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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: ) ) Comcast Cablevision of the South) CSR-4756-E ) ) Chamblee, Georgia Petitions for Determination of ) CUID No. GA 0241 Effective Competition ) ) CSR-4918-E ) ) DeKalb County, Georgia ) CUID No. GA 0243 MEMORANDUM OPINION AND CONSOLIDATED ORDER Adopted: June 9, 1997 Released: June 11, 1997 By the Chief, Cable Services Bureau: I. Introduction 1. In the above-captioned proceedings, Comcast Cablevision of the South ("Comcast"), has filed petitions for special relief, pursuant to Section 76.7 of the Commission's Rules, asserting that it is subject to effective competition in Chamblee and DeKalb County, Georgia. The Commission gave public notice seeking comment on the petitions. No comments were received in response to the petitions. 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 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 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(1)(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(1)(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 states that it operates a cable television system that provides cable television service to the City of Chamblee, Georgia, and adjacent portions of Dekalb County, Georgia. Specifically, Comcast states that it serves those portions of Dekalb County that are located north and east of Interstate 85 ("Northern DeKalb County"). Comcast further states that the system passes 2,887 homes in Chamblee and approximately 44,491 homes in Northern Dekalb County. The system, acquired by Comcast on November 17, 1996, was previously owned and operated by TeleScripps Cable Company, d/b/a/ Scripps Howard Cable TV Company since 1984. 4. On February 7, 1995, Comcast notes, the Commission granted BellSouth Telecommunications, Inc. ("BellSouth"), a LEC, authority to construct and operate facilities to provide video programming service and video dialtone ("VDT") service to residents in portions of Chamblee and Dekalb County for a trial period of 18 months. Comcast states that in that VDT order, the Commission authorized BellSouth to provide service in a trial area that passes a total of 12,000 households in its franchise areas, including approximately 700 households in Chamblee and the remainder in Northern DeKalb County. According to Comcast's estimation, BellSouth's VDT facilities were actually built out to approximately 7,000 homes in Comcast's franchise areas. However, while Comcast states that it is aware that BellSouth has commenced service pursuant to this VDT authorization, Comcast is uncertain as to how many residents subscribed to BellSouth's VDT service. 5. Comcast further states that in addition to BellSouth's VDT authorization, the City of Chamblee, by franchise agreement dated April 16, 1996 ("Franchise Agreement"), authorized BellSouth's affiliate, BellSouth Interactive Media Services, Inc. ("BIMS") to provide cable television service in Chamblee for an initial term of 10 years. Comcast states that BIMS began offering its cable television service in Chamblee on or about April 29, 1996. Under the Franchise Agreement, BIMS is utilizing the facilities originally constructed by BellSouth for the purpose of providing VDT service in Chamblee. 6. Comcast notes that on November 6, 1996, BellSouth filed with the Commission a "Notice of Election and Request for Extension of Time" regarding Implementation of Section 302 of the Telecommunications Act of 1996 (Open Video Systems), CS Docket No. 96-46, notifying the Commission that it elected to use its VDT facilities in Chamblee to provide cable television transport service to BIMS. BellSouth requested an extension of time for its election as to the DeKalb portion of the trial area while BIMS continued its efforts to obtain a cable franchise from DeKalb County. Comcast further notes that on December 2, 1996, BellSouth filed an "Amended Notice of Election" with the Commission withdrawing its extension request and notifying the Commission that BIMS had received a television franchise from DeKalb County and was now providing service pursuant to the franchise. Comcast states that according to the November 27, 1996 Franchise Agreement, BIMS is authorized to provide service in Dekalb County for an initial term of 15 years. 7. Regarding BIMS' affiliation with BellSouth, Comcast states that while the relationship between BellSouth and BIMS is not defined in the DeKalb Franchise Agreement, the Franchise Agreement that BIMS has with Chamblee indicates that BIMS is either wholly or substantially owned by BellSouth and, therefore, is a LEC affiliate within the meaning set forth in Section 3 of the 1996 Act. Comcast also points out that the "Amended Notice of Election" was filed by BellSouth on behalf of BIMS. Comcast also states that it is not affiliated with either BellSouth or BIMS. 8. With regard to the requirement in the LEC effective competition test that the LEC competitor offer video programming service in the unaffiliated cable operator's franchise area, Comcast asserts that BIMS is physically able to deliver video programming service to potential subscribers with minimal additional investment. BIMS is currently offering cable service in Chamblee over the network that BellSouth had already constructed in its VDT trial area. Comcast further adds that the service rate card filed by BellSouth with Chamblee provides for a standard installation fee for cable service of $39.95 for a "residence within 150 of existing plant." According to Comcast, this establishes that BIMS' cable service is at least available to all potential subscribers within 150 feet of its existing plant, and is further evidence that BIMS can provide such service with only minimal additional investment. In addition, Comcast points out that the Chamblee Franchise Agreement requires BIMS to provide cable service in the BellSouth trial area and authorizes the provision of cable service throughout Chamblee. Comcast also states that its service personnel have witnessed BIMS representatives engaging in door-to-door marketing efforts in its Chamblee service area. Comcast goes on to state that since April 29, 1996, when sales solicitations began, at least 23 of Comcast's subscribers in Chamblee have notified the company that they have decided to discontinue receiving Comcast's service in favor of the service now being provided by BIMS. Overall, Comcast estimates that approximately 34 to 40 Chamblee residents are currently subscribing to BIMS' cable service. 