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In the Small System Order, the Commission further extended small" ,**88"  S- xzsystem rate relief to certain systems that exceed the 1,000subscriber standard.^hm {Oh-ԍxSmall System Order, 10 FCC Rcd at 7406.^ These   systems were  S- xldeemed eligible for small system rate relief because they were found to face higher costs and other  S-burdens disproportionate to their size. Zhm {O-  >ԍxId. at 7407. More recently, Congress amended Section 623 of the Communications Act to allow greater  xideregulation for "small cable operators," defined as operators that "directly or through an affiliate, [serve] in the  xaggregate fewer than 1 percent of all subscribers in the United States and [are] not affiliated with any entity or  xKentities whose gross annual revenues in the aggregate exceed $250,000,000." Telecommunications Act of 1996  x-("1996 Act"), Pub. L. No. 104104,  301(c), 110 Stat. 56, approved February 8, 1996; Communications Act   x623(m), 47 U.S.C.  543(m). Pursuant to this amendment, the rate regulation requirements of Sections 623(a), (b)  xand (c) do not apply to a small cable operator with respect to "(A) cable programming services, or (B) a basic service  xhtier that was the only service tier subject to regulation as of December 31, 1994," in areas where the operator serves  {O -50,000 or fewer subscribers. Id.   S`- ` }x3.` ` The Small System Order defines a small system as any system that serves 15,000 or fewer  S:- xsubscribers.^:. hm {O-ԍxSmall System Order, 10 FCC Rcd at 7406.^ The Commission recognized that systems with no more than 15,000 subscribers were  x/qualitatively different from larger systems with respect to a number of characteristics, including: (1)  xkaverage monthly regulated revenues per channel per subscriber; (2) average number of subscribers per  S- xmile; and (3) average annual premium revenues per subscriber.C hm {O"-ԍxId. at 7408.C The magnitude of the differences between  x.the two classes of systems as to these characteristics indicated that the 15,000 subscriber threshold was  xthe appropriate point of demarcation for purposes of providing for substantive and procedural regulatory  SJ -relief.;J R hm {O<-ԍxId. ;  S - ` x4.` ` Rate relief provided under the Small System Order and the Commission's rules is also  S - x=available only to a small system that is affiliated with a small cable company, which is defined as a cable  S - xoperator that serves a total of 400,000 or fewer subscribers over all of its systems. ^ hm {O0-  ԍxId. A small system is deemed affiliated with a larger cable company if the company "holds more than a  {O- x20 percent equity USESESUSinterest (active or passive) in the system or exercises de jure control (such as through a general  {O-partnership or majority voting shareholder interest)." Id. at 741213, n.88. The Commission  x\adopted this threshold because it roughly corresponds to $100 million in annual regulated revenues, a  xstandard the Commission has used in other contexts to identify smaller entities deserving of relaxed  S4- xjregulatory treatment.F 4 hm {O"-ԍxId. at 740911.F The Commission found that cable companies exceeding this threshold would find  xit easier than smaller companies to attract the financing and investment necessary to maintain and improve  S- xservice.C hm {O &-ԍxId. at 7411.C In addition, the Commission determined that cable companies that exceeded the small company". ,`(`(88"  xdefinition "are better able to absorb the costs and burdens of regulation due to their expanded  S-administrative and technical resources."C hm {O@-ԍxId. at 7409.C x` `  S- ` ox5.` ` In addition to adopting the new categories of small systems and small cable companies,  S`- xthe Small System Order introduced a form of rate regulation known as the small system costofservice  S:- xmethodology.F :Zhm {O4-ԍxId. at 741828.F This approach, which is available only to small systems owned by small cable companies,  x[is more streamlined than the standard costofservice methodology available to cable operators generally.  xyIn addition, the small system rules include substantive differences from the standard costofservice rules  x[to take account of the proportionately higher costs of providing service faced by small systems. Eligible  x[systems establish their rates under this methodology by completing and filing FCC Form 1230. In order  xjto qualify for the small system costofservice methodology, systems and companies must meet the new  SJ - xsize standards as of either the effective date of the Small System Order, or on the date thereafter when  S$ -they file the documents necessary to elect the relief they seek.$ hm {O-ԍxId. at 7413. The effective date of the Small System Order was August 21, 1995.  