Federal Communications Commission DA 10-1023 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petition for Determination of Effective Competition in 33 Scranton, Pennsylvania-area Franchise Areas ) ) ) ) ) ) ) CSR 8191-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 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 Community listed on Attachment C and hereinafter referred to as the Group C Community because the Petitioner serves fewer than 30 percent of the households in the franchise area. The petition is 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 petition 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 10-1023 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 the 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. Petitioner asserts that it is the largest MVPD in all but one of the Group B Communities.14 647 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 4-5. 12See Petition at Exhibit 2. 13See Petition at 3. 14Id. at 7. Comcast states that it is the largest in 31 of the 32 Franchise Areas that qualify under the competing provider test. In Clinton, the remaining Franchise Area that it asserts qualifies under this test, Comcast states that both Comcast and the DBS providers each serve more than 15 percent of all households. The Commission has recognized previously that where “the subscriber penetration for both [the cable operator] and the aggregate DBS (continued....) Federal Communications Commission DA 10-1023 3 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 that identified the number of subscribers attributable to the DBS providers within the Group B Communities on a zip code plus four 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 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 Community. Therefore, the low penetration test is also satisfied as to the Group C Community. (...continued from previous page) information each exceed 15 percent in the franchise area, the second prong of the competing provider test is satisfied.” Charter Communications – Seven Local Franchise Areas in Missouri, 21 FCC Rcd 1208, 1210 ¶ 5 (2006). 15Petition at 5-7. 16Petition at 7, Exhibit 7. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-1023 4 III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petition for a determination of effective competition filed in the captioned proceeding by Comcast Cable Communications, LLC IS 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 10-1023 5 ATTACHMENT A CSR 8191-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUIDs Abington PA1119 Archbald PA1117 Avoca PA1188 Blakely PA1118 Clinton PA2010 Dallas PA0886 Dickson City PA1259 Dunmore PA1185 Dupont PA1159 Duryea PA1150 Edwardsville PA1134 Forty Fort PA1135 Glenburn PA1122 Jefferson PA3024 Jenkins PA1151 Jessup PA1065 Luzerne PA1138 Nanticoke PA1189 Newton PA1011 North Abington PA2481 Olyphant PA1148 Pittston PA1129 Plains PA1136 Plymouth PA1191 Ransom PA3025 Scranton PA0830 Swoyersville PA1234 Taylor PA1186 Throop PA1306 West Pittston PA1130 West Wyoming PA1137 Wyoming PA1093 Yatesville PA1361 Federal Communications Commission DA 10-1023 6 ATTACHMENT B CSR 8191-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Abington PA1119 17.73% 609 108 Archbald PA1117 29.92% 2,470 739 Avoca PA1188 23.53% 1,177 277 Blakely PA1118 28.56% 2,843 812 Clinton PA2010 34.19% 465 159 Dallas PA0886 25.64% 2,917 748 Dickson City PA1259 25.00% 2,692 673 Dunmore PA1185 22.02% 6,141 1,352 Dupont PA1159 26.14% 1,228 321 Duryea PA1150 30.14% 1,984 598 Edwardsville PA1134 18.68% 2,345 438 Forty Fort PA1135 26.65% 1,989 530 Glenburn PA1122 26.11% 471 123 Jenkins PA1151 25.89% 1,715 444 Jessup PA1065 30.31% 1,976 599 Luzerne PA1138 24.33% 1,410 343 Nanticoke PA1189 26.25% 4,850 1,273 Newton PA1011 46.14% 919 424 North Abington PA2481 17.44% 258 45 Olyphant PA1148 29.31% 2,197 644 Pittston PA1129 23.77% 3,530 839 Plains PA1136 23.49% 4,556 1,070 Plymouth PA1191 23.55% 2,794 658 Ransom PA3025 37.27% 542 202 Federal Communications Commission DA 10-1023 7 2000 Estimated Census DBS Communities CUIDs CPR* Households Subscribers Scranton PA0830 20.32% 30,069 6,111 Swoyersville PA1234 28.71% 2,243 644 Taylor PA1186 25.35% 2,678 679 Throop PA1306 26.16% 1,709 447 West Pittston PA1130 27.55% 2,243 618 West Wyoming PA1137 31.11% 1,183 368 Wyoming PA1093 21.39% 1,487 318 Yatesville PA1361 32.62% 233 76 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-1023 8 ATTACHMENT C CSR 8191-E COMMUNITY SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID Households Subscribers Percentage Jefferson PA3024 1,321 102 7.72%