Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 7537-E                   |
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| Coxcom, Inc. d/b/a Cox           | ) |                              |
| Communications Northern Virginia | * |                              |
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| Petition for Determination of    |   |                              |
| Effective Competition in Various | * |                              |
| Virginia Communities             | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: August 12, 2008 Released: August 13, 2008**

By the Associate Chief, Media Bureau:

# I. introduction and Background

1.  Coxcom, Inc. d/b/a Cox Communications Northern Virginia, hereinafter
    referred to as "Petitioner," has filed with the Commission a
    petition pursuant to Sections 76.7, 76.905(b)(1), 76.905(b)(2),
    76.905(b)(4) and 76.907 of the Commission's rules for a
    determination that Petitioner is subject to effective competition in
    the community listed on Attachment A and hereinafter referred to as
    "Community." Petitioner alleges that its cable system serving the
    Community 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
    Community because of the competing service provided by two direct
    broadcast satellite ("DBS") providers, DirecTV, Inc. ("DirecTV") and
    Dish Network ("Dish").[^3] Petitioner additionally claims to be
    exempt from cable rate regulation in the Community listed on
    Attachment B because of the Petitioner serves fewer than 30 percent
    of the households in the franchise area. Petitioner finally claims
    that it is exempt from cable rate regulation in the Community listed
    on Attachment C because of the competing service provided by Verizon
    Virginia, hereinafter referred to as "Competitor." The petition is
    opposed by Stafford County.

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(l) of the Communications Act 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] 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, B, and C).

# 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;[^7] 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.[^8]

5.  Turning to the first prong of this test, it is undisputed that the
    Community is "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.[^9] 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.[^10] We further find that Petitioner has provided
    sufficient evidence of DBS advertising in local, regional, and
    national media that serve the Community to support their assertion
    that potential customers in the Community are reasonably aware that
    they may purchase the service of these MVPD providers.[^11] 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[^12] and is
    supported in this petition with copies of channel lineups for both
    DIRECTV and Dish.[^13] Also undisputed is Petitioner's assertion
    that both DIRECTV and Dish offer service to at least "50 percent" of
    the households in the Community because of their national satellite
    footprint.[^14] Accordingly, we find that the first prong of the
    competing provider test is satisfied.[^15]

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 one of the largest MVPDs in the
    Community.[^16] Petitioner sought to determine the competing
    provider penetration in the Community 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 Community on a zip code
    plus four basis.[^17]

7.  In opposition, Stafford County ("Stafford" or "County") argues that
    the SBCA data supplied by Cox is flawed because it is not precise
    enough to determine whether the DBS subscribers attributed to the
    County actually live in it or simply share a zip code with residents
    that live outside of it.[^18] Stafford asserts that the Commission
    has accepted the use of a five digit zip code allocation formula,
    but only in a proceeding that was uncontested, while in this
    instance, the County has a specific objection to the use of such
    data, and the evidence and information provided is overly broad and
    possibly inaccurate.[^19] Stafford contends that neither the
    Commission nor the County is able to verify the accuracy of the zip
    code information provided by Cox to SBCA regarding the
    jurisdictional boundaries, and if the boundaries are incorrect, the
    data cannot be relied upon.[^20] Stafford also contends that zip
    code 22408 covers Spotsylvania County and not Stafford.[^21] In
    addition, the County argues that Cox includes zip code 22556 and its
    corresponding DBS subscribers (2,840) as part of the franchise area,
    but has no corresponding household data.[^22] Stafford further
    argues that Cox fails to take into consideration the County's 24
    percent increase in households and provides information from the
    Census Bureau indicating that there were 39,741 occupied households
    in the County as of 2006.[^23] Stafford claims that the 2000 Census
    Bureau (30,187) estimates are outdated for the County and should not
    be used.[^24] Finally, Stafford argues that Cox fails to mention
    that it only serves the southern portion of the County while Comcast
    Cable Communications, LLC ("Comcast") serves the northern portion of
    the County.[^25] According to Stafford, Cox does not compete head to
    head with Comcast and erroneously counts the entire population of
    the County and DBS subscribers throughout the County even thought it
    actually serves less than one-half of the County under its franchise
    agreement.[^26] Thus, Cox has failed to provide sufficient
    documentation for the Commission to verify the accuracy of Cox's
    conclusions.

