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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) BLUE RIDGE CABLE ) CUID No. PA1353 TELEVISION, INC. ) ) Petition for Revocation ) of the Certification of ) Tunkhannock Township, ) Pennsylvania to Regulate Basic ) Cable Rates ) MEMORANDUM OPINION AND ORDER Adopted: July 8, 1996 Released: July 16, 1996 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On March 22, 1995, Blue Ridge Cable Television, Inc. ("Blue Ridge") filed a Petition for Revocation challenging the certification of the Township of Tunkhannock, Pennsylvania (the "Township" or "Tunkhannock") to regulate Blue Ridge's rates for basic cable service and associated equipment. On April 24, 1995, Pocono CATV, Inc. ("Pocono"), a competing cable operator in the Township, filed clarifying information in response to a Cable Services Bureau (the "Bureau") staff request. The Township did not file an opposition to Blue Ridge's petition. 2. Section 623(a)(4) of the Communications Act of 1934, as amended, allows franchising authorities to become certified to regulate the basic cable service rates of cable systems 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 (filed pursuant to Section 76.911 of the Commission's Rules) 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. BACKGROUND 3. On January 23, 1995, the Bureau issued a Memorandum Opinion and Order ("Order") denying a petition for reconsideration filed by Blue Ridge challenging the certification of Tunkhannock to regulate rates for basic cable service and associated equipment. Blue Ridge based its original challenge on the competing provider test for effective competition. Blue Ridge argued that its system serving the Township was subject to effective competition because its franchise area is: 1) served by itself and Pocono, an unaffiliated multichannel video programming distributor ("MVPD"), each of which offers comparable programming to at least 50 percent of the households in the franchise area; and 2) the number of households subscribing to Pocono, the smaller operator, exceeds 15 percent of the households in the franchise area. 4. In its original petition, Blue Ridge asserted that there are 2,196 "homes" in Tunkhannock Township, the franchise area. Blue Ridge claimed that its cable system passed 407 of the 2,196 "homes," or 18.5 percent of the total number of "homes." In addition, Blue Ridge stated that it served 258 of the 2,196 "homes" or 12 percent of the total number of "homes." With respect to Pocono, Blue Ridge stated that Pocono passed 550 of the 2,196 "homes" or 25 percent of the total number of "homes" in the franchise area. In addition, it stated that Pocono served 224 of the 2,196 "homes," or 10 percent of the total number of "homes." 5. The Township filed an opposition to Blue Ridge's original petition, asserting that: "Tunkhannock Township is served exclusively by Blue Ridge Cable Television, Inc. and there are no [un]affiliated multi-channel video program distributors in the context of Section 76.905." The Township subsequently clarified its position by stating that Blue Ridge and Pocono each operate cable systems in different parts of the Tunkhannock Township franchise area. 6. In its Order, the Bureau found, after further clarification by Blue Ridge, that the number of "homes passed" by Blue Ridge was in fact the number of households passed by its system (i.e., only occupied, non-seasonal housing units were counted). The Bureau also determined from the 1990 Census information supplied by Blue Ridge that there are 719 households in the Township. Based on this information, the Bureau calculated that Blue Ridge's system passed 407 of the 719 households, or 56.6 percent of the households in Tunkhannock. The Bureau denied Blue Ridge's petition because Blue Ridge failed to demonstrate that Pocono calculated its households passed data using occupied, non-seasonal housing unit data. However, the Bureau stated that "if Blue Ridge can demonstrate to the Commission with sufficient evidence that the number of 'homes' passed by Pocono in the franchise area is indeed the number of 'households' (i.e., occupied, non-seasonal housing units) passed . . . the Commission would entertain a new petition." The Bureau stated that such a petition should be brought as a petition for revocation pursuant to Section 76.914 of our rules. III. DISCUSSION A. Blue Ridge's Petition 7. In its instant petition, Blue Ridge again argues that it is subject to competing provider effective competition in its Tunkhannock Township franchise area. In large part, Blue Ridge's petition relies on the Bureau's findings in its Order. Specifically, Blue Ridge relies on the Bureau's findings that "(i) there are 719 households in the Township; (ii) Blue Ridge passes 407 of the 719 households (56.6 percent) in its franchise area; (iii) Blue Ridge serves 258 full- time subscribers in the Township [35.88 percent]; and (iv) Pocono CATV, Inc. is an unaffiliated multichannel video programming distributor offering comparable programming to subscribers in the Township." In addition to its reliance on the Bureau's Order, Blue Ridge asserts that, as of March 13, 1995, its cable system continues to pass 407 households and now serves 257 full-time subscribers in its franchise area. 8. With regard to Pocono, Blue Ridge provides a letter from Pocono dated March 8, 1995 which states that, as of February 21, 1995, Pocono serves 419 full-time subscribers and passes 1,007 "homes" in the franchise area. The letter includes a computer printout indicating that Pocono has 419 subscribers in the Township. Blue Ridge states that although the number of "homes" passed by Pocono exceeds the number of households as determined by the Census, "this discrepancy can be ignored by the Bureau in light of Pocono CATV's subscriber data." Blue Ridge asserts that with 419 actual subscribers, it is clear that Pocono passes more than 50 percent of the 719 households in the franchise area. 9. Blue Ridge argues that "[b]oth Blue Ridge and unaffiliated Pocono CATV, Inc. offer comparable programming to at least 50 percent of the households in the Township and the number of subscribers served by both companies exceeds 15 percent of the households (Blue Ridge -- 35.7 percent; Pocono CATV, Inc. -- 58.3 percent)." Based on the Bureau's findings in its Order and the updated information contained in its petition, Blue Ridge asserts that it is subject to competing provider effective competition in its franchise area, and that the certification of Tunkhannock Township should therefore be revoked. 