Before the

Federal Communications Commission

Washington, D.C. 20554

+----------------------------------+---+------------------------------+
| In the Matter of:                | * | CSR 6329-E                   |
|                                  | * |                              |
| Adelphia Cable Communications    | ) |                              |
|                                  | * |                              |
| Petition for Determination of    | * |                              |
| Effective                        |   |                              |
|                                  | * |                              |
| Competition in Greenacres,       | * |                              |
| Hypoluxo, Lake Charles Shores,   | ) |                              |
| Lantana, Palm Springs, Royal     | * |                              |
| Palm Beach, and West Palm Beach, | * |                              |
| Florida                          |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
+----------------------------------+---+------------------------------+

MEMORANDUM OPINION AND ORDER

**Adopted: February 28, 2005** **Released: March 7, 2005**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

1.  Adelphia Cable Communications ("Adelphia") has filed with the
    Commission a petition pursuant to Sections 76.7 and 76.907 of the
    Commission\'s rules for a determination of effective competition in
    Greenacres, Hypoluxo, Lake Charles Shores, Lantana, Palm Springs,
    Royal Palm Beach, and West Palm Beach, Florida (the "Communities").
    Adelphia alleges that its cable systems serving these communities
    are subject to effective competition pursuant to Section 623(1) of
    the Communications Act of 1934,[^1] and the Commission\'s
    implementing rules,[^2] and are therefore exempt from cable rate
    regulation. More particularly, Adelphia claims the presence of
    effective competition in the Communities stems from the competing
    services provided by two unaffiliated direct broadcast satellite
    (\"DBS\") providers, Direct TV and DISH Network. Adelphia claims it
    is subject to effective competition in these Communities under the
    "competing provider" effective competition test set forth in Section
    623(1)(1)(B) of the Communications Act.[^3] The petition is opposed
    by the cities of Greenacres and West Palm Beach, and the Village of
    Royal Palm Beach (the "Cities").

# discussion

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(1) 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] Section 623(l) of
    the Communications Act provides that a cable operator is subject to
    effective competition, if either one of four tests for effective
    competition set forth therein is met.[^7] A finding of effective
    competition exempts a cable operator from rate regulation and
    certain other of the Commission's cable regulations.[^8]

3.  Section 623(l)(1)(B) of the Communications Act provides that a cable
    operator is subject to effective competition if its 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.[^9]
    Turning to the first prong of this test, we find that 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.[^10] Adelphia has provided evidence of the advertising of
    DBS service in regional and national media serving the franchise
    areas.[^11] Moreover, the two DBS providers' subscriber growth
    reached approximately 23.16 million as of June 30, 2004, comprising
    approximately 23 percent of all MVPD subscribers nationwide; DirecTV
    has become the second largest, and EchoStar the fourth largest, MVPD
    provider.[^12] We conclude that the population of the Communities at
    issue here may be deemed reasonably aware of the availability of DBS
    services for purposes of the first prong of the competing provider
    test. 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 more than 12 channels of video programming and more
    than one non-broadcast channel.[^13] We find that Adelphia has
    demonstrated that these seven Florida Communities are 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. Therefore, the first prong of
    the competing provider test is satisfied.

4.  The Cities argue that DBS may not be technically available to 50
    percent of the households in these communities. The Cities suggest
    that physical limitations, homeowner and condominium association
    restrictions, and contractual restrictions may exist that preclude
    the ability of DBS signals to reach the 50 percent of households
    within the communities as required by this prong of the competing
    provider effective competition test. We reject each of these
    arguments as not supported by sufficient factual data, the
    Communications Act, or our regulations. The City of West Palm
    Beach's physical limitations argument rests on an assertion that
    many households in multiple dwelling units "MDUs" within this
    community have balconies that face toward the Atlantic Ocean and
    away from the southern or southwestern sky where DBS satellites are
    positioned, thus precluding reception of DBS signals by such
    households. The only support for this argument consists of a listing
    of twelve MDUs. However, this listing does not provide the number of
    households within such buildings or the portion of total households
    within the community represented by that undefined number of
    households. With this absence of specificity, we find the City's MDU
    listing insufficient to rebut the presumption that DBS service is
    technically available due to its nationwide satellite footprint.

5.  The City of West Palm Beach also fails to provide any factual data
    that supports its argument that restrictions imposed by homeowner
    and condominium associations may preclude reception of DBS signals
    to a sufficient number of households to rebut the presumption of the
    technical availability of DBS signals. The City offered no data of
    the number of households that may be subject to such restrictions
    nor did the city provide any data showing that such restrictions are
    actually being enforced within this community. The City shows only
    that 47 percent of the households within the community are in MDUs.
    Accordingly, we reject this argument for insufficient factual
    support.

6.  The three Cities similarly argue further that exclusivity provisions
    in Adelphia's contracts with MDUs may sufficiently preclude a
    finding that DBS signals are available to 50 percent of the
    households within the communities. The Cities assert that Adelphia
    should be required to provide the number of households impacted by
    such provisions. However, as Adelphia points out, enforcement of
    restrictions against use of facilities for reception of DBS signals
    is prohibited by Section 1.4000(a)(1) of the Commission's
    regulations.[^14] Adelphia further states that it does not enforce
    any exclusivity provision against reception of DBS service.[^15]

7.  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.
    Adelphia provided information showing that its residential
    subscribership in the seven Communities tested under the competing
    provider test exceeds the aggregate total subscribership of the DBS
    and other MVPD providers, thus establishing that it is the largest
    MVPD provider in these seven Communities.[^16]

8.  Adelphia provided DBS subscriber calculations developed by Media
    Business Corp. ("MBC"), which show that 15 percent of Franchise Area
    households in these seven Florida communities subscribe to MVPD
    services of the two DBS providers. MBC utilized 2000 Census data for
    the Communities, from which estimated 2000 household numbers for
    each of the Communities were taken.[^17] MBC compared the 2000
    Census households for each of the Communities with the households in
    each of the U.S. Postal Zip Code areas encompassing each Community,
    and allocated that proportion of the DBS subscribers within each
    such Zip Code to each Community.[^18] The resulting numbers of DBS
    subscribers were then compared to the household numbers for each
    Community to demonstrate that the DBS providers collectively have
    attained subscriber penetration levels of 18.95 percent in Greene
    Acres, 22.41 percent in Hypoluxo, 24.22 percent in Lake Charles
    Shores, 19.83 percent in Lantana, 21.57 percent in Palm Springs,
    20.87 percent in Royal Palm Beach, and 16.95 percent in West Palm
    Beach.[^19] Based on this information we find that Adelphia has
    satisfied the second prong of the competing provider test in these
    Communities by submitting sufficient evidence to demonstrate that
    its cable systems serving these Communities are subject to effective
    competition.

9.  The Cities assert that Adelphia's attempt to demonstrate that DBS
    has achieved a 15 percent penetration level is flawed for two
    reasons. The first contention is that Adelphia relied on outdated
    2000 U.S. Census household data, and that more recent data would
    better reflect DBS penetration when compared with the 2003 DBS
    subscriber count used by Adelphia. The Cities thus argue that 2000
    US Census data fails to account for household growth occurring after
    the 2000 Census. In its place, the Cities offered data based on city
    records for Residential Certificates of Occupancy[^20] and undefined
    records of the Utilities Department.[^21] Although the Commission
    will accept more recent household data that is demonstrated to be
    reliable, no definition of resulting "household" data was provided
    by the cities that would support a finding that this data equated to
    occupied households, as does the 2000 US Census occupied household
    data used by MBC. The credibility of the data as representing only
    occupied households is undermined by the Cities penetration
    computations, which indicate that occupied households have increased
    by more than 40 percent in West Palm Beach,[^22] 46 percent in Royal
    Palm Beach,[^23] and 31 percent in Greenacres[^24] since 2000. The
    hefty growth figures strongly suggest that the Cities' "household"
    data include more than occupied households, which we have used
    consistently in applying this second prong of the competing provider
    effective competition test.

10. The Cities' other contention is that the DBS subscriber count
    produced by MBC is inaccurate, because it fails to remove from
    reported Zip Codes those DBS subscribers located outside of the
    Franchise Areas, and fails to exclude commercial DBS subscribers and
    seasonal residents. The MBC Zip+4 Effective Competition Tracking
    Report specifically describes the methodology used to remove from
    franchise areas being studied those DBS subscribers located within
    zip codes provided by a cable operator but not located within the
    franchise area at issue, as well as commercial account
    subscribers.[^25] While the level of accuracy using this methodology
    may vary with the shape and size of the zip code area being studied,
    we find this method of determining DBS subscribers within a
    franchise area to be reasonable and sufficiently reliable for
    purposes of determining the presence of effective competition. We
    believe the number of seasonal residents within the Communities not
    to be of decisional significance. MBC's DBS subscriber count does
    not include seasonal residents that are not DBS subscribers.
    Therefore, the number of non-DBS subscribing seasonal residents
    doesn't affect the DBS subscriber penetration rate. Moreover, even
    if five percent of the Cities' residents represent seasonal use
    households[^26] and are not counted as DBS subscribers for that
    reason,[^27] Adelphia non-the-less demonstrated the DBS penetration
    exceeds 15 percent in Greenacres, Royal Palm Beach and West Palm
    Beach.[^28] In summary, we find that the cities failed to offer
    better alternative household data than that provided by Adelphia and
    conclude that Adelphia demonstrated that its cable systems serving
    the seven Florida Communities identified herein are subject to
    effective competition.

# ordering clauses

11. Accordingly, **IT IS HEREBY ORDERED** that the captioned petition
    for a determination of effective competition in Greenacres,
    Hypoluxo, Lake Charles Shores, Lantana, Palm Springs, Royal Palm
    Beach, and West Palm Beach, Florida, filed by Adelphia **IS
    GRANTED**.

12. This action is taken pursuant to authority delegated under Section
    0.238 of the Commission's rules.[^29]

    FEDERAL COMMUNICATIONS COMMISSION

    Steven A. Broeckaert

    Deputy Chief, Policy Division, Media Bureau

[^1]: 47 U.S.C. § 543(1).

[^2]: 47 C.F.R. § 76.905(b)(4).

[^3]: *See* 47 U.S.C. § 543(1)(1)(B).

[^4]: ^ ?^ 47 C.F.R. § 76.906.

[^5]: ^ ?^ *See* 47 U.S.C. § 543(1) and 47 C.F.R. § 76.905.

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

[^7]: *See* 47 U.S.C. § 543(l)(1)(A)-(D).

[^8]: *See* 47 C.F.R. § 76.905.

[^9]: 47 U.S.C. § 543(1)(1)(B); *see also* 47 C.F.R. § 76.905(b)(2).

[^10]: *See MediaOne of Georgia*, 12 FCC Rcd 19406 (1997).

[^11]: *See* Petition at 4 and Exhibit 1.

[^12]: *Eleventh Annual Assessment of the Status of Competition in the
    Market for Delivery of Video Programming*, FCC 05-13, at ¶¶ 54-55
    (rel. Feb.4, 2005).

[^13]: *See* 47 C.F.R. § 76.905(g). *See also* Adelphia Petition at 3-5
    and Exhibits 2 & 3.

[^14]: *See* 47 C.F.R § 1.4000 (the "OTARD" regulations).

[^15]: Adelphia Reply at 5.

[^16]: Petition at 5 and Exhibit 4.

[^17]: *Id*. 2000 Census data satisfies effective competition decision
    requirements. *See Cable Operators\' Petitions for Reconsideration
    and Revocation of Franchising Authorities\' Certifications to
    Regulate Cable Service Rates*, 9 FCC Rcd 3656 (1994).

[^18]: *Id*.

[^19]: Petition at 7 and Exhibit 5

[^20]: Opposition of Greenacres at 3; Opposition of West Palm Beach at
    4.

[^21]: Opposition of Royal Palm Beach at 4.

[^22]: Reply to West Palm Beach at 6.

[^23]: Reply to Royal Palm Beach at 6.

[^24]: Reply to Greenacres at 6.

[^25]: Petition at 6-7 & Exhibit 4.

[^26]: No data to support the 5 percent figure was provided by the
    Cities.

[^27]: The Cities offered no valid reason why such DBS subscribers
    should be disregareded for purposes of this test.

[^28]: (2,286 DBS subscribers -- (2,286 x .05)) = 2,172, or 18 percent
    of 12,059 2000 Census Greenacre households; (1,587 DBS subscribers
    -- (1,587 x .05)) = 1,508, or 20 percent of 7,604 2000 Census Royal
    Palm Beach households; (5,858 DBS subscribers -- (5,858 x .05)) =
    5,565, or 16 percent of 34,769 2000 Census West Palm Beach
    households; *See* Reply at 6.

[^29]: ^?^ 47 C.F.R. §0.238.