**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the Matter of:                | *  | CSR-6688-E                   |
|                                  | *) |                              |
| Charter Communications           | ** | CSR-6689-E                   |
|                                  |    |                              |
| Nine Petitions for Determination | *  | CSR-6690-E                   |
| of Effective Competition in      | *) |                              |
| Twenty-Five Local Franchise      | ** | CSR-6691-E                   |
| Areas in Michigan                |    |                              |
|                                  | *  | CSR-6692-E                   |
|                                  | *) |                              |
|                                  | ** | CSR-6693-E                   |
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|                                  | *  | CSR-6694-E                   |
|                                  | *) |                              |
|                                  | ** | CSR-6695-E                   |
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|                                  | *  | CSR-6696-E                   |
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+----------------------------------+----+------------------------------+

> **MEMORANDUM OPINION AND ORDER**

**Adopted: June 30, 2005 Released: July 1, 2005**

By the Deputy Chief, Policy Division, Media Bureau:

# Introduction

1.  This Order considers nine petitions filed with the Commission by
    Charter Communications, on behalf of its affiliates, ("Charter")
    pursuant to Sections 76.7, 76.905(b)(1) & (2) and 76.907 of the
    Commission's rules for a determination that Charter's cable systems
    serving twenty-five Michigan communities (the "Communities") are
    subject to effective competition pursuant to Section 623(a)(1) of
    the Communications Act of 1934, as amended ("Communications Act")
    and are therefore exempt from cable rate regulation.[^1] The
    Communities are listed in Attachment A. No opposition to any
    petition was filed. We grant the petitions finding that the Charter
    cable systems are subject to effective competition in the listed
    Communities.

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 623(1) of the Communications Act, and
    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]

# 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 its 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.[^5]
    Turning to the first prong of this test, the DBS service of DirecTV,
    Inc. ("DirecTV") and DISH Network ("DISH") 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.[^6] 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.[^7] In view of this DBS
    growth data, and the data discussed below showing that more than 15
    percent of the households in each of the communities listed on
    Attachment A are DBS subscribers, we conclude that the population of
    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 substantially more than 12 channels of video
    programming, including more than one non-broadcast channel.[^8] We
    further find that the Charter cable systems have 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
    franchise area.[^9] Charter has 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 DBS providers, and that potential subscribers in the
    Communities have been made reasonably aware of the MVPD services of
    DirecTV and DISH.[^10] Therefore, the first prong of the competing
    provider test is satisfied.

4.  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.
    Charter sought to determine the competing provider penetration in
    the Communities by purchasing a subscriber tracking report from the
    Satellite Broadcasting and Communications Association ("SCBA") that
    identified the number of subscribers attributable to the DBS
    providers within the Communities on a zip code basis.[^11] Charter
    asserts that it is the largest MVPD in the majority of the
    Communities because its subscribership exceeds the aggregate DBS
    subscribership for those franchise areas.[^12] With respect to
    Paradise Township, Charter asserts that the respective aggregate
    allocated DBS subscriber figure (486) is slightly larger than
    Charter's subscriber count (369) in that Community. However, Charter
    contends that because there are two major DBS providers in the
    Community, it is likely that Charter is still the largest individual
    MVPD in these franchise area.[^13]

5.  Based upon the aggregate DBS subscriber penetration levels as
    reflected in Attachment A, calculated using 2000 Census household
    data, we find that Charter 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
    those noted Communities. With regard to Paradise Township, we are
    able to conclude that this portion of the test is met by analyzing
    the data submitted for both Charter and the DBS providers. If the
    subscriber penetration for both Charter and the aggregate DBS
    information each exceed 15 percent in the franchise area, the second
    prong of the competing provider test in satisfied.[^14] In Paradise
    Township, the combined DBS penetration rate is 35.4 percent and
    Charter's penetration rate is 26.8 percent.[^15] Therefore, the
    second prong of the competing provider test is satisfied. Based on
    the foregoing, we conclude that Charter has submitted sufficient
    evidence demonstrating that their cable systems serving the
    Communities set forth on Attachment A are subject to competing
    provider effective competition.

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B.  **Low Penetration Effective Competition**

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6.  Section 623(1)(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."[^16] Charter asserts that it is subject to
    effective competition in Paradise Township under the low penetration
    effective competition test.[^17] Charter submitted information
    listed on Attachment A showing that its penetration rate in the
    Paradise Township Franchise Area is 26.8 percent. Accordingly, we
    conclude that Charter has demonstrated the existence of low
    penetration effective competition under our rules in Paradise
    Township.

# ORDERING CLAUSES

7.  Accordingly, **IT IS ORDERED** that the petitions filed by Charter
    Communications for a determination of effective competition in the
    Communities listed on Attachment A **ARE GRANTED**.

8.  **IT IS FURTHER ORDERED** that the certifications to regulate basic
    cable service rates granted to any of the local franchising
    authorities overseeing Charter Communications in the affected
    Communities **ARE REVOKED.**

9.  This action is taken pursuant to delegated authority pursuant to
    Section 0.283 of the Commission's rules.[^18]

    FEDERAL COMMUNICATIONS COMMISSION

    Steven A. Broeckaert

    Deputy Chief, Policy Division

    Media Bureau

    Attachment A

    **Charter Cable Systems Subject to Competing Provider Effective
    Competition**

> **CSR-6688-E through CSR-6693-E**
>
> **2000**

**Census DBS**

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

Auburn, City MI0202 17.9% 842 151

Kawkawlin, Township MI0201 22.2% 1,910 424

MI1036

MI1046

Kinross , Township MI1176 20.0% 1,156 231

Richfield, Township MI1446 16.0% 2,967 474

(Genesee County)

Rosebush, Village MI1118 40.0% 145 58

Thomas, Township MI0537 24.1% 4,545 1,097

**CSR-6694-E through CSR-6696-E**

Bellaire, Village MI0366 25.8% 489 126

Boyne City, City MI0047 26.0% 1,468 381

Cadillac, City MI0032 20.2% 4,118 833

Charlevoix, City MI0048 25.0% 1,375 344

Charlevoix, Township MI0264 25.1% 662 166

Cheboygan, City MI0168 33.0% 2,146 708

Empire, Village MI0438 24.6% 187 46

Filer, Township MI0092 16.8% 886 149

Frankfort, City MI0282 22.1% 665 147

Gaylord, City MI0050 28.9% 1,584 458

Haring, Township MI0217 20.2% 1,073 217

Kasson, Township MI0442 28.5% 557 159

MI2015

Kingsley, Village MI1124 36.5% 501 183

Lake City, City MI0497 36.7% 381 140

Littlefield, Township MI0619 35.1% 1,116 392

(Emmet County) MI0295

Manistee, City MI0051 17.0% 2,912 494

Manton, City MI0514 45.5% 497 226

McBain, City MI0810 43.5% 246 107

Paradise, Township MI1540 35.4% 1,374 486

**[Charter Systems Subject to Low Penetration Effective
Competition]{.underline}**

**Franchise Area Cable Penetration**

**Communities CUIDS Households Subscribers Level**

Paradise, Township MI1540 1,374 369 26.8%

CPR = Percent DBS penetration

\+ = See Charter Petitions

[^1]: 47 C.F.R. §§ 76.7, 76.905(b)(1)& (2), 76.907; 47 U.S.C. §
    543(a)(1).

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

[^7]: *Eleventh Annual Assessment of the Status of Competition in the
    Market for Delivery of Video Programming*, FCC 05-13, at ¶¶ 54-55
    (rel. Feb. 4, 2005).

[^8]: *See* 47 C.F.R. § 76.905(g).

[^9]: Charter Petitions at 5 and Exhibit 2.

[^10]: *Id.* at 4 and Exhibit 1.

[^11]: *Id.* at 6-7. Charter acknowledges that a standard five-digit zip
    code in certain cases may not coincide precisely with the boundaries
    of a cable operator's franchise area. To overcome this potential
    problem, Charter has applied a competitive penetration methodology.
    The Commission has approved this methodology for determining DBS
    subscribership. *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).

[^12]: Charter Petitions at 6. *See also* Declaration of Denise
    Jones-Williams, Director of Regulatory Compliance for Charter
    Communications (March 4, 2005) re: CSR-6688-E through CSR-6693-E in
    which Ms. Jones-Williams states that Charter in the largest MVPD in
    each of the relevant franchise areas. In the Declaration of Ms.
    Jones-Williams (March 24, 2005) re: CSR 6694-E through CSR-6696-E,
    Ms. Jones-Williams states that Charter is the largest MVPD in 18 of
    the 19 relevant franchise areas. In the Paradise Franchise Area, Ms.
    Jones-Williams states that it is likely that Charter is the largest
    MVPD.

[^13]: Charter Petitions at n.16. *See also* Declaration of Denise
    Jones-Williams, Director of Regulatory Compliance for Charter
    Communications (March 24, 2005).

[^14]: *See* *Time Warner Entertainment Advance/Newhouse Partnership, et
    al.*, 17 FCC Rcd 23587, 23589 (MB 2002).

[^15]: 486 DBS subscribers ÷ 1,374 Paradise Township 2000 Census
    Households = 35.4%; 369 Charter subscribers ÷ 1,374 Paradise
    Township 2000 Census Households = 26.8%.

[^16]: 47 U.S.C. § 543(1)(1)(A).

[^17]: Charter Petitions at 8. *See also* Declaration of Denise
    Jones-Williams, Director of Regulatory Compliance for Charter
    Communications (March 18, 2005).

[^18]: 47 C.F.R. § 0.283.