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Charter, Effective Competition, Massachusetts

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Released: November 15, 2013

Federal Communications Commission

DA 13-2197

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Charter Communications
)
MB Docket No. 13-20, CSR 8763-E
)
Petition for Determination of Effective
)
Competition in Three Communities in
)
Massachusetts
)

MEMORANDUM OPINION AND ORDER

Adopted: November 15, 2013

Released: November 15, 2013

By the Senior Deputy Chief, Policy Division, Media Bureau:

I.

INTRODUCTION AND BACKGROUND

1.
Charter Communications, hereinafter referred to as “Charter” or “Petitioner,” has filed
with the Commission a petition 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 the communities listed on
Attachment A and hereinafter referred to as the “Communities.” Petitioner alleges that its cable system
serving the 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”).
2.
The Massachusetts Department of Telecommunications and Cable (“MDTC”) filed an
opposition to the petition,3 to which Petitioner filed a reply.4 In its reply, Petitioner withdraws its request
for a finding of effective competition in the communities of Paxton (MA0304) and Spencer (MA0043).5
We accept the withdrawal without prejudice.6
3.
In the absence of a demonstration to the contrary, cable systems are presumed not to be
subject to effective competition,7 as that term is defined by Section 623(l) of the Communications Act and


1 See 47 U.S.C. § 543(l)(1)(B).
2 47 C.F.R. § 76.905(b)(2).
3 The MDTC is the franchise authority for rate regulation of cable services throughout the Commonwealth of
Massachusetts. Massachusetts Department of Telecommunications and Cable Opposition to Charter’s Petition for
Special Relief at 1-2 n.2 (“MDTC Opposition”). MDTC’s Opposition was filed pursuant to an extension of time
granted by the Bureau.
4 Charter Communications Reply to Opposition of Massachusetts Department of Telecommunications and Cable
(“Reply”). Petitioner filed a motion asking for an extension of time in which to file the Reply. Finding no prejudice
to the parties, we will consider Petitioner’s request granted.
5 Reply at 1-2 n.2; id. at 4 n.9.
6 Petitioner may refile a petition for effective competition in the communities of Paxton (MA0304) and Spencer
(MA0043) without prejudice.
7 47 C.F.R. § 76.906.

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DA 13-2197

Section 76.905 of the Commission’s rules.8 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.9 For the reasons set forth below, we grant the petition based on our
finding that Petitioner is subject to effective competition in the Communities listed on Attachment A.

II.

DISCUSSION

4.
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 multichannel 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.10 This test is referred to as the “competing provider” test.

A.

The First Prong of the Competing Provider Test

5.
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.11 It is undisputed that the 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.12 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.13 We further find that Petitioner has
provided sufficient evidence to support its assertion that potential customers in the Communities are
reasonably aware that they may purchase the service of these MVPD providers.14 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 programming,15 and is supported in
this petition with copies of channel lineups for both DIRECTV and DISH.16
Also undisputed is
Petitioner’s assertion that both DIRECTV and DISH offer service to at least “50 percent” of the
households in the Communities because of their national satellite footprint.17 Accordingly, we find that
the first prong of the competing provider test is satisfied.


8 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b).
9 See 47 C.F.R. §§ 76.906-.907(b).
10 47 U.S.C. § 543(l)(1)(B); 47 C.F.R. § 76.905(b)(2).
11 47 U.S.C. § 543(l)(1)(B)(i); 47 C.F.R. § 76.905(b)(2)(i).
12 See Petition at 3-4.
13 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006).
14 47 C.F.R. § 76.905(e)(2).
15 See 47 C.F.R. § 76.905(g); see also Petition at 5.
16 See Petition at Exh. 1.
17 See id. at 3-5.
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DA 13-2197

B.

The Second Prong of the Competing Provider Test

6.
The second prong of the competing provider test requires that the number of households
subscribing to MVPDs, other than the largest MVPD, exceeds 15 percent of the households in a franchise
area. Petitioner asserts that it is the largest MVPD in the Communities, an assertion that MDTC does not
dispute.18 We see no reason to doubt Petitioner’s assertion, and so we accept it. The second prong of the
competing provider test thus requires Petitioner to calculate DBS subscribership. The numerator of this
statutory ratio is the number of DBS subscribers in each Community and the denominator is the number
of households there.
a.

Charter’s Evidence

7.
Petitioner first obtained from SNL Kagan (formerly known as Media Business
Corporation) a list of zip codes that corresponds with the political boundaries of the Communities. SNL
Kagan’s process uses enhanced mapping software to identify zip plus four codes that lie within the
Communities.19 Petitioner then gave SNL Kagan’s list of zip codes to the Satellite Broadcasting and
Communications Association (“SBCA”), which reported to Petitioner the number of DBS subscribers in
each zip code.20 To determine whether the competing provider penetration exceeds 15 percent of the
households in a franchise area, Petitioner compared the DBS subscribership to the 2010 U.S. Census
household numbers for each of the Communities. Petitioner asserts that the resulting ratios show that the
number of households subscribing to MVPDs, other than the largest MVPD, exceeds 15 percent of the
households for each of the Communities.21
b.

MDTC’s Objections

8.
MDTC argues Petitioner has failed to meet the second prong of the competing provider
test.22 MDTC objects to Petitioner’s DBS subscribership numbers. Specifically, MDTC asserts that
SBCA likely included in its reports DBS subscribers living in seasonal homes, vacation homes, temporary
homes, and multiple dwelling units such as college dormitories, nursing homes, and assisted living
facilities.23 Relying on the 2010 U.S. Census, MDTC states there are 13 seasonal homes in Boylston, 39
in Leicester, and 28 in Northbridge.24 None of these housing units qualify as households.25 MDTC also
states that Petitioner likely included these DBS subscribership numbers in its numerators, but did not
include those subscribers’ housing units in its denominators. As a result, MDTC argues these calculations
inflate the DBS provider penetration rates in the Communities.26 MDTC also notes that even a minor


18 See id. at 7.
19 Id. at 6, Exh. 3. A zip code plus four analysis allocates DBS subscribers to a franchise area using zip code plus
four information that generally reflects franchise area boundaries in a more accurate fashion than standard five digit
zip code information. In instances where the entire five digit zip code is located within a particular franchise area,
SNL Kagan uses the five digit zip code, instead of the zip plus four codes. Id. at 6 n.20.
20 Id. at 6-7.
21 Id. at 7.
22 MDTC’s Opposition also raises objections concerning the communities of Paxton (MA0304) and Spencer
(MA0043). MDTC Opposition at 3-4, 6-8. However, we have accepted Petitioner’s withdrawal of these two
communities from the petition. See supra ¶ 2.
23 MDTC Opposition at 5-6.
24 Id. at 7, Exh. 3.
25 Id. at 6.
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Federal Communications Commission

DA 13-2197

reporting error could have a material impact on the presence of effective competition, particularly because
the competing provider penetration rates are close to the 15 percent threshold.27 MDTC states the
Commission should closely evaluate Petitioner’s calculations.
c.

Charter’s Reply

9.
In reply, Petitioner argues that MDTC fails to provide any community-specific evidence
to overcome its prima facie showing of effective competition. First, Petitioner refutes MDTC’s allegation
that SBCA likely includes in its reports DBS subscribers living in college dormitories, nursing homes,
and similar group housing. Petitioner asserts that SBCA does not include these types of accounts in its
reported DBS subscribership.28
Petitioner also refutes MDTC’s allegation that SBCA’s DBS
subscribership numbers include seasonal households. MDTC fails to provide any evidence that SBCA
includes these types of accounts in its reported DBS subscribership.29 However, even if seasonal
households subscribe to DBS service at the same rate as the overall population, Petitioner argues the DBS
penetration rates would still exceed 15 percent of the households for each of the Communities.30
Petitioner further argues that using MDTC’s mathematical formula for seasonal households confirms the
existence of effective competition in the Communities.31
d.

Conclusion

10.
Effective competition decisions are made based on “households,”32 which are occupied
full-time housing units.33 This excludes unoccupied housing units, college and university dormitories,34


(...continued from previous page)
26 Id. at 6. MDTC acknowledges that it is unlikely that all the seasonal homes in the Communities are DBS
subscribers. Using the Community of Spencer (MA0043) as an example in its calculations, MDTC assumes
seasonal residents subscribe to DBS providers at the same rate as the overall population of the Community. MDTC
then adds these additional subscribers to the number of housing units in the denominator to determine the adjusted
penetration rate. Id. at 7 n.29.
27 Id. at 7-8.
28 Reply at 3 and attached Declaration of Steven Hill, Deputy Executive Director for the Satellite Broadcasting and
Communications Association (May 31, 2012).
29 Reply at 3.
30 Applying MDTC’s formula, Charter’s DBS penetration rates multiplied by the number of seasonal housing units
in each Community would result in 2 seasonal DBS subscribers in Boylston (0.1584*13), 6 seasonal DBS
subscribers in Leicester (0.1537*39), and 4 seasonal DBS subscribers in Northbridge (0.1526*28). Adding these
additional subscribers to the number of housing units in the denominator would result in the approximate adjusted
penetration rates of 15.82 percent in Boylston, 15.35 percent in Leicester, and 15.25 percent in Northbridge. Id. at
3-4, Exh. B.
31 Id. at 3-4.
32 47 U.S.C. 543(l)(1)(B); see also 47 C.F.R. 76.905(b)(2).
33 Comcast Cable Commc’ns, LLC, 23 FCC Rcd 8564, 8567, ¶ 10 (2008); Bright House Networks, LLC, 22 FCC
Rcd 4161, 4165, ¶ 11 (2007); MCC Iowa LLC, 20 FCC Rcd 15267, 15270, ¶ 7 (2005); Mediacom Minnesota LLC,
18 FCC Rcd 12768, 12770-71 ¶ 8 (2003); Implementation of Sections of the Cable Television Consumer Protection
& Competition Act of 1992: Rate Regulation: Buy-Through Prohibition
, 9 FCC Rcd 4316, 4324, ¶ 17 (1994); U.S.
Census Bureau, State & County QuickFacts (“A household includes all the persons who occupy a housing unit as
their usual place of residence”) http://quickfacts.census.gov/qfd/states/00000.html (visited Oct. 30, 2013).
34 Charter Commc’ns Entm’t I LLC, 26 FCC Rcd 5975, 5980-81 ¶¶ 18-19 (2011); Marcus Cable Assocs., 25 FCC
Rcd 4369, 4372, ¶ 9 (2010); CoxCom, Inc., 22 FCC Rcd 4533, 4538, ¶ 13 (2007).
4

Federal Communications Commission

DA 13-2197

seasonal and vacation homes,35 and nursing homes and similar assisted living facilities.36 Concerning
college dormitories, nursing homes, and similar group housing, Petitioner has provided evidence that
SBCA does not include these types of accounts in its reported DBS subscribership.37 Concerning
seasonal homes, because the 2010 U.S. Census household numbers exclude seasonal, recreational, or
occasional use housing, we believe that the number of DBS households reported by SBCA may be
inflated by seasonal DBS households and so skew the ultimate percentage. We note, however, that a
proportionate reduction in SBCA’s DBS figures for the percentage of seasonal properties in these
Communities does not cause the overall DBS penetration rates to fall below 15 percent.38 Additionally,
we note that applying MDTC’s mathematical formula for seasonal households also does not cause the
overall DBS penetration rates to fall below 15 percent in these Communities.39 We have repeatedly
accepted SBCA’s subscribership reports on behalf of DBS providers in satisfaction of Section 76.907(c)
of the Commission’s rules.40 Accordingly, we will accept SBCA’s DBS subscribership numbers included
in the petition.
11.
Despite MDTC’s objections, the second prong of the competing provider test is satisfied
for each of the Communities. It requires that Petitioner show that the competing providers’ market shares
exceed 15 percent in each Community, and Petitioner has made that showing. Therefore, based upon the
aggregate DBS subscriber penetration levels that were calculated using Census 2010 household data,41 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 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 Communities listed on Attachment A.


35 47 C.F.R. § 76.905(c) (“‘households’ shall not include those dwellings that are used solely for seasonal,
occasional, or recreational use”).
36 Charter Commc’ns Entm’t I LLC, 26 FCC Rcd at 5981, ¶ 19 (2011); CoxCom, Inc., 22 FCC Rcd at 4538, ¶ 13.
37 Reply at 3 and attached Declaration of Steven Hill, Deputy Executive Director for the Satellite Broadcasting and
Communications Association (May 31, 2012).
38 The 2010 U.S. Census reports 13 seasonal, recreational, or occasional use homes in Boylston, 39 in Leicester, and
28 in Northbridge. In Boylston, 13 units represent approximately 0.73 percent of the total housing units (1,778). A
0.73 percent reduction of the allocated DBS subscribers for Boylston results in a DBS penetration rate of
approximately 15.72 percent. In Leicester, 39 units represent approximately 0.91 percent of the total housing units
(4,270). A 0.91 percent reduction of the allocated DBS subscribers for Leicester results in a DBS penetration rate of
approximately 15.22 percent. In Northbridge, 28 units represent approximately 0.45 percent of the total housing
units (6,172). A 0.45 percent reduction of the allocated DBS subscribers for Northbridge results in a DBS
penetration rate of approximately 15.20 percent. See, e.g., Comcast Cable Commc’ns, LLC, 22 FCC Rcd 1691,
1698, ¶ 16 n.61, reconsideration granted on other grounds, 22 FCC Rcd 5320 (2007) (applying similar formula to
determine proportionate reduction in SBCA’s DBS figures for percentage of seasonal, recreational, or occasional
use properties).
39 Reply at 3-4, Exh. B. See also supra note 30.
40 See, e.g., MCC Iowa LLC, 25 FCC Rcd 2101, 2103-04, ¶ 9 (2010); Bright House Networks, LLC, 22 FCC Rcd
4169, 4172, ¶ 7 (2007); CoxCom Inc., 22 FCC Rcd 4522, 4526, ¶ 12 (2007); Comcast of Dallas, L.P., 20 FCC Rcd
17968, 17970-71, ¶ 7 (2005).
41 Petition at 6-7, Exhs. 5, 6.
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DA 13-2197

III.

ORDERING CLAUSES

12.
Accordingly,

IT IS ORDERED

that the petition for a determination of effective
competition filed in the captioned proceeding by Charter Communications

IS GRANTED

for the
Communities of Boylston, Leicester, and Northbridge.
13.

IT IS FURTHER ORDERED

that the certification to regulate basic cable service rates
granted to any of the Communities set forth on Attachment A

IS REVOKED

.
14.
This action is taken pursuant to delegated authority pursuant to Section 0.283 of the
Commission’s rules.42
FEDERAL COMMUNICATIONS COMMISSION
Steven A. Broeckaert
Senior Deputy Chief, Policy Division, Media Bureau


42 47 C.F.R. § 0.283.
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DA 13-2197

ATTACHMENT A

MB Docket No. 13-20, CSR 8763-E

COMMUNITIES SERVED BY CHARTER COMMUNICATIONS

2010 Census

Estimated DBS

Communities

CUID

CPR*

Households

Subscribers

Boylston
MA0260
15.84%
1,698
269
Leicester
MA0044
15.37%
4,021
618
Northbridge
MA0180
15.26%
5,896
900

*CPR = Percent of competitive DBS penetration rate.
7

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