Federal Communications Commission DA 10-827 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 Franchise Areas in Pennsylvania ) ) ) ) ) ) ) CSR 7966-E CSR 7967-E CSR 7968-E CSR 7978-E MEMORANDUM OPINION AND ORDER Adopted: May 10, 2010 Released: May 12, 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 10-827 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 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 their 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 the Group B Communities.14 Petitioner sought to 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 4-5 and Exhibit 2. 13See Petitions at 2-3. 14Id. at 5-6. Comcast cannot determine the largest MVPD in the following Communities: (CSR 7967-E – Asylum, North Towanda, Towanda (Borough), Towanda (Township) and Wysox) and (CSR 7968-E – Juniata and Tuscarora). Comcast states that it is immaterial in these Communities which MVPD is the largest because both the (continued....) Federal Communications Commission DA 10-827 3 determine the competing provider penetration in the Group B Communities by purchasing a subscriber tracking report from the Satellite Broadcasting and Communications Association (“SBCA”) that identified the number of subscribers attributable to the DBS providers within the Group B 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 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 areas. 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) DBS and the cable numbers surpass the 15 percent threshold. In cases where both DBS and cable penetration exceed 15 percent of the occupied households, the Commission has recognized that the second prong of the competing provider test is satisfied. 15Petitions at 5-6. See, e.g., Comcast of Dallas, L.P., 20 FCC Rcd 17968, 17969-70 (2005) (approving of a cable operator’s use of a Media Business Corporation “allocation factor, which reflects the portion of a five digit postal zip code that lies within the border of the City,” to determine DBS subscribership for that franchise area). 16Petitions at 6-8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-827 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.18 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1847 C.F.R. § 0.283. Federal Communications Commission DA 10-827 5 ATTACHMENT A CSR 7966-E, CSR 7967-E, CSR 7968-E and CSR 7978-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7966-E Communities CUIDS Green Lane PA2272 Milford PA0881 Perkasie PA1382 Quakertown PA0879 Richland PA1563 Richlandtown PA0880 Trumbauersville PA2124 CSR 7967-E Asylum PA2375 Monroe PA0158 North Towanda PA0159 Township Towanda Borough PA0171 Towanda Township PA0170 Wysox PA0178 CSR 7968-E Buffalo PA3298 Centre PA3299 Howe PA2488 Juniata PA3124 Liverpool PA3336 Newport PA0233 Oliver PA1561 Tuscarora PA3213 Federal Communications Commission DA 10-827 6 CSR 7978-E Amity PA2581 Bally PA0211 Bechtelsville PA0212 Boyertown PA0214 Colebrookdale PA1493 Douglass PA2120 (Montgomery County) Douglass PA1495 (Berks County) Earl PA2486 East Greenville PA1294 Hereford PA1564 New Hanover PA2119 Norristown PA0806 Oley PA2580 Pennsburg PA2291 Red Hill PA2270 Trappe PA2156 Upper Frederick PA2582 Upper Hanover PA1562 Washington PA1505 Federal Communications Commission DA 10-827 7 ATTACHMENT B CSR 7966-E, CSR 7967-E, CSR 7968-E and CSR 7978-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 7966-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Green Lane PA2272 16.02% 231 37 Milford PA0881 20.18% 3,073 620 Perkasie PA1382 15.42% 3,294 508 Quakertown PA0879 19.99% 3,421 684 Richland PA1563 19.82% 3,763 746 Richlandtown PA0880 17.67% 430 76 Trumbauersville PA2124 19.79% 374 74 CSR 7967-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Asylum PA2375 65.23% 417 272 Monroe PA0158 43.96% 207 91 North Towanda PA0159 65.17% 402 262 Township Towanda Borough PA0171 65.28% 1,279 835 Towanda Township PA0170 65.28% 432 282 Wysox PA0178 38.31% 710 272 CSR 7968-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Howe PA2488 45.27% 201 91 Federal Communications Commission DA 10-827 8 Juniata PA3124 40.20% 495 199 Newport PA0233 39.94% 666 266 Oliver PA1561 38.47% 811 312 Tuscarora PA3213 39.86% 419 167 CSR 7978-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Bally PA0211 17.92% 413 74 Bechtelsville PA0212 20.98% 348 73 Boyertown PA0214 21.83% 1,805 394 Colebrookdale PA1493 21.56% 1,994 430 Douglass PA1495 21.33% 1,200 256 (Berks County) Douglass PA2120 37.43% 3,211 1,202 (Montgomery) East Greenville PA1294 20.46% 1,124 230 New Hanover PA2119 18.52% 2,532 469 Norristown PA0806 18.31% 12,028 2,202 Oley PA2580 33.86% 1,382 468 Pennsburg PA2291 24.58% 1,009 248 Red Hill PA2270 16.91% 899 152 Trappe PA2156 16.95% 1,292 219 Upper Frederick PA2582 19.62% 1,045 205 Upper Hanover PA1562 22.97% 1,737 399 Washington PA1505 26.81% 1,212 325 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-827 9 ATTACHMENT C CSR 7967-E, CSR 7968-E and CSR 7978-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LCC CSR 7967-E Franchise Area Cable Penetration Communities CUID(S) Households Subscribers Percentage Asylum PA2375 417 94 22.54% North Towanda PA0159 402 92 22.88% Township CSR 7968-E Buffalo PA3298 420 42 10.00% Centre PA3299 843 64 7.59% Juaniata PA3124 495 85 17.17% Liverpool PA3336 356 14 3.93% CSR7978-E Amity PA2581 3,219 110 0.34% Earl PA2486 1,156 161 13.93% Hereford PA1564 1,188 148 12.46%