9. Comcast also states that BIMS is currently offering cable service in DeKalb County. Comcast notes that in its "Amended Notice of Election," BellSouth specifically states that "`BellSouth Interactive is now providing cable service in DeKalb County, pursuant to [the November 26, 1996] franchise.'" As with Chamblee, Comcast also notes that BIMS' service rate card establishes that cable service is available to all potential subscribers within 150 feet of its existing plant and its $39.95 installation fee is evidence that BIMS can provide such service with only minimal additional investment. Furthermore, BIMS is authorized to provide cable television service to the entire unincorporated area of DeKalb County pursuant to the DeKalb Franchise Agreement. BIMS is financially committed under its Franchise Agreement by a performance bond in the amount of $175 million to guarantee the faithful performance of its obligations under its franchise. Comcast states that its service personnel have witnessed BIMS representatives installing co-axial cable in DeKalb's service area. In addition, Comcast represents that its personnel have also visited the home of a former Comcast subscriber that is now receiving service from BIMS. Comcast also notes that there has been local newspaper coverage of BIMS service in Dekalb County, and the DeKalb County Council meeting which was the forum for the approval of the BIMS and DeKalb Franchise Agreement was aired several times to Comcast's viewers on Comcast's Government Access channel. 10. Comcast also asserts that BIMS cable service satisfies the comparable programming element of the LEC effective competition test. Comcast states that the BIMS channel line-up for Chamblee contains 56 "Premier Basic Channels" and 25 "Advantage Premium Channels." Comcast also notes that there are at least six local broadcast channels among the "Premier Basic Channels" offering. In DeKalb, Comcast notes that, according to the DeKalb Franchise Agreement, BIMS must offer at least 70 channels to subscribers and is required to offer 78 channels within four years of the effective date of its franchise. In addition, Comcast notes that the BIMS channel line-up for DeKalb shows BIMS offers 65 "Premiercast" channels and 23 "Americast Advantage" premium channels. According to Comcast, at least seven of the "Premiercast" channels are local broadcast channels. 11. With regard to the benefits of competition, Comcast notes that in May of 1996, in anticipation of competition from BIMS, Comcast began an upgrade of its system to 750 MHz with two-way capability. Comcast further notes that 85% of the upgrade was to be completed by February, 1997. In those locations where the upgrade is complete, Comcast states that it has already added 22 channels and has moved the Disney Channel to its expanded basic package. With regard to other benefits, Comcast states that it also began "adding multiplex premium channels on HBO, Showtime, and Cinemax and is in the process of replacing all set-top boxes with advanced analog boxes that have VCR record, electronic program guide, and real-time pay per view ordering capabilities." Comcast reports that it currently provides these additional multiplex channels and set-top replacements to approximately 35% of its subscribers and expects to reach 100% of its subscribers by May, 1997. Comcast adds that it also has been providing a 24 hour a day call center to accept orders and resolve billing disputes since May, 1996. In addition, Comcast notes that it has extended its customer service hours to 12 hours daily, seven days per week, since November 15, 1996. III. Analysis 12. 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 such effective competition, as defined by Section 76.905 of the Commission's rules, is present in the franchise area. Comcast has met this burden. 13. With regard to the LEC ownership or affiliation aspect of the effective competition test, which requires that the alleged competitive service be provided by a LEC or its affiliate (or any multichannel video programming distributor ("MVPD") using the facilities of such carrier or its affiliate), we find that BIMS, a cable operator, is using the facilities of BellSouth, a LEC,and therefore satisfies this aspect of the effective competition test. Based on Comcast's uncontroverted petitions, we also conclude that Comcast is unaffiliated with either BellSouth or BIMS. 14. With regard to the comparable programming aspect of the LEC effective competition test, Comcast has submitted evidence sufficient to demonstrate that the programming of BIMS is comparable. In Chamblee, BIMS offers over 70 channels, including at least six local broadcast channels, which satisfies the Commission's programming comparability criteria. In DeKalb, the BIMS Franchise Agreement requires it to provide at least 70 channels, with additional channels to be provided within four years. BIMS offers 88 channels in DeKalb, seven of which are local broadcast channels. 