Federal Communications Commission DA 10-1021 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 8179-E CSR 8180-E CSR 8181-E CSR 8182-E CSR 8183-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 the 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 10-1021 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 (“MVPDs”) 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 the petitions 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. 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. 12See Petitions at Exhibit 2 (CSRs 8179-E, 8180-E and 8181-E) and Exhibit 1 (CSRs 8182-E and 8183-E). 13See Petitions at 2 (CSRs 8182-E and 8183-E) and 3 (CSRs 8179-E, 8180-E and 8181-E). 14With regard to CSR 8182-E and CSR 8183-E, we note that the same franchise area reflecting the same DBS penetration rate is listed in both petitions. Two petitions were filed, however, because the North Huntingdon Franchise Area is served by two headends: PSID No. 004921 (PA2522) and PSID No. 008625 (PA0643). In this situation, the filing of two separate petitions and two separate filing fees is required. Federal Communications Commission DA 10-1021 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 zip code plus four 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) 15Petitions at 6-7. In those franchise areas where Comcast cannot determine which MVPD is the largest, Comcast asserts that the second prong of the competing provider test is still satisfied because both the DBS and Comcast figures exceed the 15 percent threshold. See Charter Communications – Seven Local Franchise Areas in Missouri, 21 FCC Rcd 1208, ¶ 5 (2006) (The Commission has recognized that where “the subscriber penetration for both [the cable operator] and the aggregate DBS information each exceed 15 percent in the franchise area, the second prong of the competing provider test is satisfied.”). 16Petitions at 5-7 (CSRs 8179-E, 8181-E and 8182-E) and at 4-7 (CSRs 8182-E and 8183-E). 17Id. at 7, Exhibit 7 (CSRs 8179-E and 8180-E), Exhibit 6 (CSR 8181-E) and at 6, Exhibit 6 (CSRs 8182-E and 8183-E). 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-1021 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 10-1021 5 ATTACHMENT A CSR 8179-E, CSR 8180-E, CSR 8181-E, CSR 8182-E & CSR 8183-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8179-E Communities CUIDs Dover PA1311 East Berlin PA3270 Hanover PA0420 Heidelberg PA2391 Hellam PA1310 Manheim PA3129 Springfield PA1535 CSR 8180-E Mount Oliver PA1245 Mount Pleasant PA2113 Nottingham PA3002 PA3039 Robinson PA1525 PA2510 Rostraver PA0715 PA2209 Sewickley PA0647 PA2210 Smith PA3218 South Huntingdon PA1357 PA2198 Suterville PA1355 West Homestead PA0667 West Mifflin PA0666 West Newton PA1356 Whitaker PA0668 CSR 8181-E Cass PA1906 East Norwegian PA2936 New Castle PA3239 Pine Grove PA1975 South Manheim PA1911 Wayne PA1913 West Brunswick PA3172 CSR 8182-E North Huntingdon PA0643 CSR 8183-E North Huntingdon PA2522 Federal Communications Commission DA 10-1021 6 ATTACHMENT B CSR 8179-E, CSR 8180-E, CSR 8181-E, CSR 8182-E & CSR 8183-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8179-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Dover PA1311 22.21% 770 171 Hanover PA0420 16.59% 6,605 1,096 Heidelberg PA2391 28.93% 1,082 313 Hellam PA1310 25.97% 2,395 622 Springfield PA1535 41.20% 1,444 595 CSR 8180-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Mount Oliver PA1245 16.78% 1,681 282 Mount Pleasant PA2113 40.19% 1,279 514 Nottingham PA3002 29.96% 968 290 PA3039 Robinson PA1525 34.84% 841 293 PA2510 Rostraver PA0715 16.60% 4,590 762 PA2209 Sewickley PA0647 19.57% 2,519 493 PA2210 South Huntingdon PA1357 21.86% 2,461 538 PA2198 Suterville PA1355 16.48% 267 44 West Homestead PA0667 16.63% 956 159 West Miflin PA0666 22.07% 9,202 2,031 West Newton PA1356 23.07% 1,318 304 Federal Communications Commission DA 10-1021 7 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Whitaker PA0668 19.11% 560 107 CSR 8181-E 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers East Norwegian PA2936 16.12% 366 59 Pine Grove PA1975 20.13% 1,570 316 Wayne PA1913 33.55% 1,827 613 CSR 8182-E 2000 Estimated Census DBS Communities CUID CPR* Households Subscribers North Huntingdon PA0643 15.79% 11,656 1,841 CSR 8183-E 2000 Estimated Census DBS Communities CUID CPR* Households Subscribers North Huntingdon PA2522 15.79% 11,656 1,841 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-1021 8 ATTACHMENT C CSR 8179-E, CSR 8180-E & CSR 8181-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8179-E Franchise Area Cable Penetration Communities CUIDs Households Subscribers Percentage East Berlin PA3270 557 47 8.44% Manheim PA3129 1,084 40 3.69% CSR 8180-E Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage Smith PA3218 1,813 5 .28% CSR 8181-E Franchise Area Cable Penetration Communities CUIDs Households Subscribers Percentage Cass PA1906 779 32 4.11% New Castle PA3239 180 4 2.22% South Manheim PA1911 796 66 8.29% West Brunswick PA3172 1,323 46 3.48%