$/ FOR FCC RECORD ONLY /$

$// MO&O, Cable Act of 1992, DA 95-43//$
$/ 300.623 Regulation of Rates /$
$/ 1.106 Petitions for Reconsideration /$
$/ 76.906 Presumption of no effective competition /$
$/ 76.910 Franchising authority certification /$
$/ 76.911 Petition for reconsideration of certification /$  

                                Before the
                     FEDERAL COMMUNICATIONS COMMISSION 
                          Washington, D.C.  20554

In the Matter of:                       )              DA-95-43
                                   )
C-TEC CABLE SYSTEMS OF MICHIGAN,   )
INC.                               )
                                   )
Petition for Reconsideration                 )
                                   )
of the Certification of                      )
Plainfield Charter Township, MI              )
to Regulate Basic Cable Service Rates        )
(MI0677)                           )
                                     
                      MEMORANDUM OPINION AND ORDER


Adopted:  January 12, 1995              Released:  January 12, 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 timely petition for reconsideration challenging the certification of Plainfield Charter
Township, Michigan (the "Township") to regulate rates for basic cable service and associated
equipment.  The Township filed an objection to C-TEC's petition, to which C-TEC filed a
reply.  On August 19, 1994 C-TEC supplemented its filings pursuant to a recent Commission
Order.  On November 30, 1994, C-TEC filed a response to a Bureau request for an
explanation of the subscriber data included in C-TEC's petitions and supplements.  On
January 3, 1995, C-TEC filed a response to a Bureau request for further explanation of the
subscriber data included in C-TEC's petitions and supplements.

     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  

     3.   C-TEC argues that its cable system is subject to effective competition because
it serves fewer than 30 percent of the households in Plainfield Charter Township, Michigan,
its alleged franchise area.  The supplement to C-TEC's petition shows that the cable system
currently serves 310 subscribers in an area with 3,432 households (that is, occupied housing
units), or 9.0 percent of the total number of households.  As supporting documentation, C-
TEC provides 1990 Census data which shows that there are 3,432 occupied housing units in
its alleged franchise area.  C-TEC also submits a computer print-out with sufficient
subscriber information to show that it has 310 subscribers to its basic cable service.  In its
January 3, 1995 response, C-TEC explains that it does not individually count, in its 310
subscriber figure, approximately 500 mobile homes served by C-TEC as part of a bulk
account.

     4.   The Township asserts that C-TEC's effective competition claim is
inappropriately based on areas unserved by C-TEC's cable system.  First, the Township
argues that pursuant to a new franchise agreement which became effective on January 1,
1994, C-TEC's franchise area is limited to the area actually served by C-TEC.  The
Township argues that, as C-TEC's service area is limited to certain areas of the Township, it
is these areas, and not the entire Township which must form the basis of any effective
competition claim.  In the alternative, the Township argues that C-TEC has made an
affirmative decision to redefine its franchise area.  Specifically, it alleges that C-TEC will
not penetrate the service area of TCI, a competing cable operator in its franchise area.  As
supporting documentation, the Township provides a map of the Township with marks
highlighting the areas served by C-TEC.  According to the Township, C-TEC's actual
service area consists of 1,075 households, of which C-TEC serves 824.  The Township
argues that under this redefined franchise area, C-TEC actually has a 76.6 percent
penetration level, and therefore has failed to overcome the presumption of the absence of
effective competition. 

     5.   In response, C-TEC disagrees with the Township's interpretation of the new
franchise agreement.  C-TEC emphasizes that under its previous franchise agreement,
effective until January 1, 1994, it was required to expand into unserved areas of the
municipality whenever the population density reached a level of five households per 660 feet
(or 40 homes per cable mile).  It states that as of January 1, 1994, it is required to expand
into unserved areas of the municipality whenever the population density reaches at least 30
homes per cable mile.  This requisite population density threshold decreases to 25 homes per
cable mile in 1998 and 20 homes per cable mile in the year 2000.  C-TEC further states that
it has requested notification from the franchise authority in the event that the required
population density level is reached.  As supporting documentation, C-TEC submits a
newsletter sent to the Township containing a form for requests to extend cable service, and
language indicating C-TEC's intent to expand when economically feasible.  This information
is supported by the declaration of a responsible official at C-TEC.     

     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 the
franchise area.  C-TEC has not met 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 Plainfield 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 [January 1, 1994] unless Company notifies Municipality in
     writing of its intent to serve 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 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 January 1,
1994.  Thus, unless C-TEC can demonstrate that it in fact serves all of the Township as of
January 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.

     7.   Next, we are concerned that C-TEC did not calculate its subscribership in a
manner that is consistent with our rules.  Specifically, C-TEC apparently counted 500
households, receiving cable service as part of a bulk account, as one subscriber.  In the first
Rate Order, the Commission stated that the number of households will primarily be
determined by the number of separately billed or billable customers when testing for the
presence of effective competition.  See e.g., Rate Order, at 5662.  However, with respect to
multiple dwelling units, the Commission stated, "[w]e except, however, multiple dwelling
units that are billed as a single customer."  It further stated "[t]herefore, for purposes of the
statutory tests for effective competition, individual residences of multiple dwelling units will
be treated as separate households subscribing to or being offered video programming
services."  Id.  We believe that C-TEC's mobile home bulk account should be treated in a
manner consistent with the Commission's rules regarding multiple dwelling units.  Thus,
pursuant to our rules, as each unit within a multiple dwelling unit is counted as a separate
household, if occupied, it follows that each unit, if occupied, that is receiving cable service
should be treated as a separate household receiving cable service.  Likewise, with respect to
the mobile home park served by C-TEC, each mobile home , if occupied, would constitute a
household under our rules.  No reason has been offered in the case which could persuasively
demonstrate why each mobile home receiving cable service should not be treated as a
separate household receiving cable service.

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 Plainfield Charter
Township, Michigan to regulate basic cable rates IS DENIED.

     9.   IT IS FURTHER ORDERED that the automatic stay imposed by Section
76.911(c) of the Commission's Rules, as amended, 47 C.F.R.  76.911(c) IS
TERMINATED.
     
     10.  IT IS FURTHER ORDERED that C-TEC Cable Systems of Michigan, Inc.
SHALL FILE the required rate justifications on the appropriate forms with Plainfield
Charter Township, Michigan within thirty days of the release date of this Memorandum
Opinion and Order or within thirty days of receipt of notice from the franchising authority
that it is regulating C-TEC Cable Systems of Michigan, Inc.'s rates, whichever is later.

     11.  This action is taken pursuant to delegated authority pursuant to Section 0.321
of the Commission's rules, 47 C.F.R.  0.321.




                    FEDERAL COMMUNICATIONS COMMISSION



                    Meredith J. Jones
                    Chief, Cable Services Bureau