Federal Communications Commission DA 13-572 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in 41 Communities in Pennsylvania ) ) ) ) ) ) ) ) MB Docket No. 12-148, CSR 8645-E MB Docket No. 12-149, CSR 8646-E MB Docket No. 12-185, CSR 8673-E MB Docket No. 12-209, CSR 8687-E MB Docket No. 12-210, CSR 8688-E MB Docket No. 12-211, CSR 8689-E MB Docket No. 12-224, CSR 8696-E MEMORANDUM OPINION AND ORDER Adopted: March 29, 2013 Released: March 29, 2013 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Comcast Cable Communications, LLC, hereinafter referred to as “Petitioner,” has filed with the Commission several petitions1 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”),2 and the Commission’s implementing rules,3 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,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 within the relevant franchise area.6 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 1 When necessary to distinguish between the six petitions, they will be referenced herein according to the first community listed. 2 See 47 U.S.C. § 543(l)(1)(B). 3 47 C.F.R. § 76.905(b)(2). 4 47 C.F.R. § 76.906. 5 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b). 6 See 47 C.F.R. §§ 76.906-.907(b). Federal Communications Commission DA 13-572 2 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 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 programming,12 and is supported in the petitions 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. Further, as Petitioner asserts, the Commission's rules provide that once the first prong of the competing provider test is satisfied, as it is with the DBS offerings in this case, the subscribers of all qualifying MVPDs count toward the 15 percent penetration figure necessary for a determination of effective competition, even if they are not available themselves to more than 50 percent of households.15 Therefore, Petitioner notes that the competing provider penetration figures for the Communities of Baldwin Borough, Baldwin Township, Bethel Park Borough, Brentwood Borough, Caln Township, Castle Shannon Borough, Churchill Borough, Derry Township, Dormont Borough, Downingtown Borough, Dublin Borough, East Brandywine Township, East Fallowfield Township, Edgmont Township, Fox Chapel Borough, Kennett Township, McCandless Township, Mount Lebanon Township, New Garden Township, New London Township, Peters Township, Pittsburgh City, Ross Township, Salford Township, Sellersville Borough, Silverdale Borough, Upper Salford Township, Upper St. Clair 7 47 U.S.C. § 543(l)(1)(B); 47 C.F.R. § 76.905(b)(2). 8 47 U.S.C. § 543(l)(1)(B)(i); 47 C.F.R. § 76.905(b)(2)(i). 9 See Petitions at 3-4. 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 Petitions at 5. 13 See Baldwin, Bedminster and Caln Petitions at Exhibit 2; Bethel Park, Churchill, Derry and Whitemarsh Petitions at Exhibit 1. 14 See Petitions at 3. 15 See Petitions at 5-6; see also 47 C.F.R. § 76.905(f); Time Warner Entertainment Co., LP et al. v. FCC, 56 F.3d 151, 189 (D.C. Cir. 1995). Federal Communications Commission DA 13-572 3 Township, Uwchlan Township, Valley Township, West Caln Township, Whitehall Borough, Whitemarsh Township and Wilkins Township, include subscribers from Verizon Communications Inc. (“Verizon”) as well as from the two DBS providers.16 Petitioner sought to determine the competing provider DBS 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 With respect to the communities of Baldwin Borough, Bedminster Township, Bethel Park, Brentwood, Castle Shannon, Derry, Dormont, Downington, Dublin, East Fallowfield, East Hanover Township, Edgmont, Elizabeth Township, Fox Chapel, Franklin, London Britain Township, McCandless, New Garden, New