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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 the Matter of: ) CSR 4944-E ) Cablevision of the Midwest, Inc. ) Berea, Ohio d/b/a V Cable, Inc. ) CUID No. OH0949 ) Petition for Determination of ) Effective Competition ) MEMORANDUM OPINION AND ORDER Adopted: March 31, 1997 Released: April 3, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Cablevision of the Midwest, Inc., a subsidiary of V Cable, Inc. ("Cablevision") has filed a Petition for Determination of Effective Competition asserting that it is subject to effective competition in Berea, Ohio ("Berea") because of the presence of Ameritech New Media's cable service in that City. This 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 which 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. II. THE PLEADINGS 3. Cablevision asserts that it is subject to LEC effective competition in its Berea, Ohio franchise area, a community it has served since 1988. With regard to the LEC affiliation requirement, Cablevision asserts that Ameritech New Media ("Ameritech") is a competing franchised cable operator wholly owned by Ameritech Corporation, a local exchange carrier serving customers in Ohio, Illinois, Indiana, Michigan, and Wisconsin. 4. With regard to the requirement that the LEC competitor offer video programming service in the unaffiliated cable operator's franchise area, Cablevision asserts that Ameritech has completed its overbuild in Berea and now is providing service to area residents. Cablevision states that Ameritech has heavily marketed the availability of its cable service through local media and further states that it has experienced subscriber loss since the introduction of Ameritech's cable service. Cablevision asserts there are no regulatory, technical, or other impediments to households taking service from Ameritech. 5. Cablevision also asserts that Ameritech offers comparable programming to Berea subscribers. Specifically, Cablevision provides Ameritech's channel line-up which demonstrates that Ameritech offers over 80 channels, 8 of which are local television broadcasting signals. Cablevision offers nearly 80 channels of programming in Berea. 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. Cablevision 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 Cablevision has provided sufficient evidence demonstrating that Ameritech New Media is an MVPD wholly owned by a LEC. Ameritech is a LEC as defined by the Communications Act, and Ameritech New Media meets the Commission's definition of MVPD. Therefore, we find that Cablevision satisfies the affiliation prong of the LEC effective competition test. Cablevision is unaffiliated with both Ameritech New Media and Ameritech. 8. We also find that Cablevision has submitted sufficient evidence to show that the programming of Ameritech is comparable to the programming which it provides. The channel information for Ameritech submitted by Cablevision establishes that Ameritech offers more than 80 channels of programming, including 8 local broadcast channels. This satisfies the programming comparability criterion. 9. In addition, we find that based on the information before us, Ameritech is offering service in Cablevision's franchise area sufficient to demonstrate the presence of effective competition. Cablevision has provided Ameritech's construction schedule and other demonstrations of Ameritech's actual offering of service. Ameritech's overbuild of Cablevision's system is complete in the City of Berea and Ameritech is now competing for customers with Cablevision in all parts of the area at issue. We find that Ameritech's presence and Cablevision's corresponding subscriber loss is additional evidence that Ameritech is physically able to offer service in the cable community at issue. 10. We note that Ameritech's aggressive marketing efforts and the extensive press coverage of Ameritech in the local media, ensure that potential subscribers are reasonably aware of the availability of Ameritech's service. Subscribers in Berea are able to receive service for only a minimal additional investment and without regulatory, technical or other impediments. We also note that Cablevision has lowered its rates, added 15 new channels, offered free pay-per-view programming, and plans to upgrade it physical plant by the second quarter of 1997, all for the benefit of its subscribers. Consistent with Congressional intent in adopting Section 623(l)(1)(d) of the Communications Act, under the circumstances we find "effective competition" to be present. IV. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the Petition for Determination of Effective Competition filed by Cablevision of the Midwest, d/b/a V Cable, challenging the certification of the City of Berea, in Berea, Ohio IS GRANTED. 12. IT IS FURTHER ORDERED that the certification of the City of Berea, Ohio to regulate the basic cable rates of Cablevision in Berea, Ohio IS REVOKED. 13. 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. 14. 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