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Midcontinent Communications SD Effective Competition

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Released: June 28, 2013

Federal Communications Commission

DA 13-1466

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Midcontinent Communications
)
MB Docket No. 12-317, CSR-8735-E
)
MB Docket No. 12-318, CSR-8736-E
Petitions for Determination of Effective
)
MB Docket No. 12-319, CSR-8737-E
Competition in Twenty-Three Communities in
)
MB Docket No. 12-320, CSR-8738-E
South Dakota
)

MEMORANDUM OPINION AND ORDER

Adopted: June 27, 2013

Released: June 28, 2013

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

I.

INTRODUCTION AND BACKGROUND

1.
Midcontinent Communications, hereinafter referred to as "Petitioner," has filed with the
Commission four petitions 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 those 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"). The petitions are unopposed.
2.
In the absence of a demonstration to the contrary, cable systems are presumed not to be
subject to effective competition,3 as that term is defined by Section 623(l) of the Communications Act and
Section 76.905 of the Commission's rules.4 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.5 For the reasons set forth below, we grant the petitions based on our
finding that Petitioner is subject to effective competition in the Communities listed on Attachment A.

II.

DISCUSSION

3.
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 multi-channel 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


1 See 47 U.S.C. 543(l)(1)(B).
2 47 C.F.R. 76.905(b)(2).
3 47 C.F.R. 76.906.
4 See 47 U.S.C. 543(l)(1); 47 C.F.R. 76.905(b).
5 See 47 C.F.R. 76.906-.907(b).

Federal Communications Commission

DA 13-1466

households in the franchise area.6 This test is referred to as the "competing provider" test.
4.
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.7 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.8 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.9 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.10 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,11 and is supported in the petitions
with copies of channel lineups for both DIRECTV and DISH.12 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.13 Accordingly, we find that the first prong of the competing
provider test is satisfied.
5.
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 sought to determine the competing provider DBS penetration in the Communities by
purchasing a subscriber tracking report from the Satellite Broadcasting and Communications Association
that identified the number of subscribers attributable to the DBS providers within the Communities on a
zip code plus four basis.14 Petitioner asserts that it is the largest MVPD in the eight franchise areas.15

6.
Based upon the aggregate DBS subscriber penetration levels that were calculated using
Census 2010 household data,16 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 Attachment A Communities. Therefore, the second
prong of the competing provider test is satisfied for each of the Communities. Based on the foregoing, we


6 47 U.S.C. 543(l)(1)(B); 47 C.F.R. 76.905(b)(2).
7 47 U.S.C. 543(l)(1)(B)(i); 47 C.F.R. 76.905(b)(2)(i).
8 See Petitions at 5-7.
9 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, 3 (2006).
10 47 C.F.R. 76.905(e)(2).
11 See 47 C.F.R. 76.905(g); see also Petitions at 4.
12 See Petitions at Exhibit 2.
13 See Petitions at 4.
14 Petitions at 8. 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.
15 See Petitions at 8.
16 Petition at 8-10, Exhibits 1 and 6.
2

Federal Communications Commission

DA 13-1466

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.

III.

ORDERING CLAUSES

7.
Accordingly,

IT IS ORDERED

that the petitions for a determination of effective
competition filed in the captioned proceedings by Midcontinent Communications

ARE GRANTED

.
8.

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

.
9.
This action is taken pursuant to delegated authority pursuant to Section 0.283 of the
Commission's rules.17
FEDERAL COMMUNICATIONS COMMISSION
Steven A. Broeckaert
Senior Deputy Chief, Policy Division, Media Bureau


17 47 C.F.R. 0.283.
3

Federal Communications Commission

DA 13-1466

ATTACHMENT A

MB Docket No. 12-317, CSR 8735-E
MB Docket No. 12-318, CSR 8736-E
MB Docket No. 12-319, CSR 8737-E
MB Docket No. 12-320, CSR 8738-E

COMMUNITIES SERVED BY MIDCONTINENT COMMUNICATIONS

2010 Census

DBS

Communities

CUID

CPR*

Households

Subscribers18

Baltic
SD0138
16.71%
389
65
Belle Fourche
SD0009
27.52%
2,322
639
Boulder Canyon
SD0116
20.69%
203
42
Canton
SD0053
27.00%
1,248
337
Central City
SD0038
31.82%
66
21
Deadwood
SD0010
34.49%
661
228
Gayville
SD0316
27.61%
163
45
Harrisburg
SD0321
31.62%
1,423
450
Lead
SD0012
33.38%
1,420
474
Madison
SD0040
28.89%
2,627
759
Meade Co.
SD0110
19.38%
5,331
1,033
(Unincorporated)
SD0165
SD0035
Meckling
SD0325
20.00%
35
7
Pennington Co.
SD0054
22.35%
9,717
2,172
(Unincorporated)
SD0262
SD0282
SD0283
SD0309
Rapid City
SD0001
16.59%
28,586
4,742
Sioux Falls
SD0017
18.91%
61,707
11,671
Spearfish
SD0013
18.17 %
4,644
844
Sturgis
SD0014
21.02%
2,916
613
Summerset
SD0323
26.56%
655
174
Tea
SD0322
26.40%
1,254
331
Vermillion
SD0047
20.57%
3,811
784
White Wood
SD0106
32.89%
374
123
Yankton
SD0046
16.11%
5,909
952
*CPR = Percent of competitive penetration rate of DBS


18 The allocated DBS subscriber figures presented in the petitions were not whole numbers so those figures have
been rounded down to the nearest whole subscriber.
4

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