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 Federal  Communications  Commission  DA  01-  305
 Before  the
 Federal  Communications  Commission
 Washington,  D.  C.  20554
 In  the  Matter  of:  )
 )
 Time  Warner  Cable  )  CSR-  4824-  E
 )  Lima,  OH  et.  al.
 Petition  for  Determination  of  )
 Effective  Competition  )
 MEMORANDUM  OPINION  AND  ORDER
 Adopted:  February  5,  2001  Released:  February  7,  2001
 By  the  Deputy  Chief,  Cable  Services  Bureau:
 I.  INTRODUCTION
 1.  In  the  above-  captioned  proceeding,  Time  Warner  Cable  ("  Time  Warner")  seeks  a  determination
 that  it  is  subject  to  effective  competition  in  Lima,  Ohio  and  surrounding  franchise  areas  1  (hereinafter
 "Communities")  because  W.  A.  T.  C.  H.  TV  Company  ("  WTC")  2  provides  competing  multichannel  video  service  in
 each  of  the  Communities.  WTC  filed  an  opposition  to  Time  Warner's  request,  as  did  the  Ohio  cities  of  Piqua,
 Sidney,  and  St.  Marys.  Time  Warner  replied  to  each  of  the  opponents'  arguments.
 2.  In  the  absence  of  a  demonstration  to  the  contrary,  cable  systems  are  presumed  not  to  be
 subject  to  effective  competition,  3  as  that  term  is  defined  by  Section  76.905  of  the  Commission's  rules.  4  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.  5  Section  623(  l)(  1)(  D)  of
 1  The  following  50  franchise  areas,  categorized  by  cable  system  headend,  are  part  of  Time  Warner's  request:  Lima--
 Allen  County  (OH0548  and  OH0585),  Amanda  (OH1140),  Auglaize  (OH1407),  Bath  (OH0582),  Beaverdam
 (OH1408),  Bluffton  (OH1413),  Buckland  (OH0339),  Cairo  (OH1241),  Criderville  (OH0583),  Elida  (OH0373),
 Harrod  (OH1410),  Jackson  (OH1411),  Lafayette  (OH1412)  Lima  (OH0069),  Monroe  (OH01238),  Shawnee
 (OH0583),  Sugar  Creek  (OH0741),  Spencer  (OH1147),  and  Spencerville  (OH1148);  Delphos--  Allen  County
 (OH1008),  Marion  (OH1144),  Putnam  County  (OH1006),  and  Van  Wert  County  (OH1007);  Greenville--  New
 Weston  (OH2359);  Kenton--  Kenton  (OH0049);  Ottawa--  Blanchard  (OH1603),  Columbus  Grove  (OH0179),
 Glandorf  (OH0181);  Ottawa  (OH0180  and  OH1604);  and  Pleasant  (OH1602);  Piqua--  Brown  (OH1750  and
 OH2360),  Fletcher  (OH1721),  Piqua  (OH0134),  Spring  Creek  (OH0135),  and  Washington  (OH0136);  St.  Marys-  -
 Burketville  (OH2342)  and  St.  Marys  (OH0050);  Sidney--  Clinton  (OH2369),  Orange  (OH2373),  Perry  (OH2374),
 Port  Jefferson  (OH1005),  Salem  (OH2375),  Sidney  (OH0051),  Washington  (OH2380),  and  West  Liberty
 (OH0636);  and  Wapakoneta--  Auglaize  County  (OH0334)  and  Wapakoneta  (OH0053).
 2  WTC  is  a  provider  of  multichannel  multipoint  distribution  service  ("  MMDS")  or  wireless  cable  service.
 3  47  C.  F.  R.    76.906.
 4  47  C.  F.  R.    76.905.
 5  See  47  C.  F.  R.    76.906  &  907.
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 Federal  Communications  Commission  DA  01-  305
 the  Communications  Act  provides  that  a  cable  operator  is  subject  to  effective  competition,  and  therefore
 exempt  from  cable  rate  regulation,  if  a  LEC  or  its  affiliate  offers  video  programming  services  directly  to
 subscribers  by  any  means  (other  than  direct-  to-  home  satellite  services)  in  the  franchise  area  of  an
 unaffiliated  cable  operator  which  is  providing  cable  service  in  that  franchise  area,  provided  the  video
 programming  services  thus  offered  are  comparable  to  the  video  programming  services  provided  by  the
 unaffiliated  cable  operator  in  that  area.  6
 3.  The  Commission  has  stated  that  an  incumbent  cable  operator  could  satisfy  the  LEC
 effective  competition  test  by  showing  that  the  LEC  is  technically  and  actually  able  to  provide  services  that
 substantially  overlap  the  incumbent  operators  service  in  the  franchise  area.  7  The  incumbent  also  must
 show  that  the  LEC  intends  to  build-  out  its  cable  system  within  a  reasonable  period  of  time  if  it  has  not
 already  done  so,  that  no  regulatory,  technical  or  other  impediments  to  household  service  exist,  that  the  LEC
 is  marketing  its  services  so  that  potential  customers  are  aware  that  the  LECs  services  may  be  purchased,
 that  the  LEC  has  actually  begun  to  provide  services,  the  extent  of  such  services,  the  ease  with  which  service
 may  be  expanded  and  the  expected  date  for  completion  of  construction  in  the  franchise  area.  8
 II.  DISCUSSION
 4.  Time  Warner  asserts  that  it  faces  effective  competition  from  WTC,  a  wireless  cable  operator
 serving  subscribers  in  Lima,  Ohio  and  surrounding  communities.  Time  Warner  asserts  that  WTC  is  affiliated
 with  Benton  Ridge  Telephone  Company,  a  local  exchange  carrier  serving  residents  in  four  central  Ohio  counties.  9
 Time  Warner  states  that  WTC  offers  service  in  all  these  communities,  as  all  are  within  WTC's  35-  mile  radius  of
 protected  service.  10  Time  Warner  also  states  that  WTC,  whose  headquarters  are  in  Lima,  serves  nearly  10,  000
 subscribers  in  these  communities  and  that  some  of  these  subscribers  are  located  more  than  35  miles  away  from
 WTC's  Cridersville  transmitter  site.  Time  Warner  argues  that  there  are  no  regulatory,  technical  or  other
 impediments  to  households'  subscribing  to  WTC  service.  Time  Warner  asserts  that  WTC's  service  offering  has
 been  made  known  to  potential  subscribers  through  the  use  of  direct  mail  and  has  been  widely  publicized  in  the
 Lima  News,  a  local  newspaper  circulated  in  Allen  County  (where  nearly  half  of  the  communities  are  located)  and
 surrounding  areas.  Time  Warner  asserts  that  WTC  offers  comparable  multichannel  video  programming  in  Lima
 and  surrounding  areas.  Time  Warner  includes  WTC's  channel  line-  up  in  its  list  of  exhibits  to  illustrate  that  the
 6  Communications  Act,    623(  1)(  1)(  D),  47  U.  S.  C.    543(  1)(  1)(  D);  see  also  47  C.  F.  R.    76.905(  b)(  4).  This  fourth
 statutory  effective  competition  test  within  Section  632(  l)  may  be  referred  to  as  the  LEC  effective  competition  test.
 7  See  Implementation  of  Cable  Act  Reform  Provisions  of  the  Telecommunications  Act  of  1996,  14  FCC  Rcd  5296,
 5305  (1999)  (  Cable  Reform  Order).  No  showing  of  meeting  a  penetration  standard  is  required  under  the  LEC
 effective  competition  test.  Id.  at  5303.
 8  Id.  at  5305.
 9  Benton  Ridge  provides  local  telephone  service  in  portions  of  four  Northwestern  Ohio  counties:  Hancock,  Henry,
 Defiance,  and  Putnam.  See  Time  Warner  Petition,  Exhibits  B&  C.
 10  WTC's  central  transmitter  is  located  in  Cridersville,  Ohio--  less  than  10  miles  away  from  Lima.
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 Federal  Communications  Commission  DA  01-  305
 wireless  operator  offers  32  channels  of  programming  comparable  to  that  which  it  provides;  the  line-  up  includes
 several  local  broadcast  channels.
 5.  In  opposition,  WTC  argues  that  a  decision  in  this  case  should  be  deferred  until  after  the
 Commission  acts  on  WTC's  pending  petition  for  special  relief  for  a  permanent  waiver  of  Section  21.912,  11  the
 Commission's  cable-  MMDS  cross-  ownership  rules,  or  a  declaration  that  no  such  waiver  is  necessary.  WTC
 asserts  that  if  its  petition  is  denied  by  the  Commission,  Benton  Ridge  may  be  forced  to  divest  WTC,  thus  mooting
 Time  Warner's  request.
 6.  The  Ohio  Cities  of  Sidney,  St.  Mary's,  and  Piqua  ("  Cities")  each  filed  separate  oppositions  to
 Time  Warner's  request.  The  City  of  Sidney  states  that  it  was  not  aware  of  WTC's  existence  until  Time  Warner
 filed  its  petition.  Sidney  also  states  that  Time  Warner  provides  no  proof  that  WTC  has  subscribers  in  Sidney  or
 surrounding  areas.  Sidney  adds  that  the  marketing  materials  provided  by  Time  Warner,  illustrating  WTC's
 coverage  area,  show  that  WTCs  transmitter  signal  encompasses  only  the  northern  part  of  Shelby  County,  and
 not  the  southern  part  where  Sidney  is  located.  The  City  adds  that  the  Lima  News  is  not  sold  in  Sidney.  The  City
 asserts  that  WTC  does  not  offer  comparable  programming  because  it  carries  only  two  television  stations  that
 Time  Warner  carries  in  Sidney.
 7.  The  Cities  of  St.  Marys  and  Piqua  argue  that  WTC's  signal  is  not  physically  available  in  their
 respective  franchise  areas  and  also  state  that  Time  Warner  failed  to  demonstrate  actual  WTC  subscribership  in
 their  respective  franchise  areas.  Piqua  explains  that  WTC's  transmissions  cannot  be  received  by  its  residents  due
 to  terrain  obstacles  even  though  the  City  is  33  miles  from  the  Cridersville  transmitter.  Piqua  adds  that  it  is  in
 Miami  County  and  that  this  county  is  not  even  included  in  the  service  area  map  provided  by  WTC  in  its
 marketing  materials.  Piqua  asserts,  as  did  Sidney,  that  WTC  only  carries  two  television  stations  that  Time
 Warner  also  carries;  thus  the  programming  comparability  factor  is  not  met  in  this  instance.  St.  Marys  asserts  that
 the  cable-  MDS  cross-  ownership  rules  could  be  considered  a  regulatory  impediment  to  WTC  providing  service  to
 subscribers  within  its  borders.  The  Cities  also  assert  that  the  Lima  News,  the  publication  which  purportedly
 publicizes  the  existence  of  WTC  to  potential  subscribers,  is  not  circulated  to  residents  within  their  borders.
 8.  In  reply,  Time  Warner  states  that  it  has  been  unable  to  confirm  whether  residents  of  Piqua  and
 Sidney  can  currently  receive  WTC's  signal  and  whether  WTC's  service  is  being  actively  marketed  in  these  two
 communities.  Time  Warner  requests  that  its  petition  be  dismissed  without  prejudice  with  respect  to  Piqua  and
 Sidney.  As  for  all  of  the  other  communities  in  its  petition,  including  St.  Marys  which  is  less  than  11  miles  away
 from  the  WTC  transmitter,  Time  Warner  reiterates  that  WTC's  service  is  unquestionably  offered  and  available,
 and  that  subscribers  are  aware  that  they  may  purchase  WTC's  service  in  the  communities.  12  Time  Warner  adds
 that  the  weekly  circulation  of  the  Lima  News  in  St.  Marys  is  1,100,  out  of  an  estimated  3,400  occupied
 households  in  that  community.  It  states  that  an  audit  report  for  the  Lima  News  demonstrates  that  the  paper  has
 significant  circulation  in  St.  Marys  as  well  as  Auglaize,  Allen,  Hancock,  Hardin,  Logan,  Mercer,  and  other
 11  WTC  is  currently  operating  under  a  temporary  waiver  of  this  rule.
 12  Time  Warner  asserts  that  one  of  WTC's  customer  service  representatives  confirmed  that  some  St.  Marys  residents
 are  WTC  subscribers.  Time  Warner  has  also  submitted  a  line-  of-  site  map  showing  that  there  are  no  technical
 impediments  to  St.  Marys  households  receiving  WTC's  wireless  service.
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 Federal  Communications  Commission  DA  01-  305
 northwest-  central  Ohio  counties.  13  As  for  the  programming  comparability  argument  presented  by  the  opposing
 Cities,  Time  Warner  argues  that  because  WTC  offers  access  to  at  least  twelve  channels  of  programming,  at  least
 some  of  which  are  television  broadcasting  signals,  WTC  offers  comparable  programming.  With  regard  to
 WTC's  argument  that  it  would  be  premature  to  act  on  the  effective  competition  petition  given  that  the
 Commission  still  has  to  act  on  the  cable-  MMDS  waiver,  Time  Warner  argues  that  so  long  as  Benton  Ridge
 continues  to  own  WTC,  it  is  entitled  to  relief.
 9.  In  the  absence  of  a  demonstration  to  the  contrary,  cable  systems  are  presumed  not  to  be  subject
 to  effective  competition  as  defined  in  the  Communications  Act.  14  The  cable  operator  bears  the  burden  of
 rebutting  the  presumption  that  effective  competition  does  not  exist  and  must  provide  evidence  sufficient  to
 demonstrate  that  effective  competition,  as  defined  by  Section  76.905  of  the  Commission's  rules,  is  present  in  the
 franchise  area.  15  Time  Warner  has  met  this  burden  for  all  the  relevant  Communities,  including  St.  Marys.  As
 per  Time  Warner's  request,  we  dismiss  the  petition  with  regard  to  the  cities  of  Sidney  and  Piqua.
 10.  With  regard  to  the  first  part  of  the  LEC  effective  competition  test,  which  requires  that  the
 alleged  competitive  service  be  provided  by  a  LEC  or  its  affiliate  (or  any  multi-  channel  video  programming
 distributor  ("  MVPD")  16  using  the  facilities  of  such  LEC  or  its  affiliate),  we  find  that  Time  Warner  has  provided
 sufficient  evidence  demonstrating  that  WTC  is  a  wholly-  owned  subsidiary  of  Benton  Ridge  Telephone  Company,
 which  is  unquestionably  a  LEC.  WTC  did  not  dispute  this  fact  in  its  Opposition.  We  find  that  Time  Warner
 satisfies  the  affiliation  prong  of  the  LEC  effective  competition  test.  We  also  find  that  Time  Warner  is  unaffiliated
 with  WTC  or  Benton  Ridge.
 11.  Time  Warner  has  submitted  sufficient  evidence  demonstrating  that  WTC  provides  comparable
 programming.  A  competing  multichannel  video  programming  distributor  is  said  to  offer  comparable
 programming  when  at  least  12  channels  of  programming,  at  least  one  of  which  is  non-  broadcast  programming,
 are  present.  Neither  the  Communications  Act  nor  the  Commission's  rules  mandate  station-  specific  comparability
 to  the  extent  argued  by  the  cities  above.  The  channel  line-  up  for  WTC  submitted  by  Time  Warner  establishes
 that  WTC  offers  32  channels  of  programming,  including  six  over-  the-  air  broadcast  signals  and  numerous  non-broadcast
 channels.  This  satisfies  the  Commission's  programming  comparability  criterion.
 12.  The  LEC  effective  competition  test  requires  that  competitive  service  be  offered  directly  to
 subscribers  in  the  franchise  area  of  an  unaffiliated  cable  operator  which  is  providing  cable  service  in  that
 franchise  area.  In  enacting  the  LEC  effective  competition  test,  Congress  indicated  that  the  Commission  should
 13  See  Time  Warner  Reply,  Exhibit  B  (Audit  Report  for  the  Lima  News).
 14  47  C.  F.  R.  76.906.
 15  47  C.  F.  R.  76.911(  b)(  1).
 16  The  Commission's  rules  define  a  MVPD  as  "an  entity  such  as,  but  not  limited  to,  a  cable  operator,  a  multichannel
 multipoint  distribution  service,  a  direct  broadcast  satellite  service,  a  television  receive-  only  satellite  program
 distributor,  a  video  dialtone  service  provider,  or  a  satellite  master  antenna  television  service  provider  that  makes
 available  for  purchase,  by  subscribers  or  customers,  multiple  channels  of  video  programming."  47  C.  F.  R.
 76.905(  d).
