Federal Communications Commission DA 13-1582 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Bright House Networks, LLC Petitions for Determination of Effective Competition in 12 Communities in Florida ) ) ) ) ) ) MB Docket No. 13-62, CSR 8768-E MB Docket No. 13-67, CSR 8771-E MB Docket No. 13-70, CSR 8774-E MEMORANDUM OPINION AND ORDER Adopted: July 11, 2013 Released: July 16, 2013 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Bright House Networks, LLC, hereinafter referred to as “Petitioner,” has filed with the Commission several 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 those communities listed on Attachment A and hereinafter referred to as the “Attachment A Communities.”1 Petitioner alleges that its cable system serving the Attachment A Communities is subject to effective competition pursuant to Section 623(l)(1)(B) of the Communications Act of 1934, as amended (“Communications Act”),2 and the Commission’s implementing rules,3 and is therefore exempt from cable rate regulation in the Attachment A Communities because of the competing service provided by two direct broadcast satellite (“DBS”) providers, DIRECTV, Inc. (“DIRECTV”), and DISH Network (“DISH”). Petitioner additionally claims to be exempt from cable rate regulation in the community listed on Attachment B and hereinafter referred to as the “Attachment B Community,” pursuant to Section 623(l)(1)(A) of the Communications Act4 and Section 76.905(b)(1) of the Commission’s rules,5 because the Petitioner serves fewer than 30 percent of the households in the franchise area. 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,6 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.7 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.8 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 Attachments A and B. 1 The two communities of Grant and Valkaria incorporated into the Town of Grant-Valkaria on July 25, 2006. See The Town of Grant-Valkaria, Florida, available at http://www.grantvalkaria.org/. 2 See 47 U.S.C. § 543(l)(1)(B). 3 47 C.F.R. § 76.905(b)(2). 4 See 47 U.S.C. § 543(l)(1)(A). 5 47 C.F.R. § 76.905(b)(1). 6 Id. § 76.906. 7 See 47 U.S.C. § 543(l); 47 C.F.R. § 76.905. 8 See 47 C.F.R. §§ 76.906-.907(b). Federal Communications Commission DA 13-1582 2 II. DISCUSSION A. The Competing Provider Test 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 multichannel 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.9 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.10 It is undisputed that the Attachment A 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.11 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.12 We further find that Petitioner has provided sufficient evidence to support its assertion that potential customers in those Attachment A Communities are reasonably aware that they may purchase the service of these MVPD providers.13 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,14 and is supported in these petitions with copies of channel lineups for both DIRECTV and DISH.15 Also undisputed is Petitioner’s assertion that both DIRECTV and DISH offer service to at least “50 percent” of the households in the Attachment A Communities because of their national satellite footprint.16 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, exceed 15 percent of the households in a franchise area. Petitioner asserts that it is the largest MVPD in the Attachment A Communities.17 Petitioner sought to determine the competing provider penetration in those 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 Attachment A Communities on a zip 9 47 U.S.C. § 543(l)(1)(B); 47 C.F.R. § 76.905(b)(2). 10 47 U.S.C. § 543(l)(1)(B)(i); 47 C.F.R. § 76.905(b)(2)(i). 11 See Petitions at 3-5. 12 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 13 47 C.F.R. § 76.905(e)(2). 14 See 47 C.F.R. § 76.905(g); see also CSR-8768-E and CSR-8774-E Petitions at 5; CSR-8771-E Petition at 5-6. 15 See Petitions at Exh. 1. 16 See CSR-8768-E and CSR-8774-E Petitions at 2-3; CSR-8771-E Petition at 3. 17 See CSR-8768-E and CSR-8774-E Petitions at 7 and Exh. 5; CSR-8771-E Petition at 8 and Exh. 5. Federal Communications Commission DA 13-1582 3 code plus four basis.18 6. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2010 household data,19 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 Attachment A Communities. Therefore, the second prong of the competing provider test is satisfied for each of the Attachment A 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 Attachment A Communities. B. The Low Penetration Test 7. Section 623(l)(1)(A) of the Communications Act provides that a cable operator is subject to effective competition if the Petitioner serves fewer than 30 percent of the households in the franchise area. This test is referred to as the “low penetration” test.20 Petitioner alleges that it is subject to effective competition under the low penetration effective competition test because it serves less than 30 percent of the households in the Attachment B Community.21 8. Based upon the subscriber penetration levels calculated by Petitioner, as reflected in Attachment B, we find that Petitioner has demonstrated that the percentage of households subscribing to its cable service is less than 30 percent of the households in the Attachment B Community. Therefore, the low penetration test is satisfied as to the Attachment B Community. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Bright House Networks, LLC ARE GRANTED for the Attachment A and B Communities. 10. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to any of the Communities set forth on Attachments A and B IS REVOKED. 11. This action is taken pursuant to delegated authority pursuant to Section 0.283 of the Commission’s rules.22 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 18 CSR-8768-E and CSR-8774-E Petitions at 6-7; CSR-8771-E Petition at 6-8. 19 Petitions at 7-8 and Exh. 7. 20 47 U.S.C. § 543(l)(1)(A). 21 CSR-8771-E Petition at 9 and Exh. 8. 22 47 C.F.R. § 0.283. Federal Communications Commission DA 13-1582 4 ATTACHMENT A COMMUNITIES SERVED BY BRIGHT HOUSE NETWORKS, LLC MB Docket No. 13-62, CSR 8768-E Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Brevard County FL0014 16.12% 86,195 13,895 Grant-Valkaria FL1348 22.68% 1,587 360 MB Docket No. 13-67, CSR 8771-E Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Edgewater FL0118 15.80% 8,786 1,388 Flagler County FL0697 27.99% 5,767 1,614 New Smyrna Beach FL0125 15.22% 11,074 1,686 Port Orange FL0060 15.14% 24,841 3,761 South Daytona FL0061 15.51% 5,532 858 MB Docket No. 13-70, CSR 8774-E Communities CUIDs CPR* 2010 Census Households Estimated DBS Subscribers Lake Mary FL0599 15.86% 5,329 845 Oviedo FL0687 20.18% 11,125 2,245 Seminole County FL0322 18.81% 79,233 14,900 Winter Springs FL0190 16.57% 13,101 2,171 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 13-1582 5 ATTACHMENT B COMMUNITY SERVED BY BRIGHT HOUSE NETWORKS, LLC MB Docket No. 13-67, CSR 8771-E Community CUID Franchise Area Households Cable Subscribers Penetration Percentage DeBary FL1183 8,065 857 10.63%