10. On April 11, 1995, the Bureau contacted Blue Ridge and asked for clarification of certain information contained in Blue Ridge's petition. The Bureau specifically inquired regarding the significant increase between the number of subscribers served and homes passed by Pocono as originally asserted by Blue Ridge (224 subscribers and 550 homes passed) and the figures provided as part of Blue Ridge's instant petition (419 subscribers and 1,007 homes passed). The Bureau requested that Blue Ridge contact Pocono and verify that "the figures submitted with Blue Ridge's petition for revocation are accurate and represent only homes passed and subscribers served within Tunkhannock Township, Pennsylvania (FCC Community ID No. PA1353)." 11. On April 24, 1995, the Bureau received a response to its clarification inquiry directly from Pocono. Pocono's response, in pertinent part, provides that: The original homes passed number contained in [Blue Ridge's original petition] provided information as of February 26, 1994. The homes passed number was a best estimate of the number of homes passed as of that date while the subscriber numbers contained within that letter were retrieved from the company's computer database. . . . The homes passed number contained in [Blue Ridge's petition for revocation] was derived from an actual walkout of the system, while the subscriber numbers in that letter were retrieved from the company's computer database. As you can see, the information provided in connection with this matter was as of two distinct points in time. In that time frame, Pocono built areas of Tunkhannock Township to which it previously had not provided service. That, along with the span of time and the difference between an estimate and a walkout, accounts for the variances [noted by the Bureau]. B. Analysis 12. The first prong of the competing provider test for effective competition requires that the franchise area be served by at least two unaffiliated MVPDs, each of which offers comparable programming to at least 50 percent of the households in the franchise area. Regarding its system, Blue Ridge states that it continues to pass 407 of the 719 households, or 56.6 percent of the total number of households in its franchise area. Therefore, consistent with the holding in our Order, the Commission finds that Blue Ridge offers service to at least 50 percent of the households in its franchise area. 13. With regard to Pocono, Blue Ridge states that Pocono's system passes 1,007 "homes" in the franchise area. It is not clear how the term "homes" is being used. Our rules require the number of households (i.e., occupied, non-seasonal housing units) passed to serve as the reference point for purposes of gauging effective competition under the competing provider test. We recognize that determining the number of households which are passed by a cable operator, as opposed to the number which exist in the franchise area, may not be easily accomplished. Such information is not provided by the Census data we routinely urge operators to rely upon for purposes of the low penetration test, and we understand that such information may not be generally available to, or collected by, operators. However, in previous cases, the Bureau has undertaken certain analyses based on the evidence presented to determine whether a cable operator offers service to at least 50 percent of the households in its franchise area. One of these analyses is to look at whether a cable operator actually provides service to at least 50 percent of the households in the franchise area, since by definition that cable operator must also offer service to at least 50 percent of the households in the franchise area. 14. Applying this analysis to the information submitted by Blue Ridge, we note that the 1990 Census data indicates that there are 719 households in the Township. Blue Ridge asserts that Pocono actually serves 419 full-time subscribers in the franchise area, which is 58.28 percent of the total number of households. Therefore, the Bureau finds that Pocono offers service to at least 50 percent of the households in the franchise area. Thus, the evidence permits us to conclude that Blue Ridge and Pocono each pass at least 50 percent of the households in the franchise area. 15. With regard to the issue of programming comparability, we find, as we did in the Order, that the programming of the two operators are comparable. As we stated in our Order, "[t]he channel lineups for both operators submitted by Blue Ridge establish that each operator offers over 44 channels with more than 30 non-broadcast channels -- this satisfies the Commission's programming comparability criteria." 16. With regard to the second prong of the competing provider effective competition test, we find that the evidence shows that more than 15 percent of the households in the franchise area subscribe to multichannel video programming other than from Pocono, the franchise area's largest MVPD. Here, Blue Ridge has submitted sufficient evidence that it serves 257 subscribers out of 719 households, or 35.74 percent of total households in the franchise area. 17. As Blue Ridge has submitted sufficient evidence demonstrating that its cable system serving Tunkhannock Township is subject to effective competition from another cable operator, its petition is granted. IV. ORDERING CLAUSES 18. Accordingly, IT IS ORDERED that the petition for revocation filed by Blue Ridge Cable Television, Inc. challenging the Certification of Tunkhannock Township, Pennsylvania (PA1353) to regulate Blue Ridges's rates for basic cable service and associated equipment IS GRANTED. 19. IT IS FURTHER ORDERED that the certification of Tunkhannock Township, Pennsylvania to regulate the rates for basic cable service and associated equipment of Blue Ridge Cable Television, Inc. IS REVOKED. 20. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, as amended. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau