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Before the Federal Communications Commission Washington, D.C. 20554 In re: ) ) Time Warner Entertainment- ) CSR-4852-E Advance/Newhouse Partnership ) ) CUID No. FL0275 d/b/a/ Time Warner Communications) ) Petition for Revocation of the ) Certification of the ) City of Mulberry, Florida to ) Regulate Basic Cable Service Rates) ) MEMORANDUM OPINION AND ORDER Adopted: September 3, 1997 Released: September 12, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Time Warner Entertainment-Advance/Newhouse partnership, d/b/a Time Warner Communications ("Time Warner") has filed a petition for revocation of the certification of the City of Mulberry, Florida (the "City") to regulate Time Warner's basic cable service and equipment rates. Time Warner alleges in its petition that it is subject to effective competition pursuant to certain provisions of the Communications Act of 1934, as amended, ("Communications Act"), 623(1)(1)(B), 47 U.S.C. 543(1)(1)(B) and Section 76.905(b)(2) of the Commission's rules. Specifically, Time Warner alleges that its cable system is subject to competing provider effective competition in the City because of the presence of American Telecasting of Central Florida, Inc., d/b/a, WANTV ("WANTV"), an unaffiliated, multichannel, multipoint distribution service ("MMDS") provider. II. BACKGROUND 2. Section 623(a)(4) of the Communications Act permits local franchising authorities to become certified to regulate the basic cable service and associated equipment rates of cable operators within their jurisdictions who are not subject to effective competition. For purposes of the initial request for certification, franchising authorities may rely on the presumption that cable operators are not subject to effective competition, unless the franchising authority has actual knowledge to the contrary. Certification becomes effective 30 days from the date of filing, unless the Commission finds that the franchising authority does not meet the statutory certification requirements. Cable operators may file petitions for reconsideration of the franchising authority's certification within 30 days from the date such certification becomes effective. Rate regulation is automatically stayed pending review of a timely-filed petition for reconsideration alleging effective competition. After the 30-day deadline for filing petitions for reconsideration has elapsed, cable operators may challenge the franchising authority's certification by filing a petition for revocation. However, regardless of its grounds, a petition for revocation does not automatically trigger a stay of the franchising authority's power to regulate basic cable service rates. 3. Section 623(a)(2) of the Communications Act provides that, where the Commission finds that a cable system is subject to effective competition, its cable service rates are not subject to regulation by the Commission or by a franchising authority. Further, Section 623(l)(1) of the Communications Act provides that a cable operator is subject to effective competition if any one of the following tests is met: (A) fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable system; (B) the franchise area is- (i) served by at least two unaffiliated multichannel video programming distributors each of which offers comparable video programming to at least 50 percent of the households in the franchise area; and (ii) the number of households subscribing to programming services offered by multichannel video programming distributors other than the largest multichannel video programming distributor exceeds 15 percent of the households in the franchise area; or (C) a multichannel video programming distributor operated by the franchising authority for that franchise area offers video programming to at least 50 percent of the households in that franchise area; or (D) a local exchange carrier or its affiliate (or any multichannel video programming distributor using the facilities of such carrier or its affiliate) offers video programming services directly to subscribers by any means (other than direct-to- home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area. III. SUMMARY OF PLEADINGS 4. Time Warner alleges that its cable system in the City is subject to effective competition and, therefore, is exempt from rate regulation pursuant to the Commission's rules. Time Warner bases its allegation that it is subject to effective competition on the availability of WANTV's wireless cable service in the City. Time Warner claims that both parts of the competing provider effective competition test in Section 623(1)(1)(B) of the Communications Act are satisfied because Time Warner and WANTV each offers comparable programming to 50 percent of the households in the City and the number of subscribers to WANTV, which is the smaller of the two systems, exceeds 15 percent of the households in the City. 5. Time Warner states that WANTV's transmitter is located in the same city, Lakeland, Florida, as Time Warner's headend. Time Warner further states that the geographical coordinates of WANTV's transmitter are it approximately 10 miles from Time Warner's headend. Time Warner states that the evidence that WANTV's transmitter is in place and that it is closely proximate to Time Warner's headend demonstrates that WANTV's service is technically available to residents of the City. 6. Time Warner asserts that there are no regulatory or other impediments that encumber WANTV's service in the City. Time Warner maintains that WANTV can serve subscribers with the minimal investment needed to install a rooftop antenna on, or near, a subscriber's home. Time Warner states that WANTV's marketing materials include a letter distributed to residents of the City which describes WANTV's cable service and rates. Time Warner