Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 6037-E                   |
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| Millennium Digital Media         | ) |                              |
| Systems, LLC                     | * |                              |
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| Petition for Determination of    |   |                              |
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| Competition in Various Michigan  | ) |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: February 27, 2007 Released: March 1, 2007**

By the Deputy Chief, Policy Division, Media Bureau:

# introduction

### 1. Millennium Digital Media Systems, LLC ("Millennium") has filed with the Commission a petition pursuant to Section 623(a)(1) of the Communications Act of 1934, as amended (\"Communications Act\") and Sections 76.7(a)(1) and 76.905(b)(1) of the Commission\'s rules for a determination of effective competition in various communities in Michigan (the "Communities").[^1] Millennium alleges that its cable systems serving the Communities are subject to effective competition and therefore exempt from cable rate regulation. Millennium alleges that its cable systems serving thirty-five Communities are subject to effective competition and therefore exempt from cable rate regulation because of competing services provided by two direct broadcast satellite ("DBS") providers, DirecTV, Inc. ("DirecTV") and DISH Network ("DISH"). Millennium also claims the presence of effective competition in forty-two communities because fewer than thirty percent of the households subscribe to the cable services of its cable system. No opposition to the petition was filed. {#millennium-digital-media-systems-llc-millennium-has-filed-with-the-commission-a-petition-pursuant-to-section-623a1-of-the-communications-act-of-1934-as-amended-communications-act-and-sections-76.7a1-and-76.905b1-of-the-commissions-rules-for-a-determination-of-effective-competition-in-various-communities-in-michigan-the-communities.-millennium-alleges-that-its-cable-systems-serving-the-communities-are-subject-to-effective-competition-and-therefore-exempt-from-cable-rate-regulation.-millennium-alleges-that-its-cable-systems-serving-thirty-five-communities-are-subject-to-effective-competition-and-therefore-exempt-from-cable-rate-regulation-because-of-competing-services-provided-by-two-direct-broadcast-satellite-dbs-providers-directv-inc.-directv-and-dish-network-dish.-millennium-also-claims-the-presence-of-effective-competition-in-forty-two-communities-because-fewer-than-thirty-percent-of-the-households-subscribe-to-the-cable-services-of-its-cable-system.-no-opposition-to-the-petition-was-filed. .unnumbered}

**II. DISCUSSION**

2\. In the absence of a demonstration to the contrary, cable systems are
presumed not to be subject to effective competition,[^2] as that term is
defined by Section 76.905 of the Commission\'s rules.[^3] 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.[^4] Based on the record
presented in this proceeding, Millennium has met this burden.

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 fifteen percent (15 percent)
of the households in the franchise area.[^5] In addition, Section
623(l)(1)(A) of the Communications Act provides that a cable operator is
subject to effective competition, and therefore exempt from cable rate
regulation, if "fewer than 30 percent of the households in the franchise
area subscribe to the cable service of the cable system."[^6]

**The Competing Provider Test**

4\. Turning to the first prong of the competing provider test, 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.[^7] Millennium has provided evidence of the advertising of
DBS service in the news media serving the communities.[^8] The two DBS
providers' subscriber growth reached approximately 26.1 million as of
June 2005, comprising approximately 27.7 percent of all MVPD subscribers
nationwide; DirecTV has become the second largest, and DISH the third
largest, MVPD provider.[^9] In view of this DBS growth data, and the
data discussed below showing that more than 15 percent of the households
in the communities are DBS subscribers, 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 at least 12 channels of video programming, including
at least one non‑broadcast channel.[^10] We find further that Millennium
has demonstrated that the community is 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.

5\. 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. Millennium sought to determine the
competing provider penetration in thirty-five of its franchise areas by
purchasing a report from SkyTrends that identified the number of
subscribers attributable to the DBS providers within the Communities on
a zip code plus four basis.[^11] Millennium asserts that it is the
largest MVPD in thirty of the Communities because Millennium's
subscribership exceeds the aggregate DBS subscribership for those
franchise areas.[^12] Based upon the aggregate DBS subscriber
penetration levels as reflected in Attachment A, calculated using 2000
Census household data,[^13] we find that Millennium 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 these thirty Communities. Therefore, the second prong of
the competing provider test is satisfied as to these thirty Communities.
Based on the foregoing, we conclude that Millennium has submitted
sufficient evidence demonstrating that its cable systems serving thirty
of the Communities set forth on Attachment A are subject to effective
competition.

6.  As to five other communities, Boston Township, Handy Township,
    Henrietta

    Township, Marengo Township, and Perry Township, Millennium is unable
    to determine the largest MVPD because the number of DBS subscribers
    for DirecTV and DISH Network provided by SkyTrends are aggregated
    and exceed the number of Millennium subscribers. Nevertheless, we
    are able to conclude that the second prong is met by analyzing the
    data submitted for both Millennium and the DBS providers. If the
    subscriber penetration for both Millennium and the aggregate DBS
    providers each exceed 15 percent in the franchise area, the second
    prong of the competing provider test is satisfied. In Boston
    Township, assuming Millennium is the largest MVPD, the combined DBS
    penetration rate is 36.48 percent.[^14] Conversely, assuming that
    one of the DBS providers is the largest MVPD in Boston Township, the
    subscribership of Millennium is 32.29 percent.[^15] In Handy
    Township, assuming that Millennium is the largest MVPD, the combined
    DBS penetration rate is 23.48 percent.[^16] Conversely, assuming
    that one of the DBS providers is the largest MVPD in Handy Township,
    Millennium's penetration rate is 22.36%.[^17] In Henrietta Township,
    assuming that Millennium is the largest MVPD, the combined DBS
    penetration rate is 40.33 percent.[^18] Conversely, assuming that
    one of the DBS providers is the largest MVPD in Henrietta Township,
    Millennium's penetration rate is 34.26 percent.[^19] In Marengo
    Township, assuming Millennium is the largest MVPD, the combined DBS
    penetration rate is 35.75 percent.[^20] Conversely, assuming that
    one of the DBS providers is the largest MVPD in Marengo Township,
    Millennium's penetration rate is 34.22%.[^21] In Perry Township,
    assuming Millennium is the largest MVPD, the combined DBS
    penetration rate is 40.49 percent.[^22] Conversely, assuming that
    one of the DBS providers is the largest MVPD in Perry Township,
    Millennium's penetration rate is 36.02%.[^23] Accordingly, we find
    that Millennium 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 its Boston
    Township, Handy Township, Henrietta Township, Marengo Township, and
    Perry Township franchise areas.

    **The Low Penetration Test**

    7\. Millennium submits sufficient evidence regarding household and
    subscriber data, demonstrating that its cable system serves less
    than 30 percent of households in forty-two of the Communities.[^24]
    Millennium provided 2000 Census Bureau household data for the
    communities in its franchise area.[^25] Millennium also provides the
    count of Millennium subscribers in the franchise area, which it used
    to calculate a subscriber-to-household penetration rate.[^26] Based
    upon the subscriber penetration levels as reflected in Attachment B,
    calculated using 2000 Census household data,[^27] we find that
    Millennium has demonstrated that the number of households
    subscribing to its service is less than 30 percent of the households
    in the forty-two Communities. Based on this record, we conclude that
    Millennium has demonstrated that its cable system meets the
    requirements of low penetration effective competition under our
    rules, and we grant its petition.

# III. ordering clauses {#iii.-ordering-clauses .unnumbered}

8\. Accordingly, **IT IS ORDERED** that the petition for a determination
of effective competition filed by Millennium Digital Media Systems, LLC
listed on Attachments A and B **ARE GRANTED**.

9\. **IT IS FURTHER ORDERED** that the low penetration claim for the
community of North Plains **IS DISMISSED** without prejudice.

10\. **IT IS FURTHER ORDERED** that the certifications to regulate basic
cable service rates granted to any of the local franchising authorities
overseeing Millennium Digital Media Systems, LLC **ARE REVOKED**.