S - ` x6.` ` Cable systems that fail to meet the numerical definition of a small system, or whose  S - xjoperators do not qualify as small cable companies, may submit petitions for special relief requesting that  xthe Commission grant a waiver of its rules to enable the petitioning systems to utilize the various forms  S\- x.of rate relief available to small systems owned by small cable companies.F\~hm {Oz-ԍxId. at 741213.F The Commission stated that  S4- xpetitioners should demonstrate that they "share relevant characteristics with qualifying systems.":4hm {O-ԍxId.: Other  xlpotentially pertinent factors include the degree by which the system fails to satisfy either or both  xdefinitions and evidence of increased costs (e.g., lack of programming or equipment discounts) faced by  S- xthe operator.:hm {O-ԍxId.: If the system fails to qualify for relief based on its affiliation with a larger cable company,  xthe Commission will consider "the degree to which that affiliation exceeds our affiliation standards, and  xwhether other attributes of the system warrant that it be treated as a small system notwithstanding the  SD- xpercentage ownership of the affiliate.";D4 hm {O -ԍxId. ; The Commission also stated that "a qualifying system that seeks  xjto obtain programming from a neighboring system by way of a fiber optic link, but that is concerned that  xinterconnection of the two systems may jeopardize its status as a standalone small system, may file a  S- xpetition for special relief to ask the Commission to find that it is eligible for small system relief."C hm {O2$-ԍxId. at 7413.C The  x=Commission specifically stated that this list of relevant factors was not exclusive and invited petitioners  S|-to support their petitions with any other information and arguments they deemed relevant.:|X hm {Ot'-ԍxId.:"|,`(`(88"Ԍ S-ԙ II.xARGUMENTS OF THE PARTIES  S- ` x7.` ` Booth's system in southeastern Michigan serves six franchise areas.Ehm yO-ԍxBooth Petition at 2.E Birmingham is the  xfranchising authority for four of the franchise areas and Bloomfield is the franchising authority for the  S`- xKother two franchise areas.B`Xhm {OX-ԍxId. at 23.B Booth claims that it has always treated the system as two separate and distinct  S8- x.systems the Birmingham system and the Bloomfield system.@8hm {O -ԍxId. at 1.@ Booth contends that the two systems  xshare a common headend because Bloomfield required Booth to construct the Bloomfield headend at the  S- x>site of the Birmingham headend.B|hm {O -ԍxId. at 45.B Booth argues that, despite the mandated headend linkage, the two  S- xsystems are operationally and administratively distinct.Chm {On-ԍxId. at 5, 8.C According to Booth's Petition, the Birmingham  S- xxsystem serves 10,660 subscribers and the Bloomfield system serves 13,635 subscribers.Ehm {O-ԍxId. at 23, 8.E Given that Booth  xoperates cable systems serving a total of less than 142,000 subscribers, Booth argues that each of these  SH - xmsystems automatically qualifies for small system relief when considered individually.BH 2 hm {O-ԍxId. at 12.B Booth  xacknowledges that the Commission defines a small system by the number of subscribers served by its  S - xprincipal headend rather than by the number of subscribers in a franchise area.D hm {O\-ԍxId. at 1516.D It contends, however,  xthat it is not seeking to define its systems by franchise area because both the Birmingham and Bloomfield  S -systems serve multiple franchise areas.; V hm {O-ԍxId. ;  SX- ` Bx8.` ` Booth claims that, even when considered together, the two systems possess key small  S0- xsystem characteristics sufficient to warrant relief.@0hm {O-ԍxId. at 5.@ For instance, Booth asserts that the average subscriber  xdensity of the Birmingham system is 46 subscribers per mile and the average subscriber density of the  S- xBloomfield system is 28 subscribers per mile.@zhm {O"-ԍxId. at 9.@ When the two systems are considered together, the  S- xNaverage subscriber density is 31 subscribers per mile.=  hm {Od%-ԍxId. = In addition, Booth explains that it lost its  x.programming discounts when it acquired the interest of its partner, an affiliate of TeleCommunications," ,`(`(88 "  S- xInc. ("TCI").P!\hm {Oh-  ԍxId. at 911, 15. The system was initially operated by a partnership between Booth and Heritage  xCommunications, a TCI affiliate. Heritage Communications sold its interest in the system to Booth in January 1993.  {O-Id. at 10.P It claims that it has been forced to absorb approximately $750,000 in programming cost  S- xincreases.D"hm {Od-ԍxId. at 1011.D Further, Booth argues that the systems are operationally and administratively distinct because  xthey had different construction schedules, they are required to submit systemspecific annual reports, and  xthey are subject to different franchise requirements regarding public, educational and governmental access,  S`-local origination programming, and institutional networks.D#`~hm {O~ -ԍxId. at 1115.D  S- ` x9.