Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of:                | * | CSR 5798-E                   |
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| Falcon Cablevision, a California | ) |                              |
| Limited Partnership d/b/a        | * |                              |
| Charter Communications           | * |                              |
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| Petition for Determination of    | * |                              |
| Effective Competition in         | * |                              |
| Decatur, AL                      | ) |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: December 12, 2002 Released: December 16, 2002**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1.  Falcon Cablevision, a California Limited Partnership d/b/a Charter
    Communications ("Charter") has filed with the Commission a petition
    pursuant to Section 623(a)(1) of the Communications Act of 1934, as
    amended (\"Communications Act\"), and Sections 76.7(a)(1) and
    76.905(b)(2) of the Commission\'s rules for a determination of
    effective competition in Decatur, Alabama, (the "Franchise
    Area").[^1] Charter alleges that its' cable system serving the
    Franchise Area is subject to effective competition and is therefore
    exempt from cable rate regulation because of the competing services
    provided by two direct broadcast satellite (\"DBS\") providers,
    DirecTV, Inc. ("DirecTV") and EchoStar Communications Corporation
    ("EchoStar"). In addition to the DBS providers, P.C.L. Cable
    ("P.C.L.") is a competing cable provider in the Franchise Area. No
    opposition to the petition was filed.

# DISCUSSION

2.  In the absence of a demonstration to the contrary, cable systems are
    presumed not to be subject to effective competition,[^2] as that
    term is defined by Section 76.905 of the Commission\'s rules.[^3]
    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.
    Based on the record in this proceeding, Charter has met this burden.

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 fifteen percent of the households in the franchise area.[^4]

4.  Turning to the first prong of the competing provider test, 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.[^5] Charter has provided
    evidence of the advertising of DBS service in the local media
    serving its Decatur franchise area.[^6] 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 at least 12 channels of
    video programming, including at least one non‑broadcast channel.[^7]
    We find that Charter has demonstrated that the County is 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. Charter also demonstrated
    that two DBS providers are physically able to offer MVPD service to
    subscribers in the Franchise Area, that there exists no regulatory,
    technical, or other impediments to households within the Franchise
    Area taking the services of the DBS providers, and that potential
    subscribers in the Franchise Area have been made reasonably aware of
    the MVPD services of DirecTV and EchoStar.[^8] Therefore, the first
    prong of the competing provider test is satisfied.

5.  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.
    Charter sought to determine the competing provider penetration in
    its franchise area by purchasing a report from SkyTrends that
    identified the number of subscribers attributable to the DBS
    providers in the Franchise Area on a five-digit zip code basis.[^9]
    However, rather than simply accepting SkyTrends' figures, Charter
    assumes that some of the DBS subscribers identified in the report
    may actually live in portions of the zip codes outside its franchise
    areas.[^10] To account for such a possibility, Charter has devised a
    formula that compares U.S. Census household data for the Franchise
    Area and the relevant zip codes in order to derive an allocation to
    apply against the DBS subscriber counts.[^11] Charter then reduces
    the estimated DBS subscriber account for each franchise area by 10
    percent to reflect the possibility that some households have
    subscribed to both cable and DBS service and to take into account
    commercial or test accounts.[^12] The Commission believes that
    Charter's methodology is sound since it seeks to accurately quantify
    subscribers using the best available DBS subscriber data.

6.  Charter is the largest MVPD in the Franchise Area with 17,294
    subscribers.[^13] P.C.L. and the DBS providers have a combined
    penetration rate of 17 percent.[^14] Based upon the P.C.L./DBS
    subscriber penetration level calculated using Census 2000 household
    data,[^15] we find that Charter 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 Franchise Area. Therefore, the second prong of the competing
    provider test is satisfied. Based on the foregoing, we conclude that
    Charter has submitted sufficient evidence demonstrating that its
    cable system serving the Franchise Area is subject to effective
    competition.

# ordering clauses

7.  Accordingly, **IT IS ORDERED** that the petition for a determination
    of effective competition filed in the captioned proceeding by Falcon
    Cablevision, a California Limited Partnership d/b/a Charter
    Communications **IS GRANTED**.

8.  This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^16]

FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Deputy Chief, Policy Division, Media Bureau

[^1]: 47 U.S.C. § 543(a)(1); 47 C.F.R. §§ 76.7(a)(1), 76.905(b)(2).

[^2]: 47 C.F.R. § 76.906.

[^3]: 47 C.F.R. § 76.905.

[^4]: 47 U.S.C. §543(1)(1)(B); *see also* 47 C.F.R. §76.905(b)(2).

[^5]: *See MediaOne of Georgia*, 12 FCC Rcd 19406 (1997).

[^6]: *See* Charter Petition at 3 and Exhibit 1.

[^7]: ^?^*See* 47 C.F.R. §76.905(g). *See also* Charter Petition at 4
    and Exhibit 2.

[^8]: *See* Charter Petition at 3 -- 4 and Exhibit 1.

[^9]: *Id.* at 5.

[^10]: *Id*. at 5 -- 6 and Exhibit 5.

[^11]: *Id.*

[^12]: *Id.* at 6 and Exhibit 5. According to documentation previously
    provided to the Commission, SkyTrends' zip code subscriber numbers
    are inflated by roughly ten percent "due to dual receivers, and
    limited commercial and test accounts." *See Charter Communications*,
    17 FCC Rcd. 15,491, 15,493 n.13 (MB 2002).

[^13]: *Id.* at 5 and Exhibit 3.

[^14]: *Id.* at 6 - 7 and Exhibits 5 and 6 (3,724 combined P.C.L./DBS
    subscribers ÷ 21,824 Decatur households = 17.1%).

[^15]: *Id*. at 6 and Exhibit 4.

[^16]: 47 C.F.R. §0.283.