**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of: )

)

Time Warner Cable ) CSR-4824-E

) Lima, OH et. al.

Petition for Determination of )

Effective Competition )

**MEMORANDUM OPINION AND ORDER**

**Adopted: February 5, 2001 Released: February 7, 2001**

By the Deputy Chief, Cable Services Bureau:

**I. INTRODUCTION**

1\. In the above-captioned proceeding, Time Warner Cable (\"Time
Warner\") seeks a determination that it is subject to effective
competition in Lima, Ohio and surrounding franchise areas[^1]
(hereinafter \"Communities\") because W.A.T.C.H. TV Company
(\"WTC\")[^2] provides competing multichannel video service in each of
the Communities. WTC filed an opposition to Time Warner\'s request, as
did the Ohio cities of Piqua, Sidney, and St. Marys. Time Warner replied
to each of the opponents\' arguments.

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] Section 623(l)(1)(D) of
the Communications Act provides that a cable operator is subject to
effective competition, and therefore exempt from cable rate regulation,
if a 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, provided the video
programming services thus offered are comparable to the video
programming services provided by the unaffiliated cable operator in that
area.[^6]

3.  The Commission has stated that an incumbent cable operator could
    satisfy the "LEC" effective competition test by showing that the LEC
    is technically and actually able to provide services that
    substantially overlap the incumbent operator's service in the
    franchise area.[^7] The incumbent also must show that the LEC
    intends to build-out its cable system within a reasonable period of
    time if it has not already done so, 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.[^8]

**II. DISCUSSION**

4\. Time Warner asserts that it faces effective competition from WTC, a
wireless cable operator serving subscribers in Lima, Ohio and
surrounding communities. Time Warner asserts that WTC is affiliated with
Benton Ridge Telephone Company, a local exchange carrier serving
residents in four central Ohio counties.[^9] Time Warner states that WTC
offers service in all these communities, as all are within WTC\'s
35-mile radius of protected service.[^10] Time Warner also states that
WTC, whose headquarters are in Lima, serves nearly 10,000 subscribers in
these communities and that some of these subscribers are located more
than 35 miles away from WTC\'s Cridersville transmitter site. Time
Warner argues that there are no regulatory, technical or other
impediments to households\' subscribing to WTC service. Time Warner
asserts that WTC\'s service offering has been made known to potential
subscribers through the use of direct mail and has been widely
publicized in the *Lima News*, a local newspaper circulated in Allen
County (where nearly half of the communities are located) and
surrounding areas. Time Warner asserts that WTC offers comparable
multichannel video programming in Lima and surrounding areas. Time
Warner includes WTC\'s channel line-up in its list of exhibits to
illustrate that the wireless operator offers 32 channels of programming
comparable to that which it provides; the line-up includes several local
broadcast channels.

5\. In opposition, WTC argues that a decision in this case should be
deferred until after the Commission acts on WTC\'s pending petition for
special relief for a permanent waiver of Section 21.912,[^11] the
Commission\'s cable‑MMDS cross-­ownership rules, or a declaration that no
such waiver is necessary. WTC asserts that if its petition is denied by
the Commission, Benton Ridge may be forced to divest WTC, thus mooting
Time Warner\'s request.

6\. The Ohio Cities of Sidney, St. Mary\'s, and Piqua (\"Cities\") each
filed separate oppositions to Time Warner\'s request. The City of Sidney
states that it was not aware of WTC\'s existence until Time Warner filed
its petition. Sidney also states that Time Warner provides no proof that
WTC has subscribers in Sidney or surrounding areas. Sidney ­adds that the
marketing materials provided by Time Warner, illustrating WTC\'s
coverage area, show that WTC's transmitter signal encompasses only the
northern part of Shelby County, and not the southern part where Sidney
is located. The City adds that the *Lima News* is not sold in Sidney.
The City asserts that WTC does not offer comparable programming because
it carries only two television stations that Time Warner carries in
Sidney.

7\. The Cities of St. Marys and Piqua argue that WTC\'s signal is not
physically available in their respective franchise areas and also state
that Time Warner failed to demonstrate actual WTC subscribership in
their respective franchise areas. Piqua explains that WTC\'s
transmissions cannot be received by its residents due to terrain
obstacles even though the City is 33 miles from the Cridersville
transmitter. Piqua adds that it is in Miami County and that this county
is not even included in the service area map provided by WTC in its
marketing materials. Piqua asserts, as did Sidney, that WTC only carries
two television stations that Time Warner also carries; thus the
programming comparability factor is not met in this instance. St. Marys
asserts that the cable-MDS cross-ownership rules could be considered a
regulatory impediment to WTC providing service to subscribers within its
borders. The Cities also assert that the *Lima News*, the publication
which purportedly publicizes the existence of WTC to potential
subscribers, is not circulated to residents within their borders.

8\. In reply, Time Warner states that it has been unable to confirm
whether residents of Piqua and Sidney can currently receive WTC\'s
signal and whether WTC\'s service is being actively marketed in these
two communities. Time Warner requests that its petition be dismissed
without prejudice with respect to Piqua and Sidney. As for all of the
other communities in its petition, including St. Marys which is less
than 11 miles away from the WTC transmitter, Time Warner reiterates that
WTC\'s service is unquestionably offered and available, and that
subscribers are aware that they may purchase WTC\'s service in the
communities.[^12] Time Warner adds that the weekly circulation of the
*Lima News* in St. Marys is 1,100, out of an estimated 3,400 occupied
households in that community. It states that an audit report for the
Lima News demonstrates that the paper has significant circulation in St.
Marys as well as Auglaize, Allen, Hancock, Hardin, Logan, Mercer, and
other northwest-central Ohio counties.[^13] As for the programming
comparability argument presented by the opposing Cities, Time Warner
argues that because WTC offers access to at least twelve channels of
programming, at least some of which are television broadcasting signals,
WTC offers comparable programming. With regard to WTC\'s argument that
it would be premature to act on the effective competition petition given
that the Commission still has to act on the cable-MMDS waiver, Time
Warner argues that so long as Benton Ridge continues to own WTC, it is
entitled to relief.

9\. In the absence of a demonstration to the contrary, cable systems are
presumed not to be subject to effective competition as defined in the
Communications Act.[^14] The cable operator bears the burden of
rebutting the presumption that effective competition does not exist and
must provide evidence sufficient to demonstrate that effective
competition, as defined by Section 76.905 of the Commission\'s rules, is
present in the franchise area.[^15] Time Warner has met this burden for
all the relevant Communities, including St. Marys. As per Time Warner\'s
request, we dismiss the petition with regard to the cities of Sidney and
Piqua.

10\. With regard to the first part of the LEC effective competition
test, which requires that the alleged competitive service be provided by
a LEC or its affiliate (or any multi-channel video programming
distributor (\"MVPD\")[^16] using the facilities of such LEC or its
affiliate), we find that Time Warner has provided sufficient evidence
demonstrating that WTC is a wholly-owned subsidiary of Benton Ridge
Telephone Company, which is unquestionably a LEC. WTC did not dispute
this fact in its Opposition. We find that Time Warner satisfies the
affiliation prong of the LEC effective competition test. We also find
that Time Warner is unaffiliated with WTC or Benton Ridge.

11\. Time Warner has submitted sufficient evidence demonstrating that
WTC provides comparable programming. A competing multichannel video
programming distributor is said to offer comparable programming when at
least 12 channels of programming, at least one of which is non-broadcast
programming, are present. Neither the Communications Act nor the
Commission\'s rules mandate station-specific comparability to the extent
argued by the cities above. The channel line-up for WTC submitted by
Time Warner establishes that WTC offers 32 channels of programming,
including six over-the-air broadcast signals and numerous non-broadcast
channels. This satisfies the Commission\'s programming comparability
criterion.

