Federal Communications Commission DA 11-130 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petitions for Determination of Effective Competition in Franchise Areas in New York and Pennsylvania ) ) ) ) ) ) ) CSR 8342-E CSR 8343-E CSR 8348-E CSR 8364-E CSR 8365-E CSR 8366-E MEMORANDUM OPINION AND ORDER Adopted: January 21, 2011 Released: January 25, 2011 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 six petitions 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 those communities listed on Attachment A and hereinafter referred to as the “Communities.” Petitioner alleges that its cable systems serving the Communities are subject to effective competition pursuant to Section 623(l)(1)(B) 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”). The petitions are 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 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. 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 By letters dated January 11, 2011, and by e-mails sent at 4:33 P.M. on January 18, 2011, and at 12:54 P.M. on January 19, 2011, Petitioner corrected certain numerical inaccuracies in the petitions and withdrew its request for a finding of effective competition in the Village of Pike (NY1656) because that Village had been dissolved. 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(b). Federal Communications Commission DA 11-130 2 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 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 the petitions with citations to the 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 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. 7. Petitioner asserts that it is the largest MVPD in the Communities, with two exceptions.14 The exceptions are the Towns of Eagle and Middlebury in CSR 8364-E. There, it is unclear whether Petitioner or one of the DBS providers is the largest MVPD.15 In the Town of Eagle, the DBS providers’ combined household share is over 15 percent and is larger than Petitioner’s, and Petitioner’s household share is also over 15 percent.16 This data makes clear that, whichever of the three MVPDs is the largest, 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, e.g., Petition in CSR 8342-E at 3-5. 10 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 11 See 47 C.F.R. § 76.905(g). See also, e.g., Petition in CSR 8343-E at 6. 12 See, e.g., Petition in CSR 8348-E at 4 n.12; id. at 6. 13 See, e.g., Petition in CSR 8364-E at 2-3. 14 See Petition in CSR 8365-E at 7. 15 Petition in CSR 8364-E at 8. 16 Compare id. at 9 with id. at Exh. A. Federal Communications Commission DA 11-130 3 the combined share of the other two is also over 15 percent.17 In the Town of Middlebury, however, Petitioner’s household share is under 15 percent (11.51 percent, to be precise).18 There, it is possible that one of the DBS providers is the largest MVPD and that the combined share of the other DBS provider and Petitioner is not in excess of 15 percent. If these are the facts – which the evidence at hand does not exclude as a possibility – then the second part of the competing provider test would not be met in the Town of Middlebury franchise area. If these are the facts, however, the criteria for “low penetration” effective competition would be met because “fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable system.”19 8. Petitioner sought to determine the DBS 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 zip code plus four basis.20 Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,21 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 (except for the Town of Middlebury). Therefore, the second prong of the competing provider test is satisfied for each of those Communities. 9. 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 competing provider effective competition in the Communities listed on Attachment A except for the Town of Middlebury. We also conclude that Petitioner has submitted sufficient evidence demonstrating that it is subject to low penetration effective competition in the Town of Middlebury. 17 See Comcast Cable Communications, LLC, 23 FCC Rcd 10939, 10941, ¶ 9 (2008); Time Warner- Advance/Newhouse Partnership, 17 FCC Rcd 23587, 23589, ¶ 6 (2002). 18 Compare Petition in CSR 8364-E at 9 with id. at Exh. A (61 subscribers ÷ 530 households = 11.51% share). 19 47 U.S.C. § 543(l)(1)(A); 47 C.F.R. § 76.905(b)(1). See Comcast Cable Commun., LLC, 24 FCC Rcd 2246, 2248, ¶ 6, n.14 (2009); Mountain Cable Co., 14 FCC Rcd 13994, 14002, ¶ 19 (1999). 20 Petition in CSR 8366-E at 7. A zip code plus four analysis allocates DBS subscribers to a franchise area using zip code plus four information that generally reflects franchise area boundaries in a more accurate fashion than standard five digit zip code information. 21 See, e.g., Petition in CSR 8366-E at Exh. B. Federal Communications Commission DA 11-130 4 III. ORDERING CLAUSES 10. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc., ARE GRANTED. 11. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to or on behalf of any of the Communities set forth on Attachment A IS REVOKED. 12. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.22 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 22 47 C.F.R. § 0.283. Federal Communications Commission DA 11-130 5 ATTACHMENT A CSRs 8342-E, 8343-E, 8348-E, 8364-E, 8365-E, 8366-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. CSR 8342-E Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Village of Arcade NY0858 15.37% 1672 257 Village of Barker NY1428 29.38% 211 62 Town of Chautauqua NY1242 28.71% 1881 540 Town of Clarence NY0854 30.07% 9154 2753 Village of Delevan NY0862 22.48% 436 98 Village of East Aurora NY1223 18.57% 2596 482 Village of Farnham NY1550 33.63% 113 38 Village of Gowanda NY1301, NY1302 29.37% 1161 341 Town of Grand Island NY0899 30.11% 6898 2077 Village of Lewiston NY0313 17.19% 1268 218 Village of Mayville NY1241 29.45% 686 202 Village of North Collins NY1297 40.10% 414 166 Town of Pendleton NY1259 35.40% 2116 749 Village of Sherman NY1510 22.65% 287 65 Village of Springville NY1161 25.75% 1705 439 Town of Wheatfield NY1027 35.68% 5305 1893 Village of Youngstown NY0727 23.11% 809 187 CSR 8343-E Community CUID CPR* 2000 Census Households Estimated DBS Subscribers Village of Forestville NY1212 33.22% 304 101 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 11-130 6 CSR 8348-E Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Village of Allegany NY0009 26.83% 753 202 Town of Andover NY0015 44.44% 432 192 Village of Belmont NY0016 41.07% 392 161 Village of Cattaraugus NY0860 36.61% 437 160 Town of Cuba NY0913 21.11% 1336 282 Village of East Randolph NY1153 46.46% 198 92 Township of Eldred PA1531 54.66% 686 375 Town of Ellicotville NY0857 58.96% 770 454 Village of Ellicotville NY0856 22.73% 242 55 Village of Franklinville NY0864 21.00% 1205 253 Village of Portville NY0366 22.84% 416 95 Village of Randolph NY1151 57.64% 550 317 Town of Wellsville NY0018 30.06% 2162 650 CSR 8364-E Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Town of Alexander NY0895 31.63% 860 272 Village of Alexander NY0894 16.86% 172 29 Village of Attica NY0892 17.35% 1072 186 Town of Batavia NY0850 18.59% 2334 434 Town of Bethany NY1540 38.21% 636 243 Village of Corfu NY0997 20.39% 309 63 Town of Eagle NY1793 74.29% 424 315 Village of Elba NY0896 16.33% 245 40 Village of Gainesville NY1268 15.93% 113 18 Village of Lyndonville NY1265 18.77% 325 61 Town of Mendon NY1052 15.83% 3070 486 Town of Middlebury NY1600 44.72% 530 237 Village of Middleport NY1219 18.65% 756 141 Village of Mount Morris NY1051 19.20% 1307 251 Village of Nunda NY1220 15.05% 505 76 Town of Stafford NY0891 21.34% 909 194 Federal Communications Commission DA 11-130 7 CSR 8365-E Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Village of Clyde NY0347 17.11% 859 147 Town of Fayette NY0557 27.72% 1367 379 Village of Interlaken NY1181 32.03% 256 82 Village of Manchester NY0583 15.59% 648 101 Village of Naples NY0606 17.88% 453 81 Town of Ontario NY0787 15.95% 3617 577 Village of Ovid NY1180 22.04% 245 54 Village of Phelps NY0768 15.42% 791 122 Village of Red Creek NY1130 41.90% 210 88 Town of Romulus NY1174 52.66% 583 307 Village of Shortsville NY0592 16.14% 508 82 Town of South Bristol NY0705 39.85% 670 267 Town of Varick NY1178 27.46% 630 173 Town of Victor NY0655 21.38% 3685 788 Village of Victor NY0608 15.51% 935 145 CSR 8366-E Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers Town of Jerusalem NY1390 48.32% 1606 776 Village of Penn Yan NY0217 20.69% 2141 443 Town of Pulteney NY1388 34.10% 566 193 Village of Rushville NY1399, NY1752 22.32% 224 50 Town of Wayne NY1395 20.48% 494 199