Federal Communications Commission DA 10-874 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petition for Determination of Effective Competition in various Maine and New Hampshire Communities ) ) ) ) ) ) ) CSR 7534-E MEMORANDUM OPINION AND ORDER Adopted: May 17, 2010 Released: May 18, 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), 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 Community listed on Attachment C and hereinafter referred to as the Group C Community because the Petitioner serves fewer than 30 percent of the households in the franchise area. The petition is unopposed.3 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 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). 3On November 19, 2008, Time Warner filed a request that the following Communities be deleted from consideration in this proceeding: Town of Effingham (NH0211); Town of Fryeburg (ME0154); Town of Lovell (ME0270); Town of Middleton (NH0180); Town of Moultonborough (NH0188); Town of Tamworth (NH0190); Town of Tuftonboro (NH0187); and, Town of Wakefield (NH0145). We grant Time Warner’s request. The Town of Tuftonboro filed an opposition to this petition. Because we have granted Time Warner’s request to delete the Town of Tuftonboro from this proceeding, Tuftonboro’s opposition to this petition is rendered moot. 447 C.F.R. § 76.906. 5See 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905. Federal Communications Commission DA 10-874 2 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 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;7 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.8 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.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 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.11 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 programming12 and is supported in this petition with citations to the channel lineups for both DIRECTV and Dish.13 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.14 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 6See 47 C.F.R. §§ 76.906 & 907. 747 U.S.C. § 543(1)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 847 C.F.R. § 76.905(b)(2)(i). 9See Petition at 3. . 10Mediacom 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). 1147 C.F.R. § 76.905(e)(2). 12See 47 C.F.R. § 76.905(g). See also Petition at 5-6. 13See Petition at 6 (listings available at www.directv.com and www.dishnetwork.com). 14See Petition at 6-7. Federal Communications Commission DA 10-874 3 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.15 Petitioner sought to 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 allocation formula previously approved by the Commission in other decisions.16 7. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,17 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.18 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 Community. Therefore, the low penetration test is also satisfied as to the Group C Community. 15Id. at 7-8. With regard to Acton, Time Warner notes that while the aggregate DBS subscribership for this community is 27.64 %, the Time Warner subscribership for this franchise area is less than 15 percent. Time Warner requests that if the Commission declines to find competing provider effective competition in Acton, then it seeks a finding that Acton is subject to effective competition pursuant to the low penetration effective competition test. 16Petition at 8; See, e.g., Charter Communications Properties, LLC, 17 FCC Rcd 4617, 4619 at ¶ 6 (2002); Charter Communications, 17 FCC Rcd 15491, 15492 at ¶ 5 (2002); Falcon Community Cable, L.P., 17 FCC Rcd 22162, 22164 at ¶ 7 (2002). 17Petition at 7-8. 1847 U.S.C. § 543(l)(1)(A). Federal Communications Commission DA 10-874 4 III. ORDERING CLAUSES 11. 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. 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.19 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 1947 C.F.R. § 0.283. Federal Communications Commission DA 10-874 5 ATTACHMENT A CSR 7534-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUIDS Acton, Town of ME0337 Ossipee, Town of NH0189 Federal Communications Commission DA 10-874 6 ATTACHMENT B CSR 7534-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. 2000 Estimated Census DBS Communities CUID CPR* Household Subscribers Acton, Town of ME0337 27.64% 855 236.36 Ossipee, Town of NH0189 21.64% 1,672 361.89 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 10-874 7 ATTACHMENT C CSR 7534-E COMMUNITY SERVED BY TIME WARNER CABLE INC. Franchise Area Cable Penetration Community CUID Households Subscribers Percentage Acton, Town of ME0377 855 7 0.82.%