$/ FOR FCC RECORD ONLY /$ $// MO&O, Cable Act of 1992, DA 95-179//$ $/ 300.623 Regulation of Rates /$ $/ 1.106 Petitions for Reconsideration /$ $/ 76.906 Presumption of no effective competition /$ $/ 76.910 Franchising authority certification /$ $/ 76.911 Petition for reconsideration of certification /$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) DA 95-179 ) CABLEVISION INDUSTRIES LIMITED ) PARTNERSHIP; CABLEVISION ) INDUSTRIES OF CENTRAL FLORIDA, ) INC.; AND CABLEVISION INDUSTRIES ) OF MIDDLE FLORIDA, INC. ) d/b/a CABLEVISION INDUSTRIES ) ) Petition for Revocation of Certification) ) of the Certification of Orange County,) Florida to Regulate Basic Cable Rates) (FL0548 & FL0569) ) MEMORANDUM OPINION AND ORDER Adopted: February 7, 1995 Released: February 8, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On March 21, 1994, Cablevision Industries Limited Partnership, Cablevision Industries of Central Florida, Inc., and Cablevision Industries of Middle Florida, Inc. d/b/a Cablevision Industries (collectively "CVI") filed a Petition for Revocation of Certification challenging the certification of Orange County, Florida to regulate rates for basic cable service and associated equipment. Orange County filed a Motion to Dismiss the Petition for Revocation of Certification and, alternatively, Response to the Petition on April 15, 1994. Orange County filed a supplemental pleading pursuant to the Commission's July 29, 1994 Order. CVI also filed a supplemental pleading on January 4, 1995. 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 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. After the 30-day deadline for filing petitions for reconsideration has elapsed, cable operators may challenge the franchising authority's certification by filing a petition for revocation. However, regardless of its grounds, a petition for revocation does not automatically trigger a stay of the franchising authority's power to regulate basic rates. II. DISCUSSION Disposition of CVI's Effective Competition Claim 3. CVI states that it has three systems in Orange County and bases its effective competition claim on aggregated information representing all three systems together. CVI argues that its cable systems in Orange County are subject to effective competition because together they serve fewer than 30 percent of the households in the unincorporated sections of Orange County, its franchise area. CVI claims that, through its three systems, it currently serves only 30,761 of the 120,999 households (that is, occupied housing units) in Orange County, or 25.4 percent of the total number of households. As supporting documentation, CVI provides 1990 Census data which establishes that there are 120,999 households in the unincorporated sections of Orange County which CVI is franchised to serve. CVI submits a computer print-out with sufficient subscriber information to support its claim that its separate systems serve 30,761 subscribers in the franchise area. CVI also supplied records dating back ten years which detail the size and frequency of its system expansions in the unincorporated sections of Orange County. Finally, CVI provides an affidavit under penalty of perjury by the vice president of CVI's parent corporation certifying the accuracy of the data included in the Petition. 4. Orange County's Response states that CVI is not subject to effective competition because of its affirmative decision to limit its franchise area. Orange County argues that CVI's appropriate franchise area should be defined as those areas in the unincorporated sections of Orange County in which CVI has chosen to render service. In this regard, Orange County asserts that CVI's penetration rate for its Evans' system is 51.85 percent, and the penetration rate for the Winter Garden system is 61.26 percent. In its supplement filed pursuant to the Commission's Effective Competition Order, Orange County largely reiterates the arguments contained in its Response which assert that CVI is not subject to effective competition under the Commission's low penetration test because it has affirmatively redefined its franchise area. Orange County attempts to demonstrate that CVI has redefined its franchise area by showing that CVI's service territory expanded only slightly between 1991 and 1993. Orange County then concludes that it is apparent from its history as a franchise operator that CVI is not serious about serving all of the unincorporated areas of Orange County. 5. As a preliminary matter, we are not persuaded that the appropriate franchise area for purposes of effective competition is something less than all of the unincorporated sections of Orange County. Orange County concedes that CVI's franchise area encompasses all of the unincorporated areas of Orange County. Moreover, Orange County has not met its burden of demonstrating that CVI has made an affirmative decision to redefine its service area. As the Commission stated in the First Recon. Order, "the fact that a franchise area has not as yet been filled out by construction of a system would not by itself be taken as redefining the service area." Orange County has not offered evidence showing that CVI has refused to provide service beyond the area it currently serves. To the contrary, Orange County's pleadings demonstrate that CVI's service territory has expanded, albeit modestly, in the last two years. In addition, CVI provided the Commission with evidence that it has consistently expanded its three systems since the inception of its service in Orange County. Therefore, we conclude that Orange County has failed to sustain its burden of proof that CVI redefined its franchise area. 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. CVI has met this burden. We find that CVI appropriately relied on data reflecting the number of households as required by our rules. Relying on this data, the Commission finds that CVI has submitted sufficient evidence demonstrating that its three cable systems, serving the unincorporated sections of Orange County, its franchise area, serve 30,761 of the 120,999 households, or 25.4 percent of the households within its franchise area. 7. The Commission notes that CVI incorrectly consolidated information from each of its three systems in bringing its Petition. Under our rules, CVI should have filed a separate effective competition claim for each system in the subject franchise area. CVI's consolidation, however, only minimized its chances of demonstrating effective competition by increasing its penetration rate. If it had filed a separate effective competition claim for each of its three systems, CVI also would have, in each instance, satisfied the Commission's low penetration effective competition test. For example, performing a separate effective competition analysis for each of CVI's systems, we find that the Evans system would serve 17.1 percent, the Magna system would serve 6.6 percent, and the Winter Garden system would serve 1.7 percent of the households in the unincorporated sections of Orange County. Thus, under each of the above scenarios, we find that CVI's system serving the unincorporated sections of Orange County is subject to effective competition. Accordingly, its Petition is granted. III. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that the Petition for Revocation filed by Cablevision Industries Limited Partnership, Cablevision Industries of Central Florida, Inc., and Cablevision Industries of Middle Florida, Inc. d/b/a Cablevision Industries challenging the Certification of Orange County, Florida IS GRANTED. 9. IT IS FURTHER ORDERED that the certification of Orange County, Florida to regulate the rates for basic cable service and associated equipment of Cablevision Industries Limited Partnership, Cablevision Industries of Central Florida, Inc., and Cablevision Industries of Middle Florida, Inc. d/b/a Cablevision Industries IS REVOKED. 10. This action is taken pursuant to delegated authority pursuant to Section 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau