Federal Communications Commission DA 11-491 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Time Warner Cable Inc. Petitions for Determination of Effective Competition in Communities in Ohio and Kentucky ) ) ) ) ) ) ) CSR 8380-E CSR 8381-E CSR 8388-E CSR 8389-E MEMORANDUM OPINION AND ORDER Adopted: March 14, 2011 Released: March 15, 2011 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Time Warner Cable, Inc., hereinafter referred to as “Petitioner,” has filed with the Commission four 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.” 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”)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”). Petitioner additionally claims to be exempt from cable rate regulation in the Communities listed on Attachment B and hereinafter referred to as Attachment B Communities, pursuant to Section 623(l)(1)(B) of the Communications Act 3and Section 76.905(b)(1) of the Commission’s rules,4 because the Petitioner serves fewer than 30 percent of the households in the franchise area.5 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 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 See 47 U.S.C. § 543(l)(1)(A). 4 47 C.F.R. § 76.905(b)(1). 5 Time Warner has requested that 9 communities in CSR 8388-E be withdrawn. Letter from Craig Gilley, Esq., Fleischman and Harding LLP, counsel for Time Warner, to Steven A. Broeckaert, Senior Deputy Chief, Policy Division, Media Bureau (dated Jan. 31, 2011). There is no opposition to the request, and we grant it. 6 47 C.F.R. § 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 11-491 2 finding that Petitioner is subject to effective competition in the Communities listed on Attachments A and B. 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 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.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 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 programming13 and is supported in these petitions with copies of channel lineups for both DIRECTV and DISH.14 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.15 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.16 Petitioner sought to determine the competing provider penetration in there 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 code plus four basis.17 9 47 U.S.C. § 543(l)(1)(B); see also 47 C.F.R. § 76.905(b)(2). 10 47 C.F.R. § 76.905(b)(2)(i). 11 See, e.g., Petition in CSR 8380-E at 3-5. 12 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 13 See 47 C.F.R. § 76.905(g). See, e.g., Petition in CSR 8381-E at 5-6. 14 See, e.g., Petition in CSR 8388-E at 6-7. 15 See, e.g., Petition in CSR 8389-E at 7. 16 See, e.g., Petition in CSR 8380-E at 7. 17 See, e.g., Petition in CSR 8381-E at 7. Federal Communications Commission DA 11-491 3 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 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.19 Petitioner alleges that it is subject to effective competition under the low penetration effective competition test because it serves less that 30 percent of the households in the Attachment B Communities. 8. Based upon the subscriber penetration level calculated by Petitioner, as reflected in Attachment B, we find that Petitioner has demonstrated the percentage of households subscribing to its cable service is less than 30 percent of the households in the Attachment B Communities.20 Therefore, the low penetration test is satisfied as to the Attachment B Communities. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petitions for a determination of effective competition filed in the captioned proceeding by Time Warner Cable Inc., ARE GRANTED. 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 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.21 FEDERAL COMMUNICATIONS COMMISSION Steven A. Broeckaert Senior Deputy Chief, Policy Division, Media Bureau 18 See, e.g., Petition in CSR 8388-E at Exh. B. 19 47 U.S.C. § 543(l)(1)(A). 