.74% 1,435 369.42 Mount Vernon ME0253 33.99% 603 204.96 Newcastle ME0166 23.95% 724 173.43 Nobleboro ME0280 33.74% 678 228.79 Owls Head ME0074 22.31% 723 161.28 Peru ME0082 27.73% 585 162.23 Pittston ME0169 22.82% 1,010 230.44 Federal Communications Commission DA 08-960 14 Randolph ME0022 19.18% 829 159.01 Readfield ME0252 29.75% 867 257.93 Roxbury ME0262 41.57% 165 68.60 Rumford ME0021 20.11% 2,876 578.22 Sabattus ME0134 34.70% 1,708 592.67 Sidney ME0330 21.12% 1,314 277.52 South Bristol ME0296 40.50% 410 166.04 South ME0302 24.98% 594 148.41 Thomaston Southport ME0349 33.84% 331 112.00 St. George ME0303 27.20% 1,119 304.33 Turner ME0307 37.49% 1,768 662.80 Union ME0275 33.29% 863 287.25 Vassalboro ME0106 22.87% 1,549 354.24 Waldoboro ME0281 32.09% 1,983 636.44 Wales ME0336 34.70% 468 162.39 Warren ME0177 27.37% 1,346 368.43 Wayne ME0263 20.74% 465 96.44 West ME0168 23.41% 1,115 261.08 Gardiner Westport ME0282 16.65% 318 52.95 Whitefield ME0318 34.27% 844 289.22 Windsor ME0316 23.84% 846 201.70 Winthrop ME0121 19.61% 2,495 489.23 Wiscasset ME0164 23.35% 1,472 343.78 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 08-960 15 ATTACHMENT C COMMUNITIES SERVED BY TIME WARNER CABLE, INC. CSR 7565-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Alna ME0165 266 36 13.53% Edgecomb ME0279 466 67 14.38%