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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In re ) ) Falcon Holding Group, L.P., Falcon Cable Systems ) Company, Falcon Classic Cable Income Properties, ) CSR Nos: 4644-D, 4635-D, L.P., Falcon First Communications, L.P., Falcon Video ) 4634-D, 4654-D, 4653-D, Communications, L.P., Enstar VII, Enstar VIII, ) 4639-D, 4640-D, 4643-D, Enstar IX, Enstar X, Enstar XI, Enstar Income Program ) 4641-D, 4642-D, 4662-D, 1984-1, Enstar Income Program II-1, Enstar Income ) 4656-D, 4664-D, 4661-D, Program II-2, Enstar Income Program IV-3, Enstar ) 4657-D, 4659-D, 4663-D, IV/PBD Systems Venture, Enstar Cable of Cumberland ) 4660-D, 4658-D Valley, Enstar Cable of Macoupin County, Enstar Inc./ ) Growth Program Six-A, Enstar Inc./Growth Program Six-B) MEMORANDUM OPINION AND ORDER Adopted: January 15, 1997 Released: January 17, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. In this Order, we review 19 petitions for special relief filed by entities that operate systems under the Falcon name. In their requests, Petitioners uniformly contend that they satisfy the technical criteria for special relief pursuant to the Sixth Report and Order and Eleventh Order on Reconsideration, MM Docket Nos. 92-266 and 93-215 ("Small System Order"). Each Petitioner seeks a declaration that it is eligible for small system regulatory relief. Because the petitions raise common substantive issues involving common entities and set forth identical grounds and arguments for special relief, we have consolidated the disposition of these petitions in this Order. For reasons set forth below, the petitions are denied. II. BACKGROUND 2. Section 623(i) of the Communications Act of 1934, as amended ("Communications Act"), requires that the Commission design rate regulations that reduce the administrative burdens and the cost of regulatory compliance for cable systems with 1,000 or fewer subscribers. Accordingly, in the course of establishing the standard benchmark and cost-of-service ratemaking methodologies generally available to cable operators, the Commission adopted various measures aimed specifically at easing regulatory burdens for these smaller systems. In the Small System Order, the Commission further extended small system rate relief to certain systems that exceed the 1,000-subscriber standard. These systems were deemed eligible for small system rate relief because they were found to face higher costs and other burdens disproportionate to their size. 3. The Small System Order defines a small system as any system that serves 15,000 or fewer subscribers. The Commission recognized that systems with no more than 15,000 subscribers were qualitatively different from larger systems with respect to a number of characteristics, including: (1) average monthly regulated revenues per channel per subscriber; (2) average number of subscribers per mile; and (3) average annual premium revenues per subscriber. The magnitude of the differences between the two classes of systems as to these characteristics indicated that the 15,000 subscriber threshold was the appropriate point of demarcation for purposes of providing for substantive and procedural regulatory relief. 4. Rate relief provided under the Small System Order and the Commission's rules is also available to a small system affiliated with a small cable company, which is defined as a cable operator that serves a total of 400,000 or fewer subscribers over all of its systems. The Commission adopted this threshold because it roughly corresponds to $100 million in annual regulated revenues, a standard the Commission has used in other contexts to identify smaller entities deserving of relaxed regulatory treatment. The Commission found that cable companies exceeding this threshold would find it easier than smaller companies to attract the financing and investment necessary to maintain and improve service. In addition, the Commission determined that cable companies that exceed the small company definition "are better able to absorb the costs and burdens of regulation due to their expanded administrative and technical resources." A small system will be deemed affiliated with a cable operator when the operator "holds more than a 20 percent equity interest (active or passive) in the system or exercises de jure control (such as through a general partnership or majority voting shareholder interest)." 5. In addition to adopting the new categories of small systems and small cable companies, the Small System Order introduced a form of rate regulation known as the small system cost-of-service methodology. This approach, which is available only to small systems owned by small cable companies, is more streamlined than the standard cost-of-service methodology available to cable operators generally. In addition, the small system rules include substantive differences from the standard cost-of-service rules to take account of the proportionately higher costs of providing service faced by small systems. Eligible systems establish their rates under this methodology by completing and filing FCC Form 1230. In order to qualify for the small system cost-of-service methodology, systems and companies must meet the new size standards as of either the effective date of the Small System Order, or on the date thereafter when they file the documents necessary to elect the relief they seek. 6. Cable systems that fail to meet the numerical definition of a small system, or whose operators do not qualify as small cable companies, may submit petitions for special relief requesting that the Commission grant a waiver of its rules to enable the petitioning systems to utilize the various forms of rate relief available to small systems owned by small cable companies. The Commission stated that petitioners should demonstrate that they "share relevant characteristics with qualifying systems." Other potentially pertinent factors include "the degree by which the system fails to satisfy either or both definitions, whether the system recently has been the subject of an acquisition or other transaction that substantially reduced its size or that of its operator, and evidence of increased costs (e.g., lack of programming or equipment discounts) faced by the operator." If the system fails to qualify for relief based on its affiliation with a larger cable company, the Commission will consider "the degree to which that affiliation exceeds our affiliation standards, and whether other attributes of the system warrant that it be treated as a small system notwithstanding the percentage ownership of the affiliate." The Commission specifically stated that this list of relevant factors was not exclusive and invited petitioners to support their petitions with any other information and arguments they deemed relevant. III. THE PETITIONS 7. Five of the 19 Petitioners are partnerships carrying the Falcon name. They are managed directly by a common entity that also owns equity interests in these partnerships. These petitioners include: 8. Falcon Holding Group, L.P, ("FHGLP"), CSR No. 4644-D: FHGLP requests a declaration that it is a small cable company within the meaning of the Small Systems Order. By meeting this definition, FHGLP claims that the 170 small systems within its partnership may use procedures for small system relief. At the time the petition was filed, FHGLP, through four wholly-owned partnerships, served approximately 345,000 subscribers in 21 states. Since the filing of its petition, FHGLP acquired Falcon Cable Systems Company ("Systems"), increasing the number of subscribers it now serves to approximately 480,000. FHGLP contends that the average numbers of subscribers and homes per plant mile for its systems bear a strong resemblance to the typical small operator. According to the petition, several institutional investors hold 62.1 percent of FHGLP's equity in the form of limited partnership interests. The Marc Nathanson family holds 26.2 percent in the form of limited partnership interests. The Petition states that the 11.6 percent general partner is owned by "Falcon management." 9. Falcon Cable Systems Company ("Systems"), CSR No. 4635-D: At the time its petition was filed with the Commission, Systems was a California master limited partnership that owned and operated 42 cable television systems in California and Oregon. As of June 30, 1995, Systems served approximately 135,000 subscribers. Nearly 70% of the equity was publicly held in the form of limited partnership interests traded on the American Stock Exchange. About 29% of the equity was held by members of the Marc Nathanson family and a one percent interest was held by FHGLP which served as the general partner. In July, 1996, FHGLP acquired Systems for approximately $247 million. 10. Falcon Classic Cable Income Properties, L.P. ("Classic"), CSR No. 4634-D: Classic describes its partnership as having ten systems. Each system within the partnership serves fewer than 15,000 subscribers. The partnership's total subscribership is approximately 47,000. Classic is managed by FHGLP pursuant to a management contract. Under the contract FHGLP receives a management fee and reimbursement of expenses. Classic requests confirmation that it is not affiliated with a larger entity under the "Falcon umbrella" and that its systems are eligible for small system treatment. According to Classic's Petition, "the 1% general partner is majority-owned by various individuals and entities associated with the umbrella Falcon organization." The Classic Petition explains that this one percent entity is FHGLP. 11. Falcon First Communications, L.P. ("First"), CSR No. 4654-D: First operates 20 cable systems in three states. Its total subscribership exceeds 75,000. All but one of these 20 systems serves fewer than 15,000 subscribers. First is managed by FHGLP pursuant to a management contract that pays a fee to FHGLP and reimburses expenses. Corporate and partnership venture investors hold 95 percent of the equity as limited partnership interests. The five percent general partner "is majority-owned by various individuals and entities associated with the umbrella Falcon organization." 12. Falcon Video Communications, L.P. ("Video"), CSR No. 4653-D: Video owns and operates 17 systems in six states. As of June 30, 1995, Video served approximately 66,000 basic subscribers. A diverse group of investors hold 95.1 percent of the equity in the form of limited partnership interests. The 4.9 percent general partnership is "majority-owned by various individuals and entities associated with the umbrella Falcon organization." 13. Fourteen of the Petitioners in this proceeding are Falcon partnerships that carry the Enstar name. The systems they operate, however, carry the Falcon brand label and are known in their respective communities as "Falcon Cable TV." Each of these partnerships represents that it operates its systems "within the penumbra of the Falcon name." Most of the equity in these partnerships is held by limited partners. The general partner for the Enstar partnerships, however, is Enstar Communications Corporation ("ECC") which is owned by one of the FHGLP partnerships. As described in the respective petitions, the Enstar partnerships include: 14. Enstar VII, CSR No. 4639-D: Enstar VII operates one cable system serving 685 subscribers in Pageland, South Carolina. Individuals hold 95 percent of the equity in the form of limited partnership interests. The five percent general partner, ECC, "is indirectly wholly-owned by various individuals and entities associated with the umbrella Falcon organization." 15. Enstar VIII, CSR No. 4640-D: Enstar VIII owns and operates one system serving 475 subscribers in Chesterfield, South Carolina. Individuals hold 99 percent of the equity as limited partnership interests. The one percent general partner, ECC, "is indirectly wholly-owned by various individuals and entities associated with the umbrella Falcon organization." 16. Enstar IX, CSR No. 4643-D: Enstar IX owns and operates one system serving approximately 3,000 subscribers in Mobile, Alabama. Individuals hold 99 percent of the equity as limited partnership interests. ECC holds a one percent interest and serves as the general partner. 17. Enstar X, CSR No. 4641-D: Enstar X owns and operates a cable system serving approximately 3,400 subscribers in Ripley, Tennessee. Individuals hold 99 percent of the equity as limited partners, and one percent of the equity is held by its general partner, ECC. 18. Enstar XI, CSR No. 4642-D: Enstar XI owns and operates a cable system serving approximately 2,000 subscribers in Ashdown, Arkansas. Individuals hold 99 percent of the equity in the form of limited partnership interests. The one percent general partner is ECC. 19. Enstar Income Program 1984-1, CSR No. 4662-D: Enstar Income Program 1984-1 owns and operates six systems in three states -- Tennessee, North Carolina and South Carolina. Collectively, the systems serve 12,000 subscribers. Individuals hold 99 percent of the equity as limited partnership interests. One percent of the equity is held by the general partner, ECC. 20. Enstar Income Program II-1, CSR No. 4656-D: Enstar Income Program II-1 owns and operates three systems serving approximately 7,000 subscribers in Illinois. Individuals hold 99 percent of the equity as limited partnership interests. The one percent general partner is ECC. 21. Enstar Income Program II-2, CSR No. 4664-D: Enstar Income Program II-2 owns and operates five systems in two states -- Illinois and Missouri. Together, the systems serve approximately 8,900 subscribers. Individuals hold 99 percent of the equity as limited partnership interests. The general partner, ECC, owns a one percent equity interest. 22. Enstar Income Program IV-3, CSR No. 4661-D: Enstar Income Program IV-3 owns and operates three systems in two states -- Illinois and Kentucky. Together the systems serve approximately 6,200 subscribers. Individuals own 99 percent of the equity in the form of limited partnership interests. The one percent general partner is ECC. 23. Enstar IV/PBD Systems Venture, CSR No. 4657-D: Enstar IV/PBD Systems Venture owns and operates three systems in two states -- Illinois and Missouri. Together, the systems serve approximately, 13,600 subscribers. Individuals own 99 percent of the equity as limited partnership interests. The one percent general partner is ECC. 24. Enstar Cable of Cumberland Valley, CSR No. 4659-D: Enstar Cable of Cumberland Valley owns and operates 10 systems in three states -- Kentucky, Tennessee and Missouri. Together, the systems serve approximately 17,000 subscribers with the largest of these systems serving approximately 3,300 subscribers. Two limited partnerships own 50 percent each of this petitioner. In turn, 99 percent of the equity of each of these two partnerships is held by individuals in the form of limited partnership interests. The one percent general partner is ECC. 25. Enstar Cable Macoupin County, CSR No. 4663-D: Enstar Cable Macoupin County owns and operates two systems serving approximately 4,400 subscribers in Illinois. Individuals hold 99 percent of the equity in the form of limited partnership interests. The one percent general partner is ECC. 26. Enstar Inc./Growth Program Six-A, CSR No. 4660-D: Enstar Inc./Growth Program Six-A owns and operates nine systems in two states -- Tennessee and Illinois. Together the systems serve approximately 10,000 subscribers. Individuals own 99 percent of the equity as limited partnership interests. The one percent general partner is ECC. 27. Enstar Inc./Growth Program Six-B, CSR No. 4658-D: Enstar Inc./Growth Program Six-B owns and operates six systems in three states -- Missouri, Utah and Georgia. Together, the systems serve approximately 6,500 subscribers. Individuals hold 99 percent of the equity as limited partnership interests. The one percent general partner is ECC. IV. DISCUSSION 28. A common premise runs throughout the petitions. The petitions assert that each respective partnership is, for the most part, a collection of small systems with all the economic and financial concerns that are characteristic of a small system. Collectively, systems within the Falcon partnerships average just over 2,400 subscribers, and only five of the 311 systems have more than 15,000 subscribers. These Petitioners assert that the average number of subscribers per plant mile is only 27 compared to the 35.3 average for the average small system serving fewer than 15,000 subscribers. Financing arrangements are based not on the total operations of Falcon entities, according to the Petitioners, but on the individual financial condition and operating results of each partnership. These characteristics, they claim, establish the inherent small system nature of hundreds of Falcon systems, justifying their eligibility for relaxed regulatory treatment. In essence, the requests set forth in all of these petitions turn on the same fundamental issue -- whether the systems within the Falcon partnership are affiliated with other Falcon entities that collectively serve a subscriber base beyond the 400,000 ceiling for special rate relief under the Small System Order. 29. The various Falcon partnerships assert that the systems they operate match the typical characteristics of small cable systems. Each partnership contends that financing is extended based solely on its own resources and operating results. According to the Petitioners, resources and funds are not commingled between or among the partnerships and none of the partnerships executes guarantees to assist the financing of any other Falcon entity. The partnerships argue that these independent financial arrangements prevent the sharing of resources. Although all Falcon-related entities together serve over 760,000 subscribers, these individualized financial arrangements, according to the respective partnerships, foreclose a finding of affiliation. 30. A number of municipal entities oppose the petitions relevant to their respective franchise areas. In its opposition to the FHGLP petition, the Georgia Municipal Association ("GMA") cites media reports in which Falcon is described as an operator serving more than one million customers, suggesting that the Falcon entities are sufficiently related to undermine claims of non-affiliation set forth in the Falcon petitions. GMA also cites a 1993 Securities and Exchange Commission ("SEC") filing in which the head of FHGLP describes Falcon as "one of the largest cable television operators in the United States" which owns systems with 476,900 subscribers and "controls, holds varying equity interests in, and manages" systems serving 630,400 subscribers. In addition, GMA argues that the Falcon entities are managed as one business, have access to sophisticated cable system expertise, and obtain programming discounts due to large volume transactions encompassing multiple Falcon entities. 31. The Regional Cable Commission ("RCC"), an association of franchise authorities in Oregon, also opposes FHGLP's petition. RCC contends that FHGLP is the general partner of Falcon entities serving at least 760,000 subscribers, including the partnerships within FHGLP and the systems under Falcon Cable Systems Company. As general partner, RCC asserts, FHGLP has de jure control over systems with subscriber totals well in excess of the 400,000 threshold. In Opposition to the Petition of Enstar Income Program 1984-1, Pitt County, North Carolina contends that FHGLP exercises de jure control over Enstar because administrative matters and correspondence involving the system are coordinated through FHGLP personnel. 32. The Naval Postgraduate School, which has granted a franchise to one of the systems within the Falcon Cable Systems Company partnership, claims that the local Falcon system itself has represented that it provides service to more than one million households. It cites a franchise renewal proposal filed by the system for the La Mesa Housing Complex at the Naval Postgraduate School in Monterey, California. The excerpt provided from that proposal states in part: Falcon Cable TV and its affiliated entities currently provide a wide range of cable services to over one million households in more than 700 small and medium sized communities located in 27 states. As a large national company with diverse resources and an accomplished and experienced staff, Falcon Cable takes pride in its ability to bring urban-type services to small and rural markets. Clearly, our company has all the necessary experience, qualifications, and financial strength needed to provide the system and services we are proposing for the La Mesa Village Housing Complex. 33. Several California and Oregon cities have filed their oppositions to the Systems Petition, incorporating the opposition comments of other entities, including the Regional Cable Commission and the Navel Postgraduate School. These municipalities further state that they granted franchises to individual systems that are the subject of the petitions based on representations that these systems were affiliated with a national concern. In addition, a number of municipalities have requested the Commission to obtain additional information from the Falcon partnerships, including the partnership agreements themselves, to enable a more thorough evaluation of the respective claims for small system regulatory relief. 34. In reply comments, FHGLP states that it owns between one and five percent of each of the 17 Falcon partnerships apart from the Systems partnership and the four partnerships subsumed within FHGLP. It further notes: FHGLP manages all of the cable systems contained in the 22 partnerships under a series of management contracts. When decisions need to be made affecting one or more systems in a partnership and these decisions involve matters where specialized experience needs to be brought to bear, the decisions are deferred to FHGLP. FHGLP has a staff with extensive experience in the cable television industry. It would be folly to have the various regions and partnerships making divergent decisions on important matters which affect the operation of a cable system. Indeed, it would be a dereliction of FHGLP's duties under its management contracts to permit this to happen. FHGLP again emphasizes that it does not assist the financing of other Falcon entities and that funds loaned to FHGLP from banks and other credit institutions cannot be applied to any entities other than FHGLP. This kind of stand-alone credit agreement, FHGLP explains, suggests that FHGLP, like other Falcon partnerships, does not obtain whatever capital benefits that could be derived from the commingling of funds or the execution of cross-guarantees among Falcon entities. 35. In the Small Systems Order, the Commission sought to target regulatory relief to small cable entities lacking access to the financial resources, purchasing discounts and other efficiencies of larger companies. A system is eligible for relief if it serves 15,000 or fewer subscribers and is unaffiliated with an operator that serves more than 400,000 subscribers. Despite a combined subscribership within the Falcon universe of at least 760,000 subscribers, Petitioners claim they are entitled to small system treatment because none of the affiliations between or among Falcon partnerships reach 400,000 subscribers under the 20 percent equity standard. While acknowledging the pervasiveness of the Falcon brand, the Petitioners seek a declaration that they are unaffiliated under our rules. Referring to the Commission's goal of raising the capital attractiveness of small cable systems, the partnerships explain that the financial self-sufficiency of each partnership prevents the individual partnerships from obtaining the capital access benefits of large operators. 36. We decline to grant the relief requested in these petitions. Without the need to dissect the complex equity arrangements that exist among the Falcon partnerships, we conclude that all of the partnerships fall under the de jure control of FHGLP, a cable operator with a subscriber base far above the ceiling for small cable companies. Accordingly, the partnerships whose petitions are consolidated in this proceeding are affiliated with FHGLP for purposes of the Small System Order. 37. As explained in the Small System Order, de jure control means a controlling interest "such as through a general partnership or majority voting shareholder interest." Here, through its own representations, FHGLP is the general partner of Falcon Classic Cable, Falcon First Communications, and Falcon Video Communications. Although FHGLP is not the immediate general partner of the 14 Enstar partnerships, one of FHGLP's wholly owned partnerships holds a controlling equity interest in Enstar Communications Corporation, the entity that serves as the general partner for all of the Enstar partnerships. Accordingly, FHGLP, "through a general partnership or majority voting shareholder interest," exercises de jure control over the Enstar partnerships (emphasis added). 38. The various partnerships benefit from their relationships with FHGLP. All of the partnerships have entered management contracts that confer on FHGLP the authority to render management decisions on behalf of hundreds of Falcon systems. FHGLP itself explains that it has implemented consolidated management of the Falcon systems in order to provide the various systems the benefits of "a staff with extensive experience in the cable television industry." FHGLP acknowledges that it buys programming on behalf of the various Falcon partnerships in order to obtain volume discounts. Moreover, at least one Falcon partnership has represented in a franchise application that "Falcon Cable TV and its affiliated entities" serve more than one million households and have the associated expertise and financial strength that flow from being "a large national company with diverse resources and an accomplished and experienced staff." These factors distinguish the Falcon partnerships from small entities that lack the "purchasing discounts, and other efficiencies of larger companies." 39. Our decision in Insight Communications Company, L.P. is instructive. There, we agreed with a petitioner's claim of non-affiliation with Continental Cablevision, Inc., a large multiple system operator ("MSO"), based on several factors, including the absence of contacts between respective managements, the lack of common officers and directors, and the lack of involvement in routine operations like programming and property dispositions. Moreover, we noted that Continental had no interest in the general partner that operated the petitioner's systems. We therefore concluded that the petitioner did not benefit from Continental's management expertise or experience. Unlike the circumstances in Insight, the Falcon partnerships share the benefits of common management, operational expertise, and other efficiencies such as high volume programming discounts. Although FHGLP argues that some large MSOs receive even better discounts, the efficiencies and leverage relevant to the affiliation inquiry are present. And, unlike the large cable operator in Insight, FHGLP holds an ownership interest in the petitioning entity's general partner. 