Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of:                | * | CSR 6047-E                   |
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| Alert Cable TV of South          | ) |                              |
| Carolina, Inc.                   | * |                              |
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| Time Warner                      | * |                              |
| Entertainment-Advance/Newhouse   | ) |                              |
| Partnership, d/b/a Time Warner   | * |                              |
| Cable                            | * |                              |
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| Petition for Determination of    | * |                              |
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| Competition in Thirty-Eight      | * |                              |
| Communities in South Carolina    | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: January 25, 2006** **Released: January 26, 2006**

By the Deputy Chief, Policy Division, Media Bureau:

**I. INTRODUCTION**

### 1. Alert Cable TV of South Carolina, Inc. and Time Warner Entertainment-Advance/Newhouse Partnership, d/b/a Time Warner Cable ("Time Warner") has filed with the Commission a petition pursuant to Sections 76.7 and 76.905(b)(1) & (2) and 76.907 of the Commission\'s rules seeking a finding of effective competition in thirty-eight communities in South Carolina (the "Communities").[^1] Time Warner alleges that its cable systems serving the Communities are subject to effective competition pursuant to Section 623(a)(1) of the Communications Act of 1934, as amended (\"Communications Act\")[^2] and therefore exempt from cable rate regulation. Time Warner alleges that its cable systems serving thirty-five Communities are subject to effective competition and therefore exempt from cable rate regulation because of competing service provided by two direct broadcast satellite ("DBS") providers, DirecTV, Inc. ("DirecTV") and DISH Network ("DISH"). Time Warner also alleges that three Communities are subject to effective competition under the low penetration test. The County of Richland filed an opposition to which Time Warner replied.

2\. In the absence of a demonstration to the contrary, cable systems are
presumed not to be subject to effective competition,[^3] as that term is
defined by Section 76.905 of the Commission\'s rules.[^4] 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.[^5] Based on the record
presented in this proceeding, Time Warner has met this burden.

**II. DISCUSSION**

**A. Competing Provider Effective Competition**

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 of the
households in the franchise area.[^6] 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] Time Warner asserts that
households in the Communities are reasonably aware that DBS service is
available based on the penetration rates in the communities at
issue.[^8] 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 DISH the fourth 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 listed on Attachment A 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.

4\. 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 that Time Warner has demonstrated that the
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 Communities. Time Warner
also demonstrated that the two DBS providers are physically able to
offer MVPD service to subscribers in the Communities, that there exists
no regulatory, technical, or other impediments to households within the
Communities taking the services of the DBS providers, and that potential
subscribers in the Communities have been made reasonably aware of the
MVPD services of DirecTV and DISH.[^11] Accordingly, we find that 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. Time Warner asserts that it is the
largest MVPD in thirty-three of the thirty-five Communities, for which
an effective competition finding is sought under the competing provider
test, because Time Warner's subscribership exceeds the aggregate DBS
subscribership for those franchise areas.[^12] As to two other
communities, Darlington County and the Town of Eastover, Time Warner is
unable to determine the largest MVPD because the number of DBS
subscribers for DirecTV and DISH provided by SkyTrends are aggregated
and exceed the number of Time Warner subscribers. Time Warner asserts
that the respective aggregate allocated DBS subscriber figures (3,715
and 124) are slightly larger than Time Warner's subscriber counts (3,215
and 115) in those two communities.[^13] However, Time Warner contends
that it is likely that Time Warner is still the largest individual MVPD
in these franchise areas.[^14]

6\. Time Warner derived the DBS franchise area subscribership based on
an allocation methodology previously approved by the Commission.[^15]
Time Warner initially determined the number of households in the
franchise area based on data from the 2000 Census.[^16] Time Warner then
derived an allocation ratio by dividing the 2000 Census household figure
by the SkyTrends' aggregate household figure for the five digit zip code
area covering all or part of the franchise area.[^17] Time Warner also
obtained the number of DBS subscribers for the franchise area from
SkyTrends and that figure was reduced by 2 percent to account for
commercial or test accounts.[^18] The reduced DBS subscriber count was
then multiplied by the allocation ratio to determine the number of DBS
subscribers allocable to the Franchise Area, which was then divided by
the 2000 Census household total to derive DBS penetration.[^19]

7\. In opposition, the County of Richland "accepts without conceding"
that Time Warner has satisfied the first prong of the competing provider
test, however, it alleges that Time Warner has not met its burden of
demonstrating that the number of households subscribing to DBS providers
exceed 15 percent of the households in the franchise area.[^20] Richland
argues that the Petition should be denied because: 1) it is contested;
2) Richland objects to the use of the SkyTrends' five digit zip code
report; 3) there is evidence that the DBS subscriber information data is
widely inaccurate; and 4) Time Warner did not use a SkyTrends' zip plus
four report (which are available at a nominal price).[^21] Richland
objects to the SkyTrends' Report because it claims that the County is
limited to the corporate area limits and several of the zip codes
contained in the report are only marginally in the County limits.[^22]
Richland contends that only nine of the nineteen zip codes in the
Petition are solely for Richland residents and the majority of the
remaining zip codes (29016, 29036, 29045, 29063, 29075, 29078, 29130,
29180, 29210, and 29212) substantially overlap areas that are located
outside of the County's franchise area.[^23] As a result, the household
population is inflated.[^24] In addition, the "shared" zip code blocks
are in communities that are more rural than Richland and therefore have
a greater likelihood of a higher DBS subscribership than Richland
because cable line extension to those areas would be cost
prohibitive.[^25] This results in a higher number of DBS subscribers in
rural adjacent areas. Therefore, DBS subscriber counts for these zip
code areas are unreliable indicators of the DBS penetration within the
Richland franchise area.[^26] Thus, Richland argues Time Warner has not
satisfied the second prong of the competing provider test.

8\. In reply, Time Warner argues that it has accurately applied the
Commission's methodology for determining effective competition under the
50/15 competing provider test.[^27] It also asserts that the zip code
allocation methodology has been recently affirmed in numerous cases,
including ones that were opposed.[^28] Time Warner argues that contrary
to the County's contention, it has not claimed that all of the
households in zip codes 29016 or 29036 are exclusively within the
County, but recognizes that zip codes may not precisely match government
territorial limits.[^29] Rather, SkyTrends has identified all of the
five digit zip codes that cover the County, in whole or in part and the
County has not disputed it.[^30] Nor does the County claim that Time
Warner's mathematical application of the zip code allocation methodology
was done incorrectly.[^31] Finally, Time Warner argues that the
Commission does not require that zip plus four data be utilized and the
Commission has found the allocation methodology to be reasonable and
reliable.[^32]

9\. We reject the County's challenges to the use of the SkyTrends'
Report. The SkyTrends' Report identifies the zip codes contained in the
Report as being within the franchise area and within the County in whole
or in part.[^33] As both parties are aware, zip codes do not match
franchise areas identically, so the fact that some of the zip codes are
not solely within the County does not exclude them from the franchise
area. Zip codes that are partially within the franchise area are still
relevant for the purpose of determining DBS penetration under the
effective competition test. Moreover, the allocation methodology works
to prevent over counting of households by estimating and excluding
households outside of the franchise area. We therefore reject the
County's argument that we delete all the zip codes except those that are
wholly contained within the County. We also reject the County's argument
that the allocation method for determining DBS subscribership is limited
to uncontested cases.[^34] Furthermore, we reject the County's assertion
that Time Warner was required to use a zip code plus four report. While
the Commission accepts zip code plus four data, it has not expressed a
preference for one form of data over another and accepts five digit zip
code data as reliable for purposes of determining effective competition.
Furthermore, the County has not supplied any information to support its
claim that the evidence is inaccurate other than its argument that a
number of zip codes included partial areas outside the County. Finally,
we reject Richland's argument that our analysis should consider that DBS
service is more prevalent in outlying areas of the County that Time
Warner does not serve. In the absence of specific evidence supporting
this allegation, we cannot discount or otherwise discredit the DBS
penetration data submitted by Time Warner.[^35] Accordingly, we will
accept the number of Richland DBS subscribers indicated in Time Warner's
petition as calculated using the Commission-approved allocation method.

