**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the matter of :               | *  | CSR 5862- R                  |
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| ALTRIO COMMUNICATIONS, INC.      | ** |                              |
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| ADELPHIA COMMUNICATIONS          | ** |                              |
| CORPORATION                      |    |                              |
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| Complaint Regarding Rate         | *) |                              |
| Uniformity and                   | ** |                              |
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| Predatory Pricing                | *  |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted: November 8, 2002 Released: November 15, 2002**

By the Deputy Chief, Media Bureau:

# introduction

1.  Altrio Communications, Inc. ("Altrio"), a cable operator in the
    Arcadia, California, filed a complaint against Adelphia
    Communications Corporation[^1] ("Adelphia") alleging that Adelphia
    violated the geographic rate uniformity requirement of Section
    623(d) of the Communications Act of 1934, as amended
    ("Communications Act"), and Section 76.984 of the Commission's rules
    which require that cable operators maintain a uniform rate structure
    throughout their franchise area.[^2] Adelphia filed an opposition to
    the complaint. Altrio filed a reply. In addition, Adelphia filed a
    surreply and in response Altrio filed a motion to strike Adelphia's
    surreply, to which Adelphia opposed.[^3]

# background

2.  Section 623(d) of the Communications Act requires cable operators to
    maintain a uniform rate structure in their franchise area.[^4] This
    requirement does not, however, apply to cable operators subject to
    effective competition as defined by Section 623(l) of the
    Communications Act.[^5] Section 623(d) provides, in relevant part:

> \(d\) UNIFORM RATE STRUCTURE REQUIRED. A cable operator shall have a
> rate structure, for the provision of cable service, which is uniform
> throughout the geographic area in which cable service is provided over
> its cable system. This subsection does not apply to (1) a cable
> operator with respect to the provision of cable service over its cable
> system in any geographic area in which the video programming services
> offered by the operator in that area are subject to effective
> competition, or (2) any video programming offered on a per channel or
> per program basis.[^6]

Thus, should the Commission find that a cable operator is subject to
effective competition in its franchise area, a complaint alleging
violation of the uniform rate structure requirement will be
dismissed.[^7]

# discussion

3.  Altrio's complaint alleges that Adelphia is engaged in uniform
    pricing violations to the detriment of Altrio's emerging cable
    operations. Altrio was formed during the year 2000 with the purpose
    of providing a competitive cable, telephony and broadband ISP
    alternative in the greater Los Angeles area.[^8] Altrio indicates
    that it commenced offering cable services in Arcadia in December
    2001, and that, at the time of its complaint, provided service to
    several hundred customers.[^9] In response to its entry as a new
    cable provider in the franchise area, Altrio asserts that Adelphia
    sought to eliminate Altrio as a competitor. According to Altrio, in
    November 2001, immediately before Altrio began its service launch
    and advertising campaign, Adelphia's rates were \$33.33 for analog
    expanded basic service, and an additional \$10.00 for digital
    expanded basic service and \$39.99 for cable modem service.[^10] In
    addition, Adelphia offered expanded basic service at \$19.95 per
    month, as well as cable modem service for \$19.95 for the first
    three months of service, as a special promotion to new
    customers.[^11] Altrio indicates that after the launch of its
    service in December 2001, Adelphia offered an "extraordinary deal"
    to its existing customers for one year in which Adelphia increased
    its analog channels by twelve (57-69 channels), its digital channels
    by 81 (8-89 channels), dropped its rates to \$19.95 for analog
    expanded basic service, charged only an additional \$5.88 for
    digital expanded basic, and offered cable modem service for
    \$19.95.[^12] Altrio also asserts that Adelphia customer service
    representatives engaged in "minute-by-minute" changes in its offers
    and short-term price cuts to retain existing customers contemplating
    a switch to Altrio, and to attract new customers.[^13] Altrio argues
    that Adelphia's conduct and the apparent price variations are not
    price differences that fall within a reasonable promotion exception
    to the uniform price requirement.[^14] By engaging in such conduct,
    Altrio states that Adelphia's actions violated and continue to
    violate the uniform pricing requirement of Section 623(d) of the
    Communications Act and Section 76.984(a) of the Commission's
    rules.[^15] To address Adelphia's violation, Altrio requests that
    the Commission order Adelphia to immediately cease and desist from
    charging rates that are not uniform, establish and maintain rates
    that are not predatory, and pay a forfeiture in the amount of
    \$275,000 for willful and repeated failure to comply with the
    Communications Act and the Commission's regulations.

4.  In its opposition, Adelphia defended its conduct arguing that it is
    subject to local exchange carrier ("LEC") effective competition and
    therefore exempt from the uniform pricing requirement of Section
    623(d).[^16] In particular, Adelphia argues that, because Altrio
    provides local exchange telephone service in Arcadia, Adelphia is
    subject to LEC effective competition.[^17]

5.  Subsequent to the filing of Altrio's complaint in this proceeding
    Adelphia filed a separate petition for a determination of effective
    competition in its Arcadia franchise area.[^18] In that petition,
    Adelphia asserted that it was subject to competing provider
    effective competition since before the inception of Altrio's
    competing cable service in the Arcadia franchise area.[^19] After
    examining the evidence filed with Adelphia's petition, the Bureau
    found that Adelphia was subject to effective competition under the
    competing provider test in Arcadia, California, as of October 1,
    2001.[^20] The Bureau determined that Adelphia demonstrated that at
    least two unaffiliated MVPDs, namely DirecTV, Inc. and EchoStar
    Communications Corporation, offered comparable programming to more
    than 50 percent of the households in Arcadia in satisfaction of the
    first prong of the competing provider test. With respect to the
    second prong of the competing provider test, the Bureau determined
    that Adelphia satisfied that prong by showing that the competing
    MVPDs served more than 15 percent of the households in Arcadia in
    2001.[^21]

6.  In view of the Bureau's disposition of Adelphia's effective
    competition petition, the Commission's rules governing uniform rates
    are inapplicable to Adelphia.[^22] Therefore, Altrio's petition must
    be dismissed.[^23]

# ordering clauses

7.  Accordingly, **IT IS ORDERED** that the complaint filed by Altrio
    Communications, Inc. against Adelphia Communications Corporation
    pursuant to Section 623(d) of the Communications Act, 47 U.S.C. §
    543(d), and Section 76.984 of the Commission's rule, 47 C.F.R. §
    76.984, **IS DISMISSED.**

8.  **IT IS FURTHER ORDERED** that the request for sanctions filed by
    Altrio Communications, Inc. against Adelphia Communications
    Corporation in CSR 5862-R **IS DENIED.**

9.  This action is taken by the Deputy Chief, Media Bureau, pursuant to
    authority delegated by Section 0.283 of the Commission's rules, 47
    C.F.R. § 0.283.

    FEDERAL COMMUNICATIONS COMMISSION

> William H. Johnson

Deputy Chief

> Media Bureau

[^1]: Adelphia operates its Arcadia system through a subsidiary,
    Century-TCI California, L.P., in which Adelphia acquired a
    controlling interest in 1999.

[^2]: 47 U.S.C. § 543(d); 47 C.F.R. § 76.984.

[^3]: Because we dispose of Altrio's complaint on other grounds, we need
    not determine whether or not to accept the additional submissions.

[^4]: 47 U.S.C. § 543(d).

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

[^6]: 47 U.S.C. § 543(d); 47 C.F.R. § 76.984.

[^7]: *See e.g., American Cable Company and Jay Copeland v. Telecable of
    Columbus, Inc.,* 11 FCC Rcd 10090 (1996); *Cross Country Cable,
    Inc., v. C-TEC Cable Systems of Michigan, Inc.,* 12 FCC Rcd 2538
    (1997).

[^8]: Altrio Complaint at 2.

[^9]: *Id*.

[^10]: *Id.*

[^11]: *Id.*

[^12]: *Id.*

[^13]: *Id.*

[^14]: *Id.* at 4. Altrio points out that examples of rate variations
    which the Commission has found may be reasonable, depending upon the
    circumstances, include differences in rates between seasonal and
    full-time subscribers, introductory or promotional rates universally
    applied at a given time but subsequently discontinued, and
    reasonable discounts to senior citizens or other economically
    disadvantaged groups. *See Implementation of Section of the Cable
    Television Consumer Protection and Competition Act of 1992 -- Rate
    Regulation,* 8 FCC Rcd 5631, 5897 (1993).

[^15]: Altrio Complaint at 4.

[^16]: Opposition at 3-4. The LEC test provides that a cable system is
    subject to effective competition when: a local exchange carrier or
    its affiliate (or any multichannel video programming distributor
    using the facilities of such carrier 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 so
    offered in that area are comparable to the video programming
    services provided by the unaffiliated cable operator in that area.
    *See* 47 U.S.C. § 543 (l)(1)(D).

[^17]: Opposition at 3.

[^18]: *See Century-TCI California, L.P.,* DA 02-2391 (MB rel. Sept. 26,
    2002). Altrio was served with a copy of Adelphia's effective
    competition petition.

[^19]: *Id.* Adelphia's petition was unopposed. The competing provider
    test provides that a cable operator is subject to effective
    competition if the franchise area is (a) served by at least two
    unaffiliated multichannel video programming distributors ("MVPDs")
    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. *See* 47 U.S.C. § 543(l)(1)(B).

[^20]: *Id*.

[^21]: *Id.*

[^22]: *See Texas Cable Partners, L.P.,* 17 FCC Rcd 4377, 4380 (2002)
    ("The Communications Act expressly permits cable operators that are
    determined to be subject to effective competition to maintain
    non-uniform rates."); *Coxcom, Inc.,* 14 FCC Rcd 7134, 7143 (1999)
    ("The U.S. Court of Appeals for the District of Columbia has held
    that all rate regulation-related rules, including the uniform rate
    requirement, cease to apply where the Commission has determined . .
    . effective competition exists."); *see also Time Warner
    Entertainment Co. v. FCC,* 56 F. 3d 151, 191 (D.C. Cir. 1995).

[^23]: If Altrio believes that Adelphia is no longer subject to
    effective competition at some time in the future and has the same
    concerns as discussed in its filing, it is free to bring a new
    uniformity complaint.