London, Peters, Pittsburgh, Ross, Salford, Sellersville, Silverdale, Upper Salford, Valley, West Caln, West Nantmeal Township, Whitehall and Wilkins, Petitioner asserts that it is the largest MVPD in those franchise areas.18 With respect to the communities of Baldwin Township, Caln, Churchill, East Brandywine, Kennett, Mount Lebanon, Upper St. Clair, Uwchian and Whitemarsh, Petitioner asserts that it serves in excess of 15 percent of the households in those communities, while competing providers serve an aggregate of more than 54 percent,19 52 percent,20 57 percent,21 58 percent,22 53 percent,23 47 percent,24 55 percent25, 54 percent26 and 37 percent,27 respectively, of the communities. 6. Based upon the aggregate DBS subscriber penetration levels that were calculated using Census 2010 household data,28 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 Baldwin Borough, Bedminster, Bethel 16 See Petitions at 6. Petitioner has requested that we treat as confidential certain data that was supplied by its competitor Verizon and that shows Verizon activity in some of the Communities. Baldwin, Bedminster and Caln Petitions at 6 n.24, Exh. 5; Bethel Park, Churchill, Derry and Whitemarsh Petitions at 6 n.23, Exh. 4. Businesses typically protect such data from disclosure, and no one has objected to confidential treatment. Accordingly, we grant the Petitioner's request. We believe that by combining Verizon's subscriber figures in the relevant Communities with the direct broadcast satellite figures provided by the Satellite Broadcasting and Communications Association, we will sufficiently protect the confidentiality of Verizon's subscriber figures. See, e.g., CoxCom, Inc., 22 FCC Rcd 4384 (MB 2007). We reserve the right, if another party requests access to the confidential data, to engage in a more formal process for their evaluation, protection, and limited disclosure. See, e.g., Adelphia Commun. Corp., 20 FCC Rcd 20073 (MB 2005); Sprint Petition for Pricing Flexibility for Special Access & Dedicated Transport Services, Protective Order, 20 FCC Rcd 19882 (WCB 2005). 17 Petitions at 6-8. 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. 18 See Baldwin, Bedminster, Bethel Park, Caln and Derry Petitions at 8; Churchill Petition at 7-8. 19 Baldwin Petition at 8, Exhibit 9. 20 Caln Petition at 8, Exhibit 9. 21 Churchill Petition at 8. 22 Caln Petition at 8, Exhibit 9. 23 Id. 24 Bethel Park Petition at 8. 25 Id. 26 Caln Petition at 8, Exhibit 9. 27 Whitemarsh Petition at 8. 28 Baldwin, Bedminster and Caln Petitions at Exhibits 8-9; Bethel Park, Churchill, Derry and Whitemarsh Petitions at Exhibits 7-8. Federal Communications Commission DA 13-572 4 Park, Brentwood, Castle Shannon, Derry, Dormont, Downington, Dublin, East Fallowfield, East Hanover, Edgmont, Elizabeth, Fox Chapel, Franklin, London Britain, McCandless, New Garden, New London, Peters, Pittsburgh, Ross, Salford, Sellersville, Silverdale, Upper Salford, Valley, West Caln, West Nantmeal, Whitehall and Wilkins. With regard to the communities of Baldwin Township, Churchill, Mount Lebanon, Upper St. Clair and Whitemarsh, we are able to conclude that this portion of the test is met by analyzing the data submitted for both the Petitioner and its MVPD competitors. If the subscriber penetration for both the Petitioner and the aggregate competing MVPD information each exceed 15 percent in the franchise area, the second prong of the competing provider test is satisfied.29 In Baldwin Township, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 54 percent,30 while in Caln, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 52.04 percent.31 In Churchill, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 57 percent,32 while in East Brandywine, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 58.25 percent.33 In Kennett, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 53.85 percent,34 while in Mount Lebanon, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 47.95 percent, 35 In Upper St. Clair, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 55.13 percent,36 while in Uwchlan, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 54.28 percent.37 Finally, in Whitemarsh, the Petitioner’s penetration rate is in excess of 15 percent and the combined competing MVPD provider penetration rate is 37 percent.38 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. 29 Charter Communications, 21 FCC Rcd 1208, 1210 (MB 2006); Time Warner Entertainment Advance/Newhouse Partnership, 17 FCC Rcd 23587, 23589 (MB 2002). 30 Baldwin Petition at 8, Exhibit 9. 31 Caln Petition at 8, Exhibit 9. 32 Churchill Petition at 8. 33 Caln Petition at 8, Exhibit 9. 34 Id. 35 Bethel Park Petition at 8. 36 Id. 37 Caln Petition at 8, Exhibit 9. 38 Whitemarsh Petition at 8. Federal Communications Commission DA 13-572 5 III. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceedings by Comcast Cable Communications, LLC ARE 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.39 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 39 47 C.F.R. § 0.283. Federal Communications Commission DA 13-572 6 ATTACHMENT A MB Docket No. 12-148, CSR 8645-E; MB Docket No. 12-149, CSR 8646-E; MB Docket No. 12-185, CSR 8673-E; MB Docket No. 12-209, CSR 8687-E; MB Docket No. 12-210, CSR 8688-E; MB Docket No. 12-211, CSR 8689-E; MB Docket 12-224, CSR 8696-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATIONS LLC Communities CUID CPR* 2010 Census Households Estimated Non- Comcast MVPD Subscribers Baldwin Borough PA0693 17.60% 8,669 1,526 Baldwin Township PA1105 54.18% 849 460 Bedminster Township PA2712 17.10% 2,403 411** Bethel Park Borough PA1231 30.88% 13,659 4,218 Brentwood Borough PA1215 43.75% 4,379 1,916 Caln Township PA0179 52.04% 5,259 2,737 Castle Shannon Borough PA0698 34.26% 3,902 1,337 Churchill Borough PA0580 57.67% 1,363 786 Derry Township PA0582 36.29% 9,637 3,497 Dormont Borough PA1106 40.66% 4,051 1,647 Downingtown Borough PA1045 41.27% 3,286 1,356 Dublin Borough PA2711 45.23% 902 408 Edgmont Township PA2518 31.48% 1,655 521 East Brandywine Township PA1907 58.25% 2,369 1,380 East Fallowfield Township PA1384 53.45% 2,640 1,411 East Hanover Township (Dauphin County) PA2279 27.81% 2,226 619** East Hanover Township (Lebanon County) PA2275 29.27% 1,025 300** Elizabeth Township PA0525 16.64% 5,578 928** Fox Chapel Borough PA1228 33.69% 2,063 695 Franklin Township PA2929 26.17% 1,433 375** Kennett Township PA1941 53.85% 2,986 1,608 London Britain Township PA2931 24.91% 1,092 272** McCandless Township PA0709 36.51% 11,659 4,257 Mount Lebanon Township PA1344 47.95% 14,196 6,807 New Garden Township PA1939 46.26% 3,694 1,709 New London Township PA2928 40.77% 1,739 709 Peters Township PA1519 51.39% 7,292 3,747 Pittsburgh City PA1855 24.15% 136,217 32,890 Ross Township PA0714 35.99% 14,125 5,084 Salford Township PA2387 47.97% 888 426 Federal Communications Commission DA 13-572 7 Sellersville Borough PA1383 40.27% 1,721 693 Silverdale Borough PA2710 43.75% 320 140 Upper Salford Township PA2388 45.58% 1,154 526 Upper St. Clair Township PA1459 55.13% 6,976 3,846 Uwchlan Township PA1582 54.28% 6,610 3,588 Valley Township PA0182 50.53% 2,656 1,342 West Caln Township PA2494 41.01% 3,260 1,337 West Nantmeal Township PA3058 21.10% 820 173** Whitehall Borough PA0889 37.96% 6,156 2,337 Whitemarsh Township PA1990 37.10% 6,744 2,502 Wilkins Township PA0598 51.84% 3,148 1,632 *CPR = Percent of competitive penetration rate of both DBS and, where applicable, Verizon. ** = only includes DBS subscribers