11\. This action is taken pursuant to authority delegated under Section
0.283 of the Commiss1on's rules.[^28]

FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Deputy Chief, Policy Division, Media Bureau

**Attachment A**

**CSR-6037-E**

> **2000 Estimated**

**Census DBS Millennium**

## Communities CUIDS CPR\* Households^+^ Subscribers^+^ Subscribers^+^ {#communities-cuids-cpr-households-subscribers-subscribers .unnumbered}

##   {#section .unnumbered}

## Alaeidon MI1832 23.4 1115 261 440 {#alaeidon-mi1832-23.4-1115-261-440 .unnumbered}

Athens MI0930 21.9 397 87 239

Aurelius Township MI1716 39.2 1130 443 504

Bath Charter MI1060 21.9 2799 613 1846

Bellevue MI1064 15.2 525 80 335

Benton Township MI0653 33.4 991 331 446

Concord Village MI0477 20.4 318 65 47

Eaton Township MI0652 29.4 1531 451 780

Fowlerville Village MI0493 15.13 1156 175 736

Grass Lake Village MI1088 21.6 421 91 376

Hastings City MI0151 21.4 2759 592 1455

Homer Village MI1082 24.6 707 174 356

Hubbardston Village MI1549 20.0 130 26 51

Leslie City MI0454 20.1 734 148 485

Marshall Township MI1690 20.7 1081 224 312

Morrice Village MI1294 16.7 316 53 177

Mulliken Village MI1157 16.4 195 32 120

Oneida Charter MI1719 24.7 1352 335 373

Pewamo Village MI1375 15.7 197 31 109

Portland City MI0610 16.0 1507 242 1176

Potterville City MI0651 20.4 802 164 563

Union City Village MI0837 21.9 685 150 450

Vermontville Village MI1301 26.8 287 77 84

Vevay Township MI0614 35.0 1264 443 493

Victor Township MI1061 25.5 1139 291 346

Watertown Charter MI1314 28.4 1469 418 650

Williamstown Township MI0611 22.4 1692 379 1086

Windsor Charter MI0706 15.06 2781 419 1256

Woodhull Township MI1292 25.1 1390 350 872

Boston Township MI1250 25.4 1881 479 424

Handy Township MI0612 23.4 2504 588 560

Henrietta Township MI1087 40.3 1614 651 553

Marengo Township MI1691 35.7 786 281 269

Perry Township MI0745 32.3 1252 507 451

Sunfield Village MI1156 222 6 161

\*CPR = Percent of competitive DBS penetration rate.

^+^See Petition at 6-7 and Exhibits A and D.

**Attachment B**

> **2000**

**Census Millennium**

## Communities CUIDS CPR\* Households^+^ Subscribers^+^ {#communities-cuids-cpr-households-subscribers .unnumbered}

##   {#section-1 .unnumbered}

## Albion Township MI1711 5.58 466 26 {#albion-township-mi1711-5.58-466-26 .unnumbered}

Athens Township MI1519 0.07 956 70

Bellevue Township MI1065 0.07 1161 82

Bunkerhill Township MI1068 2.03 690 14

Burlington Township MI1602 0.01 734 30

Campbell Township MI1249 0.04 780 34

Carmel Township MI1774 19.83 923 183

Concord Township MI0478 0.06 986 65

Convis Township MI1296 5.47 622 34

Danby Township MI1297 19.75 914 178

Eagle Township MI1315 16.39 848 139

Eaton Rapids Township MI1717 13.86 1328 184

Eckford Township MI1756 15.13 476 72

Fredonia Township MI1708 11.78 679 80

Grass Lake Township MI1089 13.49 1653 223

Green Oak Township MI0905 19.97 5438 1086

Hanover Township MI1077 22.99 1374 316

Hastings Charter MI1858 9.36 1015 95

Homer Township MI1083 0.02 1117 23

Ingham Township MI1604 18.55 722 134

Leroy Township MI0613 0.11 1329 148

Leslie Township MI1076 0.04 855 35

Liberty Township MI1298 14.63 1073 157

Lyons Township MI1548 0.01 1268 25

Odessa Township MI1090 0.06 1492 100

Onondaga Township MI1718 5.14 993 51

Parma Township MI1081 20.25 943 191

Portand Township MI1058 25.97 828 215

Pulaski Township MI0479 15.57 700 109

Roxand Towship MI1158 0.09 658 63

Sandstone Charter Town MI1079 0.00 1321 13

Sciota Township MI1063 22.72 625 142

Sheridan Township MI1737 27.14 770 209

Sherwood Township MI0931 17.74 885 157

Spring Arbor Township MI1078 1.05 2570 27

Stockbridge Township MI1085 0.20 1220 25

Sunfield Township MI1159 0.08 777 63

Union Township MI0932 0.08 1184 99

Walton Township MI1067 18.60 699 130

Westphalia Township MI1295 4.82 436 21

Wheatfield Township MI1293 12.98 570 74

Woodland Township MI1091 14.60 808 118

\*CPR = Percent of Millennium penetration rate.

^+^See Petition at 8 and Exhibit B.

[^1]: *See* 47 U.S.C. § 543(a)(1); 47 C.F.R. §§ 76.7(a)(1) and
    76.905(b)(1). Concord Village (MI0477) is certfied to regulate basic
    cable rates. Millennium filed for seventy-eight communities,
    thirty-five under the competing provider test and forty-three under
    the low penetration test. Millennium no longer has a franchise in
    the community of North Plains, therefore, the petition for this
    community is dismissed.

[^2]: 47 C.F.R. § 76.906.

[^3]: 47 C.F.R. § 76.905.

[^4]: *See* 47 C.F.R. §§ 76.906 & 907.

[^5]: 47 U.S.C. §543(1)(1)(B); *see also* 47 C.F.R. §76.905(b)(2).

[^6]: 47 U.S.C § 543(l)(l)(A).

[^7]: *See MediaOne of Georgia*, 12 FCC Rcd 19406 (1997).

[^8]: *See* Millennium Petition at 5-6 and Exhibit C.

[^9]: *Twelfth Annual Assessment of the Status of Competition in the
    Market for the Delivery of Video Programming*, FCC 06-11 at ¶¶ 6,
    13, 72-73 (rel. March 3, 2006).

[^10]: ^?^*See* 47 C.F.R. § 76.905(g). *See also* Petition at 5-6 and
    Exhibits E and F.

[^11]: *Id.* at 6-7 and Exhibits A and D (SkyTrends Report).

[^12]: *Id.*

[^13]: *Id*. and Exhibit A.

[^14]: *Id.* and Exhibits A and D (479 combined DBS subscribers ÷ 1313
    Boston Township households = 36.48%).

[^15]: *Id*. (424 Millennium subscribers ÷ 1313 Boston Township
    households = 32.29%).

[^16]: *Id.* (588 combined DBS subscribers ÷ 2504 Handy Township
    households = 23.48%).

[^17]: *Id.* (560 Millennium subscribers ÷ 2504 Handy Township
    households = 22.36%).

[^18]: *Id.* (651 DBS subscribers ÷ 1614 Henrietta Township households =
    40.33%).

[^19]: *Id.* (553 Millennium subscribers ÷ 1614 Handy Township
    households = 34.26%).

[^20]: *Id.* and Exhibits And D (281 combined DBS ÷ 786 Marengo
    households = 35.75%).

[^21]: *Id.* (269 Millennium households ÷ 786 Marengo households =
    34.22%).

[^22]: *Id.* and Exhibits A and D (507 combined DBS subscribers ÷ 1252
    Perry Township households = 40.49%).

[^23]: *Id.* (451 Millennium subscribers ÷ 1252 households = 36.02).

[^24]: *Id.* at 8.

[^25]: *Id.* and Exhibit B.

[^26]: *Id.*

[^27]: *Id*.

[^28]: 47 C.F.R. § 0.283.