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Time Warner Cable Inc., Effective Competition, New York, Pennsylvania

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Released: July 22, 2013

Federal Communications Commission

DA 13-1609

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Time Warner Cable Inc.
)
MB Docket No. 13-90, CSR 8776-E
)
MB Docket No. 13-91, CSR 8777-E
Petition for Determination of Effective
)
Competition in 13 New York Franchise Areas and )
2 Pennsylvania Franchise Areas

MEMORANDUM OPINION AND ORDER

Adopted: July 22, 2013

Released: July 22, 2013

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

I.

INTRODUCTION AND BACKGROUND

1.
Time Warner Cable Inc., hereinafter referred to as "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 those communities listed on
Attachment A (the "Attachment A Communities"). Petitioner alleges that its cable system serving the
Attachment A 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 Attachment A
Communities because of the competing service provided by two direct broadcast satellite ("DBS")
providers, DIRECTV, Inc. ("DIRECTV"), and DISH Network ("DISH"). Petitioner also claims, pursuant
to Section 623(l)(1)(A) of the Communications Act3 and Section 76.905(b)(1) of the Commission's
rules,4 to be exempt from cable rate regulation in the Communities listed on Attachment B (the
"Attachment B Communities") because the Petitioner serves fewer than 30 percent of the households in
those franchise areas. The petition is unopposed.
2.
In the absence of a demonstration to the contrary, cable systems are presumed not to be
subject to effective competition,5 as that term is defined by Section 623(l) of the Communications Act
and Section 76.905 of the Commission's rules.6 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.7 For the reasons set forth below, we grant the petition(s) based on our
finding that Petitioner is subject to effective competition in the Communities listed on Attachments A and
B.


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

Federal Communications Commission

DA 13-1609

II.

DISCUSSION

A.

The Competing Provider Test

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
households in the franchise area.8 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.9 It is undisputed that the Attachment A 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.10
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.11 We further find that Petitioner
has provided sufficient evidence to support its assertion that potential customers in the Attachment A
Communities are reasonably aware that they may purchase the service of these MVPD providers.12 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,13 and is
supported in this petition with citations to channel lineups for both DIRECTV and DISH.14 Also
undisputed is Petitioner's assertion that both DIRECTV and DISH offer service to at least "50 percent" of
the households in the Attachment A Communities because of their national satellite footprint.15
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 asserts that it is the largest MVPD in the Attachment A Communities.16 Petitioner sought
to determine the competing provider penetration in those 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 Attachment A Communities on a zip


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

Federal Communications Commission

DA 13-1609

code plus four basis.17
6.
Based upon the aggregate DBS subscriber penetration levels that were calculated using
Census 2010 household data,18 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 Attachment A 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.

B.

The Low Penetration Test

7.
Section 623(l)(1)(A) of the Communications Act provides that a cable operator is subject
to effective competition if the Petitioner serves fewer than 30 percent of the households in the franchise
area. This test is referred to as the "low penetration" test.19 Petitioner alleges that it is subject to effective
competition under the low penetration effective competition test because it serves less than 30 percent of
the households in the Attachment B Communities.
8.
Based upon the subscriber penetration level calculated by Petitioner, as reflected in
Attachment B, we find that Petitioner has demonstrated the percentage of households subscribing to its
cable service is less than 30 percent of the households in the Attachment B Communities. Therefore, the
low penetration test is satisfied as to the Attachment B Communities.

III.

ORDERING CLAUSES

9.
Accordingly,

IT IS ORDERED

that the petition for a determination of effective
competition filed in the captioned proceeding by Time Warner Cable Inc.

IS GRANTED

.
10.

IT IS FURTHER ORDERED

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

IS REVOKED

.
11.
This action is taken pursuant to delegated authority pursuant to Section 0.283 of the
Commission's rules.20
FEDERAL COMMUNICATIONS COMMISSION
Steven A. Broeckaert
Senior Deputy Chief, Policy Division, Media Bureau


17 Id. at 7.
18 Id. at 7.
19 47 U.S.C. 543(l)(1)(A).
20 47 C.F.R. 0.283.
3

Federal Communications Commission

DA 13-1609

ATTACHMENT A

MB Docket No. 13-90, CSR 8776-E
MB Docket No. 13-91, CSR 8777-E

COMMUNITIES SERVED BY TIME WARNER CABLE INC.

Communities

CUIDs

CPR*

2010 Census

Estimated Competing

Households

Provider Subscribers

CSR 8776-E

Athens
PA0579
15.26
1,422
217
Nichols
NY1074
33.94
990
336
South Waverly
PA0594
16.35
422
69

CSR 8777-E

Earlville
NY0877, NY0876
19.21
354
68
Floyd
NY0921
19.14
1,463
280
Lee
NY0744
16.63
2,574
428
Lincoln
NY1593, NY1103
36.41
758
276
Madison
NY0825
16.03
131
21
Munnsville
NY0598
21.98
182
40
Vernon
NY0577
18.04
2,250
406
Verona
NY0843
30.00
2,423
727
Western
NY1021
34.30
796
273
Westmoreland
NY1379
15.01
2,372
356

*CPR = Percent of competitive DBS penetration rate.
4

Federal Communications Commission

DA 13-1609

ATTACHMENT B

MB Docket No. 13-91, CSR 8777-E

COMMUNITIES SERVED BY TIME WARNER CABLE INC.

Communities

CUIDs

Franchise Area

Cable

Penetration

Households

Subscribers

Percentage

CSR 8777-E

Amboy
NY1986
468
22
4.70
Whitestown
NY1380, NY0085
7,845
8
0.10
5

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