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Ԋ 9&B! #Xj\  P6G;XP##&a\  P6G;r&P#PK Before the  S- Federal Communications Commission  xx-  S-""Washington, D.C. 20554 ă  S`-In the Matter of:j)CSR 5136E ` `  j)  S-Time Warner Entertainment Co., L.P.j)Honolulu, HI et. al.b< yOx-  ԍTime Warner's Petition for a determination of effective competition encompasses the following communities:   (1) Waianae (HI0001); (2) Oahu Central (HI0004); (3) Kaneohe (HI0007); (4) Kalihi (HI0008); (5) Kailua (HI0009);   w(6) Enchanted Hills (HI0059); (7) Ewa District (HI0041); (8) Iwilei (HI0061); (9) Kaimuki (HI0064); (10) Kahaluu   (HI0065); (11) Kapahulu (HI0067); (12) Moanalua (HI0069); (13) Pearl Harbor (HI0070); (14) Salt Lake (HI0071); (15) Honolulu (HI0005); and (16) Honolulu (HI0006).b    S- ggbggbgZ mmm` `  j)pp    S-Petition for Determinationh)  S-Effective Competition h) j  S -  MEMORANDUM OPINION AND ORDER lU  S - Adopted: January 25, 1999hh,V  Released: January 26, 1999 By the Chief, Cable Services Bureau:  S0- I.INTRODUCTION  S-  1.` ` Time Warner Entertainment Company, L.P. d/b/a Oceanic Cablevision ("Time Warner"),  S-  filed a petition with the Commission asserting that it is subject to local exchange carrier ("LEC")\@x< yO-ԍThe Communications Act defines the term "local exchange carrier" as:   #XX` ` any person that is engaged in the provision of telephone exchange service or exchange   #access. Such term does not include a person insofar as such person is engaged in the   #3provision of a commercial mobile service under Section 332(c), except to the extent that the Commission finds that such service should be included in the definition of such term. ` Communications Act  3(26), 47 U.S.C.  153(26).\ effective   kcompetition in Honolulu, Hawaii and other Oahu communities from GTE Media Ventures, Inc., d/b/a   Oahu Wireless Cable Co. ("GTE"), a wireless cable operator serving the island of Oahu, Hawaii. This petition, although unopposed, was recently amended to provide the Commission with new information.  S-  32.` ` 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  S-  !operators which are not subject to effective competition.d < yO%-ԍCommunications Act  623(a)(4), 47 U.S.C.  543(a)(4).d For purposes of the initial request for   kcertification, local franchising authorities may rely on a presumption that cable operators within their  SP-  jurisdiction are not subject to effective competition unless they have actual knowledge to the contrary.PP< yO)-ԍ47 C.F.R.  76.906, 76.910(b)(4).P "P,**88"   Certification becomes effective 30 days from the date of filing unless the Commission finds that the  S-  authority does not meet the statutory certification requirements. {O@-ԍ47 C.F.R.  76.910(e); 47 C.F.R.  76.910(b); see also Communications Act  623(a)(4), 47 U.S.C.  543(a)(4). In Implementation of Cable Act Reform  S-  ?Provisions of the Telecommunications Act of 1996 ("Cable Act Reform Order"),EZ yO-ԍ11 FCC Rcd 5937, 5944 (1996).E 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  S<-  effective competition pursuant to Section 76.7 of the Commission's rules.<< yO -ԍ47 C.F.R.  76.7.< Section 623(l)(1)(D) of the Communications Act provides that a cable operator is subject to effective competition where:   #XX` ` 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 directto  #Thome 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   #Fprogramming services so offered in that area are comparable to the video  S -programming services provided by the unaffiliated cable operator in that area.j z yO-ԍCommunications Act  623(l)(1)(D), 47 U.S.C.  543(l)(1)(D).j `  S - II.THE PLEADINGS  S4-  3.` ` Time Warner explains that it provides cable service to Honolulu and Oahu residents   kpursuant to three cable franchises: one from the State of Hawaii to provide cable service to all civilian   Lareas on Oahu; one from the United States Navy to provide cable service to naval bases and installations   =on Oahu; and one from the United States Army to provide cable service to Army bases and installments   .on Oahu. Time Warner argues that it is subject to LEC effective competition in Honolulu, Hawaii and in  Sl-these other franchise areas from GTE, a wireless cable operator serving those same communities. l  yO-ԍTime Warner provides cable service to approximately 250,000 subscribers on the island of Oahu.  S-  4.` ` With regard to the LEC affiliation requirement,  yOV-  ԍThe Commission determined that the definition of affiliate provided in Section 3 of the 1996 Act will apply to the LEC effective competition test: The term "affiliate" means a person that (directly or indirectly) owns or controls, is owned or controlled by, or is under common ownership or control with another person. For purposes of this paragraph, the term "own" means to own an equity interest (or the equivalent thereof) of more than 10 percent.  {O%-Cable Act Reform Order, 11 FCC Rcd at 5944 (quoting Communications Act  3(1), 47 U.S.C.  153(1)).  Time Warner contends that GTE Media   Ventures is a competing wireless cable operator wholly owned by GTE, a local exchange carrier serving"4 ,p(p(884"  S-  .telephone customers in Hawaii and other parts of the United States.  yOh-  ԍTime Warner attaches Hawaiian Telephone's 1996 SEC 10K filing to show that Hawaiian Telephone is a subsidiary of GTE Corp. and provides local exchange telephone service throughout the State of Hawaii. GTE makes available 22 channels of video programming on its wireless cable system.  S-  P5.` ` With regard to the requirement that the LEC competitor offer (   yOH-  ԍIn implementing the LEC effective competition test on an interim basis, the Commission determined that its   preexisting definition of the term "offer" as used in the three effective competition definitions set forth in the 1992  yO-  Cable Act would apply to the LEC test. 11 FCC Rcd at 5942. The Commission previously determined that service of a multichannel video programming distributor will be deemed offered:   #CXX` ` (1) When the multichannel video programming distributor is physically able to deliver   #5service 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. ` 47 C.F.R.  76.905(e).  video programming service   \in the unaffiliated cable operator's franchise area, Time Warner asserts that GTE is physically able to   =deliver service to potential subscribers in Honolulu and other Oahu communities. Time Warner explains  S-  that GTE provides wireless cable service to Oahu through the use of an MMDS transmitter located at   Palehua Ridge on the Waianae Range. According to Time Warner, GTE's MMDS transmitter's 35mile   presumptive service boundary covers all of its franchise areas. Time Warner also asserts that most of  S-  MOahu can technically receive service from GTE, including those in its franchise areas.  yOH-  ;ԍTime Warner includes a lineofsight map, attached as Exhibit H, to demonstrate that potential subscribers can receive GTE's wireless cable service. To prove that   ]service is indeed available, Time Warner obtained subscriber counts from GTE showing that 2891   households (purportedly all within Time Warner's franchise areas) currently subscribe to the competing   wireless cable system. Finally, Time Warner contends that no regulatory, technical or other impediments exist to the receipt of GTE's service in Honolulu.  S -  6.` ` Time Warner asserts that potential subscribers in its franchise areas are reasonably aware   that they may purchase multichannel video service from GTE. Time Warner provides marketing materials   /from GTE which have been distributed in its franchise areas. These materials include GTE's channel   .guide as well as flyers promoting the wireless service. Newspaper articles discussing GTE's venture are   also attached to Time Warner's petition to show that potential subscribers have been made aware of the   competing wireless cable service. Time Warner makes the assumption that many of GTE's current   subscribers have made their neighbors aware that they are subscribing to the wireless service and that such neighbors may purchase the service as well.  Sh-"hh ,p(p(88d"Ԍ S-   7.` ` Time Warner asserts that GTE offers programming comparable yOh-  ԍThe Commission observed that Congress specified a different definition of comparable programming for the   LEC effective competition test from that adopted for the first three effective competition tests enacted as part of the   1992 Cable Act. The Commission, on an interim basis, determined that it will apply this new comparable   iprogramming standard which "includes access to at least 12 channels of programming, at least some of which are  {O-  Ytelevision broadcasting signals" to the LEC effective competition test. See Cable Act Reform Order at 12 (quoting 1996 Act Conference Report, S. Rep. 104230 at 170 (Feb. 1, 1996)). to that offered by Time   Warner in Honolulu and other Oahu communities. Time Warner provides GTE's channel lineup which   /demonstrates that GTE's most basic service consists of 22 channels of video programming, including seven local television broadcast signals.  S8-  38.` ` On December 10, 1998, Time Warner filed a supplement to its petition. Time Warner   states that GTE has recently switched over to a digital form of transmission and is now providing over   100 channels of programming to subscribers, including 9 local television station signals, in the three   relevant franchise areas. Time Warner also asserts that GTE has increased its marketing efforts in Oahu   mto alert potential subscribers of the availability of its digital service. Time Warner attempts to   demonstrate, by reference to numerous newspaper ads and articles, that Oahu residents are reasonably  SH -  !aware of GTE's service. One of these newspapers, the Honolulu StarBulletin, is the major daily  S" -  newspaper on the island and has a daily Oahu circulation of 67,362.F" B yO-ԍTime Warner's supplement at 3.F Finally, Time Warner claims that   GTE's marketing plan is working because 1,368 Oahu residents are now subscribing to GTE's digital  S -wireless cable service.  {OD-  KԍId. at 4, and Exhibit G (Subscriber count number reflected in a letter dated October 26, 1998 from Kathleen Palter, CounselGTE to Craig Gilley, Fleishman and Walsh, L.L.P.).  S - III.ANALYSIS  S2-   9.` ` In the absence of a demonstration to the contrary, cable systems are presumed not to be  S -  subject to effective competition.> ,  yO-ԍ47 C.F.R.  76.906.> The cable operator bears the burden of rebutting the presumption that   effective competition does not exist with evidence that effective competition, as defined by Section 76.905  S-  \of the Commission's rules, is present within the franchise area.T  yO-ԍ47 C.F.R.  76.905 and  76.911(b)(1).T Time Warner has failed to meet this   burden. While Time Warner partially satisfies the LEC test for effective competition by demonstrating   that GTE is a LEC affiliate that provides comparable programming, Time Warner fails to fully establish that GTE "offers" service as contemplated by the statute and our rules.  S-  10.` ` With regard to the first part of the LEC test, which requires that the alleged competitive  S-  service be provided by a LEC or its affiliate (or any multichannel video programming distributor using  S-  the facilities of such LEC or its affiliate), Time Warner has provided sufficient evidence demonstrating"L ,p(p(88"  S-  that GTE is LECaffiliated under the Commission's interim rules.j {Oh-ԍCable Act Reform Order, 11 FCC Rcd at 59385945, 59615964. j Additionally, we find that Time Warner is unaffiliated with GTE.  S-  2 11.` ` We also find that Time Warner has submitted sufficient evidence demonstrating that GTE   ?provides programming comparable to Time Warner's channel lineup in Honolulu and other Oahu   communities. GTE's channel lineup consists of over 100 channels of video programming, including 9 local television broadcast channels, which satisfies the programming comparability criterion.  S-  12.` ` As to the requirement that the LEC competitor "offer" service, Time Warner has not met   Mits burden. While it appears that prospective subscribers have been made reasonably aware of GTE's   service through direct mail campaigns, newspaper advertisements, and other marketing efforts, it is still   unclear who has knowledge of the competitive service. For example, although Time Warner claims that   jthe marketing materials were distributed to residents of the communities in question, there is no evidence   in the record defining the scope of the direct mail campaign. Specifically, there is no information   Lconcerning how many subscribers in Honolulu and Oahu, if any, were actually sent mailings. Moreover,   .it is unclear in which of Time Warner's three franchise areas potential subscribers received mailings from   GTE. We also do not agree with Time Warner that wordofmouth is an effective method of publicizing   the availability of GTE's competing service. Such a method of communication is difficult to prove and easily manipulated.  