Federal Communications Commission DA 11-946 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of MCC Iowa LLC Petitions for Determination of Effective Competition in various Iowa Communities ) ) ) ) ) ) ) CSR 8271-E CSR 8287-E CSR 8289-E CSR 8290-E CSR 8293-E MEMORANDUM OPINION AND ORDER Adopted: May 23, 2011 Released: May 25, 2011 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. MCC Iowa LLC, 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 the communities listed on Attachment A and hereinafter referred to as the “Communities.” Petitioner alleges that its cable systems serving the Communities are 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 are 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 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). Federal Communications Commission DA 11-946 2 households in the franchise area.6 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.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 programming11 and is supported in these petitions with website 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 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 the Communities. Based on the foregoing, we conclude that 6 47 U.S.C. § 543(l)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 7 47 C.F.R. § 76.905(b)(2)(i). 8 See e.g., Petition in CSR 8271-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, e.g., Petition in CSR 8271-E at 4-5. 12 See, e.g., Petition in CSR 8287- E at 6. 13 See, e.g., Petition in CSR 8289-E at 6-7. 14 See, e.g., Petition in CSR 8290-E at 7. 15 See, e.g., Petition in CSR 8293-E at 7-8. 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 CSR 8271-E at 7. Federal Communications Commission DA 11-946 3 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 petitions for a determination of effective competition filed in the captioned proceeding by MCC Iowa LLC ARE GRANTED. 8. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to 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 11-946 4 ATTACHMENT A CSR 8271-E, 8287-E, 8289-E, 8290-E, 8293-E COMMUNITIES SERVED BY MCC IOWA LLC Communities CUID CPR* 2000 Census Households Estimated DBS Subscribers CSR 8271-E Mason City IA0074 17.23% 12,368 2,131 CSR 8287-E Riverside IA0543 19.31% 378 73 Wellman IA0310 18.03% 549 99 CSR 8289-E Clinton IA0033 20.28% 11,427 2,317 Morrison IA0329 23.34% 1,787 417 Fulton IA0250 17.51% 1,582 277 Savanna IA0330 20.80% 1,558 324 Albany IA0331 17.19% 349 60 Thomson IA0882 19.23% 234 45 CSR 8290-E West Burlington IA0110 16.95% 1,434 243 Danville IA0295 23.58% 352 83 CSR 8293-E New London IA0297 28.59% 794 227 West Point IA0205 17.84% 426 76 Westwood IA0856 36.96% 46 17 *CPR = Percent of competitive DBS penetration rate.