40. The use of the Falcon brand by the Petitioners' systems illustrates the value of centralized control. FHGLP acknowledges that the "Falcon Cable TV" brand is used by all of the partnerships. This is done because FHGLP manages these partnerships and the use of a common name creates a brand identity which helps in marketing and communications, and sends the message that FHGLP has the resources and expertise to successfully manage the partnerships' systems. FHGLP, in its Reply Comments, suggests that the public perception arising from widespread use of the Falcon Cable TV brand is not relevant to the regulatory definition of affiliation. We disagree. The Falcon brand confers on systems using it a measure of expertise and operating credibility in the eyes of consumers and investors. FHGLP acknowledges this utility by stating that use of the brand assists the partnerships in their marketing and communications efforts. FHGLP, by attaching the Falcon label to the systems it manages, confers intangible economic benefits on these systems, even if the benefits come in the form of assistance with marketing and communications. 41. We are unpersuaded by assertions of non-affiliation based on claims that each Falcon partnership is little more than disparate, independent entity for financial purposes. Despite assertions that provisions in the various partnership agreements require financial independence and insularity, we cannot conclude that such provisions by themselves should defeat a determination of affiliation. First, as noted above, the authorized use of the Falcon Cable TV brand confers some economic benefit on all systems that use it. Second, we note that the Falcon partnerships are not claiming a shortage of needed capital. Indeed, some of the Falcon systems are finding investors with an interest in acquiring them. Third, the factors of common management and operating efficiencies are inherently related to capital attractiveness. Investors look to the reliability and experience of management in making investment decisions. Similarly, operating efficiencies like programming discounts lead to cost savings that affect the bottom line. Lower costs mean higher cash flows which enhance capital attractiveness. We do not base our finding of affiliation on the availability of capital or financial assistance among Falcon entities. We note, however, that the record does not indicate that the asserted financial independence provisions in the partnership agreements have actually foreclosed the "ability to attract capital." 42. We also examined the asserted claims of financial independence made by the Enstar partnerships. Each Enstar partnership states that it is controlled and partially owned by ECC and that its partnership agreement "specifically limits the comingling (sic) of corporate funds and disallows cross-capitalization." Each Enstar partnership also states that it "cannot guarantee, directly or indirectly, the financial commitments of other Falcon entities." We note, however, that in the SEC Form 10-K filed by FHGLP for the fiscal year ending December 31, 1995, FHGLP states that ECC, "a wholly-owned subsidiary" of one of the FHGLP-owned partnerships, "has guaranteed the debt obligations of certain Enstar partnerships in which it [FHGLP] acts as general partner." At a minimum, this indirect guarantee of individual Enstar partnership debt obligations by other Enstar partnerships through ECC evidences a sharing of financial resources. The assets of ECC are the collective equity interests it holds in the various Enstar partnerships. As noted earlier, ECC itself is owned by a partnership entity that, in turn, is owned and controlled by FHGLP. 43. Thus, despite assertions that each partnership's capital terms depend solely on the assets and operations of that partnership, we conclude that FHGLP, through its series of equity relationships and its management and operational control of the various Falcon partnerships, maintains de jure control over these partnerships. This level of control is sufficient to demonstrate that the petitioners are affiliated with FHGLP, an entity whose subscriber totals well exceed the 400,000 ceiling for small cable companies. 44. Finally, we note that FHGLP, emphasizing the small system attributes of the systems it owns directly, has requested a waiver of the 400,000 ceiling to enable small system regulatory treatment of the FHGLP systems. One of the factors relevant to our decision to grant or deny such a request is the degree to which the operator fails to satisfy the definition of a small cable company. The size of the operator is "a relevant factor in all cases," and the operator's size will weigh strongly against the request when it significantly exceeds the 400,000 ceiling. Here, the excess beyond 400,000 is substantial as the total subscribership within the relevant Falcon universe, based on our analysis in this proceeding, exceeds 760,000. Moreover, in light of other benefits conferred on Falcon systems by affiliation with FHGLP, "we see no countervailing circumstances of equal weight." The waiver request is denied. V. ORDERING CLAUSES 45. Accordingly, IT IS ORDERED that the Petitions for Special Relief filed by the Falcon partnerships requesting a declaration of eligibility for small system rate relief ARE DENIED. 46. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau