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 Federal  Communications  Commission  DA  02-  3237 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of: 
 Hometown  Online,  Inc. 
 Petition  for  Determination  of  Effective  Competition  in  West  Milford  Township,  New 
 Jersey  (NJ0632),  Warwick  Village,  New  York  (NY1721)  and  Florida  Village,  New  York 
 (NY1722) 

 )  ) 
 )  ) 
 )  ) 
 )  ) 
 ) 

 CSR  5960  E 

 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  November  22,  2002  Released:  November  25,  2002 
 By  the  Deputy  Chief,  Policy  Division,  Media  Bureau: 

 I.  INTRODUCTION 
 1.  Hometown  Online,  Inc.  (  Hometown)  has  filed  with  the  Commission  a  petition  pursuant  to  Section  76.7  of  the  Commission's  rules  for  a  determination  of  effective  competition  in  West  Milford 

 Township,  New  Jersey  and  the  Villages  of  Warwick  and  Florida,  New  York  (the  Communities).  Hometown  claims  that  it  is  subject  to  effective  competition  and  is  therefore  exempt  from  cable  rate 
 regulation  in  the  Communities  because  fewer  than  30  percent  of  the  households  in  each  franchise  area  subscribe  to  Hometowns  cable  services.  Hometown  asserts  that  it  is  therefore  subject  to  effective 
 competition  under  the  low  penetration  effective  competition  test  set  forth  in  Section  623(  1)(  1)(  A)  of  the  Communications  Act  of  1934,  as  amended  (  Communications  Act).  1  No  opposition  to  the  petition  was 
 filed. 
 II.  DISCUSSION 
 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  Based  on  the  record  in  this  proceeding,  Hometown  has  met  this 

 1  47  U.  S.  C.    543(  a);  47  C.  F.  R.    76.  905(  b). 
 2  47  C.  F.  R.    76.906. 
 3  See  47  U.  S.  C.    543(  1);  47  C.  F.  R.    76.  905. 
 4  See  47  C.  F.  R.    76.906  &  76.907. 
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 burden. 
 3.  Section  623(  l)  of  the  Communications  Act  provides  that  a  cable  operator  is  subject  to  effective  competition,  if  either  one  of  four  tests  for  effective  competition  set  forth  therein  is  met.  5  Under 

 the  low  penetration  test,  a  cable  system  will  be  deemed  subject  to  effective  competition  if  less  than  30  percent  of  the  households  in  the  systems  franchise  area  subscribe  to  the  system's  service.  6  A  finding  of 
 effective  competition  exempts  a  cable  operator  from  rate  regulation  and  certain  other  of  the  Commissions  cable  regulations.  7 

 4.  Hometown  is  a  wholly-  owned  subsidiary  of  Warwick  Valley  Telephone  Company  (  WVT),  a  facilities-  based,  incumbent  local  exchange  carrier.  On  June  10,  2002,  Hometown  obtained  from 
 the  New  Jersey  Board  of  Public  Utilities  a  certificate  of  authority  to  provide  cable  service  throughout  West  Milford  Township.  8  Pursuant  to  a  construction  timetable  set  forth  in  its  certificate  of  authority,  Hometown 
 must  be  capable  of  serving  a  specified  primary  service  area  (  PSA)  within  the  Township  no  later  than  June  10,  2005.  9  Hometown  indicates  that  this  PSA  comprises  approximately  16  percent  of  the  total  9,190 
 occupied  housing  units  in  the  Township.  10  Hometown  asserts  that,  as  of  July  31,  2002,  it  served  ten  households  in  West  Milford  Township,  which  produces  a  penetration  rate  of  less  than  0.11  percent.  11 
 Hometown  states  that  it  expects  to  provide  cable  service  to  less  than  30  percent  of  households  in  West  Milford  Township  for  the  foreseeable  future.  12 

 5.  Pursuant  to  a  franchise  agreement  executed  with  the  Village  of  Warwick  and  a  Certificate  of  Confirmation  granted  by  the  New  York  Public  Service  Commission  (  PSC),  Hometown  is  also 
 authorized  to  provide  cable  service  throughout  the  Village  of  Warwick.  13  Hometown  is  required  to  be  capable  of  serving  its  PSA  within  the  Village  by  the  end  of  2003.  14  Hometown  asserts  that  this  PSA 
 encompasses  approximately  76  percent  of  the  2,523  households  in  the  Village.  15  As  of  July  31,  2002,  Hometown  served  4  households  in  the  Village,  equaling  a  penetration  rate  of  0.16  percent.  16  Hometown 
 again  states  that  it  expects  to  continue  to  serve  less  than  30  percent  of  the  households  in  the  Village  for  the 
 5  See  47  U.  S.  C.    543(  l)(  1)(  A)-(  D). 
 6  See  47  U.  S.  C    543(  l)(  1)(  A);  47  C.  F.  R.    76.905(  b)(  l). 
 7  See  47  C.  F.  R.  76.905. 
 8  Petition  at  3. 

 9  Id. 
 10  Id.  The  Commission  has  stated  that,  for  effective  competiton  purposes,  the  term  households  has  the  same 
 meaning  as  that  used  by  the  U.  S.  Census  Bureau.  See,  e.  g.,  Implementation  of  Cable  Act  Reform  Provisions  of  the  Telecommunications  Act  of  1996,  9  FCC  Rcd  4316,  4324  (1994).  The  U.  S.  Census  Bureau  defines  households  as 

 [  a]  person  or  group  of  persons  who  live  in  a  housing  unit  or  occupied  housing  units.  See  <www.  census.  gov/  dmd/  www/  glossary.  html>.  Hometowns  West  Milford  Township  occupied  housing  unit  data  is 
 taken  from  the  2000  Census.  See  Petition  at  3  n.  6.  11 
 Petition  at  3.  12 
 Id.  at  3-  4.  13 
 Id.  at  4.  14 
 Id.  15 
 Id.  at  4  n.  8.  16 
 Id.  at  4-  5. 
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 foreseeable  future.  Finally,  Hometown  was  recently  granted  a  Certificate  of  Confirmation  by  the  NY  PSC  which  authorizes  the  operator  to  provide  cable  service  pursuant  to  its  franchise  with  the  Village  of 
 Florida.  17  As  with  the  Village  of  Warwick,  Hometown  must  serve  a  PSA  covering  approximately  76  percent  of  the  974  occupied  housing  units  in  Florida  by  the  end  of  2003.  18  Hometown  does  not  yet  have 
 any  subscribers  within  the  Village.  Based  on  the  record  in  this  proceeding,  Hometown  is  subject  to  low  penetration  effective  competition  in  its  West  Milford,  New  Jersey  franchise  area  and  its  Warwick  and 
 Florida,  New  York  franchise  areas. 
 III.  ORDERING  CLAUSE 
 6.  Accordingly,  IT  IS  ORDERED,  pursuant  to  authority  delegated  under  Section  0.283  of  the  Commissions  rules,  19  that  the  captioned  petition  for  a  determination  of  effective  competition  filed  by 

 Hometown  Online,  Inc.  IS  HEREBY  GRANTED. 

 FEDERAL  COMMUNICATIONS  COMMISSION 
 Steven  A.  Broeckaert  Deputy  Chief,  Policy  Division,  Media  Bureau 

 17  Id.;  see  also  November  20,  2002  Supplemental  Filing. 
 18  Petition  at  5. 
 19  47  C.  F.  R.    0.283. 
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