$/ FOR FCC RECORD ONLY /$ $// MO&O, Cable Act of 1992, DA 95-99//$ $/ 300.623 Regulation of Rates /$ $/ 1.106 Petitions for Reconsideration /$ $/ 76.906 Presumption of no effective competition /$ $/ 76.910 Franchising authority certification /$ $/ 76.911 Petition for reconsideration of certification /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) DA 95-99 ) PONDEROSA CABLE SYSTEMS, LTD. ) ) Petition for Reconsideration ) ) of Certification of ) Town of Danville, California ) to Regulate Basic Cable Service Rates ) (FCC Community ID No. CA1061) ) MEMORANDUM OPINION AND ORDER Adopted: January 20, 1995 Released: January 23, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On December 22, 1993, Ponderosa Cable Systems, Inc. ("Ponderosa") filed a timely petition for reconsideration challenging the certification of the Town of Danville, California ("The Town") to regulate rates for basic cable service and associated equipment. In addition, Ponderosa submitted a supplement to its petition containing supporting documentation pursuant to a recent Commission Order. Ponderosa later filed a response to the Bureau's request for clarifying information. The Town did not file an opposition to Ponderosa'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 as defined by the Communications Act of 1934. 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 such effective competition unless they have actual knowledge to the contrary. Such certification becomes effective 30 days from 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 effective competition as defined by the Communications Act of 1934. II. DISCUSSION Petitioner's Contentions 3. Ponderosa bases its challenge on the competing provider test for effective competition. In the circumstances presented here, this test requires Ponderosa to show that its system serving the Town is subject to effective competition because its franchise area is: 1) served by itself and TCI Cablevision of Contra Costa County ("TCI"), an unaffiliated multichannel video programming distributor ("MVPD") and that each offers comparable programming to at least 50% of the households in the franchise area; and 2) the number of households subscribing to the smaller operator, exceeds 15% of the households in the franchise area. 4. In its pleadings, Ponderosa states that there are 1,227 "homes" in the franchise area, and that "TCI and/or Ponderosa have plant activated to serve 75% [sic], i.e. 950 homes." Ponderosa refers to these 950 homes as "completed homes." Ponderosa states that "the remaining [sic] 307 homes, most of which are still under construction, are currently passed by conduit only, not by activated plant," and that these are "homes which are under construction and thus need not be included." Ponderosa claims that out of 950 "completed homes," in the Town of Danville, 724, or 76.2% have the technical and actual opportunity to subscribe to either TCI or Ponderosa; however, Ponderosa does not indicate how it arrives at these figures. 5. Next, Ponderosa does not provide separate subscriber numbers for it or TCI with respect to the Town of Danville franchise area. With respect to subscribership data, Ponderosa states only that TCI serves 40% of the entire Contra Costa County, which includes the Town of Danville. However, this statement is not evidence of either cable operator's subscribership within the Town of Danville, the relevant franchise area in this case. As supporting documentation, Ponderosa provides a copy of its franchise agreement with Contra Costa County, and a map which Ponderosa claims represents the entire franchise area, which includes the Town of Danville. Ponderosa also submits a copy of its channel line-up which indicates that Ponderosa offers a total of 80 channels, including more than 70 non-broadcast channels. In addition, Ponderosa also submits a copy of TCI's channel line-up which indicates that TCI offers a total of 42 channels, including more than 30 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 evidence, we find that Ponderosa has not met this burden. Ponderosa has provided us with a great amount of information. Unfortunately, Ponderosa has not provided us with the critical information, with respect to the circumstances in the Town of Danville, that we need to determine that it has met the test. This is so even though we asked for further information. In fact, Ponderosa stated that it refused to provide additional information. 7. First, Ponderosa fails to demonstrate that it and TCI each offer comparable programming to at least 50% of the households in the franchise area as required by the first prong of the competitive providers test. The information provided by Ponderosa does not enable us to determine that the circumstances in the Town of Danville satisfy the first prong of the competing provider test. It is unclear whether Ponderosa is claiming that it and TCI together offer comparable programming to at least 50% of the households in the franchise area or whether it is claiming that each operator separately offers comparable programming to at least 50% of the households in the franchise area. Ponderosa's failure to clarify this point, even after requested to do so, is fatal to its claim. Next, Ponderosa's claim is inappropriately based on the number of "homes" passed in the franchise area. Our rules, however, require the use of data reflecting the number of "households" (i.e., occupied housing units) passed in the franchise area. See Third Order on Reconsideration, in MM Docket Nos. 92-266 and 92-262, 9 FCC Rcd 4316, 4324 (1994) ("Third Recon. Order"). In some cases, we have been able to make a determination of households passed by making calculations from data on housing units passed compared to subscriber lists. Such an analysis cannot be made in this case, in part because we do not have clear information on each of the two systems separately, with respect to the number of households each passes, or the number of housing units each passes, or the number of subscribers each has within the Town of Danville. Such information is required in order to support a claim that a franchise area is served by at least two unaffiliated MVPD's offering comparable programming to at least 50% of the households in the franchise area. 8. With regard to the issue of programming comparability, we find that Ponderosa has submitted sufficient evidence that the programming of the two operators are comparable. The channel lineups for both operators submitted by Ponderosa establish that each operator offers over 40 channels with more than 25 non-broadcast channels -- this satisfies the Commission's programming comparability criteria. 9. With regard to the second prong of the competitive providers effective competition test, we find that Ponderosa has not submitted sufficient evidence showing that more than 15% of the households in the Town of Danville, the relevant franchise area, subscribe to multichannel video programming other than from the largest MVPD. As we stated above, Ponderosa appears to aggregate its and TCI's subscriber numbers rather than providing them separately, as the rules require. Thus, it is unclear whether Ponderosa or TCI is the larger of the two systems and what percentage each has of subscribers compared to households passed. As such, a determination cannot be made as to whether more than 15% of the households subscribe to the service of a MVPD other than the largest one. 10. As Ponderosa has not submitted sufficient evidence demonstrating that its cable system serving the Town of Danville is subject to effective competition from another cable operator, its petition is denied. Should Ponderosa 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. III. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the petition for reconsideration filed by Ponderosa Cable Systems, Ltd. challenging the certification of the Town of Danville, California to regulate Ponderosa's basic cable rates IS DENIED. 12. 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. 13. IT IS FURTHER ORDERED that Ponderosa SHALL FILE the required rate justifications on the appropriate forms with the Town of Danville, CA 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 Ponderosa's rates, whichever is later. 14. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, as amended, 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau