Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 8033-E, 8052-E, 8030-E,  |
|                                  | * | 8047-E,                      |
| Time Warner Entertainment --     | ) |                              |
| Advance/Newhouse Partnership     | * | 8044-E, 8050-E, 8039-E,      |
|                                  | * | 8027-E                       |
| Petition for Determination of    |   |                              |
| Effective Competition in Several | * |                              |
| Texas 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 petitions 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 petition(s) 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.

    **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 certification to regulate basic
    cable service rates granted to any of the Communities set forth on
    Attachment A **IS REVOKED**.

13. 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 8039-E, 8050-E, 8047-E, 8044-E, 8030-E, 8052-E**

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

**2000 Estimated**

**Census DBS**

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

##  

## Asherton TX2042 27.34% 428 117

## Carrizo Springs TX0185 32.93% 1816 598

Crystal City TX0186 22.26% 2183 486

Agua Dulce TX2350 25.64% 234 60

Beeville TX0122 26.12% 4697 1227

Driscoll TX2349 25.39% 256 65

Odem TX2156 28.09% 776 218

Orange Grove TX1209 45.67% 473 216

Robstown TX0742 25.44% 3644 927

San Diego TX0322 20.80% 1548 322

Woodsboro TX0758 35.24% 613 216

Cotulla TX2052 30.79% 1208 372

Dilley TX0351 29.53% 955 282

Pearsall TX0339 23.40% 2201 515

Anthony TX0634 18.13% 684 124

Clint TX0556 27.92% 308 86

El Paso TX0242 19.12% 182063 34819

Horizon City TX0423 26.74% 1668 446

Beaumont TX0251 17.17% 44361 7617

Bridge City TX0457 19.50% 3195 623

Orange TX0106 29.82% 7310 2180

Pine Forest TX1637 23.32% 223 52

Pinehurst TX0107 21.52% 962 207

Port Arthur TX0223 15.12% 21839 3302

Rose Hill Acres TX1297 16.57% 169 28

Silsbee TX0370 26.37% 2385 629

Vidor TX0458 23.19% 4222 979

West Orange TX0108 21.47% 359 1672

Del Rio TX0183 18.46% 10778 1990

Laughlin AFB TX2105 18.43% 120 651

Gonzales TX0284 37.22% 2571 957

Yoakum TX0234 45.92% 2156 990

\*CPR = Percent of competitive DBS penetration rate.

ATTACHMENT B

**CSR 8027-E, 8030-E,8047-E, 8052-E**

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

##  Franchise Area Cable Penetration 

## Communities CUID(S) Households Subscribers Percentage 

##  

## Kerr County TX0484 8611 1792 20.81%

## Orange County TX2377 13868 1632 11.77%

## Fabens TX0057 2147 442 20.59%

## Socorro TX0558 6756 1674 24.78%

## Sunland Park NM0151 3355 570 16.99%

## Vinton TX2347 496 114 22.98%

## Val Verde County TX1458 31642 1854 5.86% 

[^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 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 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 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.