Federal Communications Commission DA 10-828 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 Pennsylvania Franchise Areas ) ) ) ) ) ) ) CSR 8024-E CSR 8025-E CSR 8040-E CSR 8045-E CSR 8055-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 those 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 10-828 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 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 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 4-5. 12See Petitions at 5 and Exhibit 1 (CSR 8045-E), Exhibit 2 (CSR 8040-E and CSR 8055-E), Exhibit 3 (CSR 8024-E and CSR 8025-E ). 13See Petitions at 3. 14Id. at 6. In those Communities where Comcast is not the largest MVPD, Comcast asserts that it is nonetheless subject to effective competition because in addition to DBS penetration exceeding 15 percent of the occupied (continued....) Federal Communications Commission DA 10-828 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 some of 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) households, the number of Comcast subscribers also exceeds 15 percent and the Commission has recognized that in such cases the second prong of the competing provider test is satisfied. 15Petitions at 5-8. . Comcast states that because five digit zip codes do not perfectly align with franchise boundaries, it has reduced the reported number of DBS subscribers in each zip code by an allocation ratio (the number of households in the franchise area over the number of households in the zip area). Id. at 7. 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 8. 1747 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-828 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 10-828 5 ATTACHMENT A CSR 8024-E, CSR 8025-E, CSR 8040-E, CSR 8045-E & CSR 8055-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8024-E Communities CUIDS Chanceford PA2678 Dallastown PA0782 Dover PA1312* East Manchester PA1197 Germany PA3271* Hamilton PA3127 Jackson PA1536 Lower Windsor PA1626 Manchester PA1198 McSherrystown PA0421 Mt. Pleasant PA3269 Newberry PA2893 North York PA0783 Paradise PA2368 Red Lion PA0900 Spring Garden PA0781 West York PA0785 Windsor PA0902 Yoe PA0910 York PA0119 York Haven PA1195 Yorkana PA2547 Federal Communications Commission DA 10-828 6 CSR 8025-E Dover PA2452* Germany PA2769* (*Comcast operates in this community under a single franchise). CSR 8040-E Carlisle PA0543 Carroll PA2324 Dickinson PA2356 Lower Frankford PA3174 Middlesex PA2090 Monroe PA1793 Mt. Holly Springs PA0544 North Middleton PA1328 Penn PA2889 Silver Spring PA2066 Spring PA3434 West Pennsboro PA2211 CSR 8045-E Kennett Square PA1940 Upper Oxford PA2930 West Grove PA1938 CSR 8055-E Brady PA1863 Catharine PA1861 Coalmont PA1951 Henderson PA1864 Juniata PA2727 Kistler PA1588 Federal Communications Commission DA 10-828 7 Logan PA1497 Miller PA1496 Morris PA3490 Newton Hamilton PA0401 Porter PA1481 Saxton PA0071 Shirley PA1589 Shirleysburg PA1002 Union PA3395 Wayne PA1590 Wells PA1949 Wood PA1950 Woodbury PA1862 Federal Communications Commission DA 10-828 8 ATTACHMENT B CSR 8024-E, CSR 8025-E, CSR 8040-E, CSR 8045-E & CSR 8055-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8024-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Chanceford PA2678 44.41% 2,155 957 Dallastown PA0782 21.52% 1,622 349 Dover PA1312 33.25% 6,999 2,327 Germany PA3271 40.10% 773 310 Jackson PA1536 32.18% 2,281 734 Lower Windsor PA1626 24.86% 2,791 694 Manchester PA1198 24.58% 1,009 248 McSherrystown PA0421 19.66% 1,175 231 North York PA0783 26.21% 725 190 Paradise PA2368 44.25% 1,313 581 Red Lion PA0900 27.75% 2,575 710 Spring Garden PA0781 18.40% 4,180 769 West York PA0785 27.36% 1,897 519 Windsor PA0902 28.30% 484 137 Yoe PA0910 21.51% 437 94 York PA0119 19.64% 16,137 3,169 York Haven PA1195 26.62% 278 74 Yorkana PA2547 22.10% 95 21 Federal Communications Commission DA 10-828 9 CSR 8025-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Dover PA2452 33.25% 6,999 2,327 Germany PA2769 40.10% 773 310 CSR 8040-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Carlisle PA0543 20.98% 7,426 1,558 Carroll PA2324 31.36% 1,897 595 Dickinson PA2356 27.54% 1,721 474 Lower Frankford PA3174 20.35% 683 139 Middlesex PA2090 20.19% 2,298 464 Monroe PA1793 16.69% 2,073 346 Mount Holly Springs PA0544 22.96% 836 192 North Middleton PA1328 22.99% 4,039 848 West Pennsboro PA2211 30.08% 1,938 583 CSR 8045-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Kennett Square PA1940 23.39% 1,868 437 West Grove PA1938 32.99% 864 285 CSR 8055-E 2000 Estimated Census DBS Communities CUIDS CPR* Household Subscribers Brady PA1863 51.33% 376 193 Catharine PA1861 40.14% 294 118 Federal Communications Commission DA 10-828 10 Coalmont PA1951 26.00% 50 13 Henderson PA1864 38.48% 395 152 Kistler PA1588 35.51% 138 49 Newton Hamilton PA0401 29.29% 99 29 Porter PA1481 44.79% 768 344 Saxton PA0071 28.29% 357 101 Shirley PA1589 48.48% 988 479 Shirleysburg PA1002 24.59% 61 15 Wayne PA1590 39.19% 944 370 Woodbury PA1862 41.93% 570 239 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-828 11 ATTACHMENT C CSR 8024-E, CSR 8040-E, CSR 8045-E, & CSR 8055-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS, LLC CSR 8024-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Chanceford PA2678 2,155 618 28.68% East Manchester PA1197 1,926 253 13.14% Hamilton PA3127 740 50 6.76% Mount Pleasant PA3269 1,616 52 3.22% Newberry PA2893 5,399 700 12.96% CSR 8040-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Lower Frankford PA3174 683 125 18.30% Monroe PA1793 2,073 612 29.52% Penn PA2889 974 45 4.62% Silver Spring PA2066 4,061 299 7.36% Spring PA3434 746 87 11.66% CSR 8045-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Upper Oxford PA2930 725 105 14.48% Federal Communications Commission DA 10-828 12 CSR 8055-E Franchise Area Cable Penetration Communities CUIDS Households Subscribers Percentage Juniata PA2727 395 64 16.20% Logan PA1497 273 35 12.82% Miller PA1496 199 5 2.51% Morris PA3490 138 19 13.77% Union PA3395 398 59 14.82% Wells PA1949 221 9 4.07% Wood PA1950 277 5 1.80% Woodbury PA1862 570 160 28.07%