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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of:               )
                                   )Clearwater, FL
   Time Warner Entertainment-      )CUID No.  FL0492
      Advance/Newhouse Partnership    )
                                     )
Petition for Determination of   )
Effective Competition           )
                                 
                                 

                  MEMORANDUM OPINION AND ORDER

    Adopted:  December 11, 1996Released:  December 12, 1996

By the Chief, Cable Services Bureau:

   I.INTRODUCTION

      1.In the captioned proceeding, Time Warner-Advance/Newhouse Partnership ("Time
Warner") seeks a determination that Time Warner is subject to effective competition in Clearwater,
Florida ("Clearwater" or "City") due to the presence of GTE Media Ventures, Inc. ("GTE"), a
franchised cable operator also serving Clearwater.  The petition is unopposed.
     
      2.Section 623(a)(4) of the Communications Act of 1934, as amended
("Communications Act"), allows franchising authorities to become certified to regulate basic cable
service rates of cable operators that are not subject to effective competition.  For purposes of the
initial request for certification, local franchising authorities may rely on a presumption that cable
operators within their jurisdiction are not subject to effective competition unless they have actual
knowledge to the contrary.  Certification becomes effective 30 days from the date of filing unless
the Commission finds that the authority does not meet the statutory certification requirements.  In
Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, ("Cable Act
Reform Order"), the Commission instructed cable operators believing themselves subject to local
exchange carrier ("LEC") effective competition under Section 623(l)(1)(D) of the Communications
Act to file a petition for determination of effective competition pursuant to Section 76.7 of the
Commission's rules.  Section 623(l)(1)(D) of the Communications Act provides that a cable operator
is subject to effective competition where:

          a local exchange carrier or its affiliate (or any multichannel video
          programming distributor using the facilities of such carrier or its affiliate)
          offers video programming services directly to subscribers by any means
          (other than direct-to-home satellite services) in the franchise area of an
          unaffiliated cable operator which is providing cable service in that franchise
          area, but only if the video programming services so offered in that area are
          comparable to the video programming services provided by the unaffiliated
          cable operator in that area.

Successful LEC effective competition petitions will exempt a cable operator from rate regulation as
of February 8, 1996, the enactment date of the Telecommunications Act of 1996 (the "1996 Act").

  II.THE PLEADINGS

      3. Time Warner asserts that it is subject to LEC effective competition in its Clearwater,
FL franchise area.  With regard to the LEC affiliation requirement, Time Warner asserts that GTE
Media Ventures is a competing franchised cable operator wholly owned by GTE, a local exchange
carrier serving telephone customers in Clearwater and other parts of the United States.  GTE makes
available 77 channels of video programming on its Clearwater cable system.

      4.With regard to the requirement that the LEC competitor offer video programming
service in the unaffiliated cable operator's franchise area, Time Warner first asserts GTE is
physically able to offer service to subscribers in Clearwater.  Time Warner attaches a map prepared
by Time Warner employees, and based on their personal observations, that outlines the LEC's
construction plan.  Time Warner states that this map shows that GTE has already completed
construction in virtually all of the City.  Time Warner also asserts that, as of June 20, 1996, there are
no regulatory, technical, or other impediments to households taking service.  The operator states
that GTE became eligible to begin service to Clearwater residents on that date.  Time Warner also
asserts that potential subscribers in the franchise area are "reasonably aware" that they may purchase
GTE's service.  Time Warner states that GTE has generated extensive publicity about its new
Clearwater cable service through news releases, newspaper articles, and other marketing materials.

      5.Time Warner asserts that GTE offers comparable programming to Clearwater
subscribers.  Specifically, Time Warner provides GTE's channel line-up which demonstrates that
GTE offers 77 channels of programming, 11 of which are local television broadcasting signals. 
Time Warner points out that its system offers 70 channels in Clearwater.

 III.ANALYSIS 

      6.In the absence of a demonstration to the contrary, cable systems are presumed not to
be subject to effective competition as defined in the Communications Act.  The cable operator
bears the burden of rebutting the presumption that such effective competition does not exist and so
must provide evidence sufficient to demonstrate that effective competition, as defined by Section
76.905 of the Commission's rules, is present in the franchise area.  Time Warner has met this
burden.

      7.With regard to the first part of the LEC effective competition test, which requires that
the alleged competitive service be provided by a LEC or its affiliate (or any multi-channel video
programming distributor ("MVPD") using the facilities of such LEC or its affiliate), we find that
Time Warner has provided sufficient evidence demonstrating that GTE New Media is an MVPD
wholly owned by a LEC.  GTE is unquestionably a LEC as defined by the Communications Act,
and GTE Media Ventures meets the Commission's definition of MVPD.  Therefore, we find that
Time Warner satisfies the affiliation prong of the LEC effective competition test.  Time Warner is
unaffiliated with both GTE Media Ventures and GTE.

      8.We also find that Time Warner has submitted sufficient evidence that the
programming of GTE is comparable to that which it provides.  The channel line-up for GTE
submitted by Time Warner establishes that GTE offers 77 channels of programming, including 11
local broadcast channels; this satisfies the Commission's programming comparability criterion.

      9.To meet the LEC effective competition test, the alleged competitive service  must also
be offered directly to subscribers in the franchise area.  In enacting the LEC test, Congress indicated
that the Commission should apply its preexisting definition of the term "offer" to the new LEC
effective competition test.  Under that definition service is offered:

          (1) When the multichannel video programming distributor is physically able
          to deliver service to potential subscribers, with the addition of no or only
          minimal additional investment by the distributor, in order for an individual
          subscriber to receive service; and (2) When no regulatory, technical or other
          impediments to households taking service exist, and potential subscribers in
          the franchise area are reasonably aware that they may purchase the services
          of the multichannel video programming distributor.

      10.Based on the information before us, we find that GTE is offering service in
Clearwater sufficient to demonstrate the presence of effective competition.  Time Warner has
provided GTE's construction schedule (as found in its franchise agreement with the City) and maps
of wired areas demonstrating actual and planned offering of service by GTE.  GTE has wired more
than 75 percent of the City of Clearwater, with construction to be completed in three years.  While
the entire franchise area is still in the process of being wired, GTE's franchise agreement appears to
provide that GTE will construct its system throughout the City of Clearwater.  Under its 10 year
franchise, GTE is obligated to complete system construction three years after the date of the
franchise grant.  GTE also has a legal obligation to pay $50,000 to reimburse the City for the costs
incurred in connection with the award of the franchise, maintain a performance bond of $100,000,
provide the City with free cable service at police stations, fire stations, and courthouses, and abide
by rigorous customer service standards.   

     11.  GTE's aggressive marketing efforts, combined with the extensive press coverage of
GTE in the local media, ensure that potential subscribers are well aware of the availability of GTE's
service.  According to the documents attached to Time Warner's petition, in those areas wired and
marketed by GTE, potential subscribers need only contact GTE to activate service.  Moreover,
subscribers are able to receive service for only a minimal additional investment and without
regulatory, technical or other impediments.  We note that Time Warner has upgraded its cable plant
to 750 megahertz and has moved the Disney Channel to its expanded basic package.  In the
circumstances, consistent with Congressional intent in adopting Section 623(l)(1)(d) of the
Communications Act, we find "effective competition" to be present. 
    
  IV.ORDERING CLAUSES

      12.Accordingly, IT IS ORDERED that the Petition for Determination of Effective
Competition filed by Time Warner Entertainment-Advance/Newhouse Partnership challenging the
certification of the City of Clearwater, in Clearwater, Florida IS GRANTED.

      13.IT IS FURTHER ORDERED that the certification of the City of Clearwater,
Florida to regulate the basic cable rates of Time Warner Entertainment-Advance/Newhouse
Partnership in Clearwater, Florida IS REVOKED.

      14.This action is taken pursuant to the interim rules adopted in Implementation of Cable
Reform Provisions of the Telecommunications Act of 1996, and is without prejudice to any further
action taken by the Commission in adopting final rules pursuant to the Notice of Proposed
Rulemaking contained therein.

      15.This action is taken pursuant to delegated authority under Section 0.321 of the
Commission's rules, as amended.

     FEDERAL COMMUNICATIONS COMMISSION



     Meredith J. Jones
     Chief, Cable Services Bureau