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 Before the
 Federal Communications Commission
 Washington, D.C. 20554

In the Matter of: )
 )
TKR CABLE OF )
NORTHERN KENTUCKY )
 )
Petition for Revocation ) CUID KY0542
of Certification of )
Unincorporated Boone County, Kentucky )
to Regulate Basic Cable Service Rates)
 )

 MEMORANDUM OPINION AND ORDER

 Adopted: August 2, 1996 Released: August 22, 1996

By the Chief, Cable Services Bureau:

 INTRODUCTION

 1. On January 11, 1996, TKR of Northern Kentucky ("TKR") filed a petition for
revocation challenging the certification of the Kenton/Boone Counties CATV Board ("Cable
Board"), as agent for the Fiscal Court of Boone County, to regulate rates for basic cable service
and associated equipment. The Cable Board filed an opposition to the petition and TKR filed
a reply. TKR also filed two supplemental pleadings notifying the Commission of new facts and
legal precedent that arose subsequent to the filing of its reply.

 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. Once the period for filing petitions for reconsideration has
elapsed, cable operators may challenge a franchising authority's certification by filing a petition
for revocation. Regardless of the grounds, however, the filing of a petition for revocation does
not automatically trigger a stay of a franchising authority's ability to regulate basic cable rates.

II. ARGUMENTS OF THE PARTIES

 3. TKR's claim of effective competition is based on the competing provider test for
effective competition set forth in the 1992 Cable Act and the Commission's rules. The 1992
Cable Act and the Commission's rules provide that only the rates of cable systems that are not
subject to effective competition may be regulated. One basis upon which a cable system is
deemed subject to effective competition is the competing provider test, where the franchise area
is: 1) served by at least two unaffiliated multichannel video programming distributors ("MVPDs")
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 multichannel video programming
other than the largest MVPD exceeds 15 percent of the households in the franchise area.

 4. As background, TKR explains that on December 16, 1980, the prior franchisee,
Storer Communications, was granted a franchise to serve both the incorporated and
unincorporated areas of Boone County for a period of fifteen years. The municipalities of the
City of Florence, the City of Walton, and the City of Union authorized the Boone County Fiscal
Court to award a cable television franchise for all areas within each city which comprise the
incorporated portions of the County. According to TKR, cities have the authority to grant cable
television franchises within municipal boundaries because, per statute, municipalities are given
authority to control streets, roads, and public grounds in order to provide utility services. By
contrast, fiscal courts in Kentucky have the power to grant franchises for cable television only
in unincorporated areas, since cable television systems are constructed or erected over county
road systems and rights-of-way, over which fiscal courts have jurisdiction. TKR explains that
the power of fiscal courts in granting cable franchises is limited to the unincorporated areas of
the county because the city's exclusive authority over streets precludes county action.

 5. TKR asserts that there are four distinct, separate franchise areas within Boone
County: the three municipalities, and the unincorporated areas. TKR argues that a cable operator
subject to rate regulation must establish a separate rate structure for each area served. Therefore,
despite the apparent grant of a single franchise by the cities of Florence, Union, and Walton, and
the Fiscal Court of Boone County in 1980, TKR asserts that the question of effective
competition must be resolved separately for unincorporated Boone County, the subject of the
instant proceeding, and each of the three cities.

 6. The first prong of the competing providers 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. TKR
states that Bluegrass Cable Partners, Inc., d/b/a Telesat Cable TV ("Telesat") is also authorized
to provide cable television service to all of unincorporated Boone County. TKR asserts that it
directly competes with Telesat in this franchise area and that the two are unaffiliated
multichannel video program distributors serving at least 50 percent of the households in
unincorporated Boone County. TKR provides U.S. Census information which demonstrates that
there are approximately 12,071 total households (i.e., occupied housing units) in the franchise
area of unincorporated Boone County. With regard to the first prong of the competing provider
test, TKR states that it offers service to approximately 9,678 households, or 80.2% of the
franchise area, while Telesat offers service to approximately 9,319 households, or 77.2% of the
franchise area. TKR submits that Telesat and itself offer comparable programming to their
subscribers in the franchise area as each provides at least 12 channels of programming, including
at least one channel of non-broadcast service programming.

 7. With regard to the second prong of the competing provider test, whether more than
15 percent of the households in the franchise area subscribe to competing multichannel video
programming providers, TKR states that approximately 4,119 of the 12,071 households, or 34.1%,
subscribe to TKR's cable system, and approximately 4,598, or 38.1%, subscribe to Telesat's cable
system. Based on this evidence, TKR argues that the second prong of the competing provider
test is satisfied as more than 15 percent of the households in its franchise area subscribe to
Telesat, the smaller cable operator.

 8. The Cable Board opposes TKR's petition for revocation on four separate grounds.
First, the Cable Board alleges that TKR does not have standing before the Commission because
its franchise with Boone County expired on December 16, 1995. Without a franchise, the Cable
Board argues that TKR has no legal right to file the instant petition.

 9. Second, the Cable Board argues that the petition is not properly before the
Commission because certain procedural requirements have not been met. The Cable Board
argues that TKR's reliance on Section 76.914 of the Commission's regulations when filing its
petition is premature as this section addresses revocations in situations where the franchise
authority should be given the first opportunity to cure the defect or non-conformance. The Cable
Board argues that TKR should instead have relied on Section 76.915 of the Commission's
regulations for relief as that is the section which involves a change in regulatory status. The
Cable Board asserts that Section 76.915 must be satisfied before asking the Commission for
relief.

 10. The Cable Board's third ground for opposition is that TKR has redefined its
franchise area to such an extent that it no longer comprises all of unincorporated Boone County.
Here, the Cable Board argues that while Telesat has wired rural areas of Boone County, TKR
has remained near the denser population centers of unincorporated Boone County which are
adjacent to larger cities and commercial zones. The Cable Board also asserts that the General
Manager of TKR "informed the Cable Board's franchise renewal negotiation team that TKR does
not intend to extend its cable system into rural Boone County." The Cable Board argues that
the Commission should dismiss TKR's petition and require it to demonstrate that effective
competition exists within the "redefined" franchise area by submitting either a petition pursuant
to Section 76.915, or a new petition for revocation to the Commission.

 11. The Cable Board's fourth basis of opposition is that the relevant franchise area for
TKR includes all of unincorporated Boone County and the City of Florence, and that in this
larger franchise area, there is no effective competition. The Cable Board argues that TKR failed
to mention the Interlocal Cooperation Act of Kentucky ("ICA") when it asserted that only fiscal
courts in the state can issue a franchise in the unincorporated areas of their respective counties.
According to the Cable Board, the ICA permits cities and counties to join together for
cooperative undertakings, and these joint ventures may include the award of a cable television
franchise covering city and county areas. The Cable Board argues that the Fiscal Court of Boone
County and the City of Florence entered into such an arrangement in 1980 when they issued a
single franchise covering both the unincorporated areas of Boone County and the incorporated
area of the City. The Cable Board states that since rate regulation commenced in 1993, TKR
has filed single rate filings for all of Boone County, in addition to adjacent Kenton County, as
a single franchise area.

 12. Turning to effective competition factors, and basing its analysis on a franchise area
consisting of unincorporated Boone County and the City of Florence, the Cable Board concedes
that TKR and Telesat offer comparable programming and that the cable service provided by
Telesat is physically and actually available in its franchise area which includes all of Boone
County. However, the Cable Board argues that the petition for revocation should be dismissed
because TKR fails the first prong of the effective competition test. It explains that the total
households for the combined franchise area of unincorporated Boone County (12,071 households)
and the City of Florence (6,993 households) equals 19,064 households. TKR offers service to
16,671 households, or 87% of the relevant franchise area, while Telesat offers service to
approximately 9,319 households, or 49% of the combined Boone County/Florence franchise
area. The Cable Board argues that since Telesat does not offer service to at least 50% of the
households in the relevant franchise area, the first prong of the competing provider test is not
satisfied.

 13. In its reply, TKR counters each argument presented by the Cable Board. It rejects
as "patently false" the Cable Board's assertion that it is currently operating without a franchise.
TKR states the Cable Board omits the fact that the two parties have formally agreed in writing
that TKR will continue to provide cable service pursuant to TKR's 1980 franchise; this agreement
incorporates further provisions which are detailed in a letter dated December 6, 1995. TKR
states that these documents show the parties expressly agree that "TKR will continue to provide
cable service in accordance with the franchise ordinances beyond the expiration dates and that
the formal renewal procedures or process set forth by the Federal Cable Act will be suspended,
so long as negotiations continue in good faith and reasonable progress is achieved."

