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Time Warner Petition For Effective Competition, Kentucky

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Released: July 16, 2013

Federal Communications Commission

DA 13-1569

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Time Warner Cable Inc.
)
MB Docket No. 12-143, CSR 8641-E
)
Petition for Determination of Effective
)
Competition in Eight Kentucky Franchise Areas
)

MEMORANDUM OPINION AND ORDER

Adopted: July 11, 2013

Released: July 16, 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 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 petition is 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 petition 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
households in the franchise area.6 This test is referred to as the "competing provider" test.


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).
6 47 U.S.C. 543(l)(1)(B); 47 C.F.R. 76.905(b)(2).

Federal Communications Commission

DA 13-1569

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 this petition
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 asserts that it is the largest MVPD in the Communities.14 Petitioner sought to determine
the competing provider 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.15
6.
Based upon the aggregate DBS subscriber penetration levels that were calculated using


7 47 U.S.C. 543(l)(1)(B)(i); 47 C.F.R. 76.905(b)(2)(i).
8 See Petition at 3-5.
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 Petition at 5-6.
12 See Petition at 5, citing www.directv.com and www.dishnetwork.com.
13 See Petition at 6.
14 See id. at 7 and attached Declaration of Edward Kozelek, Vice President of Government Relations Midwest for
Time Warner Cable (May 15, 2012). Time Warner submitted an amendment in this proceeding in which it noted
that a review of the Commission's file copy of this Petition revealed that page 7 of the Petition was missing. Time
Warner's amendment supplied the missing page 7 that was not filed with the Petition. See Letter from Craig A.
Gilley, Attorney for Time Warner to Marlene H. Dortch, Secretary, Federal Communications Commission (April 1,
2013). The missing page 7 as supplied in this amendment contained the competing provider penetration chart. The
DBS provider penetration percentage for Lynnview as reflected in this chart was incorrectly calculated. Time
Warner later filed another amendment stating that the correct DBS penetration for Lynnview is 16.02%. See Letter
from Craig A. Gilley, Attorney for Time Warner to Marlene H. Dortch, Secretary, Federal Communications
Commission (June 21, 2013).
15 Petition at 6-7. 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.
2

Federal Communications Commission

DA 13-1569

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 Communities. Therefore, the second prong of the
competing provider test is satisfied for each of 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.

III.

ORDERING CLAUSES

7.
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

.
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


16 Petition at 7.
17 47 C.F.R. 0.283.
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Federal Communications Commission

DA 13-1569

ATTACHMENT A

MB Docket No. 12-143, CSR 8641-E

COMMUNITIES SERVED BY Time Warner Cable Inc.

2010 Census

Estimated DBS

Communities

CUIDs

CPR*

Households

Subscribers

Forest Hills
KY0499
17.92%
173
31
Glenview
KY1257
17.70%
226
40
Lynnview
KY0444
16.02%
412
66
Meadowbrook
KY0491
16.28%
43
7
Farm
Plantation
KY0587
15.85%
347
55
South Park View
KY0505
50.00%
4
2
Watterson Park
KY0628
20.33%
487
99
Westwood
KY0522
15.60%
218
34

*CPR = Percent of competitive DBS penetration rate.
4

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