Federal Communications Commission DA 10-841 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of COXCOM, Inc. d/b/a/Cox Communications Oklahoma City and Cox Communications Tulsa Petition for Determination of Effective Competition in Various Oklahoma Communities ) ) ) ) ) ) CSR-8059-E CSR-8060-E MEMORANDUM OPINION AND ORDER Adopted: May 13, 2010 Released: May 13, 2010 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. COXCOM, Inc., hereinafter referred to as “Petitioner,” has filed with the Commission a petition 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 10-841 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 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 determine the competing provider penetration in the Group B Communities by purchasing a subscriber 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 Petition at 6 & Exhibit 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 Petition at 4. 12See Petition at Exhibit 2. 13See id. at 5. 14Id. at 8. Federal Communications Commission DA 10-841 3 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 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 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. III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petition for a determination of effective competition filed in the captioned proceeding by COXCOM, Inc. IS 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 15Id. 16Id. at 9. 1747 U.S.C. § 543(l)(1)(A). 1847 C.F.R. § 0.283. Federal Communications Commission DA 10-841 4 ATTACHMENT A CSR-8059-E &CSR-8060-E COMMUNITIES SERVED BY COXCOM, Inc. Communities CUID(s) Bixby OK0202 Broken Arrow OK0065 Catoosa OK 0283 Coweta OK0185 Glenpool OK0193 Jenks OK0195 Kiefer OK0223 Owasso OK0188 Sand Springs OK0064 Sapulpa OK0194 Rogers County OK0293 Osage County OK0391 Creek County OK0222 Wagoner County OK0294 Lake Aluma OK0770 Valley Brook OK0179 Canadian County OK0774 Cleveland County OK0694 Logan County OK0358 Oklahoma County OK 0693 Tulsa County OK0292 Federal Communications Commission DA 10-841 5 ATTACHMENT B CSR-8059-E COMMUNITIES SERVED BY COXCOM, Inc. 2000 Estimated Census DBS Communities CUID(s) CPR* Households Subscribers Bixby OK0202 15.2865% 4903 749.50 Broken Arrow OK0065 25.4889% 26159 6667.65 Catoosa OK 0283 30.2125% 1972 595.79 Coweta OK0185 44.4890% 2582 1148.71 Glenpool OK0193 31.9072% 2761 880.96 Jenks OK0195 30.5109% 3451 1052.93 Kiefer OK0223 32.5364% 373 121.36 Owasso OK0188 45.7170% 6595 3015.03 Sand Springs OK0064 21.3245% 6564 1399.74 Sapulpa OK0194 30.4351% 7430 2261.33 Wagoner County OK0294 43.3126% 11700 5067.58 Lake Aluma OK0770 26.9447% 40 10.78 Valley Brook OK0179 16.5630% 298 49.36 Canadian County OK0774 35.2211% 1888 664.97 Oklahoma County OK 0693 41.9332% 4711 975.47 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-841 6 ATTACHMENT C CSR-8060-E COMMUNITIES SERVED BY COXCOM, Inc. Franchise Area Cable Penetration Communities CUID(s) Households Subscribers Percentage Cleveland County OK0694 3307 12 0.36% Logan County OK0358 7232 2106 29.12% Rogers County OK0293 15997 3099 19.37% Osage County OK0391 8195 259 3.16% Creek County OK0222 12139 1670 13.76% Tulsa County OK0292 12864 3606 28.03%