further states that WANTV's marketing campaign has resulted in WANTV gaining hundreds of subscribers in the City and that potential subscribers in the City are reasonably aware of WANTV's service. For these reasons, Time Warner submits that WANTV clearly offers service to more than 50 percent of the households in the City. Time Warner also states that the City lies completely within 35 miles of WANTV's transmitter site and that the Commission has determined that wireless cable is deemed to be offered anywhere within a 35-mile interference-free contour zone. 7. With regard to whether Time Warner meets the 50 percent threshold, Time Warner states that in 1990 the City had 1,141 households and 1,444 housing units. Time Warner calculates that it currently offers service to 1,311 households. Thus, while acknowledging that considerable growth has occurred in the City since 1990, Time Warner asserts that it clearly offers service to more than 50 percent of the households in the City. Time Warner notes that, in any event, the 50 percent threshold prong of the test could be met by considering the presence of direct broadcast satellite ("DBS") services which the Commission has found to be available nationwide. 8. Time Warner argues that WANTV's programming is comparable to that of its own since WANTV currently offers 36 channels of programming, including several channels of non-broadcast programming and several local television broadcast stations. Time Warner further states that it offers a channel line-up that is similar to WANTV's. Time Warner argues that, because of the similar channel line- ups offered by itself and WANTV, the City is being served by at least two unaffiliated MVPDs each of which offers comparable programming. Finally, Time Warner argues that WANTV, the smaller of the two MVPDs, meets the requirement that at least 15 percent of the households in the City be subscribers to the smaller of the two MVPDs. Data from the 1990 Census show that WANTV serves 25.5 percent of the households in the City. IV. DISCUSSION 9. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition, as that term is defined in Section 76.905 of the Commission's rules. 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. Pursuant to the competing provider effective competition test, the cable operator must show that the two competitors each offer comparable programming to 50 percent of the households in the area and that at least 15 percent of the households in the area subscribe to service from an alternative provider offering a comparable video programming service. 10. With regard to the first portion of the test, Time Warner introduced evidence from the 1990 Census to show that it and WANTV each offer comparable programming. to at least 50 percent of the households in the City. We also find that Time Warner meets the 50 percent threshold by serving 1,311 households in the City, a greater number of households than existed in the City in 1990, which can be attributed to housing growth in the intervening years. With respect to the availability of service within the franchise area from a competing provider, it appears that WANTV offers comparable service to at least 50 percent of the households in the City. Time Warner has introduced evidence showing that WANTV's transmitter is located in the same city as Time Warner's headend and in close proximity to it. A line-of- sight/shadow plot map of the area indicates that the City lies within WANTV's line-of-sight area. In any event, as Time Warner argues, the 50 percent threshold of the competing provider effective competition test is met, regardless of WANTV's service, because of the availability of DBS service in the City. The Commission concluded in the Rate Order that DBS providers that provide nationwide service are presumed to satisfy the 50 percent threshold. Accordingly, whether by virtue of the service WANTV provides or because of the DBS service presumed to be available, we conclude that, in addition to the MVPD service being offered by Time Warner, at least one other entity is providing MVPD service to more than 50 percent of the households in the City. 13. We also find that the programming offered by Time Warner and WANTV meets the Commission's definition of "comparable programming" contained in Section 767.905(g) because each offers "at least twelve channels of programming, including at least one channel of non-broadcast programming." 14. The second part of the competing provider test requires that the number of households subscribing to an MVPD other than the largest MVPD exceeds 15 percent of the households in the City. Time Warner submitted evidence that WANTV serves 25.5 percent of households in the City. We find that Time Warner has demonstrated that WANTV's penetration rate in the City satisfies the requirement of the second prong of the competing provider test. 15. We conclude that Time Warner has established that the competing provider effective competition test has been met and we therefore grant Time Warner's petition and revoke the certification of the City to regulate Time Warner's basic service and equipment rates. V. ORDERING CLAUSES 16. Accordingly, IT IS ORDERED that the Petition for Revocation of the Certification of the City of Mulberry to Regulate the Basic Cable Service Rates of Time Warner Entertainment- Advance/Newhouse Partnership d/b/a Time Warner Communications, CSR-4852-E, pursuant to Section 76.905(b)(2) of the Commission's rules, 47 C.F.R.  76.905(b)(2), IS GRANTED. 17. IT IS FURTHER ORDERED that the certification of the City of Mulberry, Florida, CUID No. FL0275, to regulate the basic cable rates of Time Warner in that community IS REVOKED. 18. This action is taken pursuant to delegated authority under Section 0.321, 47 C.F.R.  0.321, of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau