Federal Communications Commission DA 11-2088 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petitions for Determination of Effective Competition in 23 Ohio Communities ) ) ) ) ) ) CSR 8534-E CSR 8535-E CSR 8536-E MEMORANDUM OPINION AND ORDER Adopted: December 28, 2011 Released: December 29, 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 determinations 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 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. 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 11-2088 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 of DBS advertising in local, regional, and national media that serve the Communities 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 petitions 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 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 that Petitioner has submitted sufficient evidence demonstrating that both prongs of the competing 7 47 C.F.R. § 76.905(b)(2)(i). 8 See, e.g., Petition in 8534-E at 3-4. 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, e.g., Petition in 8535-E at 5. 12 See, e.g., Petition in 8536-E at 4 n.12; id. at 5. 13 See, e.g., Petition in 8534-E at 6. 14 See, e.g., Petition in 8535-E at 6; id., Declaration of Pamela McDonald, Petitioner’s Vice President of Government Relations for the Southwest Ohio Division (October 5, 2011) at ¶ 3. 15 See, e.g., Petition in 8536-E at 7; id. at Exhs. A, 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 See, e.g., Petition in 8534-E at 7; id. at Exh. C. Federal Communications Commission DA 11-2088 3 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 petitions for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc. ARE GRANTED. 8. 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. 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 11-2088 4 ATTACHMENT A COMMUNITIES SERVED BY TIME WARNER CABLE INC. CSR 8534-E Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Town of Aberdeen OH0001 20.53 760 156 Village of Amelia OH1122 28.03 1830 513 Village of Maineville OH1872 36.41 401 146 Sprigg Township OH1983 23.32 742 173 Union Township (Clermont County) OH2425 22.02 18,617 4,099 CSR 8535-E Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Dinsmore Township OH1171 16.13 1,277 206 Harrison Township (Champaign County) OH2348 32.82 326 107 Johnson Township (Champaign County) OH1053 OH2349 23.13 1,323 306 Monroe Township (Logan County) OH2366 42.06 611 257 Salem Township OH2375 32.13 806 259 Van Buren Township OH1170 26.56 689 183 Washington Township (Darke County) OH2376 OH2377 41.82 495 207 Federal Communications Commission DA 11-2088 5 CSR 8536-E Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Village of Cherry Fork OH2446 18.75 64 12 Colerain Township OH0733 24.58 22,543 5,541 Fairfield Township OH0634 28.66 7,387 2,117 Village of Fayetteville OH1493 18.75 128 24 Village of Greenhills OH0712 17.48 1,499 262 Village of Milville OH0834 24.91 269 67 Village of Mount Orab OH2808 48.52 1,381 670 Pleasant Township (Brown County) OH2949 15.70 2,249 353 Village of Seaman OH1068 23.40 47 11 Village of St. Martin OH1531 15.03 366 55 Village of Winchester OH1069 21.67 420 91 *CPR = Percent of competitive DBS penetration rate.