WPC2V 2MBVRKZ3|j7jC:,+Xj\  P6G;XP"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdHP4M (PCL) (Additional); Local PrintHL4MPCAD.PRSXj\  P6G;\O!QXXP2yEK Z X-#XP\  P6Q+XP#3|j"i~'^09CSS999S]+9+/SSSSSSSSSS//]]]Ixnnxg]xx9?xgxx]xn]gxxxxg9/9MS9ISISI9SS//S/SSSS9?/SSxSSIP!PZ9+ZM999+99999999S/xIxIxIxIxIlnIgIgIgIgI9/9/9/9/xSxSxSxSxSxSxSxSxSxSxIxSxRxSxSxS]SxIxIxInInInZnIxigIgIgIgIxSxSxSxZxSxZxS9/9S999Su]ZZxSg/gCg9g9g/xSbxSxSxSxSxn9n9n9]?]?]?]ZgFg/gMxSxSxSxSxSxSxxZgIgIgIxSg9xS]?g9xSi+SS88WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN/>/>/>/x]SSSSx]x]x]x]xSxSx]SSxSxSf]xSxSxSxIxIxWxIx{nInInInISSSWS]a?/?]?9?]]WW]n/nKn9nCn/x]xx]x]SSxxIxIxI]?]?]?]WnUn9nax]x]x]x]x]x]xxWnInInIx]n9x]]?n9xSz+SS8-8WuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNNKP\R0V"i~'^"(22TN"""28"2222222222888,\HBBH>8HH"&H>XHH8HB8>HH^HH>"".2",2,2,"222N2222"&22H22,006"6."""""""""""2H,H,H,H,H,XAB,>,>,>,>,""""H2H2H2H2H2H2H2H2H2H2H,H2H1H2H2H282H,H,H,B,B,B6B,H?>,>,>,>,H2H2H2H6H2H6H2""2"""2F866H2>>(>">">H2;H2H2H2H2XHB"B"B"8&8&8&86>*>>.H2H2H2H2H2H2^HH6>,>,>,H2>"H28&>"H2?22!!WFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxN$<<$.2",2222`2 LL2 LL2L"",,2d""p yO !-ԍ47 C.F.R.  76.984.> and 76.1001?Xp yO"-ԍ47 C.F.R.  76.1001.? of the Commission's rules. CTEC filed a consolidated  xyresponse ("Consolidated Response"). Complainants did not file a reply. Pursuant to a request  xzby the staff of the Cable Services Bureau, Complainants separated their allegations into two  XL!- x[complaints: the "Geographic Uniformity Complaint" and the "Program Access Complaint."X L!p yO&- xKԍOn July 29, 1994, Cross Country and Robert Burgess filed together as cocomplainants ("Joint Complaint").  xJOn September 14, 1994, pursuant to our request, Cross Country filed a separate complaint in its sole capacity which  x<addressed only its allegations concerning program access and unfair practices. In the latter filing, Cross Country"u(,))("  xmerely deleted that portion of the Joint Complaint which concerned the geographic rate uniformity requirement and  xresubmitted the filing. Because the information contained in Cross Country's second filing with regard to program  xaccess is identical to such information contained in the Joint Complaint, we resolve both complaints here and cite only to the Joint Complaint.  In"L!,))ZZX "  X- xlight of a decision issued in Time Warner Entertainment Co., L.P. v. FCC,w\ {Oa- xKԍ56 F.3d 151 (D.C. Cir. 1995) ("Time Warner"). The Court held,  inter alia, that "the Commission's uniform  xjrate structure regulation is contrary to the [1992 Cable Act] insofar as it applies to cable operators subject to  {O-effective competition." Id. at 191.w in which the court  xconcluded that the uniform rates requirement does not apply to cable operators that are subject  xto effective competition, the staff asked CTEC to submit supplemental pleadings if it wished to  X- x[assert the presence of effective competition within the relevant franchise area. yOB - xzԍLetter to Rodger I. Sweeting and Gardner F. Gillespie from Steve A. Broeckart, Cable Services Bureau, February 6, 1996. CTEC filed its  xsupplement ("Supplement") to which Cross Country did not respond. In this Order, we address  xfirst the effective competition showing, then geographic uniformity, and finally, program access. We resolve both the Geographic Uniformity Complaint and the Program Access Complaint.  XJ- II. GEOGRAPHIC UNIFORMITY AND EFFECTIVE COMPETITION ă  X - A.xBackground  X - ` x2.` ` Section 623(d) of the Communications Act requires cable operators to maintain  xa rate structure that is uniform throughout their service areas. In accordance with the court's  X - xzdecision in Time Warner, Congress amended Section 623(d) to provide that the uniform rate  x<structure requirement does not apply to cable operators subject to effective competition. Section 623(d) provides, in relevant part, as follows:  ` pbXxX` ` (d) Uniform Rate Structure Required A cable operator shall have a rate  ` p4structure, for the provision of cable service, that is uniform throughout the  ` pgeographic area in which cable service is provided over its cable system.  ` pThis subsection does not apply to (1) a cable operator with respect to the  ` pprovision of cable service over its cable system in any geographic area in  ` pwhich the video programming services offered by the operator in that area  ` pare subject to effective competition, or (2) any video programming offered  X-on a per channel or per program basis.^,  yO"-ԍCommunications Act  623(d), 47 C.F.R.  76.984.^ `   xThe Commission must first determine whether a cable operator is subject to effective competition  xbefore turning to the question of whether the uniform rate structure requirement has been  xyviolated. Section 623(l)(1) of the Communications Act provides that a cable operator is subject to effective competition if any one of the following tests is met:"R ,-(-(ZZ"Ԍ ` ppԙXxX` ` (A) fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable system; ` XxX` ` (B) the franchise area is `   vx` ` X (i) served by at least two unaffiliated multichannel video   programming distributors each of which offers comparable video  programming to at least 50 percent of the households in the franchise area; and   x` ` X (ii) the number of households subscribing to programming services   offered by multichannel video programming distributors other than   the largest multichannel video programming distributor exceeds 15 percent of the households in the franchise area; or x  ` pdXxX` ` (C) a multichannel video programming distributor operated by the  ` pfranchising authority for that franchise area offers video programming to at least 50 percent of the households in that franchise area; or `  ` pXxX` ` (D) a local exchange carrier or its affiliate (or any multichannel video  ` pprogramming distributor using the facilities of such carrier or its affiliate)  ` pqoffers video programming services directly to subscribers by any means  ` p(other than directtohome satellite services) in the franchise area of an  ` punaffiliated cable operator which is providing cable service in that  ` p&franchise area, but only if the video programming services so offered in  ` pthat area are comparable to the video programming services provided by  X-the unaffiliated cable operator in that area." yOQ- xԍCommunications Act 623(l)(1)(A), (B), (C), (D), 47 U.S.C. 543(l)(A), (B), (C), (D); Section (D) was added  xby Section 301(b)(2) of the Telecommunications Act of 1996, Pub. L. No. 104104, 110 Stat. 56 (1996) (the "1996  {O- xwAct"); see also, 47 C.F.R. 76.905(b)(1), (2), (3), (4), in which the Commission adopted the statutory terms by rule.  `  X- B.xSummary of Pleadings  X|- ` x3.` ` Complainant Cross Country provides cable service to the City of Montague and  xZthe City of Whitehall, Michigan. The Complainants assert that CTEC also provides cable service  XN- xto the Cities of Montague and Whitehall, as well to the Township of Whitehall, Michigan.+XN yO!- xԍJoint Complaint at 1 2. CTEC also provides cable service to the Villages of Lakewood Club, New Era and  xRothbury, Michigan and to the Townships of Dalton, Fruitland, White River, Blue Lake, Grant and Montague, Michigan.+ The  xLComplainants further assert that CTEC is not subject to effective competition because neither  x\CTEC nor Cross Country offers cable service to at least 50 percent of the households in C" ,-(-(ZZ\"ԫ X-TEC's franchise area.C  yOy-ԍJoint Complaint at 7.C  X- ` x4.` ` I n its Supplement, CTEC asserts that it is subject to effective competition in each  X- xfranchise area at issue.T X yO-ԍSupplement at 3, referencing Section 76.905.T CTEC alleges that, in both the City of Whitehall and the City of  xzMontague, a competitor is providing effective competition as that term is defined in Section  X- x623(l)(1)(B) of the Communications Act and in Section 76.905(b)(2) of the Commission rules D  yO& -ԍ47 C.F.R.  76.905(b)(2).D  Xv- xyCTEC states that the competition satisfies both parts of the "competing provider" test. Under that test, a cable operator must show that the franchise area at issue is:  ` XxX` ` (1) served by at least two unaffiliated multichannel video  ` programming distributors each of which offers comparable video  ` programming to at least 50 percent of the households in the franchise area; and,x`  ` XxX` ` (2) the number of households subscribing to multichannel video  ` other than the largest multichannel video programming distributor  X-exceeds 15 percent of the households in the franchise area. x {O- xԍId. The wording of Section 76.905(b)(2) of the Commission's rules is very similar to the wording of Section 623(l)(1)(B) of the Communications Act.x`  Xb- ` x5.` ` With regard to the first prong of the competing provider test, CTEC states that  xit and Cross Country offer "comparable programming" in that each offers at least 12 channels of  xvideo programming and at least one channel of nonbroadcast service programming to more than  X- xL50 percent of the households in the franchise areas of the Cities of Montague and Whitehall.b  yO-ԍSupplement at 3; channel lineup cards at Exhibit 1.b  xCTEC also states that there are 884 occupied housing units (households) in the City of Montague  X- xand 1,173 occupied housing units (households) in the City of Whitehall.b  {O - xiԍCiting 1990 Census of Population and Housing, Summary Population and Housing Characteristics, Michigan at 175. CTEC asserts that it  xpasses more than 50 percent of those households as required under the first prong of the  X- xcompeting provider test.<  yO.$-ԍSupplement at 34. < In fact, CTEC asserts that it passes nearly all the households in each  X- x-franchise area .8L  yO&-ԍSupplement at 4.8 CTEC maintains that, since CTEC passes at least 50 percent of the households",-(-(ZZ"  x/in each franchise area, Cross Country must also pass as many, because Cross Country has  X-overbuilt CTEC's system.R yOb-ԍSupplement at 4 and Exhibit 3.R  X- ` x6.` ` With regard to the second prong of the test, that multichannel video programming  xdistributor(s) (MVPDs) other than the largest MVPD must serve at least 15 percent of the  x.households in the franchise area, CTEC states that it and Cross Country are the only MVPDs  xin the two franchising areas at issue and that they each serve more than 15 percent of the  xhouseholds in the respective franchise areas. CTEC states that Cross Country has a total of 970  XH- x.customers between the two relevant franchise areas1HX {OQ -ԍId.1 and that Cross Country has captured 65  X1- xpercent of the cable television market in those areas,1 yO - x;ԍFor this information regarding Cross Country, CTEC refers to an interview with Steve Jones, founder of Cross Country, which appeared in a local newspaper April 30, 1995. and so must serve well over 15 percent  X - x<of the households in the Cities of Montague and Whitehall.1 B {O -ԍId.1 Cross Country did not respond to the Supplement.  X - C.xDiscussion  X - ` x7.` ` In the absence of a demonstration to the contrary, cable systems are presumed not  X- xto be subject to effective competition,> yO-ԍ47 C.F.R.  76.906.> as that term is defined by Section 76.905 of the  Xy- xCommission's rules.>yd  yO-ԍ47 C.F.R.  76.905.> The cable operator bears the burden of rebutting the presumption that  x<effective competition does not exist with evidence that effective competition is present within the  XK- x\relevant franchise area. In the instant case, CTEC alleges, in its Supplement, that the cable  xoperator is subject to competing provider effective competition in each of the franchise areas at  xyissue. CTEC submits census data from the 1990 Census to indicate the number of households  X- xin the Cities of Whitehall and Montague.  {O - xiԍSee Cable Operators' Petition for Reconsideration and Revocation of Franchising Authorities' Certifications  {Ou!