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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) TIME WARNER ENTERTAINMENT - ) CUID No. FL0027 ADVANCE/NEWHOUSE PARTNERSHIP ) d/b/a TIME WARNER COMMUNICATIONS) ) Petition for Change ) CSR 4818-E in Regulatory Status ) MEMORANDUM OPINION AND ORDER Adopted: March 4, 1997 Released: March 5, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On August 7, 1996, Time Warner Entertainment-Advance Newhouse Partnership d/b/a Time Warner Communications ("Time Warner") filed a petition for change in regulatory status pursuant to Section 76.915(f) of the Commission's rules relating to its cable system serving the City of Inverness, Florida ("Inverness"). On September 13, 1996, the Commission gave public notice seeking comment on Time Warner's petition. No comments were filed. 2. Section 623(a)(4) of the Communications Act of 1934, as amended ("Communications Act"), allows franchising authorities to become certified to regulate the basic cable service rates of cable operators which are not subject to effective competition. For purposes of the initial request for certification, a franchising authority may rely on the presumption that cable operators within its jurisdiction are not subject to effective competition, unless the franchising authority has actual knowledge to the contrary. Such certification becomes effective thirty days from the date of filing, unless the Commission finds that the franchising authority does not meet the statutory certification requirements. In franchise areas in which the franchising authority does not become certified to regulate basic cable service rates, cable operators remain subject to many of the rate requirements of the Communications Act and the Commission's rules (e.g., regulation of unreasonable cable programming service rates and the uniform rate requirement). In these situations, the Commission's rules provide for determinations of effective competition through a petition for change in regulatory status. A successful petition for change in regulatory status will exempt a cable operator from rate regulation in the same manner as would a successful petition for reconsideration or revocation of certification in the context of a certified franchising authority. II. DISCUSSION A. The Pleadings 3. The City of Inverness has not become certified to regulate the basic cable service rates of cable operators within its boundaries. Time Warner bases its petition for change in regulatory status on the competing provider test for effective competition. Time Warner argues that its system serving the City of Inverness is subject to effective competition because its franchise area is: (1) served by itself and Telesat Cablevision, Inc. ("Telesat"), an unaffiliated cable operator, each of which offers comparable programming to at least 50% of the households in Inverness, and (2) the number of households subscribing to Time Warner, the smaller cable operator, exceeds 15% of the households in the franchise area. 4. Time Warner submits 1990 Census information contained in Florida Municipal Profiles demonstrating that there are 3,099 housing units and 2,674 households (that is, occupied housing units) in Inverness. Time Warner submits a computer printout with sufficient information demonstrating that its system offers service to 2,729 housing units, and provides service to 1,159 households in Inverness. Time Warner submits a copy of its channel line-up which demonstrates that it provides 55 channels of programming, including at least 43 non-broadcast channels. 5. With respect to Telesat, Time Warner provides a copy of a letter from Telesat's District Manager stating that Telesat offers service to 3,445 housing units, and provides service to 1,829 households in Inverness. Time Warner also submits a copy of Telesat's channel line-up which demonstrates that Telesat provides 60 channels of programming, including at least 40 non- broadcast channels. B. Analysis 6. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition. The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition, as defined by Section 76.905 of the Commission's rules, is present within its franchise area. Time Warner has met this burden. 7. The first prong of the competing provider test requires that the franchise area be served by at least two unaffiliated multichannel video program distributors ("MVPD"), each of which offers comparable programming to at least 50% of the households in the franchise area. Time Warner's evidence indicates that there are 2,674 households in its Inverness franchise area. To satisfy the first prong of the competing provider test, Time Warner must establish that its system, and that of Telesat, offers service to at least 1,337 households in Inverness (50% of 2,674 households). Time Warner provides evidence that its system offers service to 2,729 housing units. After reducing this number by the franchise area vacancy rate of 13.7%, we find that Time Warner offers service to approximately 2,355, or 88.1% of the total households in Inverness. In addition, Time Warner provides evidence that Telesat's system offers service to 3,445 housing units. After reducing this number by the franchise area vacancy rate of 13.7%, we find that Telesat offers service to approximately 2,973 households -- significantly above the 1,337 households necessary to establish that Telesat offers service to at least 50% of the households in the franchise area. 8. With respect to the second part of the first prong of the competing provider test, programming comparability, we find that the programming of Time Warner and Telesat are comparable. We note that each provider offers at least 12 channels of video programming, including at least one non-broadcast channel. This satisfies the Commission's programming comparability criterion. 9. With regard to the second prong of the competing provider effective competition test, we find that the evidence shows that more than 15% of the households in the franchise area subscribe to multichannel video programming other than from Telesat, the largest MVPD. Here, Time Warner has submitted sufficient evidence that it serves 1,159 of the 2,674 households, or 43.3% of the households in the franchise area. 10. As Time Warner has submitted sufficient evidence demonstrating that its cable system serving the City of Inverness is subject to competing provider effective competition, its petition is granted. III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petition for change in regulatory status filed by Time Warner Entertainment-Advance Newhouse Partnership d/b/a Time Warner Communications relating to its cable system serving the City of Inverness, Florida IS GRANTED. 12. This action is taken pursuant to delegated authority pursuant to Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau