Federal Communications Commission DA 16-437 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Comcast Cable Communications, LLC Petitions for Determination of Effective Competition in Various Massachusetts Communities ) ) ) ) ) ) ) ) ) ) ) ) MB 13-157, CSR 8803-E MB 13-158, CSR 8804-E MB 13-159, CSR 8805-E MB 13-160, CSR 8806-E MB 13-161, CSR 8807-E MB 13-167, CSR 8809-E MB 13-168, CSR 8810-E MB 13-169, CSR 8811-E MB 13-170, CSR 8812-E MB 13-172, CSR 8814-E MB 13-180, CSR 8817-E MEMORANDUM OPINION AND ORDER Adopted: April 21, 2016 Released: April 21, 2016 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Comcast Cable Communications, LLC (“Comcast”) 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 Comcast is subject to effective competition in the communities listed on Attachment A (the “Communities”). Comcast 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 that it 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”), as well as Verizon. The Massachusetts Department of Telecommunications and Cable (“MDTC”) and the Town of Hull, Massachusetts (“Hull”) filed oppositions to the petitions.3 Comcast filed replies. In addition, the MDTC filed a revised Form 328 seeking to remain certified to regulate rates in several communities, including one of the Communities at issue in this proceeding, Templeton.4 Herein we address that Form 328 insofar as it pertains to Templeton. 2. In June 2015, a Commission order adopted a rebuttable presumption that cable operators are subject to one type of effective competition, commonly referred to as competing provider effective competition.5 Accordingly, in the absence of a demonstration to the contrary, the Commission now 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 We refer to these pleadings as “MDTC Comments” and “Hull Comments.” 4 See MDTC Form 328 (filed Dec. 8, 2015), available at http://apps.fcc.gov/ecfs/proceeding/view?name=INBOX- 76.910. 5 See Amendment to the Commission’s Rules Concerning Effective Competition; Implementation of Section 111 of the STELA Reauthorization Act, Report and Order, 30 FCC Rcd 6574 (2015) (“Effective Competition Order”). Federal Communications Commission DA 16-437 2 presumes that cable systems are subject to competing provider effective competition, and it continues to presume that cable systems are not subject to any of the other three types of effective competition, as defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.6 For the reasons set forth below, we grant Comcast’s petitions. II. 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.7 This test is referred to as the “competing provider” test. Pursuant to the Effective Competition Order, absent evidence to the contrary, the Commission presumes that the competing provider test is met. A. The First Part 4. The first part 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 As explained in the Effective Competition Order, “we find that the ubiquitous nationwide presence of DBS providers, DIRECTV and DISH, presumptively satisfies the” first part of the test for competing provider effective competition, absent evidence to the contrary.9 The MDTC and Hull have not put forth any information to rebut the first part of the competing provider effective competition test. In accordance with the presumption of competing provider effective competition, and based on the information submitted by Comcast, we thus find that the first part of the test is satisfied. B. The Second Part 5. The second part 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.10 As explained in the Effective Competition Order, “[w]ith regard to the second prong of the test, we will presume that more than 15 percent of the households in a franchise area subscribe to programming services offered by MVPDs other than the largest MVPD.”11 The MDTC and Hull argue that Comcast’s data is inaccurate and unreliable, yielding penetration rates of more than 100 percent in many franchise areas.12 Comcast responds that the MDTC and Hull overstate the cumulative subscriber 6 See 47 U.S.C. § 543(l)(1); 47 C.F.R. §§ 76.905(b), 76.906. 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 Effective Competition Order, 30 FCC Rcd at 6580-81, ¶ 8. 10 47 C.F.R. § 76.905(b)(2)(ii). 11 Effective Competition Order, 30 FCC Rcd at 6581-82, ¶ 9. 12 MDTC Comments at 2-3; Hull Comments at 2-3. The MDTC requests that the Commission dismiss Comcast’s petitions, at least with regard to the 21 franchise areas where Comcast’s data allegedly yields penetration rates that exceed 100 percent. Those franchise areas are: Billerica (MA 0079), Duxbury (MA0302), Easton (MA 0233), Lakeville (MA 0278), North Andover (MA 0102), Marblehead (MA 0263), Middleton (MA 0223), Topsfield (MA 0288), Cohasset (MA 0207), Hanover (MA 0244), Hull (MA 0205), Norwell (MA 0206), Dover (MA 0314), Foxborough (MA 0176), Norfolk (MA 0248), Wrentham (MA 0203), Weston (MA 0268), Stow (MA 0256), Bellingham (MA 0221), Hopedale (MA 0218), and Mendon (MA 0252). Federal Communications Commission DA 16-437 3 counts by including commercial, seasonal, and dual13 subscribers in MDTC’s subscriber numbers, and by excluding new occupied households that were not reported in the 2010 Census, which erroneously inflated the cumulative MVPD penetration rate.14 Comcast maintains, however, that the alleged subscriber surplus does not in any way impact the competing provider test because the 15 percent threshold under the statutory test is exceeded in every community.15 Further, Comcast objects to the MDTC and Hull’s request that the Commission dismiss the petitions because, unlike instances in which the Commission denied petitions where the stated subscriber numbers exceeded the number of households,16 here Comcast utilized the more detailed and reliable nine-digit zip code plus four data.17 6. We recognize that including dwellings that do not count as “households,” such as seasonal homes, could have at least some impact on competing provider subscriber figures. More significantly, however, the MDTC and Hull do not dispute that the 15 percent threshold necessary to demonstrate competing provider effective competition is present.18 The evidence submitted by the MDTC and Hull is not specific or significant enough to demonstrate a lack of competing provider effective competition, particularly given the new presumption regarding the presence of this type of effective competition. 7. Subsequent to the filing of Comcast’s petition, the Commission in the Effective Competition Order required all franchising authorities with existing certifications that wished to remain certified to file a revised Form 328, including a showing rebutting the presumption of competing provider effective competition.19 The MDTC filed a revised Form 328 seeking to remain certified to regulate rates for several franchise areas, including one of the Communities at issue in this proceeding, Templeton. In its revised Form 328, the MDTC asserts that the number of households subscribing to DBS does not exceed 15 percent of the households in the franchise area.20 In particular, with regard to Templeton, the MDTC argues that the DBS subscribership must be reduced by the high percentage of seasonal homes in that community as compared to total housing units.21 As stated above, we recognize that including dwellings that do not count as “households,” such as seasonal homes, could have at least some impact on competing provider subscriber figures. We find, however, that the evidence the MDTC submitted regarding seasonal homes is not specific or significant enough to demonstrate a lack of competing 13 We use the term “dual subscribers” to reference those subscribing to more than one MVPD. The Commission permits the inclusion of dual subscribers in the competing MVPD penetration calculation, even though their inclusion necessarily inflates the cumulative number of MVPD subscribers in each community and the overall penetration rate. See Comcast Replies at 9, citing Mediacom Minnesota LLC, 20 FCC Rcd 4984, 4988, ¶ 13 (2005). 14 Comcast Replies at 2, 5-9, Attachment B (Declaration of Mark Renaud, Director, Regulatory Accounting, Comcast Cable Communications, LLC). 15 Id. at 3. 16 See, e.g., Time Warner Cable Inc., and Time Warner Entertainment–Advance/Newhouse Partnership, 23 FCC Rcd 12069, 12072, ¶ 10 (MB 2008), reconsideration denied, 23 FCC Rcd 16483 (MB 2008). 17 Comcast Replies at 12-13, citing Time Warner Cable Inc., 25 FCC Rcd 14422, 14424, ¶ 8 (MB 2010); Time Warner Cable Inc., and Time Warner Entertainment–Advance/Newhouse Partnership, 23 FCC Rcd at 12072. 18 Notwithstanding Comcast’s explanation for the alleged subscriber surplus, we urge Comcast to make its petitions as accurate as possible. 19 Effective Competition Order, 30 FCC Rcd at 6592, ¶¶ 27-28 (“If a currently certified franchising authority files revised Form 328 and there is a pending cable operator Effective Competition petition . . . the Media Bureau will consider the record from that filing along with the new certification in making its determination regarding whether the franchising authority has overcome the presumption of Competing Provider Effective Competition.”). 20 MDTC Form 328, Attachment 3, Attachment to Question 6(a) at 3. 21 MDTC Form 328, Attachment 3, Attachment to Question 6(a) at 5. Federal Communications Commission DA 16-437 4 provider effective competition, particularly given the new presumption regarding the presence of this type of effective competition. 8. For the above reasons, the arguments put forth by the MDTC and Hull fail to rebut the presumption of competing provider effective competition. In accordance with the presumption of competing provider effective competition, and based on the information submitted by Comcast, the MDTC, and Hull we thus find that the second prong of the test is satisfied. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Comcast Cable Communications, LLC ARE GRANTED as to the Communities listed on Attachment A hereto. 10. IT IS FURTHER ORDERED that the certification to regulate basic cable service rates granted to or on behalf of any of the Communities set forth on Attachment A IS REVOKED. 11. IT IS FURTHER ORDERED that the Form 328 certification request filed by the Massachusetts Department of Telecommunications and Cable IS DENIED with regard to Templeton, Massachusetts. 12. 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 22 47 C.F.R. § 0.283. Federal Communications Commission DA 16-437 5 ATTACHMENT A CSR 8803-E, 8804-E, 8805-E, 8806-E, 8807-E, 8809-E, 8810-E, 8811-E, 8812-E, 8814-E, 8817-E COMMUNITIES SERVED BY COMCAST CABLE COMMUNICATION, LLC Community CUIDS DBS Subscribers Verizon Subscribers 23 2010 Census Households Estimated DBS and Verizon Penetration MB 13-157, CSR 8803-E Duxbury MA0302 242 2150 5344 44.76% MB 13-158, CSR 8804-E Easton MA0233 164 2339 7865 31.82% MB 13-159, CSR 8805-E Lakeville MA0278 151 1628 3725 47.76% MB 13-160, CSR 8806-E Billerica MA0079 566 5011 14034 39.74% Chelmsford MA0147 442 3810 13313 31.94% MB 13-161, CSR 8807-E North Andover MA0102 309 3909 10516 40.11% MB 13-167, CSR 8809-E Danvers MA0279 439 4050 10615 42.29% Marblehead MA0263 190 2998 8144 39.15% Middleton MA0223 100 1086 2898 40.92% Topsfield MA0288 44 1265 2090 62.63% MB 13-168, CSR 8810-E Cohasset MA0207 92 879 2722 35.67% Hanover MA0244 135 2108 4709 47.63% Hingham MA0251 206 3172 8465 39.91% 23 Comcast obtained the Verizon subscribership figures from the MDTC’s website. See e.g., Comcast Petition in MB 13-168, CSR-8810-E at n. 25 (http://www.mass.gov/ocabr/government/oca-agencies/dtc-lp/competition- division/cable-tv-division/statistics-and-general--info/). Federal Communications Commission DA 16-437 6 Hull MA0205 167 1785 4630 42.16% Norwell MA0206 108 1330 3553 40.47% Randolph MA0212 1032 3573 11551 39.87% MB 13-169, CSR 8811-E Dover MA0314 77 882 1869 51.31% Foxborough MA0176 370 1788 6504 33.18% Norfolk MA0248 132 1740 3049 61.40% Walpole MA0220 349 4112 8730 51.10% Wrentham MA0203 227 1456 3703 45.45% MB 13-170, CSR 8812-E Wayland MA0267 107 2247 4808 48.96% Weston MA0268 127 1358 3776 39.33% MB 13-172, CSR 8814-E Ashby MA0262 277 1105 25.07% Leominster MA0017 1090 5343 16767 38.37% Maynard MA0146 172 1888 4239 48.60% Shirley MA0295 427 2264 18.86% Stow MA0256 95 1200 2429 53.31% Templeton MA0127 489 2882 16.97% MB 13-180, CSR 8817-E Ashland MA0231 319 2950 6385 51.20% Bellingham MA0221 384 2529 6155 47.33% Holliston MA0236 165 3050 4940 65.08% Hopedale MA0218 141 754 2194 40.79% Medway MA0189 142 2486 4435 59.26% Mendon MA0252 149 813 2022 47.58% Milford MA0181 691 3462 10872 38.20% Millis MA0174 203 1124 3030 43.80%