10\. Based upon the aggregate DBS subscriber penetration levels, as
reflected in Attachment A, calculated using Census 2000 household
data,[^36] we find that Time Warner 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 as to the Communities. Based on the foregoing, we conclude
that Time Warner has submitted sufficient evidence demonstrating that
its cable system serving the Communities is subject to effective
competition.

**B. Low Penetration Effective Competition**

11\. 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."[^37] As to the three remaining franchise areas, Clarendon
County, Georgetown County, and Kershaw County, Time Warner's penetration
rate is 6.76 percent in Clarendon County, 14.3 percent in Georgetown
County, and 8.17 percent in Kershaw County. Time Warner's penetration
rate in these franchise areas as listed on Attachment B shows that less
than 30 percent of the households within these three franchise areas
subscribe to its cable services. Based on this record, we conclude that
Time Warner has demonstrated the existence of low penetration effective
competition under our rules.

**III. ORDERING CLAUSES**

12\. Accordingly, **IT IS ORDERED** that the petition for a
determination of effective competition filed by Alert Cable TV of South
Carolina, Inc. and Time Warner Entertainment-Advance/Newhouse
Partnership **IS** **GRANTED**.

13\. **IT IS FURTHER ORDERED** that the certifications to regulate basic
cable service rates granted to any of the local franchising authorities
overseeing Alert Cable TV of South Carolina, Inc. and Time Warner
Entertainment-Advance/Newhouse Partnership **ARE REVOKED**.

14\. This action is taken pursuant to authority delegated under Section
0.283 of the Commission's rules.[^38]

FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Deputy Chief, Policy Division, Media Bureau

**Attachment A**

**CSR 6047-E**

> **2000**

**Census DBS**

## Communities CUIDS CPR\* Households^+^ Subscribers^+^ 

##  

Town of Andrews SC0164 33.7% 1182 398

SC0193

SC0194

Town of SC0305 38% 2167 824

Batesburg-Leesville SC0306

SC0307

City of Bishopville SC0029 33.9% 1438 487

Town of Blythewood SC0452 35.6% 73 26

SC0558

Town of Chapin SC0370 30.9% 249 77

Town of Cordova SC0381 15.3% 59 9

Darlington County SC0115 19.3% 19251 3715

City of Darlington SC0114 21.3% 2812 600

Town of Eastover SC0339 40.4% 307 124

Town of Elgin SC0297 29.9% 288 86

Florence County SC0057 17.5% 29936 5245

City of Georgetown SC0001 20.9% 3411 714

Town of Greeleyville SC0530 36.8% 163 60

SC0571

Town of Hemingway SC0209 42.1% 259 109

SC0210

City of Johnsonville SC0208 33.8% 532 180

SC0211

Town of Kingstree SC0108 24.7% 1448 358

SC0284

City of Lake City SC0003 22.3% 2409 537

Town of Lane SC0551 28.3% 223 63

Lexington County SC0052 20.7% 60681 12554

SC0342

SC0549

SC0550

Town of Lexington SC0082 20.5% 3644 748

SC0308

Town of Little SC0417 49.6% 121 60

Mountain

City of Manning SC0185 30.1% 1550 466

SC0187

Town of Mayesville SC0431 25.1% 331 83

Orangeburg County SC0114 26.5% 26054 6895

City of Pamplico SC0313 41.3% 419 173

Town of Pelion SC0437 35.4% 192 68

Town of Pine Ridge SC0189 24.8% 606 150

Town of Pinewood SC0390 31.1% 190 59

Richland County SC0053 16.9% 69901 11837

SC0175

SC0344

SC0454

SC0455

SC0559

SC0572

Town of St. Matthews SC0319 37.1% 823 305

Town of Scranton SC0005 31.8% 314 100

Town of South SC0190 16.4% 890 146

Congaree

Town of Summerton SC0186 26.1% 452 118

Sumter County SC0116 17.6% 22643 3975

Town of Timmonsville SC0192 27.5% 829 228

**Attachment B**

**Low Penetration Effective Competition**

**Franchise Area Cable Penetration**

## Communities Households Subscribers Level

##  

Clarendon County 9471 640 6.76%

Georgetown County 16997 2437 14.3%

Kershaw County 16861 1377 8.17%

\*CPR = Percent of competitive DBS penetration rate.

^+^See Petition at 10-13 and Exhibits D, E, F, and G; Erratum to
Supplement to Petition for Special Relief and Exhibit A.

[^1]: *See* 47 C.F.R. §§ 76.7(a)(1) and 76.905(b)(1) & (2). Time Warner
    requests that we revoke the certifications of the local franchising
    authorities that are currently certified to regulate basic cable
    rates.

[^2]: *See* 47 U.S.C. § 543(a)(1).

[^3]: 47 C.F.R. § 76.906.

[^4]: 47 C.F.R. § 76.905.

[^5]: *See* 47 C.F.R. §§ 76.906 & 907.

[^6]: 47 U.S.C. §543(1)(1)(B); *see also* 47 C.F.R. §76.905(b)(2).

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

[^8]: *See* Time Warner Petition at 5-6.

[^9]: *Eleventh Annual Assessment of the Status of Competition in the
    Market for Delivery of Video Programming*, FCC 05-13, 20 FCC Rcd
    2755, 2792 at ¶¶ 54-55 (rel. Feb. 4, 2005).

[^10]: *See* 47 C.F.R. §76.905(g). *See also* Time Warner Petition at
    7-8.

[^11]: *See* Time Warner Petition at 5-8.

[^12]: *Id.* at 5-9 and Exhibit A; Erratum to Petition for Special
    Relief ("Erratum Supplement") Exhibit A.

[^13]: *Id.* at 12 and Exhibit B; Erratum Supplement Exhibit A.

[^14]: Time Warner was not able to determine the largest MVPD because
    the DBS providers' aggregated subscriber counts were larger than its
    subcriber count. Nevertheless, Time Warner was able to establish
    that the competing provider test was met because the penetration
    rate of both the DBS providers and Time Warner exceeded the 15
    percent rate required by the competing provider test. Time Warner's
    penetration in Darlington County is 16.7% (3215 ÷ 19251 = 16.7%) and
    DBS penetration is 19.3%. Time Warner's penetration in the Town of
    Eastover is 37.5% (115 ÷ 307 = 37.5%) and DBS penetration is 40.4%.

[^15]: Time Warner Petition at 8-10; *see*, *e.g.*, *In re Petition for
    Determination of Effective Competition in San Luis Obispo County,
    California*, 17 FCC Rcd 4617 (2002); *Fibervision*, *Inc. Petition
    for Determination of Effective Competition in Laurel, MT and Park
    City, MT*, 17 FCC Rcd 16313 (2002).

[^16]: Time Warner Petition at 8 and Exhibit D.

[^17]: *Id.* at 9-10 and Exhibit G.

[^18]: *Id*. and Exhibits E and F.

[^19]: *Id.* and Exhibit F.

[^20]: Opposition of Richland County at 3.

[^21]: *Id.* at 1-6.

[^22]: *Id.* at 3-5.

[^23]: *Id.* at 3-4.

[^24]: *Id.* at 5.

[^25]: *Id.*

[^26]: *Id.*

[^27]: Reply at 1.

[^28]: *Id.* at 2.

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

[^30]: *Id.* at 7.

[^31]: *Id.*

[^32]: *Id.*

[^33]: Time Warner Petition Exhibits E and F.

[^34]: *See,* *In the Matter of Adelphia Cable Communications*, 20 FCC
    Rcd 4979 (2005); *In the Matter of Comcast of Dallas, L. P.*, 2005
    WL 3240068 (2005); *In the Matter of Texas Cable Partners, L.P.*, 19
    FCC Rcd 6213 (2004).

[^35]: *See* *Charter Communications, LLC d/b/a Charter Communications*,
    19 FCC Rcd 7003 (2004); *Texas Cable Partners*, 19 FCC Rcd 6213
    (2004); *Time Warner Entertainment Co.*, L.P., 18 FCC Rcd 13043
    (2003).

[^36]: Time Warner Petition Exhibits D, E and G.

[^37]: 47 U.S.C § 543(l)(l)(A).

[^38]: 47 C.F.R. § 0.283.