Federal Communications Commission DA 11-1780 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petition for Determination of Effective Competition in Thirty Ohio Franchise Areas ) ) ) ) ) ) CSR 8515-E MEMORANDUM OPINION AND ORDER Adopted: October 21, 2011 Released: October 27, 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 a petition 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 system serving the Communities is 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 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”). The petition is 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 petition based on our finding that Petitioner is subject to effective competition in the Communities listed on Attachment A. 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.6 This test is referred to as the “competing provider” test. 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 47 C.F.R. § 76.906. 4 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b). 5 See 47 C.F.R. §§ 76.906-.907(b). 6 47 U.S.C. § 543(l)(1)(B); see also 47 C.F.R. § 76.905(b)(2). Federal Communications Commission DA 11-1780 2 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 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.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 to support its assertion that potential customers in the 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 programming,11 and is supported in the petition 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. 5. 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. Petitioner asserts that it is the largest MVPD in the Communities.14 Petitioner sought to determine the competing provider 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.15 6. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2010 household data,16 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. Therefore, the second prong of the competing provider test is satisfied for each of the Communities. Based on the foregoing, we conclude 7 47 C.F.R. § 76.905(b)(2)(i). 8 See Petition at 3. 9 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 10 47 C.F.R. § 76.905(e)(2). 11 See 47 C.F.R. § 76.905(g); see also Petition at 5. 12 See Petition at 6 (listings available at wwwdirectv.com and dishnetwork.com). 13 See id. at 6. 14 See id. at 7 and Declaration of Chris Thomas, Director of Government Relations for the Northeast Ohio Division of Time Warner Cable (August 14, 2011). The Declaration was received via email on October 14, 2011 from Craig Gilley, Esq., counsel for Time Warner, to replace the Declaration of Pamela McDonald, Vice President of Government Relations for the Southwest Ohio Division of Time Warner Cable (September 1, 2011), which was attached to the record in this case. 15 Petition at 7-8 and Exhibit C. 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. 16 Petition at 7-8 and Exhibit B. Federal Communications Commission DA 11-1780 3 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 Communities listed on Attachment A. III. ORDERING CLAUSES 7. 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. 8. 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. 9. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.17 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 17 47 C.F.R. § 0.283. Federal Communications Commission DA 11-1780 4 ATTACHMENT A CSR 8515-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities (Counties) CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Bethel Township (Clark) OH0754 17.38% 7,123 1,238 Bethel Township (Miami) OH1280 27.10% 1,889 512 Concord Township OH2956 45.72% 538 246 Gasper Township OH2940 29.63% 1,404 416 Goshen Township OH2941 29.62% 1,330 394 Gratis Township OH2975 29.13% 1,634 476 Harrison Township (Montgomery) OH0507 15.76% 9,964 1,570 Harrison Township (Preble) OH2942 23.13% 1,777 411 Jackson Township (Montgomery) OH2943 20.80% 2,385 496 Jackson Township (Preble) OH2944 30.63% 457 140 Jefferson Township OH2945 25.15% 1,356 341 Lanier Township OH2914 28.11% 1,448 407 Mad River Township OH2916 40.48% 1,045 423 Monroe Township (Darke) OH2946 41.02% 646 265 Monroe Township (Logan) OH2366 37.32% 611 228 Monroe Township (Preble) OH2947 22.90% 847 194 Perry Township OH2948 18.52% 2,371 439 Salem Township OH2950 44.73% 910 407 Somers Township OH2951 21.10% 1,564 330 Somerville Village OH2952 28.13% 96 27 South Charleston Village OH1244 15.97% 720 115 Springfield City OH0279 15.07% 24,459 3,685 Spring Valley Village OH0955 16.67% 198 33 Stokes Township OH2423 28.92% 249 72 Sugarcreek Township OH0977 OH2086 22.76% 2,786 634 Twin (Darke) OH2953 15.21% 1,591 242 Federal Communications Commission DA 11-1780 5 Communities (Counties) CUIDS CPR* 2010 Census Households Estimated DBS Subscribers Twin (Preble) OH2954 33.37% 1,022 341 Union Township OH2957 46.71% 805 376 Washington Township OH2955 46.78% 684 320 Xenia Township OH0189 23.34% 1,997 466 *CPR = Percent of competitive DBS penetration rate.