Federal Communications Commission DA 10-1931 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Mediacom Southeast LLC Time Warner Cable Inc. Petitions for Determination of Effective Competition in Various Communities in Mississippi and North Carolina ) ) ) ) ) ) ) ) ) ) CSR 8295-E, CSR 8300-E, CSR 8309-E, CSR 8310-E, CSR 8313-E, CSR 8321-E & CSR 8312-E CSR 8339-E MEMORANDUM OPINION AND ORDER Adopted: October 6, 2010 Released: October 6, 2010 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Mediacom Southeast 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) 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 are subject to effective competition pursuant to Section 623(l)(1)(B) 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”). 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. II. DISCUSSION 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 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 47 C.F.R. § 76.906. 4 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b). 5 See 47 C.F.R. §§ 76.906 & 76.907. Federal Communications Commission DA 10-1931 2 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 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 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 Mediacom and Time Warner Cable Inc. have provided sufficient citations and references to the DBS providers’ web pages and other media available in the Communities to support its assertion that potential customers in those 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 are Petitioners’ assertion that both DIRECTV and DISH offer service to at least “50 percent” of the households in the 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. Petitioners assert that they are the largest MVPDs in the Communities.14 Petitioners sought to determine the competing provider penetration in the Communities by purchasing a subscriber tracking report from the Satellite Broadcasting and Communications Association that identified the number of 6 47 U.S.C. § 543(l)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 7 47 C.F.R. § 76.905(b)(2)(i). 8 See Petitions at CSR 8295-E at 4-5; CSR 8300-E at 4-5; CSR 8309-E at 4-5; CSR 8310-E at 4-5; CSR 8312-E at 4- 5; CSR 8313-E at 4-5; CSR 8321-E at 4-5; CSR 8339-E at 4-5. 9 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 10 47 C.F.R. § 76.905(e)(2). 11 See 47 C.F.R. § 76.905(g). See also Petitions at CSR 8295-E at 6-7; CSR 8300-E at 5-6; CSR 8309-E at 5-6; CSR 8310-E at 5-6; CSR 8312-E at 6-7; CSR 8313-E at 5-6; CSR 8321-E at 6-7; CSR 8339-E at 5-6. 12 See Petitions at CSR 8295-E at 5-6; CSR 8300-E at 5-6; CSR 8309-E at 5-6; CSR 8310-E at 4-5; CSR 8312-E at 5-6; CSR 8313-E at 5-6; CSR 8321-E at 4-5; CSR 8339-E at 4-5. 13 See Petitions at CSR 8295-E at 2; CSR 8300-E at 2; CSR 8309-E at 2; CSR 8310-E at 2; CSR 8312-E at 2; CSR 8313-E at 2; CSR 8321-E at 2; CSR 8339-E at 2-3. 14 See Petitions at CSR 8295-E at 7; CSR 8300-E at 7; CSR 8309-E at 7; CSR 8310-E at 7; CSR 8312-E at 7; CSR 8313-E at 7; CSR 8321-E at 7; CSR 8339-E at 7. Federal Communications Commission DA 10-1931 3 subscribers attributable to the DBS providers within the 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 A, 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 Communities. Therefore, the second prong of the competing provider test is satisfied for each of the 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 Communities listed on Attachment A. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Mediacom Southeast LLC and Time Warner Cable Inc. ARE GRANTED. 10. 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. 11. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.17 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 15 Petitions at CSR 8295-E at 7-8; CSR 8300-E at 7-8; CSR 8309-E at 7-8; CSR 8310-E at 7-8; CSR 8312-E at 7-8; CSR 8313-E at 7-8; CSR 8321-E at 7-8; CSR 8339-E at 7-8. A zip code plus four analysis allocates DBS subscribers to a franchise area using zip code plus four information that generally reflects franchise area boundaries in a more accurate fashion than standard five digit zip code information. 16 Petitions at CSR 8295-E at 8 and Exhibit C; CSR 8300-E at 8 and Exhibit C; CSR 8309-E at 8 and C; CSR 8310- E at 8 and C; CSR 8312-E at 8 and Exhibit C; CSR 8313-E at 7 and Exhibit C; CSR 8321-E at 7 and Exhibit C; CSR 8339-E at 7 and Exhibit B. 17 47 C.F.R. § 0.283. Federal Communications Commission DA 10-1931 4 ATTACHMENT A CSRs 8295-E, CSR 8300-E, CSR 8309-E, CSR 8310-E, CSR 8313-E, CSR 8321-E, CSR 8312-E & CSR 8339-E COMMUNITIES SERVED BY MEDIACOM SOUTHEAST LLC AND TIME WARNER CABLE INC. MEDIACOM SOUTHEAST LLC Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Louisville MS0066 24.88 2641 657 Wiggins MS0155 19.86 1380 274 Bay St. Louis MS0133 24.73 3271 809 Creswell Town NC0610 16.95 118 20 Plymouth Town NC0086 23.35 1623 379 Windsor Town NC0059 29.42 938 276 Edenton Town NC0289 19.16 1983 380 Hertford Town NC0290 20.30 877 178 Thomasville AL0059 23.86 1794 428 Linden AL0058 20.90 938 196 Newton City MS0094 22.39 1420 318 Union Town MS0093 25.77 780 201 TIME WARNER CABLE INC. Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Town of Boonville NC0591 26.68 476 127 Village of Clemmons NC0275 24.93 5291 1319 Town of Denton NC0671 19.16 595 114 Town of Gibsonville NC0209 NC0210 24.25 1707 414 Town of Jamestown NC0242 21.32 1229 262 Town of Jonesville NC0055 29.19 668 195 Town of Kernersville NC0211 21.92 7286 1597 Town of Lewisville NC0957 18.86 3341 630 Town of Madison NC0216 32.20 972 313 City of Mebane NC0375 34.06 2936 1000 Town of Oak Ridge NC1045 46.60 1382 644 Town of Pilot NC0510 40.85 585 239 Town of Summerfield NC1049 38.00 2518 957 Town of Walnut Cove NC0587 23.76 585 139 Federal Communications Commission DA 10-1931 5 Town of Whitsett NC1070 33.69 279 94 *CPR = Percent of competitive DBS penetration rate.