$/ FOR FCC RECORD ONLY /$ $// MO&O, Cable Act of 1992, DA 94-1525//$ $/ 300.623 Regulation of Rates /$ $/ 1.106 Petitions for Reconsideration /$ $/ 76.906 Presumption of no effective competition /$ $/ 76.910 Franchising authority certification /$ $/ 76.911 Petition for reconsideration of certification /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 94-1525 ) BLUE RIDGE CABLE ) TELEVISION, INC. ) ) Petition for Reconsideration ) ) of Certification of ) Township of Heidelberg, PA ) to Regulate Basic Cable Service Rates) (PA0742) ) MEMORANDUM OPINION AND ORDER Adopted: December 19, 1994 Released: December 20, 1994 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On March 25, 1994, Blue Ridge Cable Television, Inc. ("Blue Ridge") filed a timely petition for reconsideration challenging the certification of the Township of Heidelberg, Pennsylvania ("Township") to regulate rates for basic cable service and associated equipment. On August 18, 1994, Blue Ridge submitted its supplemental pleading in response to the Commission's July 29, 1994 Order. The Township did not file an opposition to Blue Ridge's Petition. 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 they have 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 from the date such certification becomes effective. Rate regulation is automatically stayed pending review of a timely-filed petition for reconsideration alleging the presence of effective competition. II. DISCUSSION Petitioner's Contentions 3. Blue Ridge bases its challenge on the competing provider test for effective competition set forth in the 1992 Cable Act and our rules. Blue Ridge argues that its system serving the Township is subject to effective competition because its franchise area is: 1) served by itself and Twin County Trans Video, Inc. d/b/a Twin County Cable ("Twin County"), an unaffiliated multichannel video programming distributor ("MVPD") and that each of them offers comparable programming to at least 50 percent of the households in the franchise area; and 2) the number of households subscribing to Twin County, the smaller operator, exceeds 15 percent of the households in the franchise area. 4. Blue Ridge states that there are 1,089 "homes" in Heidelberg Township, the franchising area. Blue Ridge states that its cable system passes 800 of the 1,089 "homes," or 73 percent of the total number of "homes." In addition, Blue Ridge states that it serves 662 of the 1,089 "homes" or 60.8 percent of the total number of "homes." Blue Ridge submits 1990 Census information applicable to the Township which indicates that there are 1,089 total "housing units" in Heidelberg Township. In addition, Blue Ridge submits a revised Annual Report of Cable Television Systems (FCC Form 325) stating that it passes 800 homes in the franchise area. Blue Ridge further submits a copy of a computer-printout with sufficient information to demonstrate that it serves 662 subscribers. Finally, Blue Ridge submits a copy of its channel guide which demonstrates that it provides 56 channels of programming, including at least 41 non-broadcast channels. 5. With respect to Twin County, Blue Ridge states that Twin County passes 653 of the 1,089 "homes" or 60 percent of the total number of "homes" in the franchise area. In addition, it states that Twin County serves 225 of the 1,089 "homes," or 20.7 percent of the total number of "homes." As support, Blue Ridge submits a letter from Twin County, in which Twin County states that its cable system in Heidelberg passes 653 and serves 225 of the 1089 "homes." In addition, Blue Ridge submits a copy of an advertisement listing Twin County's channel line-up, which demonstrates that Twin County offers 51 channels of video programming, including at least 32 non-broadcast channels. 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, is present within its franchise area. Based on the totality of the evidence presented, we find that Blue Ridge has met this burden. Disposition of Blue Ridge's Competitive Provider Effective Competition Claim 7. The first prong of the competitive providers test for effective competition requires that the franchise area be served by at least two unaffiliated MVPDs, each of which offers comparable programming to at least 50 percent of the households in the franchise area. Blue Ridge asserts that it passes 73 percent of the 1,089 "homes" in the franchise area and that Twin County passes 60 percent of the 1,089 "homes" in the franchise area. The 1990 Census data submitted by Blue Ridge shows that there are 1,089 total housing units (i.e. occupied and unoccupied housing units), including 1,051 households (i.e. occupied housing units) in the franchise area. Thus, it is clear that the word "homes" as used by Blue Ridge refers to total housing units, not to households. Yet our rules require the number of households to be the reference point for purposes of gauging effective competition under this test, just as it is required under the low penetration test. However, we recognize that determining the number of households (i.e. occupied housing units) which are passed by a cable operator, as opposed to the number which exist in the franchise area, may not be easily accomplished. Such information is not provided by the Census data we routinely urge operators to rely upon for purposes of the low penetration test, and we understand that such information may not generally be available to or collected by operators. Because we are concerned to identify franchise areas which are subject to effective competition between or among providers, we will examine the totality of the evidence submitted by Blue Ridge to see if conclusions can be drawn from it about the percentage of households passed by Blue Ridge and Twin County. 8. As stated earlier, the 1990 Census data submitted by Blue Ridge indicates that there are 1,089 total housing units and 1,051 households in the franchise area. Blue Ridge asserts that it actually serves 662 subscribers in the area. Our calculations show that 662 subscribers represent 63 percent of the total households in the franchise area. Therefore, Blue Ridge clearly passes more than 50 percent of the households in the franchise area. Next, Blue Ridge submits a letter from Twin County stating that Twin County passes 653 "homes." If we subtract the total number of households from the total number of housing units, we find that 38 housing units, or approximately 3.5 percent of total housing units, were unoccupied. If we reduce the number of "homes" passed by Twin County by 3.5 percent, we arrive at a rough household number of 630. This number is about 60 percent of the total households in the area. Alternatively, if we assume as a worst case that Twin County passes all of the unoccupied housing units in the franchise area, and so subtract 38 from 653, we are left with a total of 615 households passed, which is 58.5 percent of total households. Under either scenario, the evidence permits us to conclude that both Blue Ridge and Twin County pass more than 50 percent of the households in the franchise area. 9. With regard to the issue of programming comparability, we find that Blue Ridge has submitted sufficient evidence that the programming of the two operators are comparable. The channel lineups for both operators submitted by Blue Ridge establish that each operator offers over 50 channels with more than 30 non-broadcast channels -- this satisfies the Commission's programming comparability criteria. 10. With regard to the second prong of the competitive providers effective competition test, we find that the evidence shows that more than 15 percent of the households in the franchise area subscribe to the multichannel video programming distributor other than from Blue Ridge, the largest MVPD. Here, Blue Ridge has submitted sufficient evidence that Twin County, the smaller of the two competitors, serves 225 subscribers out of the 1,051 households, or 21.4 percent of total households. 11. As Blue Ridge has submitted sufficient evidence demonstrating that its cable system serving Heidelberg Township is subject to effective competition from another cable operator, its petition is granted. III. ORDERING CLAUSES 12. Accordingly, IT IS ORDERED that the Petition for Reconsideration filed by Blue Ridge Cable Television, Inc. challenging the Certification of the Township of Heidelberg, Pennsylvania IS GRANTED. 13. IT IS FURTHER ORDERED that the certification of the Township of Heidelberg, Pennsylvania to regulate the basic cable rates of Blue Ridge Cable Television, Inc. IS RESCINDED. 14. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau