$/ For FCC Record Only/$ $// Order, Cable Act of 1992, certification, DA 95-6//$ $/ 600.623 Regulation of Rates/$ $/ 76.905 Standards for Effective Competition/$ $/ 76.906 Presumption of No Effective Competition/$ $/ 76.910 Franchising Authority Certification/$ $/ 76.911 Petition for Reconsideration/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 95-6 ) C-TEC CABLE SYSTEMS ) OF MICHIGAN, INC. ) ) Petition for Reconsideration ) ) of the Certification of ) Alpine Charter Township, Michigan ) to Regulate Basic Cable Rates (MI0678) ) MEMORANDUM OPINION AND ORDER Adopted: January 4, 1995 Released: January 5, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On October 29, 1993, C-TEC Cable Systems of Michigan, Inc. ("C-TEC") filed a Petition for Reconsideration challenging the certification of Alpine Charter Township, Michigan (the "Township") to regulate rates for basic cable service and associated equipment. The Township filed an Objection to Petition for Reconsideration ("Objection"). Both parties filed additional pleadings pursuant to the Commission's July 29, 1994 Order. At the Commission's request, the Township supplied clarifying information regarding C- TEC's franchise area on December 22, 1994. 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 systems within their jurisdiction are not subject to effective competition, unless they have actual knowledge to the contrary. Certification becomes effective 30 days after 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 the presence of effective competition. II. DISCUSSION 3. C-TEC argues that its system serving Alpine faces effective competition because the system serves fewer than 30 percent of the households in Alpine Charter Township, its alleged franchise area. The supplement to C-TEC's Petition shows that the cable system serves 104 of the 1,584 households (that is, occupied housing units) within the Township, its alleged franchise area, or 6.6 percent of the total number of households. As supporting documentation, C-TEC provides 1990 Census data which indicates that there are 1,584 households in Alpine Charter Township. In addition, it submits a copy of a computer print-out which indicates that C-TEC had 104 subscribers in its alleged franchise area as of April 9, 1994. 4. The Township's Objection argues that C-TEC is not subject to effective competition because of C-TEC's affirmative decision to limit its service area. The Township states that the northern portion of Alpine Township is served by C-TEC and the southern portion is served by a competitor, TCI Cablevision of West Michigan, Inc. Despite the fact that both cable operators' franchise areas encompass all of the Township, the Township asserts that neither operator has attempted to serve a home within the other operator's "perceived" service territory -- thereby denying the citizens of the Township the benefit of actual competition. 5. In a letter accompanying its Response to C-TEC's motion for leave to file out of time, the Township states that "[b]y written agreement of the parties, the authorized area of service by C-TEC within Alpine Charter Township specifically excludes all areas not actually served by C-TEC." At the Commission's request, the Township supplied the Commission with this agreement, the new franchise agreement between the Township and C- TEC effective July 1, 1994. 6. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition. The cable operator has 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. C-TEC has failed to meet this burden. C-TEC fails to base its effective competition claim on its franchise area as defined by its new franchise agreement. We are persuaded that the appropriate franchise area for purposes of effective competition is the area that C-TEC currently serves in Alpine Charter Township. The relevant section of the new franchise agreement states that: Authorized Area shall mean the entire area from time to time within the corporate limits of the municipality, excluding, however, (a) all areas that are within such limits solely due to agreements executed under the authority of Michigan Act 425 of 1984, and (b) all areas not served by Company on the Effective Date [July 1, 1994] (shown generally on Exhibit F) unless Company notifies Municipality in writing of its intent to serve any portion of such areas and does so within 6 months of such notice. As we noted previously, the Commission defines a "franchise area" as "the area a system operator is granted authority to serve in its franchise." This new franchise agreement establishes C-TEC's franchise area as its current service area. C-TEC claims that its franchise area remains the entire township as this agreement allows and even requires it to expand into other parts of the township. We disagree. The language of the agreement states that C-TEC's "authorized area" excludes those areas that C-TEC did not serve as of July 1, 1994. Thus, unless C-TEC can demonstrate that it in fact serves all of the Township as of July 1, 1994, or that it has notified the Township of an intent to expand, we must find that C-TEC's franchise area is the area it currently serves. As C-TEC has failed to submit information demonstrating that it is subject to effective competition based on its franchise area as specified in its franchise agreement, its petition is denied. Should C-TEC wish to submit information specific to its actual franchise area, it may do so by filing a petition for revocation pursuant to Section 76.914 of the Commission's rules. 47 C.F.R.  76.914. III. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that the Petition for Reconsideration filed by C-TEC Cable Systems of Michigan, Inc. challenging the certification of Alpine Charter Township, Michigan IS DENIED. 9. IT IS FURTHER ORDERED that the automatic stay imposed by Section 76.911(c) of the Commission's rules, as amended, IS TERMINATED. 10. IT IS FURTHER ORDERED that C-TEC Cable Systems of Michigan, Inc. SHALL FILE the required rate justifications on the applicable forms with the Township of Alpine, Michigan within thirty days of the release date of this Memorandum Opinion and Order or within thirty days of receipt of notice from the Township of Alpine, Michigan that it is regulating C-TEC's rates, whichever is later. 11. This action is taken pursuant to delegated authority pursuant Section 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau