$/ FOR FCC RECORD ONLY /$ $// MO&O, Cable Act of 1992, DA 94-1526//$ $/ 300.623 Regulation of Rates /$ $/ 1.106 Petitions for Reconsideration /$ $/ 76.906 Presumption of no effective competition /$ $/ 76.910 Franchising authority certification /$ $/ 76.911 Petition for reconsideration of certification /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 94-1526 ) TWIN COUNTY TRANS VIDEO, INC. ) d/b/a TWIN COUNTY CABLE ) ) Petition for Reconsideration ) ) of Certification of ) Township of Heidelberg, PA ) to Regulate Basic Cable Service Rates) (PA1263) ) MEMORANDUM OPINION AND ORDER Adopted: December 19, 1994 Released: December 21, 1994 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On May 19, 1994, Twin County Trans Video, Inc. d/b/a Twin County Cable ("Twin County") 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 19, 1994, Twin County submitted its supplemental pleading in response to the Commission's July 29, 1994 Order. Pursuant to a Commission inquiry, a clarifying letter was also filed August 29, 1994. The Township did not file an opposition to Twin County'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. Twin County bases its challenge on the competing provider test for effective competition set forth in the 1992 Cable Act and our rules. Twin County argues that its system serving the Township is subject to effective competition because its franchise area is: 1) served by itself and Blue Ridge Cable Television, Inc. ("Blue Ridge"), 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. Twin County states that there are 1,089 "homes" in Heidelberg Township, the franchising area. Twin County states that its cable system passes 653 of the 1,089 "homes," or 60 percent of the total number of "homes." In addition, Twin County states that it serves 227 of the 1,089 "homes" or 21 percent of the total number of "homes." Twin County submits 1990 Census information applicable to the Township which indicates that there are 1,089 total "housing units" in Heidelberg Township. In addition, Twin County submits a computer generated print-out stating that it passes 653 homes in the franchise area. This same print-out demonstrates that Twin County serves 227 subscribers. Finally, Twin County provides 51 channels of programming, including at least 32 non-broadcast channels. 5. With respect to Blue Ridge, Twin County states that Blue Ridge passes 800 of the 1,089 "homes" or 73 percent of the total number of "homes" in the franchise area. In addition, it states that Blue Ridge serves 662 of the 1,089 "homes," or 61 percent of the total number of "homes." As support, Twin County submits a letter from Blue Ridge, in which Blue Ridge states that its cable system in Heidelberg passes 800 and serves 662 of the 1089 "homes." In addition, Blue Ridge offers 56 channels of video programming, including at least 41 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 Twin County has met this burden. Disposition of Twin County'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. Twin County asserts that it passes 60 percent of the 1,089 "homes" in the franchise area and that Blue Ridge passes 73 percent of the 1,089 "homes" in the franchise area. The 1990 Census data submitted by Twin County 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. Twin County acknowledges that the term "homes" as used by Twin County refers to total housing units, not to households. Our rules, however, require the number of households to serve as 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 Twin County to see if conclusions can be drawn from it about the percentage of households passed by Twin County and Blue Ridge. 8. As stated earlier, the 1990 Census data submitted by Twin County indicates that there are 1,089 total housing units and 1,051 households in the franchise area. Twin County states that it passes 653 "homes" in the franchise area. If we compare the total number of households with 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 franchise 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 Twin County passes more than 50 percent of the households in the franchise area. 9. Turning to Blue Ridge, Twin County submits a letter from Blue Ridge stating that Blue Ridge passes 800 "homes and serves 662 subscribers in the franchise area." Our calculations show that 662 subscribers represents 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. Thus, the evidence permits us to conclude that both Twin County and Blue Ridge pass more than 50 percent of the households in the franchise area. 10. With regard to the issue of programming comparability, we find that the programming of the two operators are comparable. We note that each operator offers over 50 channels with more than 30 non-broadcast channels -- this satisfies the Commission's programming comparability criteria. 11. 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 multichannel video programming distributor other than from Blue Ridge, the franchise area's largest MVPD. Here, Twin County has submitted sufficient evidence that Twin County, the smaller of the two competitors, serves 227 subscribers out of the 1,051 households, or 21.4 percent of total households. 12. As Twin County 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 13. Accordingly, IT IS ORDERED that the Petition for Reconsideration filed by Twin County Trans Video, Inc. d/b/a Twin County Cable challenging the Certification of the Township of Heidelberg, Pennsylvania IS GRANTED. 14. IT IS FURTHER ORDERED that the certification of the Township of Heidelberg, Pennsylvania to regulate the basic cable rates of Twin County Trans Video, Inc. d/b/a Twin County Cable IS RESCINDED. 15. 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