Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: )CSR 5016-E ) United Cable Television Corp. of Michigan)Lincoln Park, MI d/b/a TCI Cablevision of Woodhaven, Inc.)CUID No. MI0432 ) Petition for Determination of ) Effective Competition ) MEMORANDUM OPINION AND ORDER Adopted: August 1, 1997 Released: August 4, 1997 By the Chief, Cable Services Bureau: I.INTRODUCTION 1.United Cable Television Corporation of Michigan d/b/a TCI Cablevision of Woodhaven, Inc. ("TCI") has filed a Petition for Determination of Effective Competition asserting that it is subject to effective competition in Lincoln Park, MI ("Lincoln Park") because of the presence of Ameritech New Media's cable service in that City. 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. TCI asserts that it is subject to LEC effective competition in its Lincoln Park, Michigan franchise area. With regard to the LEC affiliation requirement, TCI asserts that Ameritech New Media ("Ameritech") is a competing franchised cable operator wholly owned by Ameritech Corporation, a local exchange carrier serving customers in Michigan, 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, TCI asserts that Ameritech has nearly completed its overbuild in Lincoln Park and now is providing service to at least 6,400 area residents. TCI states that Ameritech has heavily marketed the availability of its cable service through local media and other means. TCI asserts there are no regulatory, technical, or other impediments to households taking service from Ameritech. 5.TCI also asserts that Ameritech offers comparable programming to Lincoln Park subscribers. Specifically, TCI provides Ameritech's channel line-up which demonstrates that Ameritech offers 70 channels, 9 of which are local television broadcasting signals. TCI offers 76 channels of programming in Lincoln Park. 6.Finally, TCI states that it has made several pricing and marketing changes in response to increased competition from Ameritech. TCI notes that it recently: (1) reduced rates for basic service from $11.24 to $9.91; (2) reduced its installation window to within 24 hours of being called by a new customer; (3) increased system bandwidth to 750 MHz; (4) added channels to the basic and CPS tiers; and (5) moved the Disney Channel from premium to basic. TCI adds that it is contemplating additional actions to win customers back from Ameritech. 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. TCI 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 TCI 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 New Media meets the Commission's definition of MVPD. Therefore, we find that TCI satisfies the affiliation prong of the LEC effective competition test. TCI is unaffiliated with both Ameritech New Media and Ameritech. 9.We also find that TCI 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 TCI establishes that Ameritech offers more than 70 channels of programming, including 9 local broadcast channels. This satisfies the programming comparability criterion. 10.In addition, we find that based on the information before us, Ameritech is offering service in TCI's franchise area sufficient to demonstrate the presence of effective competition. Ameritech's overbuild of TCI's system is almost complete in the City of Lincoln Park and Ameritech is now competing for customers with TCI in the area at issue. We find that Ameritech's rapid construction progress, and its undisputed recruitment of 6,400 subscribers in the franchise area, are indicia that Ameritech is physically able to offer service in the cable community. 11.We note that Ameritech's extensive marketing efforts and the wide press coverage of Ameritech's construction activity in the local media ensure that potential subscribers are reasonably aware of the availability of Ameritech's service. Generally, subscribers in Lincoln Park are able to receive Ameritech's cable service for only a minimal additional investment and without encountering regulatory or technical obstacles. We also note that TCI has lowered its rates, added new channels, and upgraded its cable plant, all for the benefit of its subscribers. 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 12.Accordingly, IT IS ORDERED that the Petition for Determination of Effective Competition filed by United Cable Television Corporation of Michigan d/b/a TCI Cablevision of Woodhaven, Inc., challenging the certification of the City of Lincoln Park, in Lincoln Park, Michigan IS GRANTED. 13.IT IS FURTHER ORDERED that the certification of the City of Lincoln Park, Michigan to regulate the basic cable rates of TCI in Lincoln Park, Michigan IS REVOKED. 14.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. 15.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