Federal Communications Commission DA 11-726 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Bresnan Communications, LLC Petition for Determination of Effective Competition in Communities in Utah and Wyoming ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 8421-E CSR 8422-E CSR 8423-E CSR 8424-E CSR 8425-E CSR 8426-E CSR 8427-E CSR 8428-E CSR 8429-E CSR 8430-E CSR 8431-E CSR 8432-E CSR 8433-E CSR 8434-E CSR 8435-E CSR 8436-E CSR 8437-E MEMORANDUM OPINION AND ORDER Adopted: April 21, 2011 Released: April 22, 2011 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Bresnan Communications, LLC (“Bresnan”), 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 Bresnan is subject to effective competition in those communities listed on Attachment A and hereinafter referred to as the “Communities.” Bresnan 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”).3 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,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 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 Bresnan states that its rates are not regulated in any of the Communities and that it is seeking formal exemption from the beginning of regulation under current conditions. Petition at 3 n.5. 4 47 C.F.R. § 76.906. 5 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b). Federal Communications Commission DA 11-726 2 within the relevant franchise area.6 For the reasons set forth below, we grant the petition based on our finding that Bresnan 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.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 It is undisputed that the Communities are “served by” both DBS providers, DIRECTV and DISH, and that these two MVPD providers are unaffiliated with Bresnan 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 Bresnan has provided sufficient evidence of DBS advertising in 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.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 copies of channel lineups for both DIRECTV and DISH.13 Also undisputed is Bresnan’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.14 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. Bresnan asserts that in some Communities it is the largest MVPD and in others one of the other MVPD providers is the largest and the combined household share of Bresnan and the other MVPDs exceeds 15 percent.15 The Commission has recognized that in those conditions, whichever MVPD is the 6 See 47 C.F.R. §§ 76.906-.907(b). 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 Petition at 4. 10 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 11 47 C.F.R. § 76.905(e)(2). 12 See 47 C.F.R. § 76.905(g). See also Petition at 7. 13 See Petition at Exh. 4. 14 See Petition at 4. 15 Petition at 8 & Exh. 1 (Declaration of Paul Jamieson, Managing Counsel, Legislative & Regulatory, Cablevision Systems Corp. (an affiliate of Bresnan), dated Feb. 8, 2011) at ¶ 3. Federal Communications Commission DA 11-726 3 largest, the remaining competitors have subscribership of over 15 percent.16 Bresnan 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.17 6. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2000 household data,18 as reflected in Attachment A, we find that Bresnan 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 Bresnan has submitted sufficient evidence demonstrating that both prongs of the competing provider test are satisfied and Bresnan 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 Bresnan Communications, LLC, IS GRANTED. 8. 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 16 If Bresnan is the largest MVPD, then MVPDs other than the largest one are the DBS providers, which have a combined share of over 15%. On the other hand, if one of the DBS providers is the largest MVPD, then Bresnan (which alone has over 15%) and the other DBS provider combined have over 15%. See, e.g., Time Warner Cable Inc., 25 FCC Rcd 14422, 14424, ¶ 6 (2010); Charter Commun., 21 FCC Rcd 1208, 1210, ¶ 5 (2006). 17 Petition at 10 n.33. 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. 18 Petition at Exh. 5. 19 47 C.F.R. § 0.283. Federal Communications Commission DA 11-726 4 ATTACHMENT A CSRs 8421-E, 8422-E, 8423-E, 8424-E, 8425-E, 8426-E, 8427-E, 8428-E, 8429-E, 8430-E, 8431-E, 8432-E, 8433-E, 8434-E, 8435-E, 8436-E, 8437-E COMMUNITIES SERVED BY BRESNAN COMMUNICATIONS, LLC Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers CSR 8421-E Big Horn County WY0047 30.71% 1488 457 Greybull WY0032 20.87% 781 163 CSR 8422-E Buffalo WY0008 26.19% 1718 450 Johnson County WY0048 84.80% 1138 965 CSR 8423-E Cody WY0006 17.38% 3791 659 Park County WY0040 65.06% 4276 2782 CSR 8424-E East Thermopolis WY0140 26.00% 150 39 Hot Springs County WY0148 63.54% 587 373 Thermopolis WY0003 33.08% 1342 444 CSR 8425-E Fremont County WY0039 WY0078 54.92% 5990 3290 Lander WY0001 17.14% 2794 479 Riverton WY0002 18.42% 3816 703 CSR 8426-E Washakie County WY0136 52.19% 1006 525 Worland WY0004 30.70% 2130 654 CSR 8427-E Weston County WY0152 56.62% 1012 573 Newcastle WY0045 61.37% 1253 769 CSR 8428-E Albany County WY0156 52.20% 1839 960 CSR 8429-E Bar Nunn WY0131 26.35% 315 83 CSR 8430-E Campbell County WY0046 56.10% 4342 2435 CSR 8431-E Laramie County WY0041 40.38% 8316 3358 Federal Communications Commission DA 11-726 5 Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers CSR 8432-E Natrona County WY0056 40.26% 3929 1582 CSR 8433-E Powell WY0007 16.13% 2083 336 CSR 8434-E Rawlins WY0022 35.63% 3320 1183 CSR 84335-E Sheridan County WY0057 46.26% 3558 1646 CSR 8436-E Teton County WY0050 WY0052 18.14% 4057 736 CSR 8437-E Cedar City UT0039 46.38% 6486 2833 Iron County UT0258 56.34% 1954 1101 *CPR = Percent of competitive DBS penetration rate.