$/ FOR FCC RECORD ONLY /$ $// MO&O, Cable Act of 1992, DA 95-98//$ $/ 300.623 Regulation of Rates /$ $/ 1.106 Petitions for Reconsideration /$ $/ 76.906 Presumption of no effective competition /$ $/ 76.910 Franchising authority certification /$ $/ 76.911 Petition for reconsideration of certification /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 95-98 ) TELE-MEDIA COMPANY OF ) SOUTHEAST FLORIDA, INC. ) ) Petition for Reconsideration ) ) of Certification of ) City of Pembroke Pines, Florida ) to Regulate Basic Cable Service Rates) (FL0990, FL0729) ) MEMORANDUM OPINION AND ORDER Adopted: January 20, 1995 Released: January 23, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On December 6, 1993, Tele-Media Company of Southeast Florida, Inc. ("Tele-Media") filed a petition challenging the certification of the City of Pembroke Pines, Florida ("the City") to regulate rates for basic cable service and associated equipment. On November 30, 1994, Tele-Media submitted clarifying information pursuant to a Bureau request. The City did not file an opposition to Tele-Media'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 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 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. Once the 30-day period for filing petitions for reconsideration has elapsed, cable operators may challenge a franchising authority's certification by filing a petition for revocation. Regardless of its grounds, however, a petition for revocation does not automatically trigger a stay of the franchising authority's power to regulate basic rates. II. DISCUSSION 3. Tele-Media bases its challenge on the competing provider test for effective competition set forth in the 1992 Cable Act and our rules. Tele-Media argues that its system serving the City of Pembroke Pines is subject to effective competition because (1) its franchise area is served by both its system and Tele-Communications, Inc. ("TCI"), 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 the smaller of the two systems, exceeds 15 percent of the households in the franchise area. 4. Specifically, Tele-Media states that its system is authorized to provide cable service to subscribers in its franchise area, which comprises a total of 3,376 "households." Tele-Media states that its household number is based on a count of actual occupied homes within the franchise area. Next, Tele-Media claims, in its petition, that "[b]oth Tele-Media and TCI offer comparable video programming to at least 50% of the households." In its supplement, Tele-Media goes on to state that TCI "provides comparable cable television service to 100% of the cable subscribers in Tele-Media's franchised area." The only supporting documentation provided by Tele-Media is a chart which indicates that there are a total of 3,376 "homes passed" or "potential homes passed" in Tele-Media's franchise area. This chart, however, does not indicate whether Tele-Media and TCI each pass all of the 3,376 households or whether this number represents the total number of households passed by both operators in the aggregate. Tele-Media submits no other evidence which could support its claim that it or TCI offers comparable programming to at least 50 percent of the households in its franchise area. Indeed, Tele-Media never clearly indicates the specific actual number of homes passed by it or TCI. 5. With respect to subscribership, Tele-Media claims that its system actually serves 1,346 of the 3,376 households, or 40 percent of the households in its franchise area. Moreover, it states that TCI's system serves 1,558 of the 3,376 households, or 46 percent of the households in its franchise area. Tele-Media states that the subscriber number attributed to TCI is actually an estimate based on a count of all cable subscribers in Tele-Media's franchise area that are not served by Tele-Media. It is not clear, from Tele-Media's petition, however, how many cable subscribers are in its franchise area or how the total number of subscribers was determined. Thus, we can not determine whether Tele-Media's estimate of TCI's subscribership in Tele-Media's franchise area is accurate. The only other evidence regarding TCI's subscribership is a letter from TCI in which TCI states that it serves 15,858 subscribers. This number, however, is the total number of subscribers served in TCI's franchise area and not the total number served in Tele-Media's franchise area, which is the relevant franchise area for purposes of this proceeding. 6. With respect to programming comparability, Tele-Media submits copies of channel line-ups for both Tele-Media and TCI. These line-ups show that Tele-Media offers at least 50 channels of video programming, including at least 30 non-broadcast channels. TCI offers at least 50 channels of video programming, including at least 30 non-broadcast channels. 7. 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. Tele-Media has not met this burden. As to the first prong of this test, Tele-Media has not submitted information sufficient to demonstrate that it and TCI each pass at least 50 percent of the households in the franchise area. In its petition, Tele-Media merely states that "[b]oth Tele-Media and TCI offer comparable video programming to at least 50 percent of the households." Tele-Media later claims without sufficient supporting evidence, that TCI offers comparable programming to 100 percent of the households in Tele-Media's franchise area. These statements are conclusory. Tele-Media alleges no specific facts and submits no supporting documentation which demonstrates that TCI passes any homes in Tele- Media's franchise area. There have been previous cases where, in the absence of sufficient evidence regarding the number of households passed, we have been able to determine that a cable operator passes at least 50 percent of the households in the franchise area. In those cases, this determination has been made where the cable operator has demonstrated that it or its competitor actually serve at least 50 percent of the households in the franchise area. Such a determination can not be made in this case, however, as Tele-Media claims that it serves only 40 percent of the households in its franchise area, while it claims that TCI serves only 46 percent. Tele-Media has not submitted sufficient information either demonstrating that its cable system, or TCI's, offer service to at least 50 percent of the households in the franchise area, or enabling us to make the calculation regarding its claims ourselves. 8. With regard to the issue of programming comparability, we find that Tele- Media has submitted sufficient evidence that the programming of it and TCI are comparable. The channel line-ups for both operators submitted by Tele-Media establish that each operator offers at least 50 channels with at least 30 non-broadcast channels -- this satisfies the Commission's programming comparability criteria. 8. Next, Tele-Media argues that more than 15 percent of the households subscribe to the cable service of the smaller of the two systems in the franchise area. In light of Tele-Media's failure to submit sufficient evidence that it and TCI each pass at least 50 percent of the households in the franchise area, we are unable to reach this conclusion. As we stated in the Rate Order, "only those multichannel video programming distributors that offer programming to at least 50 percent of the households in the franchise area should be included" in the cumulative measurement of households subscribing to the cable services of MVPDs other than the largest MVPD. As Tele-Media has failed to establish that it and TCI each pass at least 50 percent of the households in its franchise area, we can not find that Tele-Media has met the second prong of the test. In any event, assuming arguendo, that Tele-Media could submit sufficient evidence to meet the first prong of the competing provider test, we still could not find that it has met the second prong of the test. As noted above, Tele-Media does not submit sufficient evidence supporting its alleged subscriber numbers for TCI. As such, it is unclear whether Tele-Media or TCI is the largest of the two MVPDs. Accordingly, we can not find that Tele-Media has met the second prong of the competing provider test. 7. As Tele-Media has failed to submit sufficient evidence demonstrating that its cable system serving a portion of the City of Pembroke Pines is subject to effective competition from another cable operator, its petition is denied. Should Tele-Media wish to submit more specific information in support of its effective competition claim, it may do so by filing a petition for revocation pursuant to Section 76.914 of the Commission's rules. 8. Finally, we note, in enacting the 1992 Cable Act, Congress' policy was "to promote the availability to the public of a diversity of views and information;" and to rely on the marketplace, to the maximum extent feasible, to achieve that availability." In this case, Tele-Media argued that its cable system was subject to effective competition as defined by the 1992 Cable Act. However, because Tele-Media failed to support this effective competition claim, we deny its petition. Nonetheless, we take this occasion to state our view that in the case of the cable programming service tier ("CPST") there may be circumstances where a cable system, although not subject to effective competition as defined in the 1992 Cable Act, may be charging cable rates that are constrained by the presence of one or more other multichannel video programming distributors (MVPDs) in the franchise area. In such situations, the presence of one or more such MVPDs may ensure that the rates the operators charge subscribers for CPSTs are not "unreasonable." In such instances, the public interest may be served by relying on the market forces instead of our rate rules to ensure that the operator's rates are not "unreasonable." In this case, Tele-Media has not submitted sufficient economic evidence and analysis regarding its competitor's presence in its franchise area or any other market forces which would allow us to determine that its rates are constrained by competition. Should Tele-Media or any other operator choose to submit such information, we could consider such a showing in the context of a petition for special relief filed pursuant to Section 76.7 of the Commission's rules. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petition for revocation filed by Tele- Media Company of Southeast Florida, Inc., challenging the certification of the City of Pembroke Pines, Florida to regulate Tele-Media's basic cable rates IS DENIED. 10. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau