Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 8035-E, 8043-E, 8049-E,  |
|                                  | * | 8042-E,                      |
| Time Warner Entertainment --     | ) |                              |
| Advance/Newhouse Partnership     | * | 8038-E, 8046-E, 8034-E,      |
|                                  | * | 8031-E, 8054-E, 8032-E       |
| Petition for Determination of    |   |                              |
| Effective Competition in Several | * |                              |
| North Carolina Communities       | * |                              |
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+----------------------------------+---+------------------------------+

MEMORANDUM OPINION AND ORDER

**Adopted: December 2, 2008 Released: December 3, 2008**

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), 76.905(b)(1) 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 "Communities." Petitioner alleges that its cable system
    serving the Communities is subject to effective competition pursuant
    to Section 623(1) 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"). Petitioner alternatively claims to be exempt
    from cable rate regulation in the Communities listed on Attachment B
    because the Petitioner serves fewer than 30 percent of the
    households in the franchise area. The petitions are 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 petitions based on our finding that
    Petitioner is subject to effective competition in the Communities
    listed on Attachments (A and B).

# II. DISCUSSION

**A. The Competing Provider Test**

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 ("MVPD") 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 otherwise referred to as the "competing provider" test.

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]

5.  Turning to the first prong of this test, it is undisputed that these
    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 of DBS advertising in local, regional,
    and national media that serve the Communities to support their
    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 these petitions.[^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.

6.  The second prong of the competing provider test requires that the
    number of households subscribing to MVPDs, other than the largest
    MVPD, exceed 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 ("SBCA") that identified the number of subscribers
    attributable to the DBS providers within the Communities on a zip
    code basis.[^15]

7.  Based upon the aggregate DBS subscriber penetration levels that were
    calculated using Census 2000 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.

8.  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. However,
    Petitioner included the community of McAdenville (CUID NC0309) in
    the caption of its petition, but provided no information to support
    a determination that effective competition exists for this
    community. According to Petitioner's numbers, DBS penetration for
    this community is only 14.84%, falling below the 15% minimum
    required for a finding of effective competition. Accordingly, the
    petition is denied with respect to this community.

    **B. The Low Penetration Test**

9.  Section 623(l)(1)(A) of the Communications Act provides that a cable
    operator is subject to effective competition if the Petitioner
    serves fewer than 30 percent of the households in the franchise
    area; this test is otherwise referred to as the "low penetration"
    test.[^17] Petitioner alleges that it is subject to effective
    competition under the low penetration effective competition test
    because it serves less that 30 percent of the households in the
    franchise area.

10. Based upon the subscriber penetration level calculated by
    Petitioner, as reflected in Attachment B, we find that Petitioner
    has demonstrated the percentage of households subscribing to its
    cable service is less than 30 percent of the households in the
    Communities listed on Attachment B. Therefore, the low penetration
    test is also satisfied as to the Communities.

# III. ordering clauses 

11. Accordingly, **IT IS ORDERED** that the petitions for a
    determination of effective competition filed in the captioned
    proceeding by Time Warner Cable, Inc. **ARE GRANTED**.

12. **IT IS FURTHER ORDERED** that the petition for a determination of
    effective competition filed in the captioned proceeding by Time
    Warner Cable, Inc. regarding the Community of McAdenville is
    **DENIED**.

13. **IT IS FURTHER ORDERED** that the certification to regulate basic
    cable service rates granted to any of the Communities set forth on
    Attachment A, except for the Community of McAdenville, **IS
    REVOKED**.

14. This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^18]

    FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Senior Deputy Chief, Policy Division, Media Bureau

