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FCC Time Warner Order Federal Communications Commission DA 15-164 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Time Warner Cable Inc. ) MB Docket No. 13-92, CSR 8778-E ) Petition for Determination of Effective ) Competition in Three Communities in ) Massachusetts ) MEMORANDUM OPINION AND ORDER Adopted: February 5, 2015 Released: February 5, 2015 By the Senior Deputy Chief, Policy Division, Media Bureau: I. INTRODUCTION AND BACKGROUND 1. Time Warner Cable Inc., hereinafter referred to as “Time Warner” or “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 the 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”). 2. The Massachusetts Department of Telecommunications and Cable (“MDTC”) filed an opposition to the petition,3 to which Petitioner filed a reply.4 The Town of Adams, the Town of Clarksburg, and the City of North Adams (“Franchising Authorities”) also filed an opposition to the 1 See 47 U.S.C. § 543(l)(1)(B). 2 47 C.F.R. § 76.905(b)(2). 3 The MDTC is the franchise authority for rate regulation of cable services throughout the Commonwealth of Massachusetts. Massachusetts Department of Telecommunications and Cable Opposition to Time Warner Cable Inc.’s Petition for Special Relief at 2 n.2 (“MDTC Opposition”). In its opposition, MDTC raises a procedural issue. MDTC challenges the effective filing date of Time Warner’s petition because Time Warner failed to serve MDTC at its current business address. MDTC Opposition at 2-3. In response, Time Warner states that Section 1.47(g) of the Commission’s rules allows service to be corrected unless doing so would result in material prejudice to a party. Time Warner Cable Inc. Reply to Opposition of Massachusetts Department of Telecommunications and Cable at 2 (“Reply to MDTC”). See also 47 C.F.R. § 1.47(g). As soon as MDTC informed Time Warner of the error, Time Warner mailed a corrected service copy of the petition to MDTC’s current address. Reply to MDTC at 1-2, Exh. 1. Time Warner also points out that MDTC was able to timely file its opposition. Therefore, Time Warner argues the Commission should not amend the effective filing date of its petition because MDTC was not prejudiced in any way. Id. at 1-2. Finding no prejudice to the parties, we will consider the original filing date of the petition as the effective filing date. 4 Reply to MDTC. Federal Communications Commission DA 15-164 petition,5 to which Petitioner filed a reply.6 3. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition,7 as that term is defined by Section 623(l) of the Communications Act and Section 76.905 of the Commission’s rules.8 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.9 For the reasons set forth below, we grant the petition in part based on our finding that Petitioner is subject to effective competition in the communities of Clarksburg and North Adams, but we deny the petition in part as to the community of Adams. II. DISCUSSION 4. 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 multichannel 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.10 This test is referred to as the “competing provider” test. A. The First Prong of the Competing Provider Test 5. 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.11 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.12 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.13 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.14 Also undisputed is 5 Opposition of the City of North Adams, MA, Town of Adams, MA, and Town of Clarksburg, MA, to Time Warner Cable Inc.’s Petition for Special Relief (“Franchising Authorities Opposition”). The Franchising Authorities filed motions asking for extensions of time in which to file an opposition. Finding no prejudice to the parties, we will consider the pleading for purposes of having a complete record before us. 6 Time Warner Cable Inc. Reply to Opposition of the City of North Adams, MA, Town of Adams, MA, and Town of Clarksburg, MA, (“Reply to Franchising Authorities”). 7 47 C.F.R. § 76.906. 8 See 47 U.S.C. § 543(l)(1); 47 C.F.R. § 76.905(b). 9 See 47 C.F.R. §§ 76.906-76.907(b). 10 47 U.S.C. § 543(l)(1)(B); 47 C.F.R. § 76.905(b)(2). 11 47 U.S.C. § 543(l)(1)(B)(i); 47 C.F.R. § 76.905(b)(2)(i). 12 See Petition at 3-5. 13 Mediacom Illinois LLC, 21 FCC Rcd 1175, 1176, ¶ 3 (2006). 14 47 C.F.R. § 76.905(e)(2). 2 Federal Communications Commission DA 15-164 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.15 a. Franchising Authorities’ Objections 6. 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.16 The Franchising Authorities argue that neither DBS provider offers comparable programming, and specifically, that neither DBS provider offers public, educational and government (“PEG”) access programming.17 The Franchising Authorities assert that the channels offered by the DBS providers do not cover local news and events in the Communities, unlike, for example, PEG access programming available to cable subscribers from Northern Berkshire Community Television.18 Additionally, the DBS providers only offer programming from one of the nearby over-the-air broadcast markets (i.e. Boston, Albany or Hartford), although residents in the Communities are interested in programming from more than one market.19 The Franchising Authorities also point out that given the geographic isolation of the Communities, residents have limited ability to receive over-the-air signals and are more reliant on basic cable service.20 For these reasons, the Franchising Authorities argue the DBS providers do not offer comparable programming, and therefore, Petitioner has failed to satisfy the first prong of the competing provider test. b. Time Warner’s Reply 7. In reply, Petitioner argues that 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, and does not depend on the availability of PEG access programming.21 Therefore, Petitioner concludes the DBS Providers do offer comparable programming, which is supported in the petition with citations to the channel lineups for both DIRECTV and DISH.22 c. Conclusion 8. Contrary to the assertions made by the Franchising Authorities, we find that Petitioner has submitted sufficient evidence demonstrating that the DBS providers provide comparable programming. We have repeatedly held that determining whether competing service is comparable for effective competition purposes does not depend on whether the competing service includes PEG access programming.23 The channel lineup for the DBS providers cited by Petitioner establishes that the DBS 15 See Petition at 6. 16 See 47 C.F.R. § 76.905(g); see also Petition at 5. 17 Franchising Authorities Opposition at 4-5. 18 Id. at 5, Appx. A. 19 Id. at 6. 20 Id. at 6, 8-9. 21 Reply to Franchising Authorities at 4. 22 See id. at 4; Petition at 5-6, citing www.directv.com and www.dishnetwork.com. 23 Comcast Cable Commc’ns, LLC, 28 FCC Rcd 15785, 15787, ¶ 7 (2013); see also Comcast Cable Commc’ns, LLC, 26 FCC Rcd 3993, 3994-95, ¶ 5 (2011) (“The rule does not mention PEG channels, and we have repeatedly held that the absence of PEG channels from competing service does not disqualify its programming from being ‘comparable’ to cable operators’ for purposes of determining effective completion.”); CoxCom, Inc., 14 FCC Rcd 7134, 7141-42, ¶ 19 (1999) (“PEG programming is not one of the factors the Commission has indicated is germane (continued....) 3 Federal Communications Commission DA 15-164 providers’ services offer far more channels than our rule requires.24 Therefore, the DBS providers’ programming satisfies all the criteria stated in our rule’s definition.
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