Federal Communications Commission DA 11-1372 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petitions for Determination of Effective Competition in Communities in Ohio and Pennsylvania ) ) ) ) ) ) ) CSR 8489-E CSR 8490-E MEMORANDUM OPINION AND ORDER Adopted: August 5, 2011 Released: August 9, 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 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 “Attachment A Communities.”1 Petitioner alleges that its cable system serving the Attachment A Communities is subject to effective competition pursuant to Section 623(l)(1)(B) of the Communications Act of 1934, as amended (“Communications Act”)2 and the Commission’s implementing rules,3 and is therefore exempt from cable rate regulation in those 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 B and hereinafter referred to as Attachment B Communities, pursuant to Section 623(l)(1)(A) of the Communications Act4and Section 76.905(b)(1) of the Commission’s rules,5 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,6 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.7 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.8 For the reasons set forth below, we grant the petitions based on our 1 Page 3 of the Petition in 8489-E states that competing provider effective competition exists in Franklin Township . That Township, however, is not listed on the title page of the Petition. Also, the body of the Petition is silent about Franklin Township’s DBS subscriber number and subscribership. Accordingly, we make no ruling concerning whether Petitioner is subject to effective competition in Franklin Township. 2 See 47 U.S.C. § 543(l)(1)(B). 3 47 C.F.R. § 76.905(b)(2). 4 See 47 U.S.C. § 543(l)(1)(A). 5 47 C.F.R. § 76.905(b)(1). 6 47 C.F.R. § 76.906. 7 See 47 U.S.C. § 543(l); 47 C.F.R. § 76.905. 8 See 47 C.F.R. §§ 76.906-.907(b). Federal Communications Commission DA 11-1372 2 finding that Petitioner is subject to effective competition in the Communities listed on Attachments A and B. 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.9 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.10 It is undisputed that the Attachment A 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.11 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.12 We further find that Petitioner has provided sufficient evidence to support its assertion that potential customers in those Communities are reasonably aware that they may purchase the service of these MVPD providers.13 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 programming,14 and is supported in these petitions with citations to the channel lineups for both DIRECTV and DISH.15 Also undisputed is Petitioner’s assertion that both DIRECTV and DISH offer service to at least “50 percent” of the households in the Attachment A Communities because of their national satellite footprint.16 Accordingly, we find that the first prong of the competing provider test is satisfied. 5. 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 Attachment A Communities.17 Petitioner sought to determine the competing provider penetration there by purchasing a subscriber tracking report from the Satellite Broadcasting and Communications Association that identified the number of subscribers 9 47 U.S.C. § 543(l)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 10 47 C.F.R. § 76.905(b)(2)(i). 11 See, e.g., Petition in CSR 8489-E at 4-5. 12 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 13 47 C.F.R. § 76.905(e)(2). 14 See 47 C.F.R. § 76.905(g); see also Petition in CSR 8489-E at 6. 15 See, e.g., Petition in CSR 8490-E at 4 n.12; id. at 6. 16 See, e.g., Petition in CSR 8489-E at 7. 17 See, e.g., Petition in CSR 8490-E at 7. Federal Communications Commission DA 11-1372 3 attributable to the DBS providers within the Attachment A Communities on a zip code plus four basis.18 6. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2010 household data,19 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 Attachment A Communities. Therefore, the second prong of the competing provider test is satisfied for each of the Attachment A Communities. 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 Attachment A Communities. B. The Low Penetration Test 7. 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 referred to as the “low penetration” test.20 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 Attachment B Communities. 8. Based upon the subscriber penetration level calculated by Petitioner, as reflected in Attachment B, 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 Attachment B Communities. Therefore, the low penetration test is satisfied as to the Attachment B Communities. III. ORDERING CLAUSES 9. 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. 10. 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 Attachments A and B IS REVOKED. 11. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.21 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 18 See, e.g., Petition in CSR 8489-E at 8. 19 See, e.g., Petition in CSR 8490-E at Exh. B. 20 47 U.S.C. § 543(l)(1)(A). 21 47 C.F.R. § 0.283. Federal Communications Commission DA 11-1372 4 ATTACHMENT A CSRs 8489-E, 8490-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers CSR 8489-E Brimfield Township OH0566 21.20 3996 847 Bronson Township OH2004 28.89 727 210 Fowler Township OH1609 26.95 1,024 276 Garrettsville Village OH0449 25.52 964 246 Gloria Glens Village OH1506 17.88 179 32 Jackson Township OH2184 OH0464 38.75 1,164 451 Lordstown Village OH1663 22.45 1,412 317 Loudonville Village OH0007 21.48 1,071 230 Madison Township OH0470 18.54 4,632 859 Montville Township OH1996 19.97 3,906 780 Oxford Township OH2634 35.13 649 228 Spencer Village OH1462 16.84 285 48 Sugar Bush Knolls Village OH1328 27.54 69 19 Vienna Township OH0215 OH1760 17.03 1,715 292 Wadsworth Township OH2244 OH2249 16.91 1,502 254 Washington Township (Richland County) OH0473 23.83 2,556 609 Sharon City PA0486 17.81 6,035 1,075 CSR 8490-E Avon City OH1258 23.48 7,584 1,781 Elyria Township OH0737 22.39 1,398 313 Elyria City OH0693 19.16 22,400 4,291 Hunting Valley Village OH1399 34.66 277 96 Kingsville Township OH0399 18.97 659 125 Kirtland Hills Village OH1215 26.53 245 65 Kirtland City OH0893 18.24 2,544 464 Lakeline Village OH0803 16.84 95 16 Marblehead Village OH1393 38.13 417 159 Orange Village OH0774 15.04 1,277 192 Pepper Pike City OH1062 15.90 2,176 346 Richmond Heights City OH0765 15.90 4,766 758 Federal Communications Commission DA 11-1372 5 Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers CSR 8490-E (continued) Russell Township OH1235 22.89 2,071 474 Sharon Township OH1273 22.00 1,823 401 South Euclid City OH0778 17.15 8,913 1,529 Waite Hill Village OH0891 27.46 193 53 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 11-1372 6 ATTACHMENT B CSRs 8489-E, 8490-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUIDs Franchise Area Households Cable Subscribers Penetration Percentage CSR 8489-E Canaan Township OH2473 1,800 84 4.67 Cass Township OH2009 535 6 1.12 Homer Township OH1382 451 87 19.29 Hubbard Township OH0310 5,749 474 8.24 Mechanic Township OH2050 889 225 25.31 Mifflin Township OH2187 452 31 6.86 Nelson Township OH1592 1,167 23 1.97 Richland Township OH0061 459 1 .22 Ridgefield Township OH0463 875 38 4.34 Ripley Township OH1255 346 41 11.85 Smith Township OH0558 1,808 35 1.94 Springfield Township OH1690 OH1808 4,386 78 1.78 Washington Township (Stark County) OH1623 1,758 376 21.39 Weathersfield Township OH0211 11,025 548 4.79 CSR 8490-E Cuyahoga Heights Village OH1196 258 73 28.29 Linndale Village OH2289 66 6 9.09 Middlefield Township OH2653 1,186 96 8.09 Rice Township OH2099 514 114 22.18