 14. With regard to the Cable Board's assertion that TKR must first file with the Cable
Board for a change in regulatory status, TKR asserts that the Commission does not require that
such a request be initially filed with the local franchising authority. TKR also asserts that the
Cable Board has already rejected its formal request for a finding that it is subject to effective
competition, as noted in the minutes of the Cable Board's meeting of June 8, 1994. TKR also
argues that Section 76.915 applies by its terms to situations with "changed circumstances," but
that there are no changed circumstances in this case since unincorporated Boone County has
qualified as a franchise area that is subject to effective competition ever since the date the Cable
Board became certified to regulate rates.

 15. Next, TKR disputes the Cable Board's redefined franchise area argument, stating
that it is neither accurate or relevant. TKR states that its franchise for unincorporated Boone
County requires it to provide service to any area of the County with a density of 35 homes per
mile or less; the operator asserts that it has substantially complied with these build-out
requirements throughout the term of the franchise, and will continue to do so. TKR notes that
the failure to construct in an area with no homes or in areas with densities less than required by
the franchise cannot be characterized as redefining the franchise area.

 16. TKR objects to the Cable Board's claim that its franchise area also includes the
City of Florence, arguing that Kentucky state law as well as the Communications Act and the
Commission's rules recognize Florence and the Boone County Fiscal Court as separate
franchising authorities serving different franchise areas. TKR recognizes that while franchise
areas, such as the ones at issue, can be jointly administered, they are still separate franchises; the
ICA does not alter the fact that each municipality and each Fiscal Court must approve its own
franchise. TKR also points to several facts indicating that the political units in Boone County
have not relinquished control over their own franchising authority: (1) an affidavit signed by the
Mayor of Florence indicates that Florence is negotiating its franchise renewal separately from the
Cable Board, and that its franchise area will be separate from the franchise area of unincorporated
Boone County; (2) two other Boone County municipalities, the City of Union and the City of
Walton, have already approved their own franchise renewals; (3) the City of Florence, in a 1993
Ordinance, indicates that the Boone County Fiscal Court in 1980 was acting on behalf of the City
to award the franchise that belongs to the City; (4) this same ordinance indicates that the City
of Florence is the franchising authority for the City of Florence and that the City is granting to
the Cable Board the authority only to negotiate on the City's behalf for renewal of Florence's
franchise; and (5) a resolution passed by the Boone County Fiscal Court on behalf of
unincorporated Boone County indicates that in 1980, the Board was authorized to issue a
franchise covering only unincorporated Boone County, and that the Fiscal Court is the franchising
authority for unincorporated Boone County.

 17. TKR also submits that there is no basis for the Cable Board's argument that it has
treated Boone County as a single franchise area. While TKR admits that it submitted
consolidated rate filings to cover this area, it argues that the Cable Board fails to mention that
the areas are served by a single cable system, as defined by the Commission's rules, and that
TKR has always filed its rates on a system-wide basis. In the absence of any other evidence that
TKR has treated the unincorporated County and the three municipalities as one franchise area,
the operator asserts that the Cable Board's arguments must be dismissed.

 18. TKR argues it is subject to effective competition because TKR and Telesat both
serve the same unincorporated franchise area of Boone County, Kentucky, a fact that the Cable
Board did not dispute; the Cable Board also did not dispute the facts that Telesat offers service
to 77.2% of the franchise area with a 38.1% penetration rate, and TKR offers service to 80.2%
of the franchise area with a 34.1% penetration rate. TKR further submits that the Cable Board
agrees that Telesat and TKR offer comparable programming. TKR additionally notes that the
Cable Board found that Telesat was subject to effective competition for unincorporated Boone
County on March 16, 1994, and that to find TKR is not subject to effective competition would
raise serious equal protection arguments under the U.S. Constitution.

III. DISCUSSION

 19. We will first address the Cable Board's procedural arguments. We reject the Cable
Board's contention that TKR does not have standing to file the instant petition because its
franchise has elapsed. TKR has shown that it has entered into a franchise extension agreement
with the Cable Board to provide cable service pursuant to TKR's 1980 franchise while it
continues to negotiate a new long-term franchise agreement. More evident, TKR's franchises
have not been revoked and it is still operating its cable system in the relevant franchise areas.
Given these facts, we find that TKR, as a party with standing, is permitted to file the instant
petition for revocation. We also accept TKR's petition as properly filed under Section 76.914,
rather than Section 76.915, of the Commission's rules. The Commission has consistently
accepted petitions for revocation without the cable operator first presenting its case to the local
franchising authority. Further, TKR demonstrates that the Commission should grant the relief
requested because the Cable Board already rejected its formal petition for a finding that it is
subject to effective competition.