-to Regulate Basic Cable Service Rates, 9 FCC Rcd 3656 at  2(3) (Cab. Serv. Bur. 1994). CTEC attempts to make a showing of the presence  xxof effective competition by making reference to the number of households passed and the number  xof households served by itself and by Cross Country. CTEC calculates the minimum number  xof households that each operator must pass and the minimum number of households that Cross  x-Country must serve in order to meet the competing provider test, and states that both CTEC and Cross Country pass, and serve, at least that many. x"|P ,-(-(ZZn"Ԍ X- ` x8.` ` The competing provider test requires, with regard to its first prong, a showing that  xat least two unaffiliated MVPDs pass at least 50 percent of households in the relevant franchise  xiareas. CTEC concludes that Cross Country passes the threshold number of households because  xCross Country has overbuilt CTEC's system. The fact that a cable operator "overbuilds" its  xsystem by entering into a market which is already being served by at least one other cable  xoperator is not demonstrative of the actual number of households which either cable system  xpasses. With regard to its second prong, the test requires a showing that one or more MVPDs,  xother than the largest MVPD, serves more than 15 percent of the households in the relevant  XH- xfranchise areas. In the instant case, CTEC implies that it is the smaller of the two cable systems  xin the relevant franchise areas, and states that it serves at least 15 percent of the households in  X -the Cities of Montague and Whitehall.Z  yO - x,ԍCTEC states that it was unable to determine the actual number of households served by Cross Country in each  xfranchise area. CTEC therefore bases its calculations on a statement made by Cross Country's founder that Cross  {O# -Country serves a total of 970 customers between the two franchise areas. Id. at 4; see also n.21, supra.Ķ  X - ` x9.` ` As noted above, CTEC has attempted to show the presence of competing provider  xeffective competition by demonstrating that it and Cross Country satisfy both prongs of the  xcompeting provider test. CTEC did not provide sufficient evidence to make a determination that  xeither CTEC or Cross Country offers service to at least 50% of the households in the City of  X- xMontague and the City of Whitehall.F {O+-ԍSee supra  56.F We find that, with regard to the first prong of the test,  xCTEC can best demonstrate the presence of competing provider effective competition by  xreference to the availability of video programming delivered by direct satellite systems. The  XK- xCommission concluded in the Rate Order that "service received from satellites . . . is technically  xavailable nationwide in all franchise areas that do not, by regulation, restrict the use of home  X- xsatellite dishes."| {OL- xԍRate Order, 8 FCC Rcd at 565960; see also Third Order on Reconsideration, 9 FCC Rcd 4316, 432122 (1994) (same). At least two unaffiliated direct broadcast satellite ("DBS") service providers,  xDIRECTV and USSB, are available to more than 50%, in fact virtually all, of the households in  xthe Cities of Montague and Whitehall. With respect to programming comparability, we find that  xMthe programming of DIRECTV and USSB is comparable to that offered by CTEC and Cross  X- x|Country.T {OJ -ԍSee discussion  supra at  5.T We note that each DBS provider offers at least 12 such channels of video  xprogramming. Section 76.905(g) of the Commission's rules defines comparable programming  xto be at least 12 channels of video programming including at least one channel of nonbroadcast  X~-service programming offered by an MVPD.A~h  yO$-ԍ47 C.F.R.  76.905(g).A Thus, the first prong of the test is satisfied.  XP- ` x10.` ` With respect to the second prong of the test, CTEC asserts that Cross Country  x.serves more households than CTEC and that CTEC serves at least 15% of the households in"9 ,-(-(ZZ"  X- x-those franchise areas.F {Oy- xԍThe Time Warner court held that each prong of the competing provider test may be satisfied independently,  {OC- xusing separate groups of competing MVPDs. Time Warner, 56 F.3d 151.  