ATTACHMENT A

**CSR 8035-E, 8043-E, 8049-E, 8042-E, 8038-E, 8046-E, 8034-E, 8031-E,
8054-3, 8032-E**

**COMMUNITIES SERVED BY TIME WARNER CABLE, INC.**

**2000 Estimated**

**Census DBS**

## Communities CUID(S) CPR\* Household Subscribers 

##  

## City of Albemarle NC0286 26.51% 6325 1677

## Town of Ansonville NC1074 31.80% 239 76

## Town of Badin NC1075 26.52% 509 135

## City of Belmont NC0346 18.43% 3272 603

## Town of Belwood NC0839 45.09% 377 170

## Bessemer City NC0005 22.74% 2005 456

## Town of Boiling Springs NC0529 20.41% 1117 228

## Town of Casar NC0843 43.70% 135 59

## City of Charlotte NC0007 20.45% 214971 43960

## City of Cherryville NC0240 27.69% 2174 602

## Town of China Grove NC0284 29.99% 1384 415

## Cleveland County (uninc.) NC0321 26.40% 21890 5779

## City of Concord NC0173 26.70% 21094 5633

## Town of Cramerton NC0311 18.03% 1159 209

## Town of Dobbin Heights NC0648 17.18% 390 67

## Town of East Spencer NC0285 16.52% 702 116

## Town of Ellerbe NC0462 21.57% 394 85

## Town of Fairview NC1084 41.92% 897 376

## Gaston County (uninc.) NC0348 23.68% 30022 7113

## City of Gastonia NC0010 20.44% 25925 5299

## Town of Grover NC0694 20.66% 271 56

## Town of Hamlet NC0025 17.27% 2449 423

## Town of Hoffman NC0963 37.04% 216 80

## Town of Huntersville NC0366 38.25% 9171 3508

## Iredell County (uninc.) NC0147 42.28% 20022 12694

## City of Kannapolis NC0193 24.82% 14676 3642

## City of Kings Mountain NC0308 21.99% 3801 836

## Town of Kingston NC1078 19.92% 256 51

## Town of Landis NC0288 27.48% 1201 330

## Town of Lattimore NC0757 19.67% 122 24

## Town of Lilesville NC0646 33.33% 62 186

## City of Locust NC0518 31.79% 909 289

## City of Lowell NC0310 15.39% 1072 165

## Town of McAdenville NC0309 14.84% 256 38

## Town of Midland NC1065 30.60% 1905 583

## City of Monroe NC0575 29.77% 9029 2688

## City of Mt. Holly NC0347 20.46% 4028 824

## Town of Patterson Springs NC0522 20.83% 240 50

## Town of Pineville NC0505 15.09% 1670 252

## Town of Polkville NC0521 20.10% 204 41

## City of Ranlo NC0243 16.14% 855 138

## Richmond County (uninc.) NC0463 26.15% 10421 2725

## City of Rockingham NC0026 17.17% 3936 676

## Rowan County (uninc.) NC0385 30.50% 29286 8933

City of Salisbury NC0015 25.97% 10246 2661

City of Shelby NC0027 20.32% 7918 1609

Town of Spencer NC0158 16.93% 1305 221

Town of Spencer Mountain NC0719 18.75% 16 3

Town of Stanfield NC0520 40.89% 428 175

Stanly County (uninc.) NC0515 36.24% 12371 4483

City of Statesville NC0103 41.97% 9256 3885

Union County (uninc.) NC0574 30.45% 19833 6040

Town of Unionville NC1082 28.08% 1617 454

Town of Waco NC0756 27.61% 134 37

Town of Wingate NC0498 29.65% 769 228

Town of Clover SC0277 19.05% 1517 289

City of Cooleemee NC0872 43.75% 400 175

Town of Danbury NC0955 48.84% 43 21

Town of Dobson NC0509 39.20% 551 216

Town of East Bend NC0679 39.49% 276 109

Town of Elkin NC0054 37.08% 1691 627

City of King NC0683 40.60% 2303 935

Town of Midway NC1062 19.81% 4502 892

Town of Mocksville NC0391 44.13% 1670 737

City of Mount Airy NC0014 33.52% 3586 1202

Town of Rural Hall NC0687 26.31% 1091 287

City of Thomasville NC0083 17.87% 7961 1423

Village of Tobaccoville NC0685 26.95% 861 232

Town of Walkertown NC1024 16.97% 1644 279

City of Winston-Salem NC0031 17.28% 75982 13129

Town of Yadkinville NC0589 35.38% 961 340

Davidson County (uninc.) NC0112 18.69% 41195 7698

Forsyth County (uninc.) NC0154 18.06% 27651 4994

Surry County (uninc.) NC0108 37.97% 21940 8331

Yadkin County (uninc.) NC0966 39.65% 11778 4670

Town of Chadbourn NC0017 38.37% 889 340

Town of Clarkton NC0538 44.10% 288 127

City of Whiteville NC0018 35.71% 2198 785

Elizabeth City NC0099 30.14% 6579 1983

Pasquotank County (uninc.) NC0104 29.48% 6330 1866

Town of Butner NC0263 20.10% 1428 287

Town of Louisburg NC0844 48.07% 1733 833

Town of Stovall NC0986 42.58% 155 66

Vance County (uninc.) NC0132 32.12% 9754 3133

Town of Black Creek NC0457 17.86% 280 50

Elm City NC0250 32.49% 474 154

City of Fremont NC0251 41.99% 593 249

Town of Stantonsburg NC0460 42.44% 311 132

Wayne County (uninc.) NC0763 30.91% 24852 7682

Town of Alliance NC0550 33.69% 282 95

Town of Aurora NC0560 48.68% 265 129

Town of Bayboro NC0552 28.33% 300 85

Town of Mesic NC0556 30.63% 111 34

Town of Vandemere NC0555 31.90% 116 37

City of Jacksonville NC0022 16.02% 17209 2757

Town of Maysville NC0585 24.81% 403 100

Town of Pollocksville NC0583 31.97% 147 47

Town of Ahoskie NC0036 34.63% 1857 643

Town of Aulander NC0824 40.16% 371 149

Town of Cofield NC0920 34.84% 155 54

Town of Murfreesboro NC0037 35.79% 908 325

Town of Winton NC0699 27.05% 366 99

Town of Four Oaks NC0325 43.52% 602 262

Town of Franklinton NC0331 37.50% 728 273

Town of Pine Level NC0253 35.78% 587 210

Town of Wendell NC0341 35.04% 1675 587

\*CPR = Percent of competitive DBS penetration rate.

ATTACHMENT B

**CSR 8035-E, 8043-E, 8049-E, 8038-E, 8046-E, 8034-E, 8031-E, 8054-E,
8032-E**

**COMMUNITIES SERVED BY TIME WARNER CABLE, INC.**

##  Franchise Area Cable Penetration 

## Communities CUID(S) Households Subscribers Percentage 

##  

## Town of Davidson NC0012 1909 100 5.24%

## Town of Matthews NC0246 7717 1357 17.58%

## Lancaster County (uninc.) SC0372 18764 1595 8.50%

## York County (uninc.) SC0315 33438 1376 4.12%

## Carroll County (uninc.) VA0446 12186 283 2.32%

## Davie County (uninc.) NC0392 10989 2659 24.20%

## Wilkes County (uninc.) NC0592 23499 409 1.74%

## Bladen County (uninc.) NC0537 9738 1250 12.81%

## Town of Bladenboro NC0536 1649 402 24.38%

## Columbus County (uninc.) NC0566 15560 853 5.48%

## Franklin County (uninc.) NC0845 15544 254 1.63%

## Granville County (uninc.) NC0169 12285 935 7.61%

## Town of Kittrell NC0990 62 13 20.97%

## Town of Norlina NC0317 468 105 22.44%

## Town of Saratoga NC0458 158 26 16.46%

## Pamlico County (uninc.) NC0645 343 447 12.91%

## Town of Stonewall NC0554 120 35 29.17%

## Jones County (uninc.) NC0584 3451 294 8.52%

## Onslow County (uninc.) NC0384 28972 4848 16.73%

## Hertford County (uninc.) NC0535 5581 1073 19.23%

## Johnston County (uninc.) NC0255 32975 5032 15.26% 

[^1]: *See* 47 U.S.C. § 543(a)(1).

[^2]: 47 C.F.R. § 76.905(b)(2) and 47 C.F.R. § 76.905(b)(1).

[^3]: 47 C.F.R. § 76.906.

[^4]: *See* 47 U.S.C. § 543(l) and 47 C.F.R. § 76.905.

[^5]: *See* 47 C.F.R. §§ 76.906 & 907.

[^6]: 47 U.S.C. § 543(1)(1)(B); *see* also 47 C.F.R. § 76.905(b)(2).

[^7]: 47 C.F.R. § 76.905(b)(2)(i).

[^8]: *See* Petitions at 3-4.

[^9]: Mediacom Illinois LLC et al., Eleven Petitions for Determination
    of Effective Competition in Twenty-Two Local Franchise Areas in
    Illinois and Michigan*,* 21 FCC Rcd 1175 (2006)*.*

[^10]: 47 C.F.R. § 76.905(e)(2).

[^11]: *See* 47 C.F.R. § 76.905(g). *See also* Petitions at 4-5.

[^12]: *See* Petitions at 5. While Petitioner did not provide copies of
    channel lineups for either DIRECTV or Dish, Petitioner did provide
    links to the relevant DBS websites where listings are available.
    Petitioner is correct to note that we have consistently found that
    the programming of both DBS providers satisfies the programming
    compatibility component of the test.

[^13]: *See* Petitions at 5-6.

[^14]: *Id.*

[^15]: *See* Petitions at 6-7, Exhibits B,D.

[^16]: Petitions at 7, Exhibits B, D-E.

[^17]: 47 U.S.C. § 543(l)(1)(A).

[^18]: 47 C.F.R. § 0.283.