Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of:                | * | CSR 6091-E                   |
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| Texas Cable Partners, L.P.       | ) |                              |
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| Petition for Determination of    | * |                              |
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| Competition in Eleven Texas      | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: March 30, 2004** **Released: April 7, 2004**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1.  Texas Cable Partners, L.P. d/b/a Time Warner Cable ("Texas Cable")
    has filed with the Commission a petition pursuant to Sections 76.7
    and 76.907 of the Commission\'s rules for a determination of
    effective competition in the eleven communities listed on Attachment
    A (the "Communities"). Texas Cable alleges that its cable systems
    serving these communities are subject to effective competition
    pursuant to Section 623(1) of the Communications Act,[^1] and the
    Commission\'s implementing rules,[^2] and are therefore exempt from
    cable rate regulation. More particularly, Texas Cable claims the
    presence of effective competition in the eleven Communities stems
    from the competing services provided by two unaffiliated direct
    broadcast satellite (\"DBS\") providers, DirecTV and EchoStar. Texas
    Cable claims it is subject to effective competition in these
    Communities under the "competing provider" effective competition
    test set forth in Section 623(1)(1)(B) of the Communications
    Act.[^3] An opposition to the petition was filed by the local
    franchising authority of the City of Baytown (the "City"). Texas
    Cable filed a reply.

# discussion

2.  In the absence of a demonstration to the contrary, cable systems are
    presumed not to be subject to effective competition,[^4] as that
    term is defined by Section 623(1) of the Communications Act of 1934,
    as amended, and Section 76.905 of the Commission\'s rules.[^5] 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.[^6]
    Section 623(l) of the Communications Act provides that a cable
    operator is subject to effective competition, if either one of four
    tests for effective competition set forth therein is met.[^7] A
    finding of effective competition exempts a cable operator from rate
    regulation and certain other of the Commission's cable
    regulations[^8]

3.  Section 623(l)(1)(B) of the Communications Act provides that a cable
    operator is subject to effective competition if its 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 fifteen percent of the households in the franchise area.[^9]
    Turning to the first prong of this test, we find that the
    programming of DBS providers, such as DirecTV and EchoStar, satisfy
    the Commission\'s programming comparability criterion. DBS service
    is presumed to be technically available due to its nationwide
    satellite footprint, and presumed to be actually available if
    households in a franchise area are made reasonably aware that the
    service is available.[^10] Texas Cable has provided evidence of the
    advertising of DBS service in regional and national media serving
    the franchise areas.[^11] Moreover, the two DBS providers'
    subscriber growth reached approximately 20.4 million as of June 30,
    2003, comprising approximately 20% of all MVPD subscribers
    nationwide; DirecTV has become the second largest, and EchoStar the
    fourth largest, MVPD provider as of June 2003.[^12]

4.  With respect to the first prong of the test, the City asserts that
    Texas Cable failed to provide evidence of local advertising
    sufficient to make potential Baytown satellite subscribers
    reasonably aware that DBS service may be purchased locally. In view
    of the data discussed above, we conclude that the population of the
    Communities at issue here may be deemed reasonably aware of the
    availability of DBS services for purposes of the first prong of the
    competing provider test and reject the contention of the City that
    Texas Cable has failed to meet its burden of proving reasonable
    awareness of the availability of DBS service in Baytown under the
    first prong of the competing provider test.

5.  With respect to the issue of program comparability, we find that the
    programming of the DBS providers satisfies the Commission\'s program
    comparability criterion because the DBS providers offer more than 12
    channels of video programming, including several non-broadcast
    channels.[^13] We find that Texas Cable has demonstrated that the
    eleven Texas Communities are served by at least two unaffiliated
    MVPDs, namely the two DBS providers, each of which offers comparable
    video programming to at least 50 percent of the households in the
    franchise area. Therefore, 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. Texas
    Cable provided information showing that its residential
    subscribership in the Communities tested under the competing
    provider test exceeds the aggregate total subscribership of the DBS
    providers, thus establishing that it is the largest MVPD provider in
    the eleven Communities.[^14]

7.  Texas Cable also provided 2000 Census data and population growth
    estimates for the eleven Communities, from which estimated 2000
    household numbers for each of the Counties were developed.[^15]
    Texas Cable then compared the 2000 Census households for each of the
    Communities with the households in each of the U.S. Postal Zip Code
    areas encompassing each Community, and allocated that proportion of
    the DBS subscribers within each such Zip Code to each
    Community.[^16] The resulting numbers of DBS subscribers were then
    compared to the household numbers for each Community to demonstrate
    that in each Community the DBS MPVD providers collectively have
    attained subscriber penetration levels ranging from 15.7 percent in
    Meadows Place, Texas, to 27.52 percent in Jamaica Beach, Texas,[^17]
    establishing that two DBS MPVD providers have attained subscriber
    penetration levels exceeding the threshold 15 percent penetration
    level in each of the eleven Communities.[^18] Based on this
    information we find that Texas Cable has satisfied the second prong
    of the competing provider test in these eleven Communities.