To satisfy the second prong of the  x.competing provider test, the subscribership of all MVPDs, other than the largest MVPD, may be aggregated,  xregardless of whether each offers service to at least 50 percent of the households in the franchise area. The  xCommission had previously interpreted the competing provider effective competition test to mean that only MVPDs  xthat offer service to at least 50 percent of the households in the franchise area under the first prong of the test can  {O-- xbe considered in the aggregate MVPD subscribership count of the second prong of the test. Rate Order, 8 FCC Rcd  yO-at 566465.  Those assertions are uncontroverted. We therefore conclude, based on  xthe totality of the evidence, that both prongs of the "competing provider" effective competition  xtest are satisfied for the Cities of Montague and Whitehall and that CTEC is subject to effective competition.  X-  X- ` x11.` ` As noted above, cable operators who overcome the presumption that they are not  Xv- xsubject to effective competition are not subject to the geographic rate uniformity requirement.Zv {O-ԍSee discussion, supra at  23.Z  x[We have determined that effective competition is present in the franchise areas of the Cities of  xyMontague and Whitehall because of the availability of DBS on virtually a nationwide basis. In  X1- xklight of this finding, our rules governing uniform rates do not apply. Accordingly, the Joint  xComplaint with regard to the allegation that CTEC violated the geographic rate uniformity requirement is dismissed.  X -  X -`  III. PROGRAM ACCESS/UNFAIR PRACTICES ă  X- A.xBackground  Xb- ` x12.` ` Section 628(b) of the Communications Act prohibits unfair methods of competition  x]and unfair or discriminatory practices in the sale of satellite cable and satellite broadcast  xprogramming. The purpose underlying the enactment of Section 628 is the promotion of the  xLpublic interest by increasing competition and diversity in the multichannel video programming  X- xmarket.Dh  yO-ԍ47 U.S.C.  548(a).D To achieve that purpose, Congress enacted specific enforcement provisions and directed  xthe Commission to adopt regulations to specify particular conduct that would constitute a violation of Section 628(b). Section 628(b) states:  ` :XxX` ` It shall be unlawful for a cable operator, a satellite cable  ` sprogramming vendor in which a cable operator has an attributable  ` sinterest, or a satellite broadcast programming vendor to engage in  ` unfair methods of competition or unfair or deceptive acts or  ` Fpractices, the purpose or effect of which is to hinder significantly  ` or to prevent any multichannel video programming distributor from"7 ,-(-(ZZ"  ` fproviding satellite cable programming or satellite broadcast  X-programming to subscribers or consumers.w  yOb-ԍCommunications Act  628(b), 47 U.S.C.  548(b); 47 C.F.R.  76.1001. wx`  X- B.xPleadings  X- ` x13.` ` With regard to the Program Access Complaint, the Complainants argue that CTEC  xwas engaging in an unfair method of competition or unfair act or practice when it marketed its  X_- xdiscount plan to subscribers residing in the Cities of Montague and Whitehall.C!_X yOh -ԍJoint Complaint at 3.C The  xComplainants allege that the discounts offered by CTEC, which resulted in nonuniform pricing,  xyalso impeded Cross Country's ability to provide satellite cable programming to subscribers and  X - x consumers in the franchise areas at issue.1"  {O-ԍId.1 The Complainants maintain that CTEC's non xKuniform rate structure has caused Cross Country to lose a substantial amount of revenue and has  X -made it more difficult for Cross Country to attract new capital.7# z {O-ԍId. at 6.7  X - ` x14.` ` In its Consolidated Response, CTEC denies the Complainants' allegation that C xTEC's marketing of a discount plan to certain of its subscribers constitutes a pattern or practice  xof unfair competition or discriminatory pricing in violation of Section 76.1001 of the  Xy- xCommissions rules.