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 Federal  Communications  Commission  DA  01-  305
 apply  its  preexisting  definition  of  the  term  "offer"  to  the  LEC  effective  competition  test.  This  definition  provides
 that  service  is  offered:
 (1)  When  the  multichannel  video  programming  distributor  is  physically
 able  to  deliver  service  to  potential  subscribers,  with  the  addition  of  no  or  only
 minimal  additional  investment  by  the  distributor,  in  order  for  an  individual
 subscriber  to  receive  service;  and
 (2)  When  no  regulatory,  technical  or  other  impediments  to  households  taking
 service  exist,  and  potential  subscribers  in  the  franchise  area  are  reasonably
 aware  that  they  may  purchase  the  services  of  the  multichannel  video
 programming  distributor.  17
 13.  Based  on  the  information  before  us,  we  find  that  WTC  is  offering  service  in  the  Communities  at
 issue.  Time  Warner  has  submitted  evidence  that  WTC's  Cridersville,  Ohio  transmitter  is  in  place  and  physically
 able  to  offer  service,  and  in  fact  currently  serves  approximately  10,000  subscribers  throughout  the  relevant
 Communities.  In  order  to  provide  service,  WTC  need  only  install  an  MMDS  antenna  on,  or  near,  a  subscriber's
 home.  Line-  of-  sight/  shadow  plot  maps  generated  by  Time  Warner  and  the  Commission  indicate  that  the
 Communities  lie  within  WTC's  line-  of-  sight  area.  These  facts  convince  us  that  WTC's  service  is  physically
 available  in  the  areas  at  issue  with  minimal,  additional  investment.  18
 14.  We  likewise  conclude  that  no  regulatory,  technical  or  other  impediments  prevent  potential
 subscribers  from  receiving  WTC's  service.  We  find  that  potential  subscribers  in  the  Communities  are  reasonably
 aware  that  they  may  receive  competing  video  service  because  of  WTCs  direct  mail  campaign  and  the  numerous
 advertisements  placed  by  WTC  in  the  Lima  News.  Time  Warner  has  also  demonstrated  through  the  use  of
 objective  audit  data,  that  the  Lima  News  is  circulated  in  the  areas  at  issue.  WTC  has  about  10,000  subscribers  in
 its  service  area,  indicating  that  the  marketing  materials  are  in  fact  educating  potential  subscribers  about  the
 availability  of  its  service.  There  are  no  other  indications  of  impediments  to  taking  service  or  regulatory,  technical
 or  other  obstacles  impeding  the  grant  of  the  petition.
 15.  We  disagree  with  WTCs  argument  that  the  Commission  should  defer  action  on  Time  Warners
 Petition  pending  resolution  of  WTCs  request  for  a  permanent  waiver  of  the  Commissions  cross-  ownership  rules.
 WTC  continues  to  provide  wireless  cable  service  to  subscribers  in  the  Communities  pursuant  to  a  temporary
 waiver  issued  by  the  Commission.  Should  WTC  discontinue  its  wireless  cable  service  for  any  reason,  Section
 76.916  of  our  rules  permits  local  franchising  authorities  to  file  a  petition  for  recertification  to  regulate  rates.  19
 III.  ORDERING  CLAUSES
 17  47  C.  F.  R.  76.905(  e).
 18  See  Rate  Order,  8  FCC  Rcd  at  5657-  58  ("  The  installation  by  the  MMDS  operator  of  a  special  subscriber  antenna
 capable  of  receiving  microwave  signals  represents  an  individual  additional  investment  by  the  operator,  the
 antenna  being  particular  to  that  household's  reception  of  the  service.").
 19  47  C.  F.  R.  76.916.
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 Federal  Communications  Commission  DA  01-  305
 15.  Accordingly,  IT  IS  ORDERED  that  the  Petition  for  Determination  of  Effective  Competition
 filed  by  Time  Warner  Cable  IS  GRANTED  with  respect  to  the  Communities  referenced  in  footnote  1  of  this
 Order,  except  that  Time  Warner  Cables  Petition  with  respect  to  the  Cities  of  Piqua  and  Sidney,  Ohio  is
 DISMISSED  without  prejudice.
 16.  IT  IS  FURTHER  ORDERED  that  the  certifications  of  the  applicable  franchise  authorities  are
 REVOKED.
 17.  This  action  is  taken  pursuant  to  delegated  authority  under  Section  0.321  of  the  Commission's
 rules,  as  amended.
 FEDERAL  COMMUNICATIONS  COMMISSION
 William  H.  Johnson
 Deputy  Chief,  Cable  Services  Bureau
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