` ` Booth states that the Birmingham system has an average monthly regulated revenue per  S- xchannel per subscriber of $0.43 and an average annual premium revenue per subscriber of $73.29.D$hm {O-ԍxId. at 3, 16.D It  xfurther states that the Bloomfield system has an average monthly regulated revenue per channel per  S- xsubscriber of $0.48 and an average annual premium revenue per subscriber of $91.66.F%hm {O-ԍxId. at 34, 16.F Booth argues that,  xalthough the levels of its premium revenues are more like those of larger systems, its higher revenues do  SH - x>not equate to higher profits and have, in fact, been steadily declining since 1990.D&H 4 hm {O-ԍxId. at 1617.D Booth claims that  xfailure to grant small system relief will create a significant economic disincentive and will hinder its ability  S - xto compete.D' hm {O^-ԍxId. at 1718.D In addition, Booth argues that relief will benefit the local franchising authorities by reducing  S -their administrative burdens.A( X hm {O-ԍxId. at 19.A  S - ` x 10.` ` In opposition to Booth's petition, Birmingham and Bloomfield both note that the  xCommission decided that small system relief should be based on the number of subscribers served by a  S0- xsystem's principal headend, not on the number of subscribers in a franchise area.h)0hm yO-ԍxBirmingham Opposition at 2; Bloomfield Opposition at 2.h They claim that Booth  S- xagreed to the shared headend, which Booth concedes saved certain capital costs.*zhm {O""-ԍxBirmingham Opposition at 2; Bloomfield Opposition at 2. See also Booth Petition at 5. In response to Booth's  xyargument that the two systems are operationally and administratively distinct, the franchising authorities  xcontend that all six communities are served by virtually the same personnel, including management,  S- xengineering staff, customer service representatives, and clerical staff.j+ hm yO<&-ԍxBirmingham Opposition at 34; Bloomfield Opposition at 3.j They are particularly disturbed by  Sh- x!Booth's reliance on the fact that it lost its programming discounts once the system was no longer"h+,`(`(88"  S- xassociated with a TCI affiliate.j,hm yOh-ԍxBirmingham Opposition at 56; Bloomfield Opposition at 3.j The franchising authorities assert that when Booth sought their approval  xto acquire its partner's interest in the system, it assured them that any resulting increases in programming  S- xcosts would not have a materially adverse impact on either Booth or its subscribers.j-Xhm yO-ԍxBirmingham Opposition at 56; Bloomfield Opposition at 3.j They also complain  S- x>that Booth has not quantified the higher costs it claims to have.h.hm yO-ԍxBirmingham Opposition at 7; Bloomfield Opposition at 3.h Finally, they contend that Booth's  xargument that small system relief will reduce the administrative burdens on the franchising authorities is  xmisplaced because neither Birmingham nor Bloomfield wishes to have its regulatory authority limited and  S-subscribers will not benefit from the resulting rate increases.l/xhm yO( -ԍxBirmingham Opposition at 89; Bloomfield Opposition at 23.l  S- ` x 11.` ` In its reply to the franchising authorities' oppositions, Booth first points out that the  xjTelecommunications Act of 1996 contains a broader definition of a small cable company which, although  Sp- x{not controlling, reflects greater regulatory flexibility on small system issues.B0phm yO-ԍxBooth Reply at 3.B Booth reiterates its  xargument that the Commission's principal headend standard should not apply in this case given that the  S - xheadend linkage was mandated by franchise agreement.B1 hm {OX-ԍxId. at 45.B Booth also continues to maintain that low  xsubscriber density, higher programming costs, higher costs relating to the operational and administrative  xseparation of the systems, and costly franchise requirements demonstrate that the Birmingham and  S - xKBloomfield systems share key small system characteristics.B2 * hm {Or-ԍxId. at 56.B Booth argues, therefore, that the Commission  xshould discount the fact that its average revenues for regulated and premium services differ from small  SX-system averages.B3X hm {O-ԍxId. at 67.B  S- ` #x 12.` ` In response to the franchising authorities' argument that Booth uses the same staff for the  x/entire system, Booth asserts that the costs are still substantial because the staff must meet with two  S- xfranchising authorities and must comply with different franchise requirements.B4N hm {O -ԍxId. at 78.B In addition, Booth argues  xthat its lack of programming discounts is a relevant factor in determining small system relief regardless  xof its assurances to the franchising authorities that the acquisition of its partner's interest would not create  S@- x.a material adverse impact.5$@hm {O$-  ԍxId. at 89. Booth also argues that it has other higher costs but that it is not necessary to respond to the  xfranchising authorities' complaint that Booth has not quantified these higher costs because the Commission has  xalready determined that the costs of large system rate regulation are overly burdensome for small cable companies.  {O'-Id. at 910. Booth's response to the franchising authorities' argument that small system"@5,`(`(88"  xyrelief will curtail their regulatory authority and lead to higher rates is that the Commission has recognized  S-that small system relief may result in rate increases.D6hm {O@-ԍxId. at 1011.D  S- ` x 13.` ` Finally, Birmingham and Bloomfield jointly filed a letter disputing Booth's claim that the  S`- xyshared headend was mandated by franchise agreement.Y7`Zhm yOZ-ԍxBirmingham and Bloomfield Letter at 12.Y They contend that Booth specifically proposed  S8- x/using the same headend to serve both Birmingham and Bloomfield.:88hm {O -ԍxId.: They argue that the franchising  S-authorities merely agreed to Booth's proposal.:9|hm {O, -ԍxId.:  S- III.xDISCUSSION  Sp- ` x 14.` ` As discussed above, a cable system that is entitled to small system relief is a system  SH - xzserving 15,000 or fewer subscribers that is not owned by a cable company serving more than 400,000  S - xjsubscribers over all of its systems.^: hm {O-ԍxSmall System Order, 10 FCC Rcd at 7406.^ Because Booth has approximately 142,000 subscribers, the system  xkat issue here is affiliated with a small cable company with a total subscribership of less than 400,000.  x[However, the system serves 24,295 subscribers. Thus, the issue in this case is whether the Commission should waive the 15,000 subscriber limit used to define a small system under its rules.  SX- ` x15.` ` We first address Booth's argument that the system is actually two different systems that  xboth automatically qualify for small system relief because, if viewed separately, each serves fewer than  x15,000 subscribers. We will not grant relief on this basis because the definition of a small system is based  S- xon the number of subscribers served by the system's principal headend.F;hm {O -ԍxId. at 741112.F In the Small System Order, the  S- x[Commission explicitly rejected a definition based on the number of subscribers in a franchise area.:<2 hm {O-ԍxId.: The  xCommission stated that "determining small system size based on a system's principal headend best  xharmonizes our small system rate rules with most of our existing regulations on cable system size. . . .  xkTo use a franchise area definition would result in some segments of a single integrated cable operation  S- xbeing subject to a different regulatory structure than other segments of the same operation.":= hm {O~"-ԍxId.: Although  xBooth is not measuring its subscribership according to each of the six franchise areas served by the  xsystem, it is basing its calculations on the number of subscribers represented by each of the two  S- xLfranchising authorities.>V hm yO&-  =ԍxAlthough the system serves six communities, the four Birmingham communities are jointly regulated by one cable board and the two Bloomfield communities are jointly regulated by one cable board. Similarly, Booth emphasizes that the system comprises two operationally and">,`(`(88"  xadministratively distinct systems because it must comply with different franchise requirements. This  xargument is not persuasive because many cable systems serve multiple franchise areas, each with specific  xkobligations and commitments. We also find Birmingham and Bloomfield's position that the system is  xNadministered as one system to be credible and not refuted by Booth. Again, Booth disregards the Commission's principal headend test, which requires an evaluation of the system as a whole.  S- ` x16.` ` Although we reject Booth's suggestion that the system should be viewed as two separate  xsystems that automatically qualify as small systems, Booth's position must be considered when evaluating  S- x>whether the system, as a whole, should be granted relief. As we stated in Inter Mountain Cable, Inc.  S- x("Inter Mountain"), the Commission seeks to encourage the interconnection of multiple small systems  St- xwhere subscribers will benefit._?thm yO -ԍx11 FCC Rcd 7081, 7086 (Cable Serv. Bur. 1996)._ Therefore, regardless of whether the shared headend was proposed by  xBooth or by the franchising authorities, we will consider the construction of a combined facility to be a beneficial costsaving action that weighs in favor of Booth's request for small system relief.  S - ` Px17.` ` We note that the average subscriber density for Booth's system is 31 subscribers per mile.  xWe also recognize that Booth no longer receives programming discounts. However, we do not find that  xthese factors alone are sufficient to overcome the countervailing factors that weigh against small system  xrelief in this case. First, the system's subscribership of 24,295 exceeds the Commission's 15,000 ceiling  S4- xby 62%. Although in Inter Mountain we granted relief to a system with 22,763 subscribers, that decision  S- xis distinguishable because other characteristics of the system in that case were particularly compelling for  S- xgranting a waiver.J@Xhm {O-ԍxSee id. at 708687.J The Inter Mountain system was a combination of extremely small systems that  xserved, on average, fewer than 600 subscribers each. It had a subscriber density of only 21 subscribers  S- xzper mile, as compared to the small system average of 35.3 subscribers per mile.^Ahm {O"-ԍxSmall System Order, 10 FCC Rcd at 7408.^ Its annual premium  Sp- xyrevenues of $8.03 per subscriber were far below the small system average of $41.00 per subscriber.:Bp|hm {O-ԍxId.: As  SH- xwith the Booth system, programming discounts were not available to the Inter Mountain system. The  S"- xCommission also found it noteworthy that the petition in Inter Mountain was unopposed. The  x-Commission decided that the combination of all of these factors outweighed the fact that the subscribership  S-of the Inter Mountain system substantially exceeded the 15,000 limit.  S- ` ~x18.` ` Similarly, Alexcom, L.P. ("Alexcom") is also distinguishable, despite the fact that one of  S`- xthe systems granted relief in that decision served 23,990 subscribers.WC`hm yO"-ԍxDA 971836 (released August 27, 1997).W The Commission found that small  x=system relief was appropriate in light of a number of balancing factors that sufficiently compensated for  xLthe large subscribership. For example, Alexcom owned only two cable systems serving a total of 42,539  S- xisubscribers, and its management team for both systems consisted of only three people.LDhm {O&&-ԍxId. at paras. 12, 14.L In contrast, Booth"0 D,`(`(88L"  S- xzserves a total of approximately 142,000 subscribers in 47 communities in six states.EEhm yOh-ԍxBooth Petition at 1.E In addition,  x\whereas the regulated and premium revenues for Alexcom's system fell in between those of small and  S- xlarger systems,KFXhm {O-ԍxAlexcom at para. 14.K the revenue figures for Booth are akin to those of larger systems, as described below.  S-Lastly, we found it significant in Alexcom that the petition was unopposed.GGhm {O-ԍxId. at para. 15.G  S:- ` ox19.` ` Unlike in Inter Mountain and Alexcom, the relevant characteristics of the Booth system  xdo not warrant an exception for a system where the subscribership exceeds the 15,000 ceiling by such a  xsubstantial amount. As mentioned above, Booth states that the monthly regulated revenues per subscriber  xper channel are $0.43 for the Birmingham system and $0.48 for the Bloomfield system. These figures  xare almost identical to the $0.44 figure that the Commission determined to be the average for systems with  St- xkmore than 15,000 subscribers (and far less than the $0.86 average for small systems).^Ht|hm {O-ԍxSmall System Order, 10 FCC Rcd at 7408.^ Likewise, the  x.average annual premium revenues per subscriber for the Booth system are much closer to those of larger  xsystems. Booth provides figures of $73.29 for the Birmingham system and $91.66 for the Bloomfield  xsystem, and the Commission determined that the average is $73.13 for larger systems and $41.00 for small  S - x=systems.:I hm {O-ԍxId.: Therefore, with respect to both of these factors, the Booth system more closely resembles a  S - xlarger system than a small system. Furthermore, in contrast with the unopposed petitions in Inter  S - xMountain and Alexcom, both Birmingham and Bloomfield oppose Booth's petition and argue that small  x system relief will not benefit either the franchising authorities or the subscribers. Taking all of these  xfactors into consideration, we do not believe that small system relief is warranted in this case. We therefore deny Booth's Petition.  S-  S- IV.xORDERING CLAUSES  Sp- ` x20.` ` Accordingly, IT IS ORDERED that the Petition for Special Relief filed by Booth  xAmerican Company with respect to its system serving the Birmingham and Bloomfield communities in  S -Michigan is hereby DENIED .  S- ` x21.` ` This action is taken pursuant to delegated authority under Section 0.321 of the  S-Commission's rules.FJhm yO!-ԍx47 C.F.R.  0.321.F x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Meredith J. Jones  S-x` `  hh@Chief, Cable Services Bureau