12\. The LEC effective competition test requires that competitive
service be offered directly to subscribers in the franchise area of an
unaffiliated cable operator which is providing cable service in that
franchise area. In enacting the LEC effective competition test, Congress
indicated that the Commission should apply its preexisting definition of
the term \"offer\" to the LEC effective competition test. This
definition provides that service is offered:

(1) When the multichannel video programming distributor is physically
    > able to deliver service to potential subscribers, with the
    > addition of no or only minimal additional investment by the
    > distributor, in order for an individual subscriber to receive
    > service; and

> \(2\) When no regulatory, technical or other impediments to households
> taking service exist, and potential subscribers in the franchise area
> are reasonably aware that they may purchase the services of the
> multichannel video programming distributor.[^17]

13\. Based on the information before us, we find that WTC is offering
service in the Communities at issue. Time Warner has submitted evidence
that WTC\'s Cridersville, Ohio transmitter is in place and physically
able to offer service, and in fact currently serves approximately 10,000
subscribers throughout the relevant Communities. In order to provide
service, WTC need only install an MMDS antenna on, or near, a
subscriber\'s home. Line-of-sight/shadow plot maps generated by Time
Warner and the Commission indicate that the Communities lie within
WTC\'s line-of-sight area. These facts convince us that WTC\'s service
is physically available in the areas at issue with minimal, additional
investment.[^18]

14. We likewise conclude that no regulatory, technical or other
    impediments prevent potential subscribers from receiving WTC\'s
    service. We find that potential subscribers in the Communities are
    reasonably aware that they may receive competing video service
    because of WTC's direct mail campaign and the numerous
    advertisements placed by WTC in the *Lima News*. Time Warner has
    also demonstrated through the use of objective audit data, that the
    *Lima News* is circulated in the areas at issue. WTC has about
    10,000 subscribers in its service area, indicating that the
    marketing materials are in fact educating potential subscribers
    about the availability of its service. There are no other
    indications of impediments to taking service or regulatory,
    technical or other obstacles impeding the grant of the petition.

15. We disagree with WTC's argument that the Commission should defer
    action on Time Warner's Petition pending resolution of WTC's request
    for a permanent waiver of the Commission's cross-ownership rules.
    WTC continues to provide wireless cable service to subscribers in
    the Communities pursuant to a temporary waiver issued by the
    Commission. Should WTC discontinue its wireless cable service for
    any reason, Section 76.916 of our rules permits local franchising
    authorities to file a petition for recertification to regulate
    rates.[^19]

> **III. ORDERING CLAUSES**

15\. Accordingly, **IT IS ORDERED** that the Petition for Determination
of Effective Competition filed by Time Warner Cable **IS GRANTED** with
respect to the Communities referenced in footnote 1 of this Order,
except that Time Warner Cable's Petition with respect to the Cities of
Piqua and Sidney, Ohio is **DISMISSED** without prejudice.

16\. **IT IS FURTHER ORDERED** that the certifications of the applicable
franchise authorities are **REVOKED.**

17\. This action is taken pursuant to delegated authority under Section
0.321 of the Commission\'s rules, as amended.

FEDERAL COMMUNICATIONS COMMISSION

William H. Johnson

Deputy Chief, Cable Services Bureau

[^1]: ^1^The following 50 franchise areas, categorized by cable system
    headend, are part of Time Warner\'s request: **Lima**\-- Allen
    County (OH0548 and OH0585), Amanda (OH1140), Auglaize (OH1407), Bath
    (OH0582), Beaverdam (OH1408), Bluffton (OH1413), Buckland (OH0339),
    Cairo (OH1241), Criderville (OH0583), Elida (OH0373), Harrod
    (OH1410), Jackson (OH1411), Lafayette (OH1412) Lima (OH0069), Monroe
    (OH01238), Shawnee (OH0583), Sugar Creek (OH0741), Spencer (OH1147),
    and Spencerville (OH1148); **Delphos**\--Allen County (OH1008),
    Marion (OH1144), Putnam County (OH1006), and Van Wert County
    (OH1007); **Greenville**\--New Weston (OH2359); **Kenton**\--Kenton
    (OH0049); **Ottawa**\--Blanchard (OH1603), Columbus Grove (OH0179),
    Glandorf (OH0181); Ottawa (OH0180 and OH1604); and Pleasant
    (OH1602); **Piqua**\--Brown (OH1750 and OH2360), Fletcher (OH1721),
    Piqua (OH0134), Spring Creek (OH0135), and Washington (OH0136);
    **St. Marys**\--Burketville (OH2342) and St. Marys (OH0050);
    **Sidney**\--Clinton (OH2369), Orange (OH2373), Perry (OH2374), Port
    Jefferson (OH1005), Salem (OH2375), Sidney (OH0051), Washington
    (OH2380), and West Liberty (OH0636); and **Wapakoneta**\--Auglaize
    County (OH0334) and Wapakoneta (OH0053).

[^2]: ^2^WTC is a provider of multichannel multipoint distribution
    service (\"MMDS\") or wireless cable service.

[^3]: ^ 3^47 C.F.R. § 76.906.

[^4]: ^4^47 C.F.R. § 76.905.

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

[^6]: ^6^Communications Act, § 623(1)(1)(D), 47 U.S.C. § 543(1)(1)(D);
    *see also* 47 C.F.R. § 76.905(b)(4). This fourth statutory effective
    competition test within Section 632(l) may be referred to as the
    "LEC" effective competition test.

[^7]: ^7^*See Implementation of Cable Act Reform Provisions of the
    Telecommunications Act of 1996*, 14 FCC Rcd 5296, 5305 (1999)
    ("*Cable Reform Order*"). No showing of meeting a penetration
    standard is required under the "LEC" effective competition test.
    *Id*. at 5303.

[^8]: ^8^*Id*. at 5305.

[^9]: ^9^Benton Ridge provides local telephone service in portions of
    four Northwestern Ohio counties: Hancock, Henry, Defiance, and
    Putnam. *See* Time Warner Petition, Exhibits B&C.

[^10]: ^10^WTC\'s central transmitter is located in Cridersville,
    Ohio\--less than 10 miles away from Lima.

[^11]: ^11^WTC is currently operating under a temporary waiver of this
    rule.

[^12]: ^12^Time Warner asserts that one of WTC\'s customer service
    representatives confirmed that some St. Marys residents are WTC
    subscribers. Time Warner has also submitted a line-of-site map
    showing that there are no technical impediments to St. Mary's
    households receiving WTC\'s wireless service.

[^13]: ^13^*See* Time Warner Reply, Exhibit B (Audit Report for the Lima
    News).

[^14]: ^14^47 C.F.R. §76.906.

[^15]: ^15^47 C.F.R. §76.911(b)(1).

[^16]: ^16^The Commission\'s rules define a MVPD as \"an entity such as,
    but not limited to, a cable operator, a multichannel multipoint
    distribution service, a direct broadcast satellite service, a
    television receive-only satellite program distributor, a video
    dialtone service provider, or a satellite master antenna television
    service provider that makes available for purchase, by subscribers
    or customers, multiple channels of video programming.\" 47 C.F.R.
    §76.905(d).

[^17]: ^17^47 C.F.R. §76.905(e).

[^18]: ^18^*See Rate Order,* 8 FCC Rcd at 5657-58 (\"The installation by
    the MMDS operator of a special subscriber antenna capable of
    receiving microwave signals represents an 'individual' additional
    investment by the operator, the antenna being particular to that
    household\'s reception of the service.\").

[^19]: 47 C.F.R. §76.916.