Federal Communications Commission DA 10-1020 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in various Pennsylvania Franchise Areas ) ) ) ) ) ) ) CSR 8072-E CSR 8075-E CSR 8078-E CSR 8079-E MEMORANDUM OPINION AND ORDER Adopted: June 3, 2010 Released: June 4, 2010 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 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 Petitioner is subject to effective competition in those communities listed on Attachment A and hereinafter referred to as “Communities.” Petitioner alleges that its 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”). 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 those franchise areas. 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 10-1020 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 to support its 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.14 Petitioner asserts that it is the largest MVPD in most of the Group B Communities.15 Petitioner 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 Petitions 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 Petitions at 4-5. 12See Petitions at 4-5 and Exhibit 2. 13See Petitions at 3. 14 On January 5, 2010, Comcast filed an amendment to CSR 8075-E. Comcast stated that it inadvertently omitted a PSID and corresponding CUID that should have been associated with the community of West Hempfield. Comcast submitted a revised Exhibit 1 to the Petition to include PSID 006485 and CUID PA0238 for West Hempfield, in addition to PSID 001871 and CUID PA1319 already identified in the Petition. Further, Comcast noted that although (continued....) Federal Communications Commission DA 10-1020 3 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 that identified the number of subscribers attributable to the DBS providers within the Group B Communities on a five digit zip code basis.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) there are now two PSIDs and two CUIDs associated with West Hempfield, it has a single franchise to serve the entire community. 15Petitions at 5-6. In those Communities where Comcast is not the largest MVPD, Comcast asserts that it is nonetheless 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. See Charter Communications – Seven Local Franchise Areas in Missouri, 21 FCC Rcd 1208, 1210 at ¶ 5 (2006). 16Id. at 5-8. 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. at 7. See, e.g., Comcast of Dallas, L.P., 20 FCC Rcd 17968, 17969-70 (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). 17Id. at 8. 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-1020 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 certifications to regulate basic cable service rates granted to any of the Communities set forth on Attachment A ARE 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 10-1020 5 ATTACHMENT A CSR 8072-E, CSR 8075-E, CSR 8078-E & CSR 8079-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LCC CSR 8072-E Communities CUIDs Bigler PA1318 Boggs (Clearfield County) PA0136 Chester Hill PA0392 Decatur PA0393 Franklin PA3396 Gulich PA1270 Houtzdale PA1265 Marion PA2431 Morris PA0394 Philipsburg PA0396 Potter PA0164 Rush PA0397 Spring PA0167 Snyder PA0029 Taylor PA2540 Worth PA2789 CSR 8075-E Bart PA1811 Caernarvon PA2787 Christiana PA2296 Columbia PA0303 Conestoga PA1819 Drumore PA2555 Earl PA0276 East Drumore PA2556 East Petersburg PA0095 Eden PA1810 Fulton PA2558 Lancaster PA0101 Leacock PA0277 Little Britain PA2559 Martic PA2560 Providence PA2627 Sadsbury PA2297 Salisbury PA1813 West Earl PA1012 West Hempfield PA1319 PA0238 Wrightsville PA0825 Federal Communications Commission DA 10-1020 6 CSR 8078-E Communities CUIDs Bendersville PA2253 Butler PA1665 Codorus PA2339 Dover PA2452 Franklin (Adams County) PA2288 Franklintown PA1332 Freedom PA2289 Gettysburg PA0683 Hamilton PA2767 Hamiltonban PA2286 Highland PA2287 Huntington PA2764 Jackson PA1944 Latimore PA2335* PA2979 Liberty PA2285 Manheim PA2765** Menallen PA2254 Monaghan PA2680 Mt. Joy PA2332 Mt. Pleasant PA2331 New Salem PA1362 North Codorus PA1044 Oxford PA2768** Paradise PA2453 Reading PA2334 Seven Valleys PA1141 Shrewsbury PA1931 Straban PA1620 Tyrone PA2447 Union