Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | CSR 8095-E                   |
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| Cablevision Systems Westchester  | ) |                              |
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| Petition for Determination of    |   |                              |
| Effective Competition in Putnam  | * |                              |
| Valley, New York (CUID NY1083)   | * |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: February 2, 2009 Released: February 3, 2009**

By the Senior Deputy Chief, Policy Division, Media Bureau:

# introduction and Background

1.  Cablevision Systems Westchester Corp. ("Petitioner") has filed with
    the Commission a petition pursuant to Sections 76.7, 76.905(b)(2)
    and 76.907 of the Commission's rules for a determination that
    Petitioner is subject to effective competition in the community
    listed on Attachment A and hereinafter referred to as the
    "Community." Petitioner alleges that its cable system serving the
    Community is subject to effective competition pursuant to Section
    623(1)(1)(B) of the Communications Act of 1934, as amended
    ("Communications Act"),[^1] and the Commission's implementing
    rules,[^2] and is therefore exempt from cable rate regulation in the
    Community because of the competing service provided by two direct
    broadcast satellite ("DBS") providers, DirecTV, Inc. ("DirecTV"),
    and Dish Network ("Dish"). The Town of Putnam Valley (the "Town")
    filed a letter opposing the petition,[^3] to which Petitioner filed
    a reply.[^4]

2.  In the absence of a demonstration to the contrary, cable systems are
    presumed not to be subject to effective competition,[^5] as that
    term is defined by Section 623(l) of the Communications Act and
    Section 76.905 of the Commission's rules.[^6] 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.[^7] For the reasons
    set forth below, we grant the petition based on our finding that
    Petitioner is subject to effective competition in the Community
    listed on Attachment A.

# DISCUSSION

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 ("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.[^8] This
    test is otherwise referred to as the "competing provider" test.

## The First Prong of the Competing Provider Test

4.  The first prong of this test has three elements: the franchise area
    must be "served by" at least two unaffiliated MVPDs who offer
    "comparable programming" to at least "50 percent" of the households
    in the franchise area.[^9]

5.  Turning to the first prong, it is undisputed that the Community is
    "served by" both DBS providers, DIRECTV and Dish, and that these two
    MVPD providers are unaffiliated with Petitioner or with each other.
    A franchise area is considered "served by" an MVPD if that MVPD's
    service is both technically and actually available in the franchise
    area. DBS service is presumed to be technically available due to its
    nationwide satellite footprint, and presumed to be actually
    available if households in the franchise area are made reasonably
    aware of the service\'s availability.[^10] The Commission has held
    that a party may use evidence of penetration rates in the franchise
    area (the second prong of the competing provider test discussed
    below) coupled with the ubiquity of DBS services to show that
    consumers are reasonably aware of the availability of DBS
    service.[^11] We further find that Petitioner has provided
    sufficient evidence of DBS advertising in media that serve the
    Community to support their assertion that potential customers in the
    Community are reasonably aware that they may purchase the service of
    these MVPD providers.[^12] Petitioner also asserts without dispute
    that both DIRECTV and Dish offer service to at least "50 percent" of
    the households in the Community because of their national satellite
    footprint.[^13]

### Comparable Programming 

6.  The "comparable programming" requirement is satisfied if a competing
    MVPD provider offers at least 12 channels of video programming,
    including at least one channel of nonbroadcast service
    programming.[^14] The petition includes copies of channel lineups
    for DIRECTV and Dish, both of which satisfy the requirement.[^15]
    The Town alleges, however, that it has several disputes with
    Petitioner about the Public, Educational, and Government ("PEG")
    channels that are part of Petitioner's cable service.[^16] The Town
    appears to be pursuing these disputes at the New York Public Service
    Commission and in an informal complaint with this Commission.[^17]
    It also appears that one of these disputes is similar to one between
    Comcast and the City of Dearborn, Michigan, that is currently under
    consideration by the Commission in the proceeding titled *Petition
    for Declaratory Ruling Regarding Primary Jurisdiction Referral in
    City of Dearborn et al. v. Comcast of Michigan III, Inc., et al.,*
    filed December 9, 2008. The Town asks that we defer ruling on the
    Petition until resolution of that proceeding.[^18]

7.  The Town's ongoing disputes with Petitioner about PEG channels are
    immaterial to this effective competition proceeding. Here, the
    material issue is whether the DBS providers' service has twelve
    channels, at least one channel of which is nonbroadcast. There is no
    dispute that the DBS providers' service exceeds those numerical
    minimums. We have previously declined to complicate and slow
    effective competition proceedings with ongoing disputes about PEG
    channels,[^19] and we find that that is the best course of action in
    this proceeding. Accordingly, we find that the DBS providers offer
    "comparable programming" for present purposes and that the first
    prong of the competing provider test is satisfied.

## The Second Prong of the Competing Provider Test 

8.  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.
    Petitioner asserts, without objection from the Town, that it is the
    largest MVPD in the Community,[^20] and we see no reason to doubt
    that assertion.

### Petitioner's Evidence

9.  The second prong of the competing provider test requires the
    calculation of a ratio, in this case of the number of DBS
    subscribers in the Community (the numerator) over the number of
    households in the Community (the denominator). Petitioner sought to
    determine the numerator by purchasing a subscriber tracking report
    from Media Business Corp. ("MBC"). The report was based in part on
    nine-digit-zip-code or "zip+4" data about DBS subscriber numbers
    that Petitioner obtained from the Satellite Broadcasting and
    Communications Association. MBC's report stated that the DBS
    providers had 555 subscribers in the Community on September 30,
    2008.[^21]

10. Petitioner determined the denominator of the ratio called for by the
    competing provider test -- the number of households in the Community
    -- by reference to 2000 Census data, which stated that there were
    3,676 households in the Community.[^22] 555 subscribers in a
    community of 3,676 households yield a ratio of 15.1% as reflected in
    Attachment A. This evidence of DBS subscribership in excess of 15
    percent, if unrefuted, satisfies the second prong of the competing
    provider test for the Community.

### The Town's Objections

11. The Town attempts to refute Petitioner's showing under the second
    prong of the competing provider test on several grounds.

12. First, the Town appears to object to counting as DBS subscribers
    "dual households," which are households that subscribe to both cable
    service and DBS service.[^23] This objection is insufficient because
    the Town does not present any evidence of how many such households
    there are in the Community.[^24] Also and more broadly, we have long
    counted dual households as subscribers to DBS service in competing
    provider effective competition cases. They are aware of alternatives
    to the petitioner's cable service and have subscribed to at least
    one of them. This is strong evidence of the very competition among
    MVPDs that Section 623(l)(1) of the Communications Act wants to
    detect.[^25]

13. Second, the Town objects that Petitioner's estimate of DBS
    subscribership may be inaccurate because a major highway "slices
    through a portion of" the Community and divides the households that
    are served by Petitioner from those that are served by another cable
    operator, Comcast. [^26] The Town thinks it possible that zip+4 data
    may not be refined and precise enough to measure DBS subscribership
    accurately and that, if Petitioner's estimate is even slightly
    overstated, then competing provider effective competition does not
    exist in the Community. The Town is mistaken. Zip+4 data such as
    Petitioner has presented is the most fine-grained and commonly
    available way of which we are aware to count DBS subscribers in a
    community.[^27] Its does not create an automatic suspicion of
    inaccuracy. Nor has the Town identified a single zip+4 area that
    falls outside the Community or challenged the methodology of MBC's
    analysis.[^28] Also, even if a major highway separates the part of
    the Community that Petitioner serves from the part of the Community
    that Comcast serves, we do not see how that fact could lead MBC to
    overstate the number of *DBS* subscribers in the whole Community,
    which is the number that is material under Section
    623(l)(1)(B)(ii).[^29] Finally, the facts that Comcast serves part
    of the Community and that its subscriber numbers are not included in
    the 555 subscribers asserted by Petitioner (see paragraph 9 above)
    indicates that Petitioner has understated the degree of competing
    provider effective competition herein by adding only the subscribers
    of the DBS providers and not those of Comcast.[^30]

14. Third, the Town objects that the basis for Petitioner's estimate of
    the number of households in the Community -- the 2000 Census -- is
    out of date because in 2000 "much of the Town wasn't even wired for
    Cablevision."[^31] This objection is without merit. We accept the
    most recent decennial Census data for household numbers unless a
    specific flaw in it is shown and/or more recent data is proffered
    that is at least as accurate as Census data.[^32] The City has made
    no such showing or proffer.[^33] Also, we do not understand how the
    degree to which Cablevision had wired the Community on any given
    date would affect the material fact, which is the number of
    households in the Community.