8.  In reply, Cox argues that the Commission should dismiss the
    Opposition because it is unsupported by a Declaration and
    Verification as required by the Commission's rules and because it
    contains inaccurate assertions and arguments that the Commission has
    specifically rejected, making it by definition, frivolous.[^27] Cox
    asserts that its petition has followed procedures that the
    Commission has developed and repeatedly affirmed over the past
    fourteen years for establishing effective competition.[^28]
    Initially, Cox notes that the Bureau has rejected challenges to the
    five digit zip code allocation methodology used and described in
    detail in the petition.[^29] Cox asserts that 0.2 percent of zip
    code 22408 is located in the County based upon information provided
    by the U.S. Postal Service and MelissaData reports.[^30] Because the
    zip code is partially located within the County, Cox argues that it
    is properly included in the franchise area and is consistent with
    the Bureau's policies and procedures.[^31] Cox also argues that even
    if you exclude 22408, DBS penetration exceeds 45 percent.[^32]
    Furthermore, Cox rejects the contention that it improperly excluded
    household data for zip code 22556.[^33] According to Cox, as it
    explained in its petition, the U.S. Postal Service created zip code
    22556 after data gathering for the 2000 Census was complete, and
    thus, no 2000 Census data was available for the new zip code.[^34]
    However, the 2000 Census data for the new zip code were already
    included in Cox's calculations because at the time the Census was
    taken, the new zip code and its households were part of zip code
    22554.[^35] Thus, Cox included in its calculations all occupied
    households within the new 22556 zip code and properly incuded all
    DBS subscriber data associated with that zip code.

9.  Cox also argues that the County's argument about the 2000 Census is
    irrelevant. According to Cox, the County fails to provide evidence
    that would change the outcome.[^36] Bureau precedent demonstrates
    that Cox could properly use 2000 Census data.[^37] Cox claims that
    the 2000 Census data is more accurate because the 2006 U.S. Census
    estimates are unverified and unsupported by affidavit or otherwise
    and the County has made no effort to explain or demonstrate the
    reliability of the estimated data.[^38] Thus, the Bureau is not
    required to use the 2006 occupied household information, but even if
    the Bureau does use the 2006 data, DBS penetration would exceed 30
    percent of the occupied households.[^39] Finally, Cox asserts that
    it has not redefined its franchise area, noting that until 2006, the
    Cox franchise area only included the southern portion of the County,
    but under its 2006 franchise agreement with the County, it is
    authorized to provide service throughout the County.[^40] Cox
    indicates that it provides overlapping service in a portion of the
    County that is also served by Adelphia Cable Communications.[^41]
    Thus, the fact that Cox has not completely build-out the entire
    County since entering the 2006 franchise agreement, which expanded
    its franchise area to encompass the whole County, does not mean that
    it has affirmatively limited its service area so that it can be
    considered to be redefined.[^42]

10. We find that the County's arguments lack merit.[^43] We have
    previously accepted data provided by SBCA since it merely provides
    industry subscriber data for the cable operator to use in its
    Petition.[^44] We also have accepted the allocation methodology used
    by Cox in this matter in contested cases.[^45] With regard to the
    County's challenge to the inclusion of zip code 22408, we have
    previously held that zip codes may be either wholly or partially in
    the franchise area.[^46] Regarding the County's challenge to new zip
    code 22556, we agree with Cox that the household population would
    have been reflected in the housing figure for the zip code that the
    population previously belonged to. We reject the County's challenge
    to the use of the 2000 Census data since we have previously held
    that use of the 2000 Census is sufficiently reliable for effective
    competition determinations.[^47] However, even if we were to adopt
    the County's position regarding the exclusion of two zip code areas
    from the franchise area and use the 2006 Census household data, Cox
    would still satisfy the requirements for establishing competing
    provider effective competition in the County. For example, if we
    exclude DBS subscribership data for zip codes 22408 and 22555 from
    the DBS subscribership total, as argued by the County, and use the
    2006 Census household figure for the County, the DBS penetration, as
    reflected in Attachment A, is 27.18 percent, well in excess of the
    15 percent required by the statute to establish competing provider
    effective competition. Thus, adopting the County's position
    regarding zip codes and population figures does not change the
    outcome. Finally, we reject the County's argument that Cox cannot
    use county-wide household figures since it has redefined its
    franchise area. As Cox has indicated in its reply, as a result of
    the 2006 franchise agreement, it is permitted to serve areas of the
    County other than just the southern portion. Furthermore, the 2006
    franchise agreement specifically states that service is mandated to
    be expanded only when the area that can be served by extension of
    the system past a specified number of occupied dwelling units.[^48]
    Thus, there is no evidence that Cox has redefined its franchise
    area. Accordingly, we will accept the revised DBS penetration
    figures for the franchise area.

11. Based upon the aggregate DBS subscriber penetration levels that were
    calculated using Census 2000 household data,[^49] 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 Community. Therefore, the second prong of the
    competing provider test is satisfied for each of the Community.

12. 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 Community listed on Attachment A.

    **B. The Low Penetration Test**

13. 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.[^50] Petitioner alleges that it is subject to effective
    competition under the low penetration effective competition test
    because it serves less than 30 percent of the households in the
    franchise area.

14. 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
    Community listed on Attachment B. Therefore, the low penetration
    test is also satisfied as to the Community.

    **C. The LEC Test**

15. Section 623(l)(1)(D) of the Communications Act provides that a cable
    operator is subject to effective competition if a local exchange
    carrier ("LEC"), or its affiliate, offers video programming services
    directly to subscribers by any means (other than direct-to-home
    satellite services) in the franchise area of an unaffiliated cable
    operator which is providing cable service in that franchise area,
    but only if the video programming services offered in that area are
    comparable to the video programming services provided by the
    competing unaffiliated cable operator[^51]; this test is otherwise
    referred to as the "LEC" test.

16. The Commission has stated that the incumbent cable operator must
    show that the LEC intends to build-out its cable system within a
    reasonable period of time if it has not completed its build-out;
    that no regulatory, technical or other impediments to household
    service exist; that the LEC is marketing its services so that
    potential customers are aware that the LEC's services may be
    purchased; that the LEC has actually begun to provide services; the
    extent of such services; the ease with which service may be
    expanded; and the expected date for completion of construction in
    the franchise area.[^52] It is undisputed that the Community on
    Attachment C are served by both Petitioner and Competitor, a local
    exchange carrier, and that these two MVPD providers are
    unaffiliated. 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[^53] and is supported in this petition with copies of
    channel lineups for Competitor.[^54] Finally, Petitioner has
    demonstrated that the Competitor has commenced providing video
    programming service within the Community on Attachment C, has
    marketed its services in a manner that makes potential subscribers
    reasonably aware of its services, and otherwise satisfied the LEC
    effective competition test consistent with the evidentiary
    requirements set forth in the *Cable Reform Order*.[^55]

17. Based on the foregoing, we conclude that Petitioner has submitted
    sufficient evidence demonstrating that its cable system serving the
    Community on Attachment C has met the LEC test and is subject to
    effective competition.

# III. ordering clauses 

18. Accordingly, **IT IS ORDERED** that the petition for a determination
    of effective competition filed in the captioned proceeding by
    Coxcom, Inc. d/b/a Cox Communications Northern Virginia **IS
    GRANTED**.

19. **IT IS FURTHER ORDERED** that the certification to regulate basic
    cable service rates granted to any of the Communities set forth on
    Attachments A, B, and C **IS REVOKED**.

20. This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^56]

    FEDERAL COMMUNICATIONS COMMISSION

Nancy Murphy

Associate Chief, Media Bureau

**ATTACHMENT A**

**CSR 7537-E**

**COMMUNITIES SERVED BY COXCOM, INC. D/B/A COX COMMUNICATIONS NORTHERN
VIRGINIA**

**2000 Estimated**

**Census DBS**

## Communities CUID CPR\* Household Subscribers 

##  

## Stafford County VA0023 44.64% 30187 13476 

\*CPR = Percent of competitive DBS penetration rate.

**ATTACHMENT B**

**CSR 7537-E**

**COMMUNITIES SERVED BY COXCOM, INC. D/B/A COX COMMUNICATIONS NORTHERN
VIRGINIA**

##  Franchise Area Cable Penetration 

## Communities CUID Households Subscribers Percentage 

##  

## Spotsylvania County VA0022 31308 1322 4.22%

**ATTACHMENT C**

**CSR 7537-E**

**COMMUNITIES SERVED BY COXCOM, INC. D/B/A COX COMMUNICATIONS NORTHERN
VIRGINIA**

## Communities CUID 

## 

## Fredericksburg VA0020

##  

[^1]: *See* 47 U.S.C. § 543(a)(1).

[^2]: 47 C.F.R. § 76.905(b)(2).

[^3]: Dish is a registered trademark of EchoStar Communications
    Corporation.

[^4]: 47 C.F.R. § 76.906.

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

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

[^7]: 47 U.S.C. § 543(1)(1)(B); *see* also 47 C.F.R. § 76.905(b)(2).

[^8]: 47 C.F.R. § 76.905(b)(2)(i).

[^9]: *See* Petition at 5-7*.*

[^10]: 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)*.*

[^11]: 47 C.F.R. § 76.905(e)(2).

[^12]: *See* 47 C.F.R. § 76.905(g). *See also* Petition at 4.

[^13]: *See* Petition at 4 and Exhibit 1.

[^14]: *See* Petition at 4.

[^15]: Stafford "accepts without conceding that the two DBS providers
    satisfy the first prong of the Competing Provider test -- comparable
    programming is being made available to at least 50 percent of the
    households in the franchise area and these potential consumers are
    reasonably aware of the service availability." Opposition at 2-3.

[^16]: *Id.* at 8. Cox is unable to determine the largest MVPD in the
    Community because the DBS subscribership data obtained from SBCA is
    aggregated and does not break down the individual subscribership of
    each DBS provider. Nevertheless, Cox argues that it is subject to
    effective competition because in addition to DBS penetration
    exceeding 15 percent of the occupied households, the number of Cox
    subscribers also exceed 15 percent and the Commission has recognized
    that in such cases the second prong of the competing provider test
    is satisfied.

[^17]: Petition at 7-10.

[^18]: Opposition at 3.

[^19]: *Id*.

[^20]: *Id*. at 4.

[^21]: *Id*.

[^22]: *Id*.

[^23]: *Id*.

[^24]: *Id*.

[^25]: *Id*. at 5.

[^26]: *Id.*

[^27]: Reply at 1-2.

[^28]: *Id.* at 3.

[^29]: *Id*. at 4-6.

[^30]: According to the Reply, MelissaData is a thirty-two year old
    online data service company that permits users to determine all zip
    codes associated with a particular county, municipality, or other
    political subdivision. Reply at 6-7 n. 21.

[^31]: *Id.* at 6-7.

[^32]: *Id*.

[^33]: *Id*.

[^34]: *Id*.

[^35]: *Id*.

[^36]: *Id.* at 8-10.

[^37]: Id.

[^38]: *Id.*

[^39]: *Id*. at 9.

[^40]: *Id.* at 10-15.

[^41]: *Id*. at 15 and Exhibit 5.

[^42]: *Id*.

[^43]: Although we have found that the County's arguments lack merit, we
    do not consider them to be "frivolous" as Cox has argued in its
    reply. Furthermore, while the opposition lacks the declaration and
    verification required by our rules, we will consider it in the
    interests of a full and complete record.

[^44]: *Coxcom, Inc. d/b/a Cox Communications Orange County*, 22 FCC Rcd
    4522, 4526 (2007).

[^45]: *Id.*

[^46]: *Id*. at 4524-4525.

[^47]: *Adelphia Cable Communications*, 22 FCC Rcd 4458, 4462 (2007)

[^48]: Reply Exhibit 5, page 6, ¶ 2.06B.

[^49]: Petition at 2 and Exhibit 7; Opposition Exhibit A; Reply to
    Opposition at 8-10. The parties agree that using Census data from
    the 2006 American Community Survey is more conservative and
    reflective of the current occupied housing data.

[^50]: 47 U.S.C. § 543(l)(1)(A).

[^51]: *See* 47 U.S.C. § 543(l)(D).

[^52]: *See Implementation of Cable Act Reform Provisions of the
    Telecommunications Act of 1996*, 14 FCC Rcd 5296, 5305-06, ¶¶ 13-16
    (1999) ("*Cable Reform Order*").

[^53]: *See* 47 C.F.R. § 76.905(g). *See also* Petition at 20-21.

[^54]: *See* Petition at 20-21 and Exhibit 15.

[^55]: *See Cable Reform Order*, 14 FCC Rcd at 5305-06, ¶¶ 13-16. *See
    also* Petition at 15-21.

[^56]: 47 C.F.R. § 0.283.