 20. We find that TKR has not redefined its Boone County franchise area. As the
Commission has ruled previously, "[t]he fact that a franchise area has not as yet been filled out
by construction of a system would not by itself be taken as redefining the service area." The
Cable Board presents no evidence that TKR has made an affirmative decision to limit its
franchise area to its current service area. In fact, TKR presents evidence that it has continued
to build out its system in accordance with the density service requirements of its franchise
agreement.

 21. We also conclude that TKR's appropriate franchise area, for purposes of the instant
petition, is unincorporated Boone County, rather than the City of Florence and unincorporated
Boone County as suggested by the Cable Board. Several indicia support this conclusion, the
most significant of which are statements contained in the affidavit of Evelyn Kalb, the Mayor
of Florence. In this document, signed under oath on March 18, 1996, Mayor Kalb states that
Florence has been negotiating a franchise renewal for its incorporated territory directly with TKR,
and that the City of Florence's franchise will be separate and distinct from Boone County's
franchise. These statements taken from a source with personal knowledge of the present
franchising situation carry great weight and point to the conclusion that unincorporated Boone
County is a franchise area separate from the City of Florence. The fact that two other Boone
County municipalities, the City of Union and the City of Walton, have already approved separate
franchise agreements with TKR is further evidence that the political units comprising Boone
County have the authority and autonomy to grant distinct franchises. The Commission's
assignment of different community unit identification (CUID) numbers for each franchise area
at issue here further supports this conclusion. These points make it difficult to conclude that
unincorporated Boone County and the City of Florence are one franchise area.

 22. The Interlocal Cooperation Act as applied in this case, and the fact that TKR
submits joint rate filings for Boone County, do not contradict this outcome. Both the ICA and
joint rate filings (for FCC Forms 393, 1200, 1205, and 1210) are designed to produce
administrative efficiency, with the former allowing local political units to conserve human
resources (for negotiation and regulatory purposes) and reduce task redundancy, and the latter
eliminating unnecessary and duplicative filings from both cable operators and the several
thousand franchising authorities in existence across the county. Moreover, it has been
Commission practice to allow cable operators to file joint rate filings where one technically
integrated cable system serves several separate franchise areas and the operator's rates are
uniform throughout the system. We do not find that either the ICA or joint rate submissions,
in this particular instance, turns all of incorporated and unincorporated Boone County into one
franchise area, nor do they act to bind the City of Florence with the unincorporated area of
Boone County under the effective competition analysis.

 23. 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.
In this instance, we find that TKR has met its burden.

 24. 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. The
1990 Census data submitted by TKR indicates that there are 12,071 households (i.e., occupied
housing units) in unincorporated Boone County. We find that TKR offers service to 9,319 of
the 12,071 total households, or 80.2% of the total. In addition, we find that Telesat offers service
to 9,319 households, or 77.2% of the franchise area. Thus, TKR and Telesat each pass at least
50 percent of the households in the franchise area as required by the 1992 Cable Act.

 25. With respect to programming comparability, it is undisputed that the programming
of the two operators is comparable. In this regard, we note that each operator offers over 40
channels with more than 30 non-broadcast channels, thus satisfying the Commission's
programming comparability criteria.

 26. With regard to the second prong of the competing provider effective competition
test, we find the evidence shows that more than 15 percent of the households in the franchise
area subscribe to the multichannel video programming provided by TKR, the smaller provider.
Here, TKR has submitted sufficient proof demonstrating that Telesat serves 4,598 households,
or 38.1% of unincorporated Boone County, while TKR's system serves 4,119 households, or
34.1% in the franchise area. Given that TKR has satisfied both prongs of the competing provider
effective competition test, we find that TKR faces effective competition, and its petition for
revocation is granted.

 IV. ORDERING CLAUSES

 27. Accordingly, IT IS ORDERED that the petition for revocation filed by TKR
Cable of Northern Kentucky challenging the certification of the Kenton/Boone Counties CATV
Board to regulate basic cable rates in the unincorporated Boone County, Kentucky franchise area
IS GRANTED.

 28. IT IS FURTHER ORDERED that the certification of the Kenton/Boone Counties
CATV Board to regulate TKR of Northern Kentucky's basic cable service rates in the
unincorporated Boone County, Kentucky franchise area IS REVOKED.

 29. This action is taken pursuant to delegated authority under Section 0.321 of the
Commission's Rules, 47 C.F.R.  0.321.

 FEDERAL COMMUNICATIONS COMMISSION

 Meredith J. Jones
 Chief, Cable Services Bureau