15. The LEC effective competition test requires that competitive service be offered directly to subscribers in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area. In enacting the LEC effective competition test, Congress indicated that the Commission should apply its preexisting definition of the term "offer" to the LEC effective competition test. This definition provides that service is offered: (1) When the multichannel video programming distributor is physically able to deliver service to potential subscribers, with the addition of no or only minimal additional investment by the distributor, in order for an individual subscriber to receive service; and (2) When no regulatory, technical or other impediments to households taking service exist, and potential subscribers in the franchise area are reasonably aware that they may purchase the services of the multichannel video programming distributor. 16. With respect to Chamblee, Comcast has demonstrated that BIMS is currently offering cable service over the network that BellSouth constructed in its VDT trial area. In the BIMS Franchise Agreement with Chamblee, the system is described as "[a]n advanced fiber/coax network ("network") for the delivery of video programming and other services in parts of the City of Chamblee, Georgia . . . ." Attached to the Franchise Agreement is a map which demonstrates that a significant portion of the facilities to be used by BIMS has already been built by BellSouth. According to the Franchise Agreement, BIMS is also required to activate service throughout its trial area over a six month period beginning on April 16, 1996, the effective date of the Franchise Agreement. 17. Comcast provides evidence through the service rate card filed by BellSouth with Chamblee that BIMS' cable television service is available to all households within 150 feet of its existing plant. Thus, with the facilities of BellSouth already in place, BIMS can provide service to potential customers with only minimal additional investment. Moreover, although the BIMS Franchise Agreement requires only that BIMS provide service in the already constructed trial area, it authorizes the provision of service to all of Chamblee. 18. We conclude that there are no regulatory, technical or other impediments to households taking service, and potential subscribers in the franchise area have been made aware that BIMS' cable service is available in Chamblee. BIMS representatives have engaged in door-to-door marketing efforts in order to gain subscribers in neighborhoods currently served by Comcast in Chamblee, and cable television installations have been performed in Chamblee, on behalf of BIMS. Comcast reports the loss of subscribers to BIMS, and local press coverage indicates that more than 100 Chamblee residents are currently receiving cable television service from BIMS. In addition, information on file in another Commission proceeding indicates that the number of subscribers served has increased and the Chamblee cable system currently serves 220 subscribers. 19. With respect to DeKalb, we find that Comcast has demonstrated that BIMS is offering cable service in that location as well. Comcast has shown through its rate card that service is available to all potential customers within 150 feet of its existing plant in DeKalb and that service can be provided with only minimal additional investment. 20. Comcast has demonstrated that co-axial cable is being installed in the DeKalb County area. While Comcast does not indicate how many homes are currently receiving service in DeKalb, information on file in another Commission proceeding indicates that the DeKalb system currently serves 697 subscribers. The fact that BIMS is authorized to provide service to the entire unincorporated area of DeKalb County is indicative of BIMS' potential capability to serve many households in the area. Currently, BIMS is utilizing facilities that have been built out to 7,000 homes and is committed to constructing a larger system because it is authorized to provide service throughout the county. In addition, BIMS has also made a financial commitment in the form of a performance bond in order to guarantee its commitment to providing service. Comcast has also demonstrated that potential subscribers are aware of BIMS' service through local press coverage and televised local Council meetings. We therefore conclude that no regulatory, technical or other impediments prevent potential subscribers from receiving BIMS' service, and potential subscribers in DeKalb County are reasonably aware that they may receive BIMS' service. 21. Because of the introduction of competition by BIMS, Comcast also has upgraded its system and moved the Disney Channel to its expanded basic package in those places where the upgrade is complete. Comcast also has provided multiplex channels and set-top replacements for some of its subscribers with the goal of providing these additions to all of its subscribers. In addition, Comcast also has improved the customer service that it provides to subscribers. 22. In light of all of the circumstances herein, we conclude that Comcast has demonstrated that BIMS, a cable operator, has met all three prongs of the local exchange carrier effective competition test as stated in Section 623(1)(1)(D) of the Communications Act. With regard to the LEC ownership or affiliation aspect of the test, Comcast has shown that BIMS is a cable operator using the facilities of a LEC. Comcast has also demonstrated that BIMS offers video programming services directly to subscribers in Chamblee and DeKalb County and that such programming is comparable to its own. 23. As Comcast has submitted sufficient evidence demonstrating that its cable systems serving DeKalb County and Chamblee, Georgia are subject to LEC effective competition from BIMS, its petitions are granted. IV. Ordering Clauses 24. Accordingly, IT IS ORDERED that the Petitions for Special Relief filed by Comcast Cablevision of the South ARE GRANTED. 25. IT IS FURTHERED ORDERED that the certifications of the City of Chamblee, Georgia and DeKalb County, Georgia to regulate the basic cable rates of Comcast Cablevision of the South ARE REVOKED. 26. This action is taken pursuant to the interim rules adopted in Implementation of Cable Act 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. 27. 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