**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the Matter of:                | ** | CSR-7015-E, 7016-E, 7017-E,  |
|                                  | )\ | 7018-E, 7019-E, 7020-E,      |
| Liberty Cablevision of Puerto    | )  | 7021-E, 7022-E, 7023-E       |
| Rico, Ltd.                       | ** |                              |
|                                  |    |                              |
| Petition for Determination of    | ** |                              |
| Effective Competition in Seven   | )\ |                              |
| Local Franchise Areas in the     | )\ |                              |
| Commonwealth of Puerto Rico      | )\ |                              |
|                                  | )\ |                              |
|                                  | )  |                              |
|                                  | ** |                              |
+----------------------------------+----+------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted: October 26, 2006 Released: October 27, 2006**

By the Deputy Chief, Policy Division, Media Bureau:

# Introduction

1.  This Order considers a Petition for Special Relief ("Petition") that
    the cable operator Liberty Cablevision of Puerto Rico, Ltd.
    ("Liberty"), filed with the Commission pursuant to Sections 76.7,
    76.905, and 76.907 of the Commission's rules.[^1] The Petition seeks
    a determination that, in seven franchise areas in the Commonwealth
    of Puerto Rico,[^2] Liberty is subject to effective competition
    pursuant to Section 623(a)(2) of the Communications Act of 1934, as
    amended ("Communications Act"),[^3] and is therefore exempt from
    cable rate regulation. No opposition to the Petition was filed.
    Finding that Liberty is subject to effective competition in the
    seven franchise areas, we grant the Petition.

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(l)(1) of the Communications Act[^5]
    and Section 76.905 of the Commission\'s rules.[^6] A cable operator
    bears the burden of rebutting the presumption that effective
    competition does not exist with evidence that it does exist in its
    franchise area.[^7]

#  {#section .unnumbered}

# DISCUSSION

## Low Penetration Effective Competition

3.  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 a
    cable system.\"[^8] Liberty provided information showing that fewer
    than 30 percent of the households within the five franchise areas
    listed in Attachment A subscribe to its cable service. Based on this
    record, we conclude that Liberty has demonstrated the existence of
    low penetration effective competition under our rules in those five
    franchise areas.

## Competing Provider Effective Competition

4.  Section 623(l)(1)(B) of the Communications Act provides that a cable
    operator is subject to effective competition in a franchise area if
    the area is (a) served by at least two unaffiliated multi‑channel
    video programming distributors (\"MVPDs\") 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 15 percent of the households in the franchise
    area.[^9]

5.  In its Petition, Liberty claims the presence of effective
    competition stems from the competing services provided by two direct
    broadcast satellite (\"DBS\") providers, DirecTV, Inc. and the DISH
    Network.[^10] 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.[^11] Liberty has also provided
    evidence that the DBS providers' service is available in Puerto
    Rico.[^12] Moreover, 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.[^13] 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,
    in the four franchise areas in question, the DBS providers offer at
    least 12 channels of video programming, including at least one
    non‑broadcast channel.[^14] We find that Liberty has demonstrated
    that the four franchise areas 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 four franchise areas. Liberty has also
    demonstrated that the two DBS providers are physically able to offer
    MVPD service to subscribers in those areas, that there exist no
    regulatory, technical, or other impediments to households within the
    areas taking the services of the DBS providers, and that potential
    subscribers in the areas have been made reasonably aware of the MVPD
    services of DirecTV and DISH.[^15] Therefore, the first prong of the
    competing provider test is satisfied for each of the four franchise
    areas in question.

6.  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.
    Liberty states, and we have no cause to doubt, that it is the
    largest MVPD in the four franchise areas where it claims to be
    subject to competing provider effective competition.[^16] To make
    the numerical showing required by the second prong, Liberty
    furnished us with Effective Competition Tracking Reports from the
    Satellite Broadcasting and Communications Association.[^17] Based
    upon the DBS subscriber penetration levels as reflected in
    Attachment B, calculated using 2000 Census household data, we find
    that Liberty 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 four
    franchise areas listed in Attachment B.[^18] Therefore, the second
    prong of the competing provider test is satisfied. Based on the
    foregoing, we conclude that Liberty has submitted sufficient
    evidence demonstrating that its cable systems serving the four
    franchise areas listed in Attachment B are subject to competing
    provider effective competition.

7.  **III. ORDERING CLAUSES**

8.  Accordingly, **IT IS ORDERED** that the Petition for Special Relief
    filed by Liberty Cablevision of Puerto Rico, Ltd., for a
    determination of effective competition in the franchise areas listed
    in Attachments A and B **ARE GRANTED**.

9.  **IT IS FURTHER ORDERED** that the certifications to regulate basic
    cable service rates granted to any of the local franchising
    authorities overseeing Liberty in the franchise areas listed in
    Attachments A and B **ARE REVOKED.**

10. This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^19]

    FEDERAL COMMUNICATIONS COMMISSION

    Steven A. Broeckaert

    Deputy Chief, Policy Division, Media Bureau

    **Attachment A**

    **Liberty Cablevision of Puerto Rico, Ltd.**

    **Low Penetration Effective Competition**

**Franchise Cable 2000 Census Cable**

**Area Communities Subscribership Households\* Subscribers\***

#1, FC-27 Aguas Buenas 11.4% 70392 8050

Aibonito

Barranquitas

Cayey

Cidra

Comerio

Naranjito

#4, FC-41 Arecibo 29.9% 65895 19730

Camuy

Hatillo

Barceloneta

#5, FC-59 Caguas 23.0% 126429 29079

Gurabo

San Lorenzo

Humacao

Juncos

Las Piedras

Yabucoa

#6, FC-74 San Sebastián 12.2% 37151 4539

Utuado

Lares

#7, FC-75 Ciales 19.8% 37157 7368

Florida

Corozal

Morovis

Orocovis

**Attachment B**

**Liberty Cablevision of Puerto Rico, Ltd.**

**Competing Provider Effective Competition**

**Franchise 2000 Census DBS**

**Area Communities CPR+ Households\* Subscribers\***

#2, FC-38 Dorado 21.6% 57805 12506

Vega Alta

Vega Baja

Manati

#3, FC-39 Fajardo 18.0% 73844 13328

Luquillo

Ceiba

Rio Grande

Canovanas

Loiza

Naguabo

#4, FC-41 Arecibo 18.4% 65895 12156

Camuy

Hatillo

Barceloneta

#5, FC-59 Caguas 21.2% 126429 26797

Gurabo

San Lorenzo

Humacao

Juncos

Las Piedras

Yabucoa

\* = See Cable Operator Petition

\+ CPR = Percent DBS penetration

[^1]: 47 C.F.R. §§ 76.7, 76.905, 76.907. Liberty filed a Motion for
    Expedited Treatment of Petition for Special Relief ("Motion").
    Because we are releasing this Memorandum Opinion and Order, we need
    not act on the Motion.

[^2]: In Exhibit 1 to its Petition, Liberty numbers the franchise areas
    1 through 7 and lists the "Franchise ID" of each one and the
    communities it contains. They are as follows: #1, Franchise ID FC-27
    (Aguas Buenas, Aibonito, Barranquitas, Cayey, Cidra, Comerio,
    Naranjito); #2, Franchise ID FC-38 (Dorado, Vega Alta, Vega Baja,
    Manati); #3, Franchise ID FC-39 (Fajardo, Luquillo, Ceiba, Rio
    Grande, Canovanas, Loiza, Naguabo); #4, Franchise ID FC-41 (Arecibo,
    Camuy, Hatillo, Barceloneta); #5, Franchise ID FC-59 (Caguas,
    Gurabo, San Lorenzo, Humacao, Juncos, Las Piedras, Yabucoa); #6,
    Franchise ID FC-74 (San Sebastian, Utuado, Lares); #7, Franchise ID
    FC-75 (Ciales, Florida, Corozal, Morovis, Orocovis). We assigned the
    Petition nine file numbers because the seven franchise areas in
    question encompass nine systems each of which has an FCC Physical
    System Identification Number.

[^3]: 47 U.S.C. § 543(a)(2).

[^4]: 47 C.F.R. § 76.906.

[^5]: 47 U.S.C. § 543(l)(1).

[^6]: 47 C.F.R. § 76.905(b).

[^7]: *See* 47 C.F.R. §§ 76.906, 76.907(b).

[^8]: 47 U.S.C § 543(l)(1)(A).

[^9]: 47 U.S.C. § 543(l)(1)(B).

[^10]: Petition at 6-9.

[^11]: *Mediacom Southeast, LLC,* DA 06-776 at ¶ 3 (rel. April 4, 2006).

[^12]: Petition, Exhibits 3 (evidence that signals from DISH Network's
    satellites reach Puerto Rico), 4 (evidence that DIRECTV's service
    reaches Puerto Rico; DIRECTV promotional material directed at Puerto
    Rico), 5 (DISH Network promotional material directed at Puerto Rico
    and lists of stores where DISH Network equipment is available).

[^13]: *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).

[^14]: 47 C.F.R. § 76.905(g); Petition, Exhibit 7.

[^15]: *See* citations to Petition and Exhibits in nn.12 & 14, *supra.*

[^16]: Petition at 10.

[^17]: *Id.* at 10 & Exhibit 6.

[^18]: *Id.,* Exhibit 1 (asserting that over 15% of households subscribe
    to DBS service in all seven Liberty franchise areas in Puerto Rico).

[^19]: 47 C.F.R. § 0.283.