Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 7150-E, CSR-7151-E & CSR |
|                                  | * | 7535-E                       |
| Time Warner Cable Inc.           | ) |                              |
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| Petition for Determination of    | * |                              |
| Effective Competition in         |   |                              |
| Twenty-Three Missouri and Kansas | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: March 25, 2008 Released: March 26, 2008**

By the Associate Bureau Chief, Media Bureau:

# I. introduction and Background

1.  Time Warner Cable Inc. ("Time Warner") , hereinafter referred to as
    "Petitioner," has filed with the Commission three 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 listed on Attachment B
    and hereinafter referred to as Group B 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 additionally claims to be exempt from cable rate
    regulation in the communities listed on Attachment C and hereinafter
    referred to as Group C Communities 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 based on our finding that
    Petitioner is subject to effective competition in the Communities
    listed on Attachment A.

# 

# 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
    Group B 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 Group B Communities to support
    their assertion that potential customers in the Group B 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 Time Warner indicates that the program
    offerings are available on the websites of both DIRECTV and Dish,
    and we have reviewed their websites and confirmed that their program
    offerings meet the test.[^12] Also undisputed is Petitioner's
    assertion that both DIRECTV and Dish offer service to at least "50
    percent" of the households in the Group B 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 Group B
    Communities.[^14] Petitioner sought to determine the competing
    provider penetration in the Group B 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 Group B
    Communities on a zip code plus four basis.[^15]

7.  Based upon the aggregate DBS subscriber penetration levels that were
    calculated using Census 2000 household data,[^16] as reflected in
    Attachment B, 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 Group B Communities. Therefore, the second prong
    of the competing provider test is satisfied for each of the Group B
    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 Group B Communities.

    **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 C, 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 Group
    C Communities. Therefore, the low penetration test is also satisfied
    as to the Group C 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

Nancy Murphy

Associate Bureau Chief, Media Bureau

**ATTACHMENT A**

**CSRs 7150-E, CSR-7151-E & CSR 7535-E**

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

**CSR 7150-E**

**Communities** **CUIDS**

Bonner Springs KS0084

Edwardsville KS0096

Leavenworth KS0077

**CSR 7151-E**

**Communities** **CUIDS**

De Soto KS0081

Gardner KS0082

**CSR 7535-E**

**Communities** **CUID(S)**

Belton MO0073

Claycomo MO0517

Ferrelview MO0830

Independence MO1039

Glenaire MO0475

Kansas City KS0045

Kansas City MO1123

Lansing KS0260

Leavenworth KS0724

Lee's Summit MO0072

Liberty MO0364

Lone Jack MO1127

Parkville MO0126

Pleasant Valley MO0476

Smithville MO0197

Tracy MO0443

Weatherby Lake MO0136

Weston MO0115

**ATTACHMENT B**

**CSRs 7150-E, CSR 7151-E &CSR 7535-E**

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

**CSR 7150-E**

**2000 Estimated**

**Census DBS**

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

Bonner Springs KS0084 25.23% 2592 654

Edwardsville KS0096 17.47% 1568 274

Leavenworth KS0077 17.06% 12035 2053

**CSR 7151-E**

**2000 Estimated**

**Census DBS**

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

De Soto KS0081 28.75% 1642 472

Gardner KS0082 21.31% 3307 705

**CSR 7535-E**

**2000 Estimated**

**Census DBS**

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

Belton MO0073 25.45% 7945 2022

Claycomo MO0517 17.45% 596 104

Ferrelview MO0830 28.15% 302 85

Independence MO1039 20.68% 47390 9801

Glenaire MO0475 20.55% 219 45

Kansas City KS0045 21.03% 53597 11276

Kansas City MO1123 15.65% 183981 28802++

Lansing KS0260 17.21% 2435 419

Lee's Summit MO0072 17.27% 26417 4562

Liberty MO0364 20.83% 9511 1981

Lone Jack MO1127 22.77% 202 46

Parkville MO0126 15.63% 1510 236

Pleasant Valley MO0476 20.78 1328 276

Smithville MO0197 30.33% 2067 627

Tracy MO0443 22.78% 79 18

Weatherby MO0136 16.71% 700 117

Lake

Weston MO0115 35.80% 676 242

\*CPR = Percent of competitive DBS penetration rate.

## ++ = (25,984 DBS Subscribers + 2,818 Everest Connections Subscribers = 28802). (Time Warner combines the DBS and Everest subscribers to establish that MVPDs other than the largest MVPD satisfies the 15 percent penetration rate required under the competing provider test).

**ATTACHMENT C**

**CSR 7535-E**

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

##  Franchise Area Cable Penetration 

## Communities CUID(S) Households Subscribers Percentage 

##  

Independence MO1039 47390 24 5.06%

Leavenworth KS0724 23071 112 0.48%

Lone Jack MO1127 202 12 0.059%

[^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* Petition CSR 7150-E at 5; Petition CSR 7151-E at 5; Petition
    CSR 7535-E 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](http://commreg.pf.com/showSingleDoc.asp?iName=caseIndex&docID=DA-06-278A1&section=1)
    (2006)*.*

[^10]: 47 C.F.R. § 76.905(e)(2).

[^11]: *See* 47 C.F.R. § 76.905(g). *See also* Petition CSR 7150-E at 6;
    Petition CSR 7151-E at 6; Petition CSR 7535-E at 5.

[^12]: *See* Petition CSR 7150-E at 6; Petition CSR 7151-E at 6;
    Petition CSR 7535-E at 6.

[^13]: *See* Petition CSR 7150-E at 7; Petition CSR 7151-E at 7;
    Petition CSR 7535-E at 6.

[^14]: *See* Petition CSR 7150-E at 8; Petition CSR 7151-E at 7-8;
    Petition CSR 7535-E at 7*.*

[^15]: Petition CSR 7150-E at 8; CSR Petition 7151-E at 8; CSR Petition
    7535-E at 7.

[^16]: Petition CSR 7150-E at 8 and Exhibit B; CSR 7151-E at 8 and
    Exhibit B; CSR 7535-E at 8 and Exhibit C.

[^17]: 47 U.S.C. § 543(l)(1)(A).

[^18]: 47 C.F.R. § 0.283.