8.  The City asserts that the second prong of the test is not met
    because Texas Cable failed to present evidence of the exact number
    of MPVD subscribers within Baytown's franchise area. We reject the
    City's assertion that Texas Cable's penetration figures for Baytown
    should not be accepted because they were based on flawed data. The
    City faulted the DBS subscriber allocations for being based on the
    use of five digit Zip Code data, contending that higher DBS
    penetration rates exist in the rural portion of the Zip Codes
    outside of Baytown, which must be accompanied by lower penetration
    rates within Baytown. The City suggests that such lower penetration
    rates are not reflected by five digit Zip Code data from the
    SkyTrends report utilized by Texas Cable in developing its DBS
    subscriber figures.[^19] The City also criticizes Texas Cable's
    failure to support the Baytown calculations with SkyTrends' Zip Code
    plus four data, which it contends is available and would more
    accurately identify the numbers of DBS subscribers within Baytown
    than the five digit Zip Code data used. The City failed to provide
    any data that supports this contention. Although it accepts Zip Code
    plus four data for purposes of demonstrating effective competition,
    the Commission has not expressed a preference for one form of
    SkyTrends report over another. Therefore, we cannot accept the
    City's objections as a credible basis for rejecting the data and DBS
    subscriber allocations presented by Texas Cable for Baytown.

9.  Texas Cable met its initial burden of coming forward with evidence
    relative to effective competition in Baytown and the other
    Communities at issue, by presenting DBS subscriber penetration
    levels developed from subscriber allocation figures based on the
    five digit Zip Code data discussed above. The City's argument alone
    that such data may be flawed failed to rebut Texas Cable's
    evidentiary showing. Instead, the City presented data which merely
    confirmed the household and subscriber data Texas Cable used to
    calculate DBS penetration.[^20] In failing to present any data shown
    to be more accurate that that presented by Texas Cable, the City
    failed in their burden of coming forward to meet the initial
    evidentiary showing made by Texas Cable.

10. Based on the foregoing, we conclude that Texas Cable has submitted
    sufficient evidence demonstrating that its cable systems serving the
    eleven Texas communities listed on Attachment A are subject to
    effective competition.

# ordering clauses

11. Accordingly, **IT IS ORDERED** that the captioned petition for a
    determination of effective competition in the eleven Texas
    communities listed on Attachment A **IS GRANTED**.

12. This action is taken pursuant to authority delegated under Section
    0.283 of the Commission's rules.[^21]

    FEDERAL COMMUNICATIONS COMMISSION

    Steven A. Broeckaert

    Deputy Chief, Policy Division

    Media Bureau

    **ATTACHMENT A**

    **File No. CSR 6091-E**

    **COMMUNITIES SERVED BY**

    **Texas Cable Partners, L.P. d/b/s Time Warner Cable**

    **Zip Code Allocations\***

**Texas 2000 Census Zip Code DBS Subs\*\* DBS Subs**

## Communities Households Households Factor Per Zip Code Allocated CPR\*\*\* {#communities-households-households-factor-per-zip-code-allocated-cpr .unnumbered}

## Baytown 23,483 32,655 72% 5336/5229 3761 16.0% {#baytown-23483-32655-72-53365229-3761-16.0 .unnumbered}

Bellaire 6,019 6,114 98% 985/965 950 15.8%

Clear Lake Shores 590 3,365 18% 545/534 94 15.95%

Freeport 4,163 6,768 62% 1409/1381 849 20.4%

Hitchcock 2,434 18,856 13% 3175/3112 402 16.5%

Humble 5,460 15,516 35% 2463/2414 849 15.6%

Jamaica Beach 483 4,548 11% 1277/1251 133 27.5%

Jersey Village 2,840 24,337 12% 4691/4597 536 18.9%

Meadows Place 1,598 10,648 15% 1648/1615 242 15.2%

Morgan's Point 111 12,690 1% 2335/2288 20 18.0%

Sugarland 20,515 39,157 52% 9654/9461 4,957 24.2%

\*See Texas Cable Petition at Exhibits B, C, & D.

\*\*Zip Code Subs/Less 2% attributed to commercial or test accounts.

\*\*\*CPR = Percent DBS penetration rates

[^1]: 47 U.S.C. § 543(1).

[^2]: 47 C.F.R. § 76.905(b)(4).

[^3]: *See* 47 U.S.C. § 543(1)(1)(B).

[^4]: 47 C.F.R. § 76.906.

[^5]: ^ ?^*See* 47 U.S.C. § 543(1) and 47 C.F.R. § 76.905.

[^6]: *See* 47 C.F.R. §§ 76.906 & 907.

[^7]: *See* 47 U.S.C. § 543(l)(1)(A)-(D).

[^8]: ^?^*See* 47 C.F.R. § 76.905.

[^9]: 47 U.S.C. § 543(1)(1)(B); *see also* 47 C.F.R. § 76.905(b)(2).

[^10]: *See MediaOne of Georgia*, 12 FCC Rcd 19406 (1997).

[^11]: *See* Petition at 4; Reply at 9-12 and Exhibit C & D.

[^12]: *Tenth Annual Assessment of the Status of Competition in the
    Market for Delivery of Video Programming*, FCC 04-5, released
    January 28, 2004, at Par. 65-67.

[^13]: *See* 47 C.F.R. § 76.905(g). *See also* Texas Cable Petition at
    6-7.

[^14]: Petition at 7.

[^15]: *Id* at 7-9 and Exhibit A. 2000 Census data satisfies effective
    competition decision requirements. *See Cable Operators\' Petitions
    for Reconsideration and Revocation of Franchising Authorities\'
    Certifications to Regulate Cable Service Rates*, 9 FCC Rcd 3656
    (1994).

[^16]: *Id*.

[^17]: Petition at 8-9 and Exhibit A.

[^18]: *See* Attachment A.

[^19]: Petition at 8 & Exhibit B.

[^20]: *Compare* Opposition at 10-11 *with* Petition at 8-9 and Exhibits
    A & B.

[^21]: 47 C.F.R. § 0.283.