Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 8089-E                   |
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| Cablevision of Oakland Inc., and | ) | CSR 8090-E                   |
| CSC TKR Inc.                     | * |                              |
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| Petition for Determination of    |   |                              |
| Effective Competition in Four    | * |                              |
| Communities in New Jersey        | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: February 19, 2009 Released: February 20, 2009**

By the Senior Deputy Chief, Policy Division, Media Bureau:

# introduction and Background

1.  Cablevision of Oakland Inc., and CSC TKR Inc., hereinafter referred
    to as "Petitioner," has filed with the Commission a petition
    pursuant to Sections 76.7 and 76.905(b)(4) 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 the "Communities." Petitioner alleges
    that its cable system serving the Communities is subject to
    effective competition pursuant to Section 623(1)(1)(D) 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 Verizon New Jersey, Inc., hereinafter
    referred to as "Competitor." An Opposition to the Petition was filed
    by the New Jersey Division of Rate Counsel (hereinafter referred to
    as the "DRC"), which is a part of the government of the State of New
    Jersey.[^3] Petitioner filed a Reply to the Opposition.[^4]

2.  In the absence of a demonstration to the contrary, cable systems are
    presumed not to be subject to effective competition,[^5] as that
    term is defined by Section 623(l)(1) of the Communications Act and
    Section 76.905(b) of the Commission's rules.[^6] 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.[^7] For the reasons
    set forth below, we grant the Petition based on our finding that
    Petitioner is subject to effective competition in the Communities

# DISCUSSION

3.  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.[^8] This test is otherwise
    referred to as the LEC test.

4.  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.[^9] It is undisputed that the Communities are
    served by both Petitioner and Competitor, a local exchange carrier,
    and that these two MVPD providers are unaffiliated. Also undisputed
    is Petitioner's statement that Competitor is offering cable service
    to substantial numbers of households in the Communities pursuant to
    a "system-wide" franchise[^10] that was granted by the BPU, and that
    Competitor's franchise covers the Communities and much more of the
    State of New Jersey.

5.  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]
    Attached to the petition are copies of channel lineups for
    Competitor showing that it offers far more than those numbers of
    channels.[^12] Finally, Petitioner has demonstrated that the
    Competitor has commenced providing video programming service within
    the Communities, 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*.[^13] These showings, if unrebutted, would suffice to show
    that Petitioner is subject to LEC effective competition in the
    Communities.

6.  The DRC, however, challenges the sufficiency of Petitioner's showing
    of LEC effective competition. The DRC does so by incorporating by
    reference objections it made against other showings of LEC effective
    competition by Petitioner. These objections are, in brief, that (1)
    Competitor's system-wide franchise is not a proper basis for a
    finding of effective competition and the issue of whether it is
    should be decided by the full Commission, (2) Petitioner has not
    shown that Competitor has actual subscribers to its cable service in
    the Communities, and (3) Competitor's cable service lacks Public,
    Educational, and Government ("PEG") channels and is therefore not
    truly "comparable" to Petitioner's.[^14] We have addressed and
    dismissed these same challenges in previous effective competition
    decisions (including ones involving New Jersey and Petitioner) and
    we do so here for the reasons stated in those decisions.[^15] The
    DRC's Opposition has given us no new, much less sufficient, grounds
    to doubt the validity of those decisions.

7.  In addition, we note two reasons, not stated in our previous
    decisions, to reject the DRC's challenge that Competitor's cable
    service must contain PEG channels for it to be "comparable" to
    Petitioner's. First, nothing in our rule's definition of comparable
    service[^16] requires, or implies a requirement of, PEG channels.
    Nothing in the definition implies that its requirements (12 channels
    of video programming, including at least one channel of nonbroadcast
    service programming) are a baseline, to which new requirements may
    be added by the DRC or any other body. The full Commission, when it
    adopted the definition of "comparable programming," was fully aware
    of PEG channels -- it discussed both in the same decisions.[^17] If
    the full Commission had wanted PEG channels to be part of
    "comparable programming," it would have stated so. It did not.

8.  Second, our definition of "comparable programming" applies alike to
    both LEC effective competition and so-called "competing provider"
    effective competition.[^18] Legislative history and rulemaking
    decisions by the full Commission indicate that competing provider
    effective competition can be based on subscribership to Direct
    Broadcast Satellite ("DBS") service.[^19] Consistent with these
    guideposts, many individual decisions have found competing provider
    effective competition based on DBS subscribership.[^20] DBS
    providers, however, do not offer PEG channels. If PEG channels were
    a necessary component of effective competition, no finding of
    effective competition could be based on DBS subscribership. All the
    just-stated history indicates that effective competition may be
    based on DBS subscribership and strengthens our conclusion that PEG
    channels are not a necessary element of "comparable programming" for
    any form of effective competition, including LEC effective
    competition.

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

# ordering clauses 

10. Accordingly, **IT IS ORDERED** that the petition for a determination
    of effective competition filed in the captioned proceeding by
    Cablevision of Oakland Inc., and CSC TKR Inc., **IS GRANTED**.

11. **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**.

12. This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^21]

    FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Senior Deputy Chief, Policy Division, Media Bureau

**ATTACHMENT A**

**CSR 8089-E, 8090-E**

**COMMUNITIES SERVED BY CABLEVISION OF OAKLAND INC. AND CSC TKR INC.**

## Communities CUID(s)  {#communities-cuids .unnumbered}

**CSR 8089-E**

Hawthorne Borough NJ0196

Montville Township NJ0407

**CSR 8090-E**

Watchung Borough NJ0485

[^1]: *See* 47 U.S.C. § 543(1)(1)(D).

[^2]: 47 C.F.R. § 76.905(b)(4).

[^3]: Opposition on Behalf of New Jersey Division of Rate Counsel
    ("Opposition"), dated Dec. 17, 2008. The DRC is a division within
    the New Jersey Department of the Public Advocate and represents the
    interests of consumers of cable TV service and other utility
    services whose interests in rate matters would otherwise be
    inadequately unrepresented. State of New Jersey, Department of the
    Public Advocate, Home, Utility Customers, *Learn About the
    Division*, http://www.state.nj.us/publicadvocate/utility/about/
    (visited Jan. 14, 2009). The DRC is not the government entity that
    grants franchises to cable operators, which is the New Jersey Board
    of Public Utilities (the "BPU"). *New Jersey Board of Public
    Utilities*, 2006 [Annual Report]{.smallcaps} at 12, available at
    http://www/state.nj. us/bpu/pdf/about/annualreports/2006.pdf
    (visited Jan. 14, 2009).

[^4]: Reply to Comments on Petition for Determination of Effective
    Competition ("Reply"), dated Dec. 31, 2008.

    The Petition, as originally filed, also requested a determination
    that Petitioner is subject to effective competition in the
    additional community of Netcong Borough, which has the Community
    Unit Identification Number NJ0138. In its Reply, Petitioner
    requested permission to withdraw that request. Reply at 3, 11-13. We
    grant that request without prejudice to Petitioner re-submitting it
    with new evidence. On January 21, 2009, the DRC filed comments on
    Petitioner's request to withdraw, raising issues that Petitioner's
    withdrawal mooted and that we are addressing in other proceedings
    involving claims of effective competition in New Jersey.

[^5]: 47 C.F.R. § 76.906.

[^6]: *See* 47 U.S.C. § 543(l)(1) and 47 C.F.R. § 76.905(b).

[^7]: *See* 47 C.F.R. §§ 76.906 & 907.

[^8]: *See* 47 U.S.C. § 543(l)(1)(D).

[^9]: *See Implementation of Cable Act Reform Provisions of the
    Telecommunications Act of 1996*, 14 FCC Rcd 5296, 5305-06, ¶¶ 13-15
    (1999) ("*Cable Reform Order*").

[^10]: Under a New Jersey law enacted in 2006, a company may receive
    from the BPU

    > "a system-wide franchise by constructing or operating a \[cable\]
    > system at any location within the State in which the company, at
    > the time of issuance of the system-wide franchise, either has
    > plant or equipment in use for the provision of any consumer video,
    > cable or telecommunications service, or has proposed to place such
    > plant or equipment into use to provide such service."

    Evidently, Competitor's system-wide franchise has the scope of the
    territory in which it has provided telecommunications service. *See*
    *The Assembly Telecommunications & Utilities Committee reports
    favorably Assembly Committee Substitute for Assembly Bill No. 804*,
    No. 804-L.2006, c.83 (May 11, 2006), printed in N.J.S.A. 48:5A-2.

[^11]: *See* 47 C.F.R. § 76.905(g). *See also* Petition at 17.

[^12]: *See* Petition at 8.

[^13]: *See Cable Reform Order*, 14 FCC Rcd at 5305-06, ¶¶ 13-15. *See
    also* Petition at 10-17.

[^14]: Opposition at 9-10 & Exh. B (the DRC's Application for Review in
    *Cablevision Systems Corp.,* Memorandum Opinion & Order DA 08-2217
    (rel. Oct. 2, 2008), available at 2008 WL 4449658, *stay denied*,
    Memorandum Opinion & Order 08-2545 (rel. Nov. 20, 2008), available
    at 2008 WL 4964162, *application for review pending*
    ("*Cablevision*")).

[^15]: *Comcast Cable Commun., LLC* ("*Comcast*"), Memorandum Opinion &
    Order DA 09-285 at ¶¶ 32-35 (rel. Feb. 19, 2009); *Cablevision,
    supra* note 14, at ¶¶ 39-43.

[^16]: *See supra* note 11.

[^17]: *Implementation of Section of the Cable Television Consumer
    Protection & Competition Act of 1992: Rate Regulation*, 8 FCC Rcd
    5631, 5665-67, ¶¶ 37-38 (discussing comparable programming),
    5737-38, ¶¶ 158-60 (discussing PEG channels) (1993), *on
    reconsideration,* 9 FCC Rcd 4316, 4322-23, ¶¶ 11-14 (discussing
    comparable programming), 4367, ¶ 139 (discussing PEG channels),
    4368-69, ¶ 144 (discussing PEG channels) (1994) ("*Reconsideration
    Order*"), *reversed in part on other grounds, Time Warner
    Entertainment Co., L.P. v. FCC*, 56 F.3d 151 (D.C. Cir. 1995),
    *cert. denied,* 516 U.S. 1112 (1996).

[^18]: Re competing provider effective competition, *see* 47 U.S.C. §
    543(l)(1)(b); 47 C.F.R. § 76.905(b)(2).

[^19]: *See, e.g.,* 138 Cong. Rec. H6487-01, H6493 (remarks of Rep.
    Cooper: "People on both sides of the aisle have said what they
    really want in cable TV is competition. . . . Sometimes they are
    going to be satellite dish companies."), available at 1992 WL 172319
    (Cong. Rec.); H.R. REP. 102-628, H.R. Rep. No. 628, 102nd Cong., 2nd
    Sess. 1992, 1992 WL 166238 (Leg. Hist.) at 46 ("The Committee agrees
    that DBS system operators potentially could provide competition to
    the cable industry."); S. REP. 102-92, S. Rep. No. 92, 102nd Cong.,
    1st Sess. 1991, 1992 U.S.C.C.A.N. 1133, 1140-41 ("Few cable systems
    would face competition under the second prong of the FCC\'s test --
    the existence of a second multichannel video provider. To date,
    there are only . . . and approximately 2 million home satellite dish
    owners"), 1148-50 (under the title "Effective Competition,"
    discussion of "Broadcasting via Satellite"), 1196, ("Effective
    competition is achieved when there is competition from . . . another
    'multichannel provider' (such as a . . . satellite system)"),
    available at 1991 WL 125145 (Leg. Hist.); *Revision of Rules &
    Policies for the Direct Broadcast Satellite Service*, 11 FCC Rcd
    9712, 9720, ¶ 23 (1995) ("we have consistently sought to promote
    effective competition to the services provided by cable systems, and
    we have encouraged the development of the DBS spectrum in precisely
    that context."); *Reconsideration Order,* 9 FCC Rcd at 4316,
    4319-22, ¶¶ 3-10 (1994) (in discussion of definition of effective
    competition, several paragraphs about satellite-delivered service).

[^20]: *See, e.g.,* *Comcast,* *supra* note 15, at ¶¶ 5-22;
    *Cablevision, supra* note 14, at ¶¶ 3-35; *Time Warner Cable Inc.,*
    23 FCC Rcd 12210, 12211-15, ¶¶ 3-18, *reconsideration denied*,
    Memorandum Opinion & Order DA 08-2465 (rel. Nov,. 7, 2008),
    available at 2008 WL 4826041, *application for review pending*; *see
    also* Reply at 5. Also, the statutory definition of "multichannel
    video programming distributor," which describes the universe of
    potential providers of competing provider effective competition,
    explicitly includes "a direct broadcast satellite service." 47
    U.S.C. §522(13).

[^21]: 47 C.F.R. § 0.283.