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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: ) CSR 5059-E ) Time Warner Entertainment Company, L.P. ) Columbus Grove, OH d/b/a Time Warner Cable ) CUID No. OH0179 ) Petition for Special Relief ) MEMORANDUM OPINION AND ORDER Adopted: November 17, 1997 Released: November 20, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Time Warner Entertainment Company, L.P. d/b/a Time Warner Cable ("Time Warner") has filed a Petition for Special Relief seeking a determination of effective competition. Time Warner asserts that it is subject to effective competition in the Village of Columbus Grove, Ohio ("Columbus Grove") because of the presence of Quality One Technologies, Inc. ("Q1"), a cable operator also providing service in that Community. This petition is unopposed. For the reasons discussed below, the Petition is granted. 2. In Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996 ("Cable Act Reform Order"), the Commission instructed cable operators believing themselves subject to local exchange carrier ("LEC") effective competition under Section 623(l)(1)(D) of the Communications Act to file a petition for determination of effective competition pursuant to Section 76.7 of the Commission's rules. A finding that a cable system is subject to effective competition precludes regulation of its cable rates by the local franchising authority. Section 623(l)(1)(D) of the Communications Act provides that a cable operator is subject to effective competition where: 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. II. THE PLEADINGS 3. Time Warner asserts that it is subject to LEC effective competition in its Columbus Grove, Ohio franchise area. With regard to the LEC affiliation requirement, Time Warner asserts that Q1 is a competing franchised cable operator wholly owned by the Columbus Grove Telephone Company, a local exchange carrier serving Columbus Grove, Ohio. 4. With regard to the requirement that the LEC competitor offer video programming service in the unaffiliated cable operator's franchise area, Time Warner asserts that Q1 has begun construction of a cable system that will lead to an overlapping service area covering the entire Village of Columbus Grove. Time Warner states that Q1 has been providing cable service to subscribers since May 1997. Time Warner estimates that at least 250 of its subscribers that cancelled service in the Village stated their reason for doing so was due to switching service to Q1. Time Warner adds that Q1 has heavily marketed the availability of its cable service through local media and other means and only requires the return of a mail-in form or a phone call in order to install and activate service to new subscribers. Time Warner asserts there are no regulatory, technical, or other impediments to households taking service from Q1. 5. Time Warner also asserts that Q1 offers comparable programming to Columbus Grove subscribers. Specifically, Time Warner provides Q1's channel line-up which demonstrates that Q1 offers over 54 channels, of which at least 8 are local television broadcasting signals. Time Warner offers 68 channels of programming in Columbus Grove, of which at least 9 are local television broadcasting signals. III. ANALYSIS 6. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition as defined in the Communications Act. The cable operator bears the burden of rebutting the presumption that such effective competition does not exist and must provide evidence sufficient to demonstrate that effective competition, as defined by Section 76.905 of the Commission's rules, is present in the franchise area. Time Warner has met this burden. 7. With regard to the first part of the LEC effective competition test, which requires that the alleged competitive service be provided by a LEC or its affiliate (or any multi-channel video programming distributor ("MVPD") using the facilities of such LEC or its affiliate), we find that Time Warner has provided sufficient evidence demonstrating that Q1 is an MVPD wholly owned by a LEC. The Columbus Grove Telephone Company is a LEC as defined by the Communications Act, and Q1 meets the Commission's definition of MVPD. Therefore, we find that Time Warner has demonstrated that Q1 satisfies the affiliation prong of the LEC effective competition test. Time Warner is unaffiliated with both Q1 and the Columbus Grove Telephone Company. 8. We also find that Time Warner has submitted sufficient evidence to show that the programming of Q1 is comparable to the programming which it provides. The channel information for Q1 submitted by Time Warner establishes that Q1 offers more than 54 channels of programming, including 8 local broadcast channels. This offering satisfies the programming comparability criterion. 9. In addition, we find that based on the information before us, Q1 is offering service in Time Warner's franchise area sufficient to demonstrate the presence of effective competition. Time Warner presented information indicating that its entire franchise area is being overbuilt by Q1, which has a twenty-five year franchise commitment to provide video service in the Village of Columbus Grove, and is now competing for customers with Time Warner in the area at issue. We find that Q1's presence and its undisputed recruitment of 250 subscribers from Time Warner in the franchise area are indicia that Q1 is physically able to offer service in the cable community. 10. We note that Q1's extensive marketing efforts and the wide press coverage of Q1's cable service offerings in the local media ensure that potential subscribers are reasonably aware of the availability of Q1's service. Subscribers in Columbus Grove are able to receive Q1's cable service for little or no additional investment and without encountering regulatory or technical obstacles. We also note that Time Warner has instituted a preferred customer plan, and added channels to some service tiers, all for the benefit of its subscribers. Consistent with Congressional intent in adopting Section 623(l)(1)(d) of the Communications Act, under the circumstances we find "effective competition" to be present. IV. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the Petition for Special Relief seeking a determination of effective competition filed by Time Warner Entertainment Company, L.P. d/b/a Time Warner Cable IS GRANTED. 12. This action is taken pursuant to the interim rules adopted in Implementation of Cable Reform Provisions of the Telecommunications Act of 1996, and is without prejudice to any further action taken by the Commission in adopting final rules pursuant to the Notice of Proposed Rulemaking contained therein. 13. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, as amended. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau