FOR FCC RECORD ONLY

$// MO&O, Cable Act of 1992, DA 94-1395//$
$/ 300.623 Regulation of rates /$
$/ 1.106 Petition for Reconsideration /$
$/ 76.906 Presumption of no effective competition /$
$/ 76.910 Franchising authority certification /$
$/ 76.911 Petition for reconsideratino of certification /$

                                Before the
                     FEDERAL COMMUNICATIONS COMMISSION
                          Washington, D.C. 20554

In the Matter of:                    )                 DA 94-1395
                                     )
TCI TKR OF HOUSTON, INC.             )
                                     )
Petition for Reconsideration         )
                                     )
of Certification of                  )
City of Houston, Texas               )
to Regulate Basic Cable Service Rates)
(FCC Community ID Nos. TX0755, TX0736, ) 
TX0737, TX0748)                      )

                       MEMORANDUM OPINION AND ORDER

Adopted:  December 5, 1994              Released:  December 5, 1994

By the Chief, Cable Services Bureau:

I.  INTRODUCTION

     1.   On December 17, 1993, TCI TKR of Houston, Inc. ("TCI") filed a timely
petition for reconsideration challenging the certification of the City of Houston ("The City"
or "Houston") to regulate rates for basic cable service and associated equipment.  TCI and
the City also filed responses in reply to our letters seeking further 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 which 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.  Such certification becomes effective 30 days from the date of
filing unless the Commission finds that the 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 date such certification becomes effective.  Rate
regulation is automatically stayed pending review of a timely filed petition for reconsideration
alleging effective competition.

II.  DISCUSSION

     3.   TCI argues that its cable system is subject to effective competition because it
serves fewer than 30 per cent of the households in the City of Houston, its franchise area. 
Specifically, TCI claims that it serves only 51,161 of the 200,352 "homes" (occupied and
vacant) in the City, or 25.5 per cent of the total number of homes as of November 1993.  As
supporting documentation, TCI provides a copy of 1990 Census data which shows that there
are 200,352 housing units in the City.  TCI also submits a computer print-out with sufficient
subscriber information to support its claim that it serves 51,161 subscribers in the franchise
area.  In calculating this number, TCI excludes the 411 "free" accounts which represent the
number of its employees receiving non-charged cable service.  TCI also excludes the 172
"municipal accounts" required to be served under the franchise agreement.  Finally, TCI
provides a declaration under penalty of perjury by a responsible official certifying to the
accuracy of the data included in the petition.

     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, is present within the
franchise area.  TCI has not met this burden.  Initially, TCI inappropriately deducted the
number of its employees receiving cable service for no charge.  TCI claims that such a
deduction is consistent with the plain meaning of the term "subscriber" which TCI defines as
a person "receiving something of a continuing or periodic nature on a prepayment plan." 
We find this argument unpersuasive.  Typically, a cable operator provides cable service in
consideration for fees paid.  In providing cable service to employees for no fee, TCI is
merely providing cable service in consideration for services rendered by its employees.  The
fact that TCI chooses to provide cable services to its employees in exchange for services
rendered instead of charging a fee (as it does for other customers receiving its cable service)
is immaterial.  Accordingly, these subscribers should have been included for purposes of
determining the presence of effective competition.

     5.   Next, we find that TCI inappropriately relied upon "housing unit" data, rather
than "household" data in calculating its penetration level.  TCI argues that a "housing unit"
test should be used for purposes of determining effective competition.  We disagree.  As the
Commission noted previously, the term "household" was defined for purposes of the 1990
Census as "all the persons who occupy a housing unit."  Thus, "households" reflects only
occupied housing units.  The term "housing unit," however, was defined by the Census
Bureau as including both occupied and vacant units.  As the Commission stated recently,     
"[a]s used in the Cable Act, we presume that Congress did not intend "households" to have a
different meaning than in the 1990 census that would include vacant units or even partial-
year vacant units."  In light of this, we find that TCI's effective competition claim is
inappropriately based on the number of housing units within its franchise area.  Accordingly,
we deny its petition.

III.  ORDERING CLAUSES

     6.   Accordingly, IT IS ORDERED that the petition for reconsideration filed by
TCI TKR of Houston, Inc. challenging the certification of the City of Houston, Texas to
regulate TCI's basic cable rates IS DENIED.

     7.   IT IS FURTHER ORDERED that the automatic stay imposed by Section
76.911(c) of the Commission's Rules, as amended, 47 C.F.R.  76.911(c) IS
TERMINATED.

     8.   IT IS FURTHER ORDERED that TCI shall file the required rate
justifications on the applicable forms with the City 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 that it is regulating TCI's basic cable rates, whichever is later.

     9.   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