Federal Communications Commission DA 10-1024 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 Indiana Communities ) ) ) ) ) ) ) CSR 7948-E, 7949-E, 7950-E, 7951-E, 7952-E, 7953-E, 7954-E, 7955-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 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 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,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 10-1024 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 of DBS advertising in local, regional, and national media that serve the Group B Communities 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. Petitioner asserts that it is the largest MVPD in most of the Group B Communities.14 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 5 and Exhibit 4. 13See Petitions at 3. 14Id. at 5. In the Communities of De Motte, Elkhart County, Hebron, Jefferson, Kingsford Heights, Lake County, Wakarusa and Washington both the Comcast penetration figure and the aggregate DBS figure clearly exceed 15 percent. Comcast argues that it is subject to effective competition because in addition to DBS penetration exceeding (continued....) Federal Communications Commission DA 10-1024 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 and zip code plus four basis where necessary.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 Communities. Therefore, the low penetration test is also satisfied as to the Group C Communities. (...continued from previous page) 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. 15Petitions at 6-7. 16Id. at 8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-1024 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.18 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 10-1024 5 ATTACHMENT A CSR(s) 7948-E, 7949-E, 7950-E, 7951-E, 7952-E, 7953-E, 7954-E, 7955-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Communities CUID(s) CSR 7948-E Bristol IN0582 Elkhart City IN0064 Elkhart County IN0072 IN1061 IN1130 Goshen IN0063 Jefferson IN0584 Marshall County IN0073 Middlebury IN0585 Mishawaka IN0062 Osceola IN0242 Plymouth IN0066 Roseland IN0065 South Bend IN0077 St Joseph IN0043 IN1062 Wakarusa IN0586 Washington IN1132 CSR 7949-E Fulton County IN0046 Rochester IN0076 CSR 7950-E Fulton County IN1144 CSR 7951-E Elkhart County IN0733 LaGrange County IN0136 IN0734 CSR 7952-E Cedar Lake IN0434 Crown Point IN0747 De Motte IN0651 Dyer IN0332 Griffith IN0225 Hebron IN0423 Highland IN0221 Hobart IN0494 Jasper County IN0943 Lake County IN0493 Lake Station IN0334 Federal Communications Commission DA 10-1024 6 Lakes of Four Seasons IN0554 IN0555 Lowell IN0226 Merrillville IN0495 Munster IN0408 New Chicago IN0333 Porter County IN0657 IN1098 IN1099 Schererville IN0407 St John IN0435 Whiting IN0406 Winfield IN1112 CSR 7953-E Beverly Shores IN1095 Burns Harbor IN1058 Chesterton IN0252 Dune Acres IN1016 Ogden Dunes IN0421 Portage IN0228 Porter County IN1057 Porter Town IN0254 Valparaiso IN0091 IN0220 CSR 7954-E La Porte City IN0445 New Carlisle IN0531 IN1068 CSR 7955-E Kingsbury IN0599 Kingsford Heights IN0598 La Porte County IN0416 IN0425 IN0530 IN0576 Long Beach IN0414 Michiana Shores IN0412 Michigan City IN0301 Porter County IN0794 IN0424 Pines IN0628 Trail Creek IN0415 Federal Communications Commission DA 10-1024 7 ATTACHMENT B CSR(s) 7948-E, 7949-E, 7951-E, 7952-E, 7953-E, 7954-E, 7955-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC 2000 Estimated Census DBS Communities CUID(s) CPR* Households Subscribers CSR 7948-E Bristol IN0582 45.08% 539 243 Elkhart City IN0064 27.98% 20,072 5,617 Elkhart County IN0072 33.77% 30,374 10,258 IN1061 IN1130 Goshen IN0063 32.54% 10,675 3,474 Jefferson IN0584 39.69% 2,154 855 Middlebury IN0585 42.60% 1,068 455 Mishawaka IN0062 21.63% 20,248 4,380 Osceola IN0242 40.19% 714 287 Plymouth IN0066 40.51% 3,838 1,555 Roseland IN0065 18.97% 311 59 South Bend IN0077 21.84% 39,244 8,572 St Joseph IN0043 28.30% 34,252 9,693 IN1062 Wakarusa IN0586 43.02% 595 256 Washington IN1132 34.70% 2,614 907 CSR 7949-E Rochester IN0076 28.11% 2,757 775 CSR 7951-E Elkhart County IN0733 33.77% 30,374 10,258 CSR 7952-E Cedar Lake IN0434 41.33% 3,394 1,403 Crown Point IN0747 45.44% 7,824 3,555 DeMotte IN0651 53.30% 1,297 691 Federal Communications Commission DA 10-1024 8 Dyer IN0332 48.97% 4,805 2,353 Griffith IN0225 27.12% 6,728 1,825 Hebron IN0423 55.81% 1,410 787 Highland IN0221 31.92% 9,636 3,076 Hobart IN0494 37.74% 9,855 3,719 Lake County IN0493 42.24% 13,725 5,797 Lake Station IN0334 29.47% 5,041 1,486 Lakes of Four Seasons IN0554 45.41% 2,506 1,138 IN0555 Lowell IN0226 53.58% 2,697 1,445 Merrillville IN0495 35.52% 11,678 4,148 Munster IN0408 32.23% 8,091 2,608 New Chicago IN0333 36.56% 826 302 Schererville IN0407 42.87% 9,660 4,142 St John IN0435 57.68% 2,800 1,615 Whiting IN0406 19.85% 2,091 415 Winfield IN1112 46.09% 692 319 CSR 7953-E Beverly Shores IN1095 19.70% 340 67 Burns Harbor IN1058 29.04% 303 88 Chesterton IN0252 31.22% 4,039 1,261 Dune Acres IN1016 43.56% 101 44 Ogden Acres IN0421 34.34% 562 193 Portage IN0228 34.70% 12,746 4,422 Porter Town IN0254 30.86% 1,844 569 Valparaiso IN0091 30.18% 10,867 3,280 IN0220 Federal Communications Commission DA 10-1024 9 CSR 7954-E La Porte City IN0445 35.51% 15,606 5,542 New Carlisle IN0531 48.36% 608 294 CSR 7955-E Kingsbury IN0599 27.77% 90 25 Kingsford Heights IN0598 58.98% 495 292 La Porte County IN0416 35.51% 15,606 5,542 IN0425 IN0530 IN0576 Long Beach IN0414 23.15% 661 153 Michiana Shores IN0412 22.22% 162 36 Michigan City IN0301 19.93% 12,550 2,502 Pines IN0628 20.18% 332 67 Trail Creek IN0415 19.63% 932 183 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-1024 10 ATTACHMENT C CSR(s) 7948-E, 7949-E, 7950-E, 7951-E, 7952-E, 7953-E, 7955-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC Franchise Area Cable Penetration Communities CUID(s) Households Subscribers Percentage Elkhart County IN0072 30,374 8,837 29.09% IN1061 IN1130 IN0733 Fulton County IN0046 4,525 247 5.46% IN1144 Jasper County IN0943 6,432 783 12.17% LaGrange County IN0136 9,194 93 1.01% IN0734 Marshall County IN0073 8,867 474 5.35% Porter County IN0657 21,427 2,121 9.90% IN1098 IN1099 IN1057 IN0794 IN0424 Washington IN1132 2,614 666 25.48%