15. Fourth, the Town objects that because the Community is "unusually
    hilly . . . with very tall trees," DBS service may not be available
    to many residents.[^34] This objection is invalid. The statutory
    standards for competing provider effective competition are
    percentages of "households" with no qualification for households
    that may have special difficulties in receiving DBS service. Also,
    the Town has given us only generalities about its hilliness and
    foliage, despite its presumably intimate knowledge of these matters.
    The Town has presented no evidence of how many households are
    effectively blocked from receiving DBS service and has not shown
    that whatever blockage exists is so great that DBS service cannot be
    an effective discipline on the behavior of Petitioner in the
    Community as a whole.[^35]

16. Fifth, the Town objects that Petitioner's showing of competing
    providers having only 15.1% is so close to the statutory minimum
    ("exceeds 15 percent") that it is unreliable.[^36] This is an
    objection we have rejected in the past.[^37] The statutory standard
    is DBS household penetration that "exceeds 15 percent," no matter
    how slightly.[^38] In the same vein, we have granted or denied
    findings of effective competition when the evidence has showed
    subscribership even slightly above or below the statutory
    minimum.[^39]

17. Therefore, despite the Town's several objections, the second prong
    of the competing provider test is satisfied for the Community.

## Conclusion

18. Based on the foregoing, we conclude that Petitioner has submitted
    sufficient evidence demonstrating that both prongs of the competing
    provider test are satisfied and that Petitioner is subject to
    effective competition in the Community listed on Attachment A.

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

19. Accordingly, **IT IS ORDERED** that the petition for a determination
    of effective competition filed in the captioned proceeding by
    Cablevision Systems Westchester Corp. **IS GRANTED**.

20. **IT IS FURTHER ORDERED** that the certification to regulate basic
    cable service rates granted to the Community set forth on Attachment
    A **IS REVOKED**.

21. This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^40]

    FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Senior Deputy Chief, Policy Division, Media Bureau

**ATTACHMENT A**

**CSR 8095-E**

**COMMUNITY SERVED BY CABLEVISION SYSTEMS WESTCHESTER CORP.**

**2000 Estimated**

**Census DBS**

## Community CUID CPR\* Households Subscribers  {#community-cuid-cpr-households-subscribers .unnumbered}

##   {#section .unnumbered}

## Putnam Valley NY1083 15.10% 3676 555  {#putnam-valley-ny1083-15.10-3676-555 .unnumbered}

\*CPR = Percent of competitive DBS penetration rate.

[^1]: *See* 47 U.S.C. § 543(l)(1)(B).

[^2]: 47 C.F.R. § 76.905(b)(2).

[^3]: Letter from Maryann V. Arrien of the Community Media Department of
    the Town of Putnam Valley, to Commission Secretary, dated Dec. 26,
    2008 ("Opposition").

[^4]: Reply Comments on Petition for Determination of Effective
    Competition ("Reply"), dated Jan. 12, 2009.

[^5]: 47 C.F.R. § 76.906.

[^6]: *See* 47 U.S.C. § 543(l)(1) and 47 C.F.R. § 76.905(b).

[^7]: *See* 47 C.F.R. §§ 76.906 & 907.

[^8]: 47 U.S.C. § 543(1)(1)(B); 47 C.F.R. § 76.905(b)(2).

[^9]: 47 C.F.R. § 76.905(b)(2)(i).

[^10]: *See* Petition at 3.

[^11]: *Mediacom Illinois LLC*, 21 FCC Rcd 1175, 1176, ¶ 3 (2006)*.*

[^12]: 47 C.F.R. § 76.905(e)(2). *See also* Petition at Exh. 2.

[^13]: *See* Petition at 3-4.

[^14]: *See* 47 C.F.R. § 76.905(g). *See also* Petition at 6.

[^15]: *See* Petition at Exh. 4.

[^16]: Opposition at 2-5.

[^17]: *Id.* at 3.

[^18]: *Id.* at 5.

[^19]: *See, e.g., Cablevision Systems Corp.,* Memorandum Opinion &
    Order DA 08-2217 at ¶ 41 (rel. Oct. 2, 2008), available at 2008 WL
    4449658, *stay denied*, Memorandum Opinion & Order DA 08-2545, ¶ 6
    (rel. Nov. 20, 2008), available at 2008 WL 4964162, *application for
    review pending* ("*Cablevision*"); *Adelphia Cable Commun.,* 22 FCC
    Rcd 4423, 4424-25, ¶ 4 (2007); *Comcast Cable Commun., LLC*, 22 FCC
    Rcd 694, 697-98, ¶¶ 8-9 (2007); *CoxCom, Inc.,* 14 FCC Rcd 7134,
    7141-42, ¶19 (1999) ("PEG programming is not one of the factors the
    Commission has indicated is germane in determining whether
    comparable programming is being offered by a competitor."),
    *reconsideration granted on other grounds,* 15 FCC Rcd 728 (2000).

[^20]: Petition at 7. It appears that Petitioner is not the only cable
    operator of long-standing in the Community, and that Comcast serves
    part of the Community. It appears that each operator now serves a
    separate part of the Community although Petitioner's franchised
    territory is the entire Community. (It is not clear whether
    Comcast's franchised territory is the same or less.) Opposition at
    2; Reply at 2-3, 6-7.

[^21]: Petition at 7-8 & Exhs. 6-7. A zip+4 analysis allocates DBS
    subscribers to a franchise area using nine-digit zip code
    information, which generally reflects franchise area boundaries in a
    more accurate fashion than standard five-digit zip code information.

[^22]: Petition at 7-8 & Exh. 5.

[^23]: Opposition at 2.

[^24]: Reply at 3.

[^25]: *See, e.g.,* *Cablevision* at ¶ 17 & cases cited in n.35.

[^26]: Opposition at 2.

[^27]: *See, e.g., Comcast Cable Commun., LLC*, Memorandum Opinion &
    Order DA 08-2632 at ¶ 6 n.15 (rel. Dec. 3, 2008), available at 2008
    WL 5084245 ("A zip code plus four analysis allocates DBS subscribers
    to a franchise area using zip code plus four information that
    generally reflects franchise area boundaries in a more accurate
    fashion than standard five digit zip code information").

[^28]: Reply at 6.

[^29]: *County of New Hanover County, North Carolina,* Memorandum
    Opinion & Order DA 08-2344 at ¶¶ 7-8 (rel. Oct. 24, 2008), available
    at 2008 WL 4693164; *Florida Cablevision Management, Corp.,* 11 FCC
    Rcd 6876, 6880-81, ¶ 11 (1996); *Valley Center Cablesystems, L.P.,*
    10 FCC Rcd 11940, 11944-45, ¶ 10 (1995).

[^30]: Reply at 3, 8.

[^31]: Opposition at 1.

[^32]: *See, e.g., Cablevision* at ¶¶ 9-14; *Time Warner Cable, Inc.,*
    23 FCC Rcd 12210, 12214, ¶ 15 (2008); *Comcast Cable Commun., LLC*
    ("*Comcast*")*,* 23 FCC Rcd 10939, 10942-43, ¶¶ 11-13.

[^33]: Reply at 4-5.

[^34]: Opposition at 2. The Town does not claim that DBS service is not
    offered to at least 50% of the households in the Community, which
    claim would be relevant under the first prong of the competing
    provider test.

[^35]: *See Adelphia Cable Commun.,* 20 FCC Rcd 20536, 20537-38, ¶¶ 4-8
    (2005) (including in "at least 50 percent" of households those that
    faced directions that might make placement of DBS receiving dishes
    difficult or had similar difficulties), *application for review
    pending; Adelphia Cable Communications,* 20 FCC Rcd 4979, 4980-81,
    ¶¶ 4-6 (2005) (same); *Cablevision of Paterson, d/b/a/ Cablevision
    of Allamuchy*, 17 FCC Rcd 17239, 17242, ¶ 6, nn.22, 25 (2002)
    (dismissing, in n.22, franchise authority's general and undocumented
    claims that some areas are "hilly, heavily wooded, and mountainous"
    and, in n.25, "the possible existence of local rules restricting the
    placement of DBS antennas").

[^36]: Opposition at 1.

[^37]: *MCC Missouri LLC*, 20 FCC Rcd 17909, 17910-11, ¶ 5 (2005).

[^38]: 47 U.S.C. § 543(l)(1)(B)(ii).

[^39]: *Time Warner Cable Inc., & Time Warner
    Entertainment-Advance/Newhouse Partnership,* 23 FCC Rcd 12069,
    12073, ¶ 15 (2008) (DBS subscribership of exactly 15%, or 14.94%,
    inadequate); *Comcast,* 23 FCC Rcd at 10942, ¶ 11 (dictum that
    15.48% would be adequate and 13.48% would be inadequate); *Texas
    Cable Partners, L.P.*, 16 FCC Rcd 4718, 4722, ¶ 8, n.33 (2001) ("The
    statute . . . does not grant the Commission discretion in close
    cases. If the aggregate MVPD penetration rate is above 15%,
    effective competition, as defined by the Communications Act,
    exists").

[^40]: 47 C.F.R. § 0.283.