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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) CSR 4988-E ) Comcast Cablevision of ) Sterling Heights, MI Sterling Heights, Inc. and ) CUID No. MI0637 ) Comcast Cablevision of Taylor, Inc. ) Fraser, MI ) CUID No. MI0418 Petition for Determination of ) Effective Competition ) Southgate, MI ) CUID No. MI0409 ) ) Garden City, MI ) CUID No. MI1179 MEMORANDUM OPINION AND ORDER Adopted: May 28, 1997 Released: May 29, 1997 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Comcast Cablevision of Sterling Heights, Inc. and Comcast Cablevision of Taylor, Inc. (hereinafter "Comcast") has filed a Petition for Determination of Effective Competition asserting that it is subject to effective competition in four Michigan communities, Sterling Heights, Fraser, Southgate and Garden City (hereinafter "Communities") because of the presence of Ameritech New Media's (hereinafter "Ameritech") cable service in those Communities. This petition is unopposed. 2. Section 623(a)(4) of the Communications Act of 1934, as amended ("Communications Act") 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 authority does not meet the statutory certification requirements. In Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996 ("Cable Act Reform Order"), the Commission instructed cable operators believing themselves subject to local exchange carrier ("LEC") effective competition under Section 623(l)(1)(D) of the Communications Act to file a petition for determination of effective competition pursuant to Section 76.7 of the Commission's rules. Section 623(l)(1)(D) of the Communications Act provides that a cable operator is subject to effective competition where: a local exchange carrier or its affiliate (or any multichannel video programming distributor using the facilities of such carrier or its affiliate) offers video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area. II. THE PLEADINGS 3. Comcast asserts that it is subject to LEC effective competition in the four communities. With regard to the LEC affiliation requirement, Comcast asserts that Ameritech is a competing franchised cable operator wholly owned by the Ameritech Corporation, a local exchange carrier serving customers in five midwestern states including Ohio, Illinois, Indiana, Michigan, and Wisconsin. 4. With regard to the requirement that the LEC competitor offer video programming service in the unaffiliated cable operator's franchise area, Comcast asserts that Ameritech has completely overbuilt Fraser, Southgate, and Garden City and is currently providing service to subscribers throughout these areas. Ameritech has not completed its overbuild in Sterling Heights but it has activated plant and is providing service to subscribers in that area. Comcast states that Ameritech currently has at least 150 subscribers in Fraser, 500 subscribers in Southgate, 1500 subscribers in Garden City, and 100 subscribers in Sterling Heights. Comcast states that Ameritech has heavily marketed the availability of its cable service through the local media and has initiated an extensive local promotion campaign. Comcast asserts there are no regulatory, technical, or other impediments to households taking service from Ameritech. 5. Comcast also asserts that Ameritech offers comparable programming to subscribers in the Communities. Specifically, Comcast provides Ameritech's channel line-up which demonstrates that Ameritech offers 90 channels of programming, nine of which are local television broadcasting signals. Comcast offers over 80 channels of programming on its cable systems serving Fraser, Southgate, Garden City, and Sterling Heights. III. ANALYSIS 7. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition as defined in the Communications Act. The cable operator bears the burden of rebutting the presumption that such effective competition does not exist and so must provide evidence sufficient to demonstrate that effective competition, as defined by Section 76.905 of the Commission's rules, is present in the franchise area. Comcast has met this burden. 8. With regard to the first part of the LEC effective competition test, which requires that the alleged competitive service be provided by a LEC or its affiliate (or any multi-channel video programming distributor ("MVPD") using the facilities of such LEC or its affiliate), we find that Comcast has provided sufficient evidence demonstrating that Ameritech New Media is an MVPD wholly owned by a LEC. Ameritech is a LEC as defined by the Communications Act, and Ameritech meets the Commission's definition of MVPD. Therefore, we find that Comcast satisfies the affiliation prong of the LEC effective competition test. Comcast is unaffiliated with both Ameritech New Media and Ameritech. 9. We also find that Comcast has submitted sufficient evidence to show that the programming of Ameritech is comparable to the programming which it provides. The channel information for Ameritech submitted by Comcast establishes that Ameritech offers more than 80 channels of programming, including nine local broadcast channels. This satisfies the programming comparability criterion. 10. In addition, we find that Ameritech is offering service in Comcast's franchise areas sufficient to demonstrate the presence of effective competition. Comcast has provided documentation showing that Ameritech is currently offering service. Comcast has stated that the entire franchise areas of Fraser, Southgate, and Garden City have been overbuilt by Ameritech, and that Ameritech is near completion of its 100% overbuild of Comcast's system in Sterling Heights. We note that Ameritech's substantial marketing efforts and the extensive press coverage in the local media ensure that potential subscribers are reasonably aware of the availability of Ameritech's service. Subscribers in Fraser, Southgate, Garden City, and substantial parts of Sterling Heights are able to receive service for only a minimal additional investment and without regulatory, technical or other impediments. Consistent with Congressional intent in adopting Section 623(l)(1)(d) of the Communications Act, under the circumstances we find effective competition to be present. IV. ORDERING CLAUSES 11. Accordingly, IT IS ORDERED that the Petition for Determination of Effective Competition filed by Comcast Cablevision of Sterling Heights, Inc. and Comcast Cablevision of Taylor, challenging the certification of the cities of Fraser, Southgate, Garden City, and Sterling Heights, all of Michigan, IS GRANTED. 12. IT IS FURTHER ORDERED that the certifications of the cities of Fraser, Southgate, Garden City, and Sterling Heights, Michigan to regulate the basic cable rates of Comcast in those communities ARE REVOKED. 13. This action is taken pursuant to the interim rules adopted in Implementation of Cable Reform Provisions of the Telecommunications Act of 1996, and is without prejudice to any further action taken by the Commission in adopting final rules pursuant to the Notice of Proposed Rulemaking contained therein. 14. 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