FOR FCC RECORD ONLY $//LaSalle Telecommunications, Inc., MO&O, DA 94-1527//$ $/76.922 Rates for Cable Programming Service Tiers/$ $/Cost of Service Rates/$ $/76.905 Identifying Systems Subject to Effective Competition/$ $/76.906 Presumption of No Effective Competition/$ Before the FEDERAL COMMUNICATIONS COMMISSION DA 94-1527 Washington, D.C. 20554 In the Matter of ) ) LaSalle Telecommunications, Inc. ) ) CUID No. IL0955 (Chicago, IL) Cost of Service Filing To Support ) Cable Programming Service Rate ) MEMORANDUM OPINION AND ORDER Adopted: December 19, 1994 Released: December 19, 1994 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On June 29, 1994, LaSalle Telecommunications, Inc. ("LaSalle"), serving Franchise Area 4 of the City of Chicago, filed a cost of service showing with the Commission in response to a complaint regarding the cable programming service ("CPS") rate in effect in LaSalle's franchise area. On September 2, 1994, LaSalle filed amended cost of service data. On September 12, 1994, in response to a request by Commission staff, LaSalle submitted additional information relating to the motion to dismiss included in LaSalle's filing. 2. LaSalle's cost of service filing seeks to establish that its CPS rate of $11.29 per month for the period September 1, 1993, to May 14, 1994, is justified based on its cost of providing CPS. LaSalle includes with its response a motion to accept the late-filed response as well as a motion to dismiss the complaint on the grounds that effective competition exists in LaSalle's franchise area. 3. We conclude that competition exists in Franchise Area 4, and therefore that the complaint against LaSalle should be dismissed. Consequently, we do not address the issue of whether LaSalle's CPS rate is cost-justified. II. DISCUSSION 4. Late-filed Response: LaSalle moves to have the Commission accept its late-filed response. The complaint underlying this case was served on the operator on April 8, 1994, thus establishing May 7, 1994, as Chicago Cable's filing deadline for responding to the complaint. LaSalle filed its cost of service showing on June 29, 1994. LaSalle later amended its showing on September 2, 1994. (a) LaSalle maintains that it overlooked the filing deadline due to confusion caused by the return of the initial complaint filed by the Cable Administrator of the City of Chicago. Chicago Cable asserts that the Cable Administrator's unsuccessful attempt to file complaints for the three franchise areas that LaSalle and its affiliated companies serve, while at the same time the Cable Administrator was seeking certification to regulate only two of the three franchise areas, caused LaSalle to overlook the 30-day deadline for a response to the LaSalle complaint. LaSalle also relies on the May 23 Order which created a window during which cable operators might correct deficiencies in filings related to CPS rate complaints. LaSalle maintains that among the "common deficiencies" for which the May 23 Order permits correction is the failure to make a rate justification within the 30-day period provided for in 47 C.F.R.  76.956. LaSalle also argues that neither the Commission nor any interested party will be prejudiced by the timing of LaSalle's rate justification submission. (b) In failing to respond to the complaint served since April 8, 1994, LaSalle was in default of the Commission's rules. LaSalle's claim of confusion regarding the Cable Administrator's certification filings is insufficient to explain or excuse LaSalle's failure to file a timely response to the Cable Administrator's CPS complaint. Further, the window of opportunity provided by the May 23, 1994 Order addresses situations where a cable operator failed to file a rate justification based on its decision to request dismissal of the rate complaint or its decision to file a cost of service showing. In this case, LaSalle did not respond in any manner to the complaint filed on April 8, 1994. Under our rules, a cable operator that is deemed to be in default may be subject to a finding that its rates are unreasonable and appropriate relief may be mandated by the Commission. (c) Our decision to review LaSalle's rate justification does not condone LaSalle's failure to observe the Commission's filing requirements with respect to the April 8, 1994 complaint to which it responds. We reiterate that, in the future, in order to preserve the integrity of our cable rate regulation process, we will impose forfeitures and other sanctions as appropriate for violations of our rules. 5. Motion to Dismiss: LaSalle asks the Commission to dismiss the complaint on the grounds that effective competition exists in Franchise Area 4. LaSalle argues that its cable system is subject to effective competition because it serves fewer than 30 percent of the households in its franchise area. (a) The Commission's rules provide that only the rates of cable systems that are not subject to effective competition may be regulated. The Commission's rules further provide that a cable system is subject to effective competition if fewer than 30 percent of the households in the system's franchise area subscribe to the system's service. (b) LaSalle claims that it serves only 53,632 of the 217,242 "dwelling units" (which includes both occupied and unoccupied housing units) in Franchise Area 4, or 24.69 percent of the total number of "dwelling units." Although maintaining that both occupied and unoccupied housing units should be used in calculating the operator's penetration rate, LaSalle also notes that if only occupied dwelling units were used, it serves 27.68 percent of the total 193,762 occupied housing units. As supporting documentation, LaSalle provides 1990 Census data which shows that there are 217,242 total occupied and unoccupied housing units, and 193,762 occupied housing units, in Franchise Area 4. LaSalle also submits a computer print-out with subscriber information to support its claim that it serves 53,632 subscribers in the franchise area. Finally, LaSalle provides an affidavit under penalty of perjury by a responsible official of the company certifying that the data included in the motion to dismiss is accurate. (c) 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. (d) As a preliminary matter, we note that we have previously rejected the argument espoused by LaSalle that unoccupied housing data (in addition to occupied housing data) should be used in calculating an operator's penetration rate. As the Commission stated recently, "we presume that Congress did not intend 'households' to have a different meaning than in the 1990 Census that would include vacant units." The 1990 Census "household" data reflects only occupied housing units. Thus, we require that for purposes of establishing the existence of effective competition, the penetration rate must be calculated based solely on occupied dwelling units (or "households" as used in the 1990 Census). (e) Even using only occupied housing data, we find that LaSalle has met its burden of establishing the existence of effective competition. LaSalle has submitted sufficient evidence demonstrating that its cable system serves 53,632 of the 193,762 occupied households, or 27.68 percent of the occupied households, within its franchise area. Because this penetration rate is less than 30 percent, we find that LaSalle's system serving Franchise Area 4 of the City of Chicago is subject to effective competition. Accordingly, we will grant LaSalle's motion to dismiss the complaint. III. CONCLUSION 6. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint filed against LaSalle Telecommunications, Inc. regarding its CPS rate in the above-referenced community IS DISMISSED. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau