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 Federal  Communications  Commission  DA  02-  3335 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of: 
 Enstar  XI  d/  b/  a  Charter  Communications 
 Petition  for  Determination  of  Effective  Competition  in  Ashdown  (AR0109)  and  Foreman 
 (AR0145),  Arkansas 

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 CSR-  6018-  E 

 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  December  2,  2002  Released:  December  6,  2002 
 By  the  Deputy  Chief,  Policy  Division,  Media  Bureau: 

 I.  INTRODUCTION 
 1.  Enstar  XI  d/  b/  a  Charter  Communications  (  Charter)  has  filed  with  the  Commission  a  petition  pursuant  to  Section  76.7  of  the  Commission's  rules  for  a  determination  of  effective  competition  in 

 the  two  above-  captioned  communities  in  Arkansas  (the  Communities).  1  Charter  alleges  that  its  cable  system  serving  the  Communities  is  subject  to  effective  competition  pursuant  to  Section  623(  a)  of  the 
 Communications  Act  of  1934,  as  amended  ("  Communications  Act"),  and  Section  76.905(  b)(  1)-(  2)  of  the  Commission's  rules,  and  seeks  revocation  of  the  certification  of  the  local  franchising  authorities  in  the 
 Communities  to  regulate  basic  cable  service  rates.  2  Charter  claims  the  presence  of  effective  competition  in  the  City  of  Ashdown  stems  from  the  competing  services  provided  by  two  direct  broadcast  satellite 
 ("  DBS")  providers,  DirecTV,  Inc.  and  EchoStar  Communications  Corporation  (  EchoStar).  Within  the  City  of  Foreman,  Charter  contends  that  effective  competition  exists  under  the  low  penetration  test.  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,  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.  Based  on  the  record 

 1  47  C.  F.  R.    76.7. 
 2  47  U.  S.  C.    543(  a);  47  C.  F.  R.    76.  905(  b)(  1)-(  2). 
 3  47  C.  F.  R.    76.906. 
 4  47  C.  F.  R.    76.905. 
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 Federal  Communications  Commission  DA  02-  3335 
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 in  this  proceeding,  Charter  has  met  this  burden. 
 A.  The  Competing  Provider  Test 
 3.  Section  623(  l)(  1)(  B)  of  the  Communications  Act  provides  that  a  cable  operator  is  subject  to  effective  competition  if  the  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 

 4.  Turning  to  the  first  prong  of  the  competing  provider  test,  DBS  service  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  Charter  has  provided  evidence  of  the  advertising  of  DBS  service  in  news  media  serving  Ashdown.  7  We  find  that  the 
 programming  of  the  DBS  providers  satisfies  the  Commission's  program  comparability  criterion  because  the  DBS  providers  offer  more  than  12  channels  of  video  programming,  including  more  than  one  non-broadcast 
 channel.  8  Charter  has  demonstrated  that  Ashdown  is  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  Ashdown.  Charter  has  also  demonstrated  that  the  two  DBS  providers  are  physically  able  to  offer  MVPD  service  to  subscribers  in  Ashdown,  that  there  exists  no  regulatory, 
 technical,  or  other  impediments  to  households  within  Ashdown  taking  the  services  of  the  DBS  providers,  and  that  potential  subscribers  in  Ashdown  have  been  made  reasonably  aware  of  the  MVPD  services  of 
 DirecTV  and  EchoStar.  9  Therefore,  the  first  prong  of  the  competing  provider  test  is  satisfied. 
 5.  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  Ashdown  by  purchasing  a  report  from  SkyTrends  that  identified  the  number  of  subscribers  attributable  to  the  DBS  providers  within 
 Ashdown  on  a  five-  digit  zip  code  basis.  10  However,  rather  than  simply  accepting  SkyTrends  figures,  Charter  assumes  that  some  of  the  DBS  subscribers  identified  in  the  report  may  actually  live  in  zip  codes 
 outside  of  Ashdown.  11  To  account  for  such  a  possibility,  Charter  has  devised  a  formula  that  compares  U.  S.  Census  household  data  for  Ashdown  and  the  relevant  zip  codes  in  order  to  derive  an  allocation  to 
 apply  against  the  DBS  subscriber  count.  12  Charter  also  reduces  the  estimated  DBS  subscriber  count  by  15  percent  to  reflect  the  possibility  that  some  households  have  subscribed  to  both  cable  and  DBS  service  and 

 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  Petition  at  4  and  Exhibit  1. 
 8  See  47  C.  F.  R.    76.905(  g).  See  also  Petition  at  4-  5  and  Exhibits  2,  3.  Exhibit  2  contains  the  nationwide  channel 
 lineups  of  DirectTV  and  EchoStar  and  Exhibit  3  includes  the  channel  line-  up  for  Charters  cable  system  serving  the  Communities. 

 9  Petition  at  3-  5. 
 10  Id.  at  5-  6. 
 11  Id.  at  6. 
 12  Id.  at  6-  7  and  Exhibits  4-  6. 
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 Federal  Communications  Commission  DA  02-  3335 
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 to  take  into  account  commercial  or  test  accounts.  13  The  Commission  believes  that  Charters  methodology  is  sound  since  it  seeks  to  accurately  quantify  subscribers  using  the  best  available  DBS  subscriber  data. 
 6.  Charter  asserts  that  it  is  the  largest  MVPD  in  Ashdown  because  Charters  subscribership  exceeds  the  aggregate  DBS  subscribership  for  the  franchise  area.  14  Based  upon  the  45.6  percent  DBS 
 subscriber  penetration  level  in  Ashdown,  calculated  using  2000  Census  household  data,  15  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  Ashdown.  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  its  cable  system  serving  Ashdown  is  subject  to  effective  competition. 

 B.  The  Low  Penetration  Test 
 7.  Section  623(  l)(  1)(  A)  of  the  Communications  Act  provides  that  a  cable  operator  is  subject  to  effective  competition  if  fewer  than  30  percent  of  the  households  in  its  franchise  area  subscribe  to  its 

 systems  cable  service.  16  Charter  serves  130  out  of  the  493  households  in  Foreman  reported  by  the  2000  Census,  resulting  in  a  26.4  percent  subscriber  penetration  rate.  17  On  this  basis,  we  find  that  Charter  has 
 established  that  its  cable  system  serving  Foreman  is  subject  to  effective  competition. 
 III.  ORDERING  CLAUSES 
 8.  Accordingly,  IT  IS  ORDERED  that  the  petition  for  a  determination  of  effective  competition  filed  by  Enstar  XI  d/  b/  a  Charter  Communications  IS  GRANTED. 

 9.  IT  IS  FURTHER  ORDERED  that  the  certifications  to  regulate  basic  cable  service  in  Ashdown  and  Foreman,  Arkansas  ARE  REVOKED. 
 10.  This  action  is  taken  pursuant  to  authority  delegated  under  Section  0.283  of  the  Commissions  rules.  18 
 FEDERAL  COMMUNICATIONS  COMMISSION 

 Steven  A.  Broeckaert  Deputy  Chief,  Policy  Division,  Media  Bureau 

 13  Id.  at  7.  According  to  documentation  previously  provided  to  the  Commission,  SkyTRENDS  zip  code  subscriber 
 numbers  are  inflated  by  roughly  ten  percent  due  to  dual  receivers,  and  limited  commercial  and  test  accounts.  See  Charter  Communications,  DA  02-  1919  at  n.  13  (MB  rel.  Aug.  6,  2002).  Since  then,  SkyTRENDS  has  revised  its 

 inflation  estimate  from  ten  to  fifteen  percent.  Petition  at  n.  23.  14 
 Petition  at  5  and  Exhibit  4.  15 
 See  id.  at  Exhibits  5-  6  (858  DBS  subscribers    1,880  Ashdown  2000  Census  Households  =  0.456).  16 
 See  47  U.  S.  C    543(  l)(  1)(  A);  47  C.  F.  R.    76.905(  b)(  l).  17 
 Petition  at  7-  8  and  Exhibits  4,  6  (130  Charter  subscribers    493  Foreman  2000  Census  Households  =  0.2636).  18 
 47  C.  F.  R.    0.283. 
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