PA2448** Warrington PA2349 Washington PA2449 CSR 8079-E Manheim PA3129** Oxford PA2409** Union PA3126** *Comcast operates in these franchise areas under a single franchise. **Comcast operates in these franchise areas under a single franchise and the Franchise Areas are served by more than one principal headend. Federal Communications Commission DA 10-1020 7 ATTACHMENT B CSR 8072-E, CSR 8075-E, CSR 8078-E & CSR 8079-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8072-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Bigler PA1318 33.45% 547 183 Boggs (Clearwater) PA0136 52.31% 736 385 Chester Hill PA0392 23.31% 399 93 Decatur PA0393 29.50% 1,210 357 Gulich PA1270 26.84% 529 142 Houtzdale PA1265 30.26% 380 115 Marion PA2431 22.36% 322 72 Morris PA0394 33.33% 1,224 408 Phillipsburg PA0396 22.25% 1,375 306 Potter PA0164 52.09% 1,267 660 Rush PA0397 24.13% 1,359 328 Snyder PA0029 33.31% 1,348 449 Spring PA0167 18.40% 2,456 452 Taylor PA2540 32.19% 292 94 Worth PA2789 31.31% 313 98 Federal Communications Commission DA 10-1020 8 CSR 8075-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Bart PA1811 24.63% 820 202 Caernarvon PA2787 17.41% 1,269 221 Christiana PA2296 21.93% 383 84 Columbia PA0303 18.45% 4,287 791 Conestoga PA1819 19.87% 1,374 273 Drumore PA2555 41.41% 739 306 East Drumore PA2556 30.24% 1,055 319 East Petersburg PA0095 18.79% 1,708 321 Eden PA1810 30.28% 578 175 Fulton PA2558 43.56% 932 406 Lancaster PA0101 15.41% 20,933 3,226 Little Britain PA2559 33.00% 1,115 368 Martic PA2560 29.25% 1,713 501 Providence PA2627 23.75% 2,387 567 Sadsbury PA2297 21.25% 880 187 Salisbury PA1813 17.31% 3,027 524 West Hempfield PA1319 18.87% 5,427 1,024 PA0238 Wrightsville PA0825 23.45% 955 224 Federal Communications Commission DA 10-1020 9 CSR 8078-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Bendersville PA2253 45.54% 202 92 Butler PA1665 47.70% 979 467 Franklin (Adams) PA2288 48.52% 1,651 801 Franklintown PA1332 39.34% 211 83 Freedom PA2289 39.94% 328 131 Gettysburg PA0683 35.85% 2,541 911 Hamilton PA2767 38.38% 740 284 Hamiltonban PA2286 43.17% 827 357 Highland PA2287 36.28% 317 115 Latimore PA2335 61.16% 914 559 PA2979 Liberty PA2285 45.21% 407 184 Manheim PA2765 47.05% 1,084 510 Monaghan PA2680 34.45% 807 278 Mount Joy PA2332 37.28% 1,191 444 Mount Pleasant PA2331 35.33% 1,616 571 New Salem PA1362 17.44% 258 45 North Codorus PA1044 31.67% 2,924 926 Oxford ` PA2768 36.78% 1,694 623 Reading PA2334 42.87% 1,803 773 Seven Valleys PA1141 40.42% 188 76 Shrewsbury PA1931 37.69% 2,157 813 Straban PA1620 36.16% 1,687 610 Tyrone PA2447 40.89% 785 321 Union PA2448 32.96% 1,074 354 Warrington PA2349 39.36% 1,702 670 Federal Communications Commission DA 10-1020 10 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Washington PA2449 42.36% 890 377 CSR 8079-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Manheim PA3129 47.05% 1,084 510 Ford PA2409 36.78% 1,694 623 Union PA3126 32.96% 1,074 354 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-1020 11 ATTACHMENT C CSR 8072-E, CSR 8075-E & CSR 8078-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8072-E Franchise Area Cable Penetration Communities CUIDs Households Subscribers Percentage Boggs (Clearfield) PA0136 1,056 190 17.99% Franklin PA3396 184 15 8.15% Marion PA2431 322 73 22.67% Potter PA0164 1,267 276 21.78% Worth PA2789 313 72 23.00% CSR 8075-E Franchise Area Cable Penetration Communities CUIDs Households Subscribers Percentage Bart PA1811 820 195 23.78% Caenarvon PA2787 1,269 305 24.03% Drumore PA2555 739 190 25.71% Earl PA0276 2,019 546 27.04% Leacock PA0277 1,426 389 27.28% West Earl PA1012 2,201 253 11.49% West Hempfield PA1319 5,284 1,350 25.55% PA0238 CSR 8078-E Franchise Area Cable Penetration Communities CUIDs Households Subscribers Percentage Codorus PA2339 1,344 115 8.56% Dover PA2452 6,999 637 9.10% Huntington PA2764 831 121 14.56% Jackson PA1944 2,281 71 3.11% Federal Communications Commission DA 10-1020 12 Franchise Area Cable Penetration Communities CUIDs Households Subscribers Percentage Menallen PA2245 1,077 118 10.96% Paradise PA2453 1,313 193 14.70% Tyrone PA2447 785 183 23.31% Warrington PA2349 1,702 265 15.57%