Federal Communications Commission DA 10-2113 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petition for Determination of Effective Competition in Five Communities in New York ) ) ) ) ) ) CSR 7500-E MEMORANDUM OPINION AND ORDER Adopted: November 3, 2010 Released: November 3, 2010 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Time Warner Cable Inc., hereinafter referred to as “Petitioner,” has filed with the Commission a petition pursuant to Sections 76.7, 76.905(b)(2) and 76.907 of the Commission’s rules for a determination that Petitioner is subject to effective competition in the five communities listed on Attachment A and hereinafter referred to as “Communities.”1 Petitioner alleges that its cable system serving the Communities is subject to effective competition pursuant to Section 623(l)(1)(B) of the Communications Act of 1934, as amended (“Communications Act”),2 and the Commission’s implementing rules,3 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”). 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,4 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.5 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.6 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. 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 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 1 The petition, as originally filed on July 26, 2007, included two other areas, the Villages of Millport (NY0380) and Wellsburg (NY0381). By letter dated November 17, 2008, Petitioner requested that they be deleted from consideration in this proceeding. We grant the request. 2 See 47 U.S.C. § 543(l)(1)(B). 3 47 C.F.R. § 76.905(b)(2). 4 47 C.F.R. § 76.906. 5 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b). 6 See 47 C.F.R. §§ 76.906 & -.907. Federal Communications Commission DA 10-2113 2 households in the franchise area.7 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.8 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 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.9 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.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 citations to the channel lineups of 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 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, exceeds 15 percent of the households in a franchise area. Petitioner asserts that it is the largest MVPD in all but one of the Communities.14 Petitioner 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 subscribers attributable to the DBS providers within the Communities on a five-digit zip code 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 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 Communities. Therefore, the second prong of the competing provider test is satisfied for each of the Communities. 7 47 U.S.C. § 543(l)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 8 47 C.F.R. § 76.905(b)(2)(i). 9 See Petition at 3-4. 10 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 11 See 47 C.F.R. § 76.905(g). See also Petition at 5-6. 12 See Petition at 4 n.12, 6. 13 See id. at 7. 14 See id. at 7. In the one exception, Ashland, both Time Warner’s subscribership and the combined subscribership of the DBS providers exceed 15%. Id. At 8. The Commission has recognized that in those conditions, whichever MVPD is the largest, the others have subscribership of over 15%. See, e.g., Time Warner-Advance/Newhouse Partnership, 17 FCC Rcd 23587, 23589, ¶ 6 (2002). 15 Petition at 8. 16 Id. at Exh. C. Federal Communications Commission DA 10-2113 3 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 Communities listed on Attachment A. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petition for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc. IS GRANTED. 10. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to or for 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 17 47 C.F.R. § 0.283. Federal Communications Commission DA 10-2113 4 ATTACHMENT A CSR 7500-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Town of Ashland NY1604 NY0420 25.55% 785 177 Town of Catlin NY0418 15.74% 985 155 Town of Chemung NY1605 16.41% 969 159 Town of Erin NY1607 17.44% 751 131 Town of Veteran NY0231 15.54% 1261 196 *CPR = Percent of competitive DBS penetration rate.