20 We note that in several of the Attachment B Communities (St. Mary’s Township, Jefferson Township, Henry Township, and Northwood City) our low penetration finding is close to the statutory threshold. We are constrained by the statute to nevertheless determine the existence of effective competition. We further note that household information based on the 2010 Census is or will soon be available. If any of these Communities believes that effective competition is no longer present within its franchise area, it may file a petition for recertification pursuant to Section 76.916 of the Commission’s rules. 47 C.F.R. § 76.916. 21 47 C.F.R. § 0.283. Federal Communications Commission DA 11-491 4 ATTACHMENT A CSRs 8380-E, 8381-E, 8388-E, 8389-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers CSR 8380-E Roundhead Township OH2162 47.14% 280 132 CSR 8381-E Adelphi Village OH0768 25.00% 156 39 Harrison Township OH2614 30.57% 471 144 Huntington Township OH0423 17.60% 2199 387 Liberty Township OH1726 23.94% 965 231 Nile Township OH1188 38.87% 764 297 Pee Pee Township OH2649 34.55% 1291 446 Piketon Township OH0535 31.31% 693 217 Springfield Township OH2637 23.68% 929 220 Union Township OH2640 17.80% 2613 465 Waverly Township OH0182 17.01% 2028 345 CSR 8388-E Concord Township OH2204 48.62% 1300 632 Deer Creek Township OH0827 41.10% 382 157 Hamilton Township OH0877 29.87% 1798 537 Harrison Township OH3009 OH2911 40.58% 653 265 Hopewell Township OH1984 OH2988 45.29% 1029 466 Liberty Township (Delaware County) OH2909 36.48% 3407 1243 Murray City Village OH0495 40.53% 190 77 Newton Township OH0273 27.26% 1948 531 North Bloomfield OH1343 45.77% 697 319 Pataskala OH0944 31.87% 3922 1250 Perry Township OH0203 OH3016 30.45% 867 264 Pleasant Township (Fairfield County) OH0407 30.46% 1855 565 Powell City OH1470 OH1664 18.18% 1975 359 Shawnee Hills Village OH2461 17.13% 181 31 Washington Township (Muskingum County) OH0158 OH1852 16.75% 1606 269 Wayne Township OH0159 OH2643 OH2886 16.51% 1738 287 Federal Communications Commission DA 11-491 5 Communities CUIDs CPR* 2000 Census Households Estimated DBS Subscribers CSR 8389-E Arlington Village OH1032 19.04% 520 99 Attica Village OH1365 40.20% 393 158 Center Township OH3028 44.86% 399 179 Clay Township OH0913 43.26% 1061 459 Clinton Township OH1039 25.32% 1560 395 Clyde City OH0031 22.96% 2304 529 Fostoria City OH0034 OH2286 OH2292 17.21% 5565 958 Green Springs Village OH1044 OH1245 19.64% 443 87 Harpster Village OH2285 17.65% 85 15 Liberty Township OH0444 OH2884 OH3030 OH2761 23.99% 2363 567 Marion Township OH0443 32.92% 881 290 Marseilles Village OH2900 29.17% 48 14 Millbury Village OH1182 42.99% 421 181 New Washington Village OH1369 20.87% 393 82 Perry Township OH0552 27.85% 736 205 Rawson Village OH1248 15.09% 159 24 Upper Sandusky City OH0042 26.24% 2744 720 Washington Township OH3021 43.71% 636 278 Wayne Village OH1459 20.77% 313 65 West Millgrove Village OH2217 56.00% 25 14 Weston Township OH3034 37.87% 272 103 *CPR = Percent of competitive DBS penetration rate. Federal Communications Commission DA 11-491 6 ATTACHMENT B CSRs 8380-E, 8381-E, 8388-E, 8389-E COMMUNITIES SERVED BY TIME WARNER CABLE INC. Communities CUIDs Franchise Area Households Cable Subscribers Penetration Percentage CSR 8380-E Clay Township OH2994 251 31 12.35% Goshen Township OH2399 187 35 18.72% Jennings Township (Van Wert County) OH3023 228 6 2.63% Jennings Township (Putnam County) OH3013 492 1 0.20% Liberty Township OH3014 408 3 0.74% Logan Township OH2442 325 2 0.62% Marion Township OH1144 1012 184 18.18% Monroe Township OH1238 607 70 11.53% Moulton Township OH2443OH2439 587 6 1.02% Noble Township OH2440 427 3 0.70% Pusheta Township OH2995 444 12 2.70% Richland Township OH1413 658 11 1.67% St. Marys Township OH2437 1384 411 29.70% City of St. Marys OH0050 3218 685 21.29% Sugar Creek Township OH3018OH1751 404 69 17.08% Union Township (Auglaize County) OH2398 592 1 0.17% Union Township (Mercer County) OH2412 300 17 5.67% Washington Township (Auglaize County) OH2441 367 3 0.82% Washington Township (Van Wert County) OH3024 1592 155 9.74% Willshire Township OH2410 375 2 0.53% CSR 8381-E Centerville Township OH3047 134 19 14.18% Colerain Township OH1976 565 17 3.01% Concord Township OH3065 1102 141 12.79% Franklin Township OH1998 616 100 16.23% Green Township (Adams County) OH2993 266 4 1.50% Green Township (Ross County) OH2931 OH3066 3460 728 21.04% Unincorporated Greenup County KY0148 6630 431 6.50% Federal Communications Commission DA 11-491 7 Communities CUIDs Franchise Area Households Cable Subscribers Penetration Percentage CSR 8381-E continued Jefferson Township OH2192 382 108 28.27% Laurelville, Village of OH0769 256 40 15.63% Unincorporated Lewis County KY0202 4737 98 2.07% Madison Township OH3057 836 36 4.31% Raccoon Township OH2527 490 3 0.61% Salt Creek Township (Hocking County) OH3054 459 5 1.09% Salt Creek Township (Pickaway County) OH3054 324 35 10.80% Scioto Township OH2251 5940 127 2.14% Seal Township OH1183 1098 64 5.83% CSR 8388-E Allen Township OH1556 512 3 0.59% Auglaize Township OH2784 843 20 2.37% Berlin Township OH2120OH2998 1180 63 5.34% Big Island Township OH2989 475 4 0.84% Blendon Township OH3001 2841 12 0.42% Blue Rock Township OH3061 249 7 2.81% Bokescreek Township OH2406 193 3 1.55% Bowling Green Township OH3004 204 2 0.98% Buck Township OH3002 2428 4 0.16% Canaan Township OH2888 591 111 18.78% Cass Township OH3008 509 97 19.06% Chester Township OH1857 1605 1 0.06% Clay Township OH2984OH2754 353 5 1.42% Clayton Township OH2889 500 47 9.40% College Township OH2985 143 34 23.78% Green Camp Township OH3005 1163 4 0.34% Harmony Township OH1855 714 4 0.56% Hilliar Township OH2986 546 74 13.55% Holmes Township OH0475 505 2 0.40% Howard Township OH1985 1682 194 11.53% Jackson Township OH2990OH3010 655 45 6.87% Jefferson Township OH3011 160 3 1.88% Lafayette Township OH2996 766 5 0.65% Leesburg Township OH2908 407 46 11.30% Liberty Township (Union County) OH2910 585 85 14.53% Liberty Township (Fairfield County) OH1390 1539 74 4.81% Federal Communications Commission DA 11-491 8 Communities CUIDs Franchise Area Households Cable Subscribers Penetration Percentage CSR 8388-E continued Liberty Township (Knox County) OH2755 526 33 6.27% Lincoln Township OH1854 576 4 0.69% Linton Township OH2997 196 6 3.06% Lykens Township OH2980 238 2 0.84% MadisonTownship OH3012 185 3 1.62% Marion Township OH1787 2401 7 0.29% Middlebury Township OH2115 369 2 0.54% Mifflin Township OH3035 248 2 0.81% Morgan Township OH3060 303 3 0.99% Morris Township OH2116 715 2 0.28% Muskingum Township OH0813OH1465 1399 55 3.93% Orange Township OH2999 12464 3 0.02% Oxford Township OH3000 295 2 0.68% Peru Township OH1853 439 7 1.59% Pleasant Township (Marion County) OH2912 1162 139 11.96% Pleasant Township (Knox County) OH2316 464 4 0.86% Pleasant Township (Franklin County) OH1176 2424 163 6.72% Pleasant Township (Madison County) OH0908 506 9 1.78% Pleasant Township (Perry County) OH3063 298 3 1.01% Porter Township OH2890 579 89 15.37% Richland Township (Wyandot County) OH2416 198 44 22.22% Richland Township (Marion County)_ OH3006 602 3 0.50% Salem Township OH2415 243 5 2.06% Scioto Township OH1897 767 3 0.39% South Bloomfield Township OH1856 504 6 1.19% Troy Township OH3052 816 86 10.54% Waldo Township OH3007 264 2 0.76% Ward Township OH3055 397 1 0.25% Washington Township (Licking County) OH3026 313 11 3.51% CSR 8389-E Bloom Township OH3027OH3025 320 33 10.31% Cass Township OH2982 1098 142 12.93% Damascus Township OH3003 379 3 0.79% Federal Communications Commission DA 11-491 9 Communities CUIDs Franchise Area Households Cable Subscribers Penetration Percentage CSR 8389-E continued Delaware Township OH2019 271 14 5.17% Freedom Township OH1581 472 56 11.86% Groton Township OH2891 500 14 2.80% Henry Township OH3029 256 57 22.27% Madison Township OH0443 435 45 10.34% Marseilles Township OH2991 128 2 1.56% Milton Township OH3031 236 3 1.27% Northwood City OH1082 2024 480 23.72% Oregon City OH3075 7708 1 0.01% Perrysburg Township OH1190 5161 278 5.39% Plain Township OH2885 616 5 0.81% Pleasant Township OH3022OH1036 282 38 13.48% Portage Township OH2983OH3032 363 33 9.09% Reed Township OH2014 341 45 13.20% Scott Township OH3020 532 1 0.19% Sherman Township OH3017 172 1 0.58% Thompson Township OH1046 2383 100 4.20% Webster Township OH3034 434 2 0.46%