$/ FOR FCC RECORD ONLY /$
$// MO&O, Cable Act of 1992, DA 95-100//$
$/ 300.623 Regulation of Rates /$
$/ 1.106 Petitions for Reconsideration /$
$/ 76.906 Presumption of no effective competition /$
$/ 76.910 Franchising authority certification /$
$/ 76.911 Petition for reconsideration of certification /$

                                Before the
                     FEDERAL COMMUNICATIONS COMMISSION
                          Washington, D.C. 20554

In the Matter of                     )            DA 95-100 
                                     )
BLUE RIDGE CABLE                     )
TELEVISION, INC.                     )
                                     )
Petition for Reconsideration            )
                                     )
of the Certification of              )
Tunkhannock Township,                )
Pennsylvania to Regulate               )      
Basic Cable Service Rates            )
(PA1353)                                          )


                       MEMORANDUM OPINION AND ORDER


Adopted:  January 20, 1995              Released:  January 23, 1995

By the Chief, Cable Services Bureau:

I.   INTRODUCTION

     1.   On February 3, 1994, Blue Ridge Cable Television, Inc. ("Blue Ridge") filed
a timely Petition for Reconsideration challenging the certification of the Township of
Tunkhannock, Pennsylvania (the "Township" or "Tunkhannock") to regulate rates for basic
cable service and associated equipment.  The Township filed a Motion in Opposition to Blue
Ridge's Petition.  On August 19, 1994, Blue Ridge submitted its supplemental pleading in
response to the Commission's July 29, 1994 Order.  Pursuant to Commission requests, Blue
Ridge filed clarifying information on August 26, 1994 and December 23, 1994, and
Tunkhannock filed clarifying information on January 3, 1995. 

     2.   Section 623(a)(4) of the Communications Act of 1934, as amended, allows
franchising authorities to become certified to regulate basic cable service rates of cable
operators that are not subject to effective competition.  For purposes of the initial request
for certification, local franchising authorities may rely on a presumption that cable operators
within their jurisdiction are not subject to effective competition, unless they have actual
knowledge to the contrary.  Certification becomes effective 30 days from the date of filing
unless the Commission finds that the franchising authority does not meet the statutory
certification requirements.  Cable operators may file petitions for reconsideration of the
franchising authority's certification within 30 days from the date such certification becomes
effective.  Rate regulation is automatically stayed pending review of a timely-filed petition
for reconsideration alleging the presence of effective competition.

II.  DISCUSSION     

Petitioner's Contentions

     3.   Blue Ridge bases its challenge on the competing provider test for effective
competition.  Blue Ridge argues that its system serving the Township is subject to effective
competition because its franchise area is:  1) served by itself and Pocono CATV, Inc.
("Pocono"), an unaffiliated multichannel video programming distributor ("MVPD"), each of
which offers comparable programming to at least 50 percent of the households in the
franchise area; and 2) the number of households subscribing to Pocono, the smaller operator,
exceeds 15 percent of the households in the franchise area. 

     4.   Blue Ridge states that there are 2,196 "homes" in Tunkhannock Township, the
franchise area.  Blue Ridge states that its cable system passes 407 of the 2,196 "homes", or
18.5 percent of the total number of "homes".  In addition, Blue Ridge states that it serves
258 of the 2,196 "homes" or 12 percent of the total number of "homes."  Blue Ridge
submits 1990 Census information applicable to the Township which indicates that there are
2,196 total housing units and 719 households in Tunkhannock Township.  In addition, Blue
Ridge submits a letter addressed to Pocono stating that Blue Ridge passes 407 homes in the
franchise area.  Blue Ridge further submits a copy of a computer print-out with sufficient
information to demonstrate that it serves 258 subscribers.  Blue Ridge also submits a copy of
its FCC Form 320 to demonstrate that it serves the Township.  Finally, Blue Ridge submits a
copy of its channel guide which demonstrates that it provides 56 channels of programming,
including at least 39 non-broadcast channels.

     5.   With respect to Pocono, Blue Ridge states that Pocono passes 550 of the 2,196
"homes" or 25 percent of the total number of "homes" in the franchise area.  In addition, it
states that Pocono serves 224 of the 2,196 "homes," or 10 percent of the total number of
"homes."  As support, Blue Ridge submits a letter from Pocono, in which Pocono states that
its cable system in Tunkhannock passes 550 and serves 224 of the 2,196 "homes."  Blue
Ridge also submits a copy of an advertisement run by Pocono in a local newspaper, and a
page from the Television and Cable Factbook demonstrating that Pocono serves the
Township.  In addition, Blue Ridge submits a copy of Pocono's channel line-up, which
demonstrates that Pocono offers 44 channels of video programming, including at least 30
non-broadcast channels.  
  
     6.   The Township filed an opposition to Blue Ridge's Petition which asserted that:
"Tunkhannock Township is served exclusively by Blue Ridge Cable Television, Inc. and
there are no [un]affiliated multi-channel video program distributors in the context of Section
76.905."  On January 3, 1995, however, pursuant to the Commission's request for
clarification, the Township, through its solicitor, clarified that Blue Ridge and Pocono each
operate cable systems in different parts of the Tunkhannock Township franchise area.  

     7.   The Commission contacted Blue Ridge requesting that Blue Ridge clarify
whether the homes passed figures submitted by Blue Ridge represent the number of housing
units (i.e., occupied and unoccupied housing units) passed, or whether the figures submitted
represent households (i.e., occupied, non-seasonal housing units) passed as required by the
Commission's rules.  In response, Blue Ridge stated that ". . . the number [of homes passed]
compiled by our engineering department, represents the actual number of occupied
households whom are potential subscribers and our cable must physically pass in front of a
potential subscriber's home.  As our engineers physically plan the cable extension, they
count and solicit homeowners to find out who may be interested in cable service."  Blue
Ridge also clarified that "[t]he homes passed number does not include homes which we know
to be used as seasonal residences.  If it is obvious that the structure is a seasonal residence it
is not counted."  The Commission also requested that Blue Ridge clarify whether the
figures regarding "homes passed" by Pocono represent the number of housing units (i.e.,
occupied and unoccupied housing units) passed, or whether the figures submitted represented
households (i.e., occupied, non-seasonal housing units) passed as required by the
Commission's rules.  In response, Blue Ridge stated that "Blue Ridge Cable and Pocono
CATV engineers probably determine homes passed in a similar manner."

     8.   In the absence of a demonstration to the contrary, cable systems are presumed
not to be subject to effective competition.  The cable operator bears the burden of rebutting
the presumption that effective competition does not exist with evidence that effective
competition, as defined by Section 76.905 of the Commission's rules, is present within its
franchise area.  Based on the totality of the evidence presented, we find that Blue Ridge has
not met this burden.  However, as discussed below, if Blue Ridge can provide us with
certain additional evidence as to the homes passed by Pocono in the franchise area, we would
entertain a new petition.  

     9.   The first prong of the competing provider test for effective competition
requires that the franchise area be served by at least two unaffiliated MVPDs, each of which
offers comparable programming to at least 50 percent of the households in the franchise
area.  

     10.  With regard to the issue of programming comparability, we find that Blue
Ridge has submitted sufficient evidence that the programming of the two operators are
comparable.  The channel lineups for both operators submitted by Blue Ridge establish that
each operator offers over 44 channels with more than 30 non-broadcast channels -- this
satisfies the Commission's programming comparability criteria.
 
     11.  The 1990 Census data submitted by Blue Ridge shows that there are 2,196
total housing units (i.e., occupied and unoccupied housing units), including 719 households
(i.e., occupied housing units) in the franchise area.  Thus, in making its calculations, Blue
Ridge used total housing units, not households.  Yet our rules require the number of
households to be the reference point for purposes of gauging effective competition under this
test, just as it is required under the low penetration test.  While the total number of
households in the franchise area (in this case 719) may be obtained from the Census data, we
recognize that determining the number of households which are actually passed by a cable
operator, as opposed to the number which exist in the franchise area, may not be easily
accomplished.  Such information is not provided by the Census data, and we understand that
such information may not generally be readily available to, or easily collected by, operators. 
However, because we are concerned to identify franchise areas which are subject to effective
competition, we will examine the totality of the evidence submitted by Blue Ridge to see if
conclusions can be drawn from it about the percentage of households passed by Blue Ridge
and Pocono. 

     12.  The Commission contacted Blue Ridge requesting that it clarify whether the
homes passed figures submitted by Blue Ridge represent the number of housing units (i.e.,
occupied and unoccupied housing units) passed, or whether the figures submitted represent
households (i.e., occupied, non-seasonal housing units) passed as required by the
Commission's rules.  Blue Ridge's clarifying information is sufficient to show that Blue
Ridge passes at least 50 percent of the households in Tunkhannock.  Blue Ridge's description
of how its engineers calculate the number of households passed clarified that only households
(i.e., occupied, non-seasonal housing units) were counted.  The Census data submitted by
Blue Ridge establishes that there are 719 households in Tunkhannock Township.  Blue Ridge
also established that its system passes 407 of the 719 households, or 56.6 percent of the total
number of households.  Therefore, the Commission finds that Blue Ridge offers service to at
least 50 percent of the households in its franchise area.

     13.  With regard to Pocono, Blue Ridge submitted a letter from Pocono asserting
that "[t]here are 550 homes passed in Tunkhannock Township."  Blue Ridge's statement
that Blue Ridge and Pocono probably calculate the number of households passed in the same
manner is not sufficient evidence for the Commission to conclude that Pocono offers service
to at least 50 percent of the households in the franchise area.  Our regulations require that a
cable operator bear the burden of rebutting the presumption that effective competition does
not exist with evidence that effective competition exists in its franchise area.  Part of this
burden is convincing the Commission that the methods used by the cable operator in
gathering statistics which demonstrate effective competition were conducted in the proper
way.  Blue Ridge has failed to so convince the Commission with regard to the number of
households passed by Pocono.

     14.  In a previous case involving Blue Ridge's claim of effective competition in the
Township of Heidelberg, Pennsylvania, an unrelated franchise area, the Commission made
certain calculations based on the evidence presented to determine whether a cable operator
offers service to at least 50 percent of the households in its franchise area.  The first
calculation determines whether a cable operator actually provides service to at least 50
percent of the households in its franchise area, since by definition that cable operator must
also offer service to over 50 percent of the households in its franchise area.  Applying these
calculations to the information submitted for Pocono, we note that the 1990 Census data
submitted by Blue Ridge indicates that there are 719 households in the franchise area.  Blue
Ridge asserts that Pocono actually serves 224 subscribers in the franchise area, which is 31.2
percent of the total households in the franchise area.  Unlike the Heidelberg case, we cannot
use this calculation to conclude that Pocono clearly passes more than 50 percent of the
households in the franchise area.  The second calculation used in the Heidelberg case uses
Census data and reduces the number of housing units passed by a cable operator's system by
the franchise area's vacant housing units to arrive at an approximate number of households
passed by the cable operator.  Here, if we subtract the total number of households (719)
from the total number of housing units (2,196), we find that in the franchise area 1,477
housing units, or approximately 67.3 percent of total housing units, were unoccupied.  If we
apply this same ratio to the number of "homes" Blue Ridge claims are passed by Pocono
(550), we arrive at a rough household number of 180.  This number is about 25 percent of
the total households in the area.  Under either calculation, the evidence does not permit us
to conclude that Pocono passes more than 50 percent of the households in the franchise area.
  
     15.  The Commission also notes that the households passed figures submitted by
Blue Ridge for itself and Pocono involve a discrepancy.  According to Blue Ridge, it passes
407 households in the Township while Pocono allegedly passes 550, for a total of 957
households passed in a franchise area of 719 households, as defined by the Census. 
Ordinarily, the Commission would attribute this discrepancy to overbuilt sections of the
Township.  However, Tunkhannock stated to the Commission that Blue Ridge and Pocono
operate their systems in separate, non-contiguous areas of Tunkhannock Township.  Because
the Commission has already concluded that Blue Ridge has submitted insufficient evidence to
support its effective competition claim, we need not make any further inquiry into, or
determination of, these claims at this time.

     16.  With regard to the second prong of the competing provider effective
competition test, we find that because Blue Ridge has not submitted sufficient evidence
demonstrating that Pocono passes at least 50 percent of the households in the franchise area,
we cannot conclude that Pocono meets the second prong of the competing provider test.  As
the Commission stated in its Rate Order, only those cable systems that offer programming to
at least 50 percent of the households in the franchise area may be considered for purposes of
the cumulative subscribership prong of the test.  Here, Blue Ridge has submitted evidence
which suggests that Pocono may be the smaller provider and that it serves 224 subscribers
out of the 719 households, or 31.2 percent of total households.  However, as Blue Ridge has
not established that Pocono meets the first prong of the competing provider test, the
Commission cannot conclude that it has met the second prong of the test.

     17.  As Blue Ridge has failed to satisfy the competing provider effective
competition test, its Petition is denied.  However, if Blue Ridge can demonstrate to the
Commission with sufficient evidence that the number of "homes" passed by Pocono in the
franchise area is indeed the number of "households" (i.e., occupied, non-seasonal housing
units) passed, and clarify the "homes passed" discrepancy discussed by the Commission in
paragraph 15, the Commission would entertain a new petition.  Such a petition should be
brought as a petition for revocation pursuant to Section 76.914 of our rules.

III. ORDERING CLAUSES

     18.  Accordingly, IT IS ORDERED that the Petition for Reconsideration filed by
Blue Ridge Cable Television, Inc. challenging the Certification of the Township of
Tunkhannock, Pennsylvania IS DENIED.

     19.  IT IS FURTHER ORDERED that the automatic stay imposed by Section
76.911(c) of the Commission's rules, as amended, IS TERMINATED.

     20.  IT IS FURTHER ORDERED that Blue Ridge Cable Television, Inc. SHALL
FILE the required rate justifications on the applicable forms with the Township of
Tunkhannock, Pennsylvania within thirty days of the release date of this Memorandum
Opinion and Order or within thirty days of receipt of notice from the Township of
Tunkhannock, Pennsylvania that it is regulating Blue Ridge's rates, whichever is later.

     21.  This action is taken pursuant to delegated authority under Section 0.321 of the
Commission's Rules. 


                    FEDERAL COMMUNICATIONS COMMISSION




                    Meredith J. Jones
                    Chief, Cable Services Bureau