$y  yO6- xԍ47 C.F.R.  76. 1001. Section 76.1001 contains wording very similar to the wording in Section 628(b) of the Communications Act. CTEC states that its practice of uniformly offering a discount to  xsubscribers in the Cities of Montague and Whitehall does not constitute an unfair method of  XK- xcompetition or deceptive act or practice.E%Kd  yO`-ԍConsolidated Response at 78.E CTEC asserts that Section 76.1001 was intended  xprimarily to prevent conduct associated with horizontal and vertical concentration among cable  xoperators and their affiliates and not to prevent cable operators from offering uniform rate  xkstructures in compliance with Commission rules. CTEC argues that the Complainants have failed to show any element of an offense under Section 76.1001.  X- C.xDiscussion   X|- ` x15.` ` In order to prevail under Section 628(b) of the Communications Act and Section  x76.1001 of the Commission's rules, the Complainants must show not only the existence of a non xuniform rate structure, but that such a rate structure is an unfair method of competition which  xKhinders or is intended to hinder or "prevent any multichannel video programming distributor from"7 %,-(-(ZZ"  x providing satellite cable programming or satellite broadcast programming to subscribers or  X- xconsumers."\& yOb-ԍCommunications Act 628(b), 47 U.S.C. 548(b).\ We have already found that CTEC is subject to effective competition and,  X-therefore, has no grounds to bring a geographic rate uniformity complaint.'X yO- xԍWe note also that the geographic rate uniformity requirement, when applicable, does not require cable operators to offer the same cable rates to subscribers who reside in different franchise areas. 47 U.S.C.  543(d).  X- ` x16.` ` The Complainants have not met their burden of proof under Section 628(b). The  xmere assertion that CTEC's discount rate plan impeded Cross Country's ability to offer its  xMservices in the franchise areas is not enough to support its program access complaint. The  xComplainants did not demonstrate any nexus between the alleged unfair method of competition  xand Cross country's ability to distribute satellite cable programming or satellite broadcast  xprogramming as required by Section 628(b). Thus, with regard to the Complainants allegation  xof a nonuniform rate structure in violation of Section 628(b), we find that the Complainants have  X - xnot made a prima facie case. In the absence of the requisite showing under the unfair practices  xprovision that the rate structure was an unfair method of competition or deceptive practice that  xhampered or prevented the distribution of programming, we have no basis for finding that CTEC  X - xengaged in unfair practices in violation of Section 628(b) of the Communications Act.L(Z  {O!- xԍSee American Cable Company and Jay Copeland v. Telecable of Columbus, Inc., 11 FCC Rcd 10090 (1996)  xJ("[a] practice permitted under the Communications Act and the Commission's rules cannot, without more, form the basis of a claim of unfair competition.").L Accordingly, the Complainants' program access claim is denied.  X{-x IV. ORDERING CLAUSES  XM- ` P x17.` ` Accordingly, IT IS ORDERED that the complaint filed by Cross Country Cable  xInc. and Robert Burgess against CTEC Cable Systems of Michigan, Inc. pursuant to Section  x623(d) of the Communications Act, 47 U.S.C.  543(d), and Section 76.984 of the Commission's  X-rules, 47 C.F.R.  76.984, IS DENIED . " (,-(-(ZZ"  X- ` x18.` ` IT IS FURTHER ORDERED that the complaint filed by Cross Country Cable  xInc. against CTEC Cable Systems of Michigan, Inc. (CSR4414P) pursuant to Section 628(b)  x=of the Communications Act, 47 U.S.C.  548(b), and Section 76.1001 of the Commission's rules,  X-47 C.F.R.  76.1001, IS DENIED .  Xv- ` ox19.` ` This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's rules, 47 C.F.R.  0.321. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Meredith J. Jones x` `  hh@Chief, Cable Services Bureau