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Time Warner Cable, Inc. Petitions for Effective Competition, Kentucky

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Released: May 9, 2013

Federal Communications Commission

DA 13-1018

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
MB Docket No. 12-191, CSR 8676-E
)
MB Docket No. 12-192, CSR 8677-E
Time Warner Cable Inc.
)
MB Docket No. 12-193, CSR 8678-E
)
MB Docket No. 12-194, CSR 8679-E
Petitions for Determination of Effective
)
MB Docket No. 12-195, CSR 8680-E
Competition in Eight Kentucky Franchise Areas
)

MEMORANDUM OPINION AND ORDER

Adopted: May 7, 2013

Released: May 9, 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 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 “Attachment A Communities.” Petitioner alleges that its
cable systems serving the Attachment A Communities are 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 are therefore exempt from cable rate regulation in those
Communities because of the competing service provided by two direct broadcast satellite (“DBS”)
providers, DIRECTV, Inc. (“DIRECTV”), and DISH Network (“DISH”). Petitioner additionally claims
to be exempt from cable rate regulation in the communities listed on Attachment B and hereinafter
referred to as Attachment B Communities, pursuant to Section 623(l)(1)(A) of the Communications Act3
and Section 76.905(b)(1) of the Commission’s rules,4 because the Petitioner serves fewer than 30 percent
of the households in the franchise areas.5 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,6 as that term is defined by Section 623(l) of the Communications Act and
Section 76.905 of the Commission’s rules.7 The cable operator bears the burden of rebutting the


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 The five separate Time Warner petitions filed in this proceeding each list the same Kentucky Communities. The
filing of five petitions was necessary because even though the same Communities are listed in all of the petitions,
some of the Communities with different CUID numbers are on a separate Time Warner cable system which
necessitated the filing of a separate petition with a separate filing fee. CSR 8676-E includes Oakland (KY0605) and
Smiths Grove (KY0604) on PSID No. 006105. CSR 8677-E includes Robards (KY0947) on PSID No. 000458.
CSR 8678-E includes unincorporated Laurel County (KY0243) on PSID No. 003345. CSR 8679-E includes
Camargo (KY0709) on PSID No. 003347. CSR 8680-E includes Clay (KY0924), Dixon (KY0923), and
unincorporated Webster County (KY1178) on PSID No. 011396.
6 47 C.F.R. § 76.906.
7 See 47 U.S.C. § 543(l); 47 C.F.R. § 76.905.

Federal Communications Commission

DA 13-1018

presumption that effective competition does not exist with evidence that effective competition is present
within the relevant franchise area.8 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 Attachments A and
B.

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.9 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.10 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.11
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.12 We further find that Petitioner
has provided sufficient evidence to support its assertion that potential customers in those Communities
are reasonably aware that they may purchase the service of these MVPD providers.13 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,14 and is supported in
this petitions with copies of channel lineups for both DIRECTV and DISH.15 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.16 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, exceed 15 percent of the households in a franchise


8 See 47 C.F.R. §§ 76.906-.907(b).
9 47 U.S.C. § 543(l)(1)(B); 47 C.F.R. § 76.905(b)(2).
10 47 U.S.C. § 543(l)(1)(B)(i); 47 C.F.R. § 76.905(b)(2)(i).
11 See Petitions at 3-5.
12 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006).
13 47 C.F.R. § 76.905(e)(2).
14 See 47 C.F.R. § 76.905(g); see also Petitions at 5-6.
15 See Petitions at 6, citing www.directv.com and www.dishnetwork.com.
16 See Petitions at 6.
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Federal Communications Commission

DA 13-1018

area. Petitioner asserts that it is the largest MVPD in the Attachment A Communities.17 Petitioner sought
to determine the competing provider penetration there 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 code plus four basis.18
6.
Based upon the aggregate DBS subscriber penetration levels that were calculated using
2010 Census household data,19 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
Attachment A Communities.

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.20 Petitioner alleges that it is subject to effective
competition under the low penetration effective competition test because it serves less that 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 that 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.


17 See id. at 7 and attached Declaration of Edward Kozelek, Regional Vice President of Government Relations –
Midwest for Time Warner Cable (June 26, 2012).
18 Petitions at 7. 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.
19 Petitions at 7-8.
20 47 U.S.C. § 543(l)(1)(A).
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Federal Communications Commission

DA 13-1018

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.21
FEDERAL COMMUNICATIONS COMMISSION
Steven A. Broeckaert
Senior Deputy Chief, Policy Division, Media Bureau


21 47 C.F.R. § 0.283.
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Federal Communications Commission

DA 13-1018

ATTACHMENT A

MB Docket No. 12-191 CSR 8676-E, MB Docket No. 12-192 CSR 8677-E, MB Docket No. 12-193

CSR 8678-E, MB Docket No. 12-194 CSR 8679-E, MB Docket No. 12-195 CSR 8680-E

COMMUNITIES SERVED BY TIME WARNER CABLE INC.

2010 Census

Estimated DBS

Communities

CUIDs

CPR*

Households

Subscribers

Oakland
KY0605
18.39%
87
16
Smiths Grove
KY0604
29.76%
289
86
Robards
KY0947
64.29%
196
126
Camargo
KY0709
42.99%
428
184
Clay
KY0924
54.76%
462
253
Dixon
KY0923
53.71%
229
123

*CPR = Percent of competitive DBS penetration rate.
5

Federal Communications Commission

DA 13-1018

ATTACHMENT B

MB Docket 12-191 CSR 8676-E, MB Docket No. 12-192 CSR 8677-E, MB Docket No. 12-193 CSR

8678-E, MB Docket No. 12-194 CSR 8679-E, MB Docket No.12-195 CSR 8680-E

COMMUNITIES SERVED BY TIME WARNER CABLE INC.

Franchise Area

Cable

Penetration

Communities

CUIDs

Households

Subscribers

Percentage

Unincorporated Laurel
KY0243
19,684
3,316
16.85%
County
Unincorporated Webster
KY1178
2,531
27
1.06%
County
6

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