S-  13.` ` As a general matter, we note that evidence presented by cable operators regarding the   number and location of subscribers to the competing service shows that the competitor is physically able   \to deliver service. Such evidence, in most cases, can also reflect the degree subscribers are reasonably   aware of the competing service since they are, in fact, receiving it. However, in this instance, the GTE   subscriber figures submitted by Time Warner does not persuade us that consumers in Honolulu and   elsewhere generally are knowledgeable about GTE's service. Specifically, the GTE subscriber count that   Time Warner includes as an attachment to its Petition is broken down according to zip code, and does not   clearly specify by community unit or another more understandable identifier, which areas can currently  S-  [receive GTE's service._Z {O-ԍSee Exhibit I attached to Time Warner's petition._ In fact, some of the areas listed in the subscriber count are not the same as those   communities designated for deregulation by Time Warner in the text of the Petition. Even more perplexing   is the differences in subscriber counts presented by Time Warner in its initial petition, where the operator   mhas attested that there are over 2800 GTE subscribers in its franchise areas, compared with its   supplemental pleading, which states that GTE has 1,368 subscribers in the same franchise areas. These   data differences not only make it difficult to determine where GTE's subscribers are located, but given   zGTE's apparent loss of over 1,300 subscribers during the past year, call into question whether GTE's   lservice is actually competitive. All of these factors leads us to conclude that Time Warner has not   provided sufficient evidence showing that Honolulu and Oahu residents are reasonably aware of the availability of GTE's service.  S -  314.` ` Time Warner also has not clearly established that all of the communities subject to the   ?petition are technically able to receive wireless cable service from GTE. A lineofsight plot map   generated by Time Warner, and a similar map developed separately by the Commission, indicates that the   communities of Kahaluu, Maunalua, Kailua, and Kaneohe, on Oahu's Eastern shore, are currently impeded"p#,p(p(88%"   .from receiving service from GTE because they are "shadowed", meaning that they would have difficulty   receiving GTE's signal because they are blocked by terrain and do not have lineofsight with the   ytransmitter. Moreover, it is difficult to determine where some of the communities in question are located,   such as Enchanted Hills or Oahu Central, since Time Warner did not include a detailed map in their   petition indicating where they currently provide cable service. Without such information in this particular   Lcase, we cannot determine whether potential subscribers are technically able to receive GTE's competing service throughout Time Warner's franchise areas.  S-  r15.` ` We find that Time Warner has failed to submit clear and convincing evidence   demonstrating that its cable system serving Honolulu, Hawaii and other Oahu communities is subject to LEC effective competition from GTE. Time Warner' petition is denied.  S - IV.ORDERING CLAUSES  S -  S -  %16.` ` Accordingly, IT IS ORDERED that the Petition for Determination of Effective   Competition filed by Time Warner Entertainment Co., L.P., d/b/a Oceanic Cablevision, challenging the  S -certification of the local franchising authorities in Oahu, Hawaii IS DENIED.  S0-   17.` ` This action is taken pursuant to the interim rules adopted in Implementation of Cable  S -  Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 (1996), and is without   prejudice to any further action taken by the Commission in adopting final rules pursuant to the Notice of  S-Proposed Rulemaking contained therein.i {O$-ԍCable Act Reform Order, 11 FCC Rcd at 59385945, 59615964.i  Sl-  18.` ` This action is taken pursuant to delegated authority under Section 0.321 of the  SD-Commission's rules, as amended.<DZ yO>-ԍ47 C.F.R  0.321.< ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,Deborah A. Lathen ` `  hh,Chief, Cable Services Bureau  X- #Xj\  P6G;XP#