Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 94-1449 ) SHELBY CABLE, INC. ) ) Petition for Revocation ) ) of Certification of ) the City of Hoover, Alabama (AL0221) ) to Regulate Basic Cable Service Rates ) MEMORANDUM OPINION AND ORDER Adopted: December 12, 1994 Released: December 13, 1994 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On February 3, 1994, Shelby Cable Inc., ("Shelby Cable") filed a petition for revocation challenging the certification of the City of Hoover, Alabama, ("Hoover") to regulate rates for basic cable service and associated equipment. In addition, Shelby Cable, filed a supplement to its original petition, pursuant to a recent Commission Order. Hoover filed an opposition to which Shelby Cable filed a reply. 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 the franchise authority has 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. Regulation of rates is automatically stayed pending review of a timely filed petition for reconsideration alleging effective competition. After the 30-day deadline for filing petitions for reconsideration has elapsed, cable operators may challenge a franchising authority's certification by filing a petition for revocation. However, regardless of its grounds, the filing of a petition for revocation, does not automatically trigger a stay of a franchising authority's power to regulate basic cable rates. II. DISCUSSION 3. In its petition, Shelby Cable states that its system serving the City of Hoover is subject to effective competition because the system serves fewer than 30 percent of the households within its franchise area. Specifically, Shelby Cable states that it serves 315 of the 16,064 households (that is, occupied housing units) in the City of Hoover, or 2.0 percent of the total number of households. As supporting documentation, Shelby Cable provides 1990 Census data which shows that there are 16,064 households in the City of Hoover. Shelby Cable also submits a computer print-out with sufficient subscriber information to support its claim that it serves 315 subscribers in the franchise area. 4. In its opposition, Hoover disputes Shelby Cable's claim that it is subject to effective competition. It argues that Shelby Cable actually serves 315 subscribers while its cable passes only 510 households in its franchise area. Thus, Hoover claims that Shelby Cable has a penetration level of 61.9 percent. Next, Hoover argues that Shelby Cable does not face effective competition from another multichannel video programming distributor. Accordingly, Hoover argues that Shelby Cable has failed to demonstrate that its cable system is subject to effective competition. In reply, Shelby Cable argues that Hoover misapplies the effective competition test. It contends that Hoover's argument is based on a "homes passed" test which is not the proper basis for determining the presence of effective competition under the "low penetration" test. Rather, Shelby Cable argues that this test is measured by the number of subscribers served by the cable system in question in relation to the total number of households in the franchise area. 5. As a preliminary matter, we find that Hoover's arguments lack merit. First, Hoover misapplies the "low penetration" test for effective competition upon which Shelby Cable is relying. As Shelby Cable correctly asserts, this test is based on the number of households within the franchise area and not the number of homes passed by the cable operator. In addition, the low penetration standard for proving effective competition is based solely on the penetration level of the cable system in question. The existence of another competitor is irrelevant for purposes of this effective competition test. 6. 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. Shelby Cable appropriately relied on data reflecting the number of households as required by our rules. Relying on this data, Shelby Cable has submitted sufficient evidence demonstrating that its cable system serving Shelby County, its franchise area, serves 315 of the 16,064 households (that is, occupied housing units) in the City of Hoover, or 2.0 percent of the total number of households. Thus, we find that Shelby Cable's system serving the City of Hoover is subject to effective competition. Accordingly, its petition is granted. III. ORDERING CLAUSES 5 Accordingly, IT IS ORDERED that the petition for revocation filed by Shelby Cable Inc., challenging the certification of the City of Hoover, Alabama, to regulate its basic cable service IS GRANTED. 6 IT IS FURTHER ORDERED that the certification granted to the City of Hoover, Alabama, to regulate Shelby Cable Inc's basic cable rates IS REVOKED. 7. This action is being 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