FOR FCC RECORD ONLY $// MO&O, Cable Act of 1992, DA 94-1282//$ $/ 300.623 Regulation of Rates /$ $/ 1.106 Petitions for Reconsideration /$ $/ 76.906 Presumption of no effective competition /$ $/ 76.910 Franchising authority certification /$ $/ 76.911 Petition for reconsideration of certification /$ Before the FEDERAL COMMUNICATIONS COMMISSION DA 94-1282 Washington, D.C. 20554 In the Matter of ) ) PRIME CABLE OF CHICAGO, INC. ) ) Petitions for Reconsideration ) of Certification of the ) City of Chicago, Illinois ) to Regulate Basic Cable Rates ) (IL0984, IL0985) ) MEMORANDUM OPINION AND ORDER Adopted: November 14, 1994 Released: November 18, 1994 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On December 27, 1993 and February 8, 1994, Prime Cable of Chicago, Inc. ("Prime Cable") filed timely petitions for reconsideration challenging the certifications of the City of Chicago, Illinois (the "City") to regulate rates for basic cable service and associated equipment in the two franchise areas in the City which are served by Prime Cable. In addition, Prime Cable submitted responses to the Bureau's subsequent requests for additional information and clarification. 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 the franchising authority has 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 of the effective date of certification. Rate regulation is automatically stayed pending review of a timely-filed petition for reconsideration alleging the presence of effective competition. II. DISCUSSION 3. Prime Cable argues that, in both franchise areas, its cable system is subject to effective competition because it serves fewer than 30% of the households in each franchise area. Prime Cable claimed that it serves 27.1% of the households in franchise area IL0984 and 23.3% of the households in franchise area IL0985. Prime Cable explained that, in deriving these percentages, it included commercial establishments in its subscriber and household totals. Prime Cable also included vacant housing units in its household totals. 4. 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, exists in the franchise area. Based on the evidence, we find that Prime Cable has failed to meet this burden. First, Prime Cable improperly included commercial establishments in calculating its penetration levels. In the Third Order on Reconsideration, the Commission concluded that Congress intended the term "household," as used in the definition of effective competition, to have the same meaning as in the 1990 Census. The 1990 Census defined the term as "all the persons who occupy a housing unit." Thus, commercial establishments are not "households" for purposes of determining effective competition, and Prime Cable should not have included them in its subscriber and household totals. 5. Second, even with the exclusion of commercial establishments, we find that Prime Cable failed to measure its penetration level in accordance with our rules. In letters sent on August 10, 1994 in response to inquiries by the Cable Services Bureau, Prime Cable attached exhibits which provided penetration levels that excluded commercial entities and were limited to residences only. However, the residential figures that were provided cannot serve as a basis for determining effective competition because they included vacant housing units. The Commission has clarified that the term "household" does not include vacant housing units. The Commission reasoned that "[p]eople who are not present cannot be presumed to be choosing local competitive alternatives." Therefore, although Prime Cable's exhibits did provide evidence of its penetration levels exclusive of commercial entities, the evidence is inconclusive because it included vacant housing units. 6. Based on the evidence, we find that Prime Cable has not demonstrated that it is subject to effective competition in either franchise area IL0984 or franchise area IL0985. Thus, its petitions are denied. III. ORDERING CLAUSES 7. Accordingly, IT IS ORDERED that the petitions for reconsideration filed by Prime Cable of Chicago, Inc. challenging the certification of the City of Chicago, Illinois to regulate basic cable service rates in the franchise areas designated as FCC Community ID Nos. IL0984 and IL0985 ARE DENIED. 8. IT IS FURTHER ORDERED that the automatic stay of rate regulation, imposed by Section 76.911(c) of the Commission's Rules, as amended, 47 C.F.R.  76.911(c), IS TERMINATED. 9. IT IS FURTHER ORDERED that Prime Cable shall file the required rate justifications on the applicable forms with the City of Chicago within thirty (30) days of the release date of this Memorandum Opinion and Order or within thirty (30) days of receipt of notice from the City of Chicago that it is regulating Prime Cable's rates, whichever is later. 10. 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