Federal Communications Commission DA 11-727 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 Montana ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CSR 8438-E CSR 8439-E CSR 8440-E CSR 8441-E CSR 8442-E CSR 8443-E CSR 8444-E CSR 8445-E CSR 8446-E CSR 8447-E CSR 8448-E CSR 8449-E CSR 8450-E CSR 8451-E CSR 8452-E CSR 8453-E CSR 8454-E CSR 8455-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, 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”) and, in Billings, Montana, USA Digital.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 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.2. 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 11-727 2 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. 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 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 We further find that Petitioner has provided sufficient evidence of DBS advertising in local and other 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 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.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 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. Federal Communications Commission DA 11-727 3 exceeds 15 percent.15 The Commission has recognized that in those conditions, whichever MVPD is the largest, the remaining competitors have subscribership of over 15 percent.16 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.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 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 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 Bresnan Communications, LLC, 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.19 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 15 Petition at 8 & Exh. 1 (Declaration of Paul Jamieson, Managing Counsel, Legislative & Regulatory, Cablevision Systems Corp. (an affiliate of Bresnan), dated Feb. 9, 2011) at ¶ 4. 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 9. 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. 6. 19 47 C.F.R. § 0.283. Federal Communications Commission DA 11-727 4 ATTACHMENT A CSRs 8438-E, 8439-E, 8440-E, 8441-E, 8442-E, 8443-E, 8445-E, 8446-E, 8447-E, 8448-E, 8449-E, 8450-E, 8451-E, 8452-E, 8453-E, 8454-E, 8455-E COMMUNITIES SERVED BY BRESNAN COMMUNICATIONS, LLC Communities CUIDs CPR* 2000 Census Households Estimated Competing Provider Subscribers 8438-E Anaconda-Deer Lodge MT0042 28.56% 3995 1141 8439-E Belgrade City MT0074 26.83% 2132 572 8440-E Billings MT0009 15.37% 37525 5767 8441-E Cut Bank MT0023 25.63% 1264 324 8442-E Kalispell MT0025 17.47% 6142 1073 8443-E Stevensville MT0094 61.50% 652 401 8444-E Townsend City MT0124 51.65% 786 406 8445-E Walkerville MT0052 19.87% 297 59 8446-E Beaverhead County MT0046 36.73% 1906 700 Dillon MT004 27.50% 1669 459 8447-E Columbia Falls MT0014 24.14% 1400 338 Big Fork MT0038 49.08% 652 320 Whitefish MT0013 15.16% 2229 338 8448-E Black Eagle MT0037 16.75% 418 70 Cascade County MT0201 54.24% 6763 3668 8449-E Clancy CDP MT0180 20.93% 540 113 Lewis and Clark County MT0006 42.75% 10618 4538 Jefferson County MT0182 44.68% 2798 1246 Federal Communications Commission DA 11-727 5 Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers 8450-E Livingston MT0007 22.76% 3084 702 Park County MT0050 48.85% 3607 1762 8451-E Havre MT0043 17.91% 4015 719 Hill County MT0075 15.19% 2377 361 84352-E Deer Lodge MT0003 28.36% 1442 409 Powell County MT0168 15.82% 980 155 8453-E Hamilton MT0020 32.34% 1772 573 Ravalli County MT0071 MT0152 67.45% 11447 7721 8454-E Ravalli County MT0172 67.45% 11447 7721 Lolo MT0064 36.37% 1218 443 Missoula County MT0045 MT0073 42.74% 14298 6111 8455-E Polson MT0017 28.92% 1739 503 Ronan MT0098 38.2% 699 267 * CPR = Percent of competitive DBS penetration rate.