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P6QP;{,C8*X9,C*f9 xQX<2J=.X &J\  P6Q&P .=2N=.X7&N4  pQ&>0J=.X9&J*f9 xQ&XP,%X)J,\  P6QJPx Times New Roman `` n    Gfm x2 yO- X   )| S- #&a\  P6G;/&P#Federal Communications Commission`j(#FCC 97358 ă  yxdddy )Պv3 #C\  P6QgP#Before the Federal Communications Commission  yO| Washington, D.C. 20554 X01Í ÍX01Í  Í҃  SX-#&a\  P6G;/&P#  S0- F#z #&J\  P6Q/&P# F#z In the Matter of: hh@h) x` `  hh@h)  S-DANIELS CABLEVISION, INC. d/b/a/@h)  S-PALA MESA CABLEVISION,hh@h)  S-d/b/a/ NORTH COUNTY CABLEVISION@h)  Sh-d/b/a/ CABLE TV OF LAKE hh@h)  S@-SAN MARCOS hh@h) x` `  hh@h)  S -Application for Review of Order ofhh@h)  S -the Cable Services Bureau Grantinghh@h)  S -Petition for Revocation of the Certification of@h)  Sx -San Diego County to Regulate Basic Cable@h)  SP -Service Rates (CA0198) (CA0672) (CA0641)@h)  S-x` `  hh@hpp  xx  S-  MEMORANDUM OPINION AND ORDER TP  S-X` hp x (#%'0*,.8135@8:elapsed, cable operators may challenge the franchising authority's certification by filing a petition for  S - x=revocation.= P B yO-ԍ47 C.F.R. 76.914.= However, regardless of its grounds, a petition for revocation does not automatically trigger  S -a stay of the franchising authority's power to regulate basic rates.@ B yOx-ԍ47 C.F.R. 76.914(d).@  S - III.xTHE BUREAU ORDER  SX- ` x4.` ` Daniels filed a petition for revocation of the certification of the County to regulate its  S0- x\basic cable service rates. 0pB yO@!- xԍThe County filed its "Certification of Franchising Authority to Regulate Basic Cable Service and Initial Finding of Lack of Effective Competition" (FCC Form 328) on September 7, 1993, which became effective October 7, 1993. The Bureau issued an order granting Daniel's petition for revocation of the  xCounty's certification, concluding that Daniels had submitted sufficient evidence demonstrating that its  x@cable system serves only 10,622 of the 127,665 households, or 8.3% of the households in the" ,`(`(88 "  S- xunincorporated portion of the County. B yOh-ԍThe County is not the local franchising authority in the incorporated portions of San Diego County. That penetration rate is significantly below the 30% threshold  S- x(of the low penetration effective competition test.RXB {O-ԍBureau Order, 11 FCC Rcd at 10351. R The County argued that Daniels had affirmatively  S- x>redefined its franchise area.n B yO:- xԍAs the Commission has stated previously, the statutory language requires that effective competition be  {O- xYdemonstrated on a franchise area basis. First Order on Reconsideration, Second Report and Order, and Third Notice  {O- xof Proposed Rulemaking, MM Docket No. 92266, 9 FCC Rcd 1164, 1180 (1994) ("First Order on  {O - xReconsideration"). A franchise area is defined as the area a system operator is authorized to serve in its franchise.  {O` - xId. Thus, demonstrations of effective competition generally must be made using household and subscriber data for  xLthe authorized area in the franchise. We also have stated that, for purposes of the low penetration effective  xcompetition test, a more restricted definition of a franchise area may be appropriate under limited circumstances,  xsuch as when an operator, "through its own conduct, selfdefine[s] the areas to be served to such an extent that this  {O - xredefined area accurately portrays the operator's 'franchise area.'" Id. The franchising authority has the burden of  {OL- xyshowing that the operator has made an "affirmative decision . . . to restrict service. . . ." Id. However, as the  xCommission cautioned, the fact that a franchise had not yet been filled out entirely by system construction by the  {O-operator would not by itself be evidence that the service area had been redefined. Id.  According to the County, the correct number of households in Daniels'  xredefined franchise area (consisting of Daniels' actual service area) was 19,743 households, significantly  S`- xbelow the (127,665 households located in the unincorporated portion of the County.I` B {O -ԍSee County Opposition at 6.I The County argued  xthat Daniels' use of the countywide household figure instead of the redefined franchise area figure, resulted in a penetration rate that was significantly understated.  S- ` x5.` ` In considering the County's claim that Daniels affirmatively redefined its franchise area,  S- xthe Bureau, relying on the Commission's previous decision in Valley Center Cablesystems, L.P., stated that:  2Xx. . . we find that the County's argument that Daniels has failed to expand into areas served  _by other cable operators is not determinative of the issue of whether Daniels has redefined  oits franchise area. The franchise agreement between Daniels and the County designates  %Daniels' authorized service area to be countywide with primary responsibility for  providing service to [Pala Mesa/Fallbrook, San Diego CountyNorth and Lake San  2Marcos]." The County does not contest that over the last ten years Daniels has expanded  its system in unincorporated San Diego County, but argues that Daniels has failed to  Cexpand within areas served by other cable operators. The fact that Daniels has not  3constructed its cable plant in locations deemed most desirable by the County does not  Pobviate the fact that Daniels has continued to expand its cable system. Therefore, we find  that the County has failed to sustain its burden of proof that Daniels has redefined its  Sj-franchise area.jB {O$- xԍBureau Order, 11 FCC Rcd at 10351 (footnote omitted), citing Valley Center Cablesystems, L.P., 10 FCC Rcd 11940 (1995).   SB- "B ,`(`(88c"Ԍ S-:IV.xTHE PLEADING S  S- ` }x6.` ` In its application for review of the Bureau Order, the County argues without specification  xthat the Bureau's actions are in conflict with the Commission's effective competition regulations, and that  Sb- x.:the Bureau Order contains erroneous findings regarding material questions of fact.@bB yO-ԍCounty Application at 4.@ The County argues  S<- x>that this proceeding is distinguishable from the Commission's Valley Center decision because Daniels  x>applied for and received multiple countywide franchise licenses requiring that Daniels initially serve  xdistinct areas of the unincorporated portion of the County, which constitutes an affirmative decision to  S- xNlimit its service area.9XB {O -ԍId. at 3. 9 The County argues that Daniels' separate licenses for the areas of primary  xresponsibility combined with its limited cable plant extension and failure to provide competing service  x!in any area served by other cable operators is conclusive evidence of Daniels' decision to limit its  SN - xfranchise area.1N B {O-ԍId.1 The County asserts that Daniels' decision to obtain individual cable television licenses  xfor previously unserved, unincorporated County communities, confirms Daniels' intention to establish  xdistinct designated service areas and also confirms the County's willful acceptance of the limited scope  S -of each license.1 |B {O-ԍId.1 The County concludes by stating that:  3XxBy failing to take into account the unique nature of county licenses, the [Commission]  opened the door for numerous petitions for revocation based upon the creative  _interpretations of cable operators. Daniels' subsequent Petition and the Bureau's response  ~has only confirmed our worst fears and resulted in rural customers ending up with little  S-or no protection from de facto monopolies.7B {O-ԍId. at 5.7   S- ` x7.` ` In its Opposition, Daniels argues that the County has not alleged grounds warranting  Sn- xreversal of the Bureau Order. Daniels asserts that the County has offered no "meaningful factual support"  xMto the Bureau, offers no new evidence in its application for review, and is "essentially asking that the  x=Commission presume," that the County has met its burden of proof that Daniels affirmatively redefined  S- xits franchise area.@B yO8 -ԍDaniels Opposition at 1.@ Daniels argues that it is incorrect to assume that its compliance with County licensing  S- xpractices constitutes an intent to constrain its service area.70 B {O"-ԍId. at 2.7 Daniels states that the County granted  S- xDaniels the legal authority to provide cable service countywide.1 B {O %-ԍId.1 Daniels claims that the "area of  xprimary responsibility" language contained in its franchise agreements is properly viewed as an assurance  xthat a cable operator serve a populated area of the unincorporated portion of the County and, once that"XT ,`(`(88"  S- xarea is served, the cable operator is free to expand its facilities elsewhere based upon demand.1B {Oh-ԍId.1 Daniels  S- x>argues the County has attempted to distinguish Valley Center on the basis that the operator in Valley  S- xCenter had only a single franchise license with countywide authority. Daniels, however, claims it did  x.not accept multiple licenses with the intention of serving only the areas of primary responsibility as the  Sd- xCounty contends.7dZB {O^-ԍId. at 3.7 Daniels states its subscriber base and physical plant in previously unserved portions  xof North San Diego County, including areas outside Daniels' areas of primary responsibility, have doubled  xover the last ten years which proves Daniels did not believe or interpret individual licenses as limiting the  S- xfranchise area to anything less than all of the unincorporated portion of the County.1B {Oz -ԍId.1 Daniels claims it  x[has always possessed and has repeatedly exercised its right to expand its service area beyond its areas of  S-primary responsibility.1~B {O-ԍId.1  Sv-   SN -V.xDISCUSSION  S - ` ~x8.` ` We uphold the Bureau Order. The County argues that, because Daniels obtained three  xseparate franchise licenses with three areas of primary responsibility, the situation presented in the instant  S - x=proceeding is factually distinguishable from the Commission's Valley Center decision. We disagree. The  x[Bureau correctly concluded that the facts present in this proceeding are materially indistinguishable from  Sb- xthe facts presented to the Commission in Valley Center. As observed in the Bureau Order, and unrefuted  xhere, "[t]he franchise agreement between Daniels and the County designates Daniels' authorized service  xarea to be countywide with primary responsibility for providing service to [Pala Mesa/Fallbrook, San  S- xDiego CountyNorth, and Lake San Marcos]."yB {O-ԍBureau Order, 11 FCC Rcd at 10351, quoting Daniels' Petition, Exhibits A&B.y The County's statement that Daniels accepted primary  xresponsibility to serve a particular area, while retaining the right to operate elsewhere in the  xKunincorporated portion of the County, does not constitute evidence that Daniels has affirmatively redefined  St- xits franchise area.XtB yO- xԍEach license issued to Daniels by the County permits Daniels to serve any portion of unincorporated San Diego  xCounty provided that Daniels first institutes service to its area of primary responsibility. Daniels asserts that it has complied with this license requirement. Daniels Opposition at 2. The County does not contest this assertion. The County does not contest that Daniels has expanded its system both inside and  xyoutside Daniels' areas of primary responsibility, but argues that Daniels has failed to expand within areas  S$-served by other cable operators. As the Commission stated in Valley Center:  S- `XxThe County's argument, without more, is simply an argument that a cable operator has  `not yet filled out its entire franchise area. This fact, if true, is insufficient to constitute  evidence by which we could conclude that a cable operator has redefined its franchise  oarea. Indeed, we note that the instant proceeding is not a case where the cable operator  has engaged in no expansion. . . . In light of these facts, we find that [Valley Center"6 ,`(`(88"  3Cablesystem's] alleged failure to expand into areas served by other cable operators, by  S-itself, is not grounds upon which to reverse the Bureau's decision.Q B {O@-ԍValley Center, 10 FCC Rcd at 11945.Q  The County has not convinced us that this reasoning is not equally applicable to the instant proceeding.  S8- ` x9.` ` In summary, the County had the burden of demonstrating that Daniels had affirmatively  S- xredefined its unincorporated San Diego County franchise area.`!ZB {O -ԍFirst Order on Reconsideration, 9 FCC Rcd at 1180.` The County has raised no arguments,  S- xnor has it introduced new evidence which brings into question the reasoning and conclusions of the  S- xBureau Order. In light of the foregoing, we find that the County's application for review should be denied.  Sr- VI.xORDERING CLAUSES  S" - ` x10.` ` Accordingly, IT IS ORDERED , that the application for review of the Bureau Order  xgranting the petition for revocation of Daniels Cablevision Inc. d/b/a/ Pala Mesa Cablevision, d/b/a/ North,  xCounty Cablevision, d/b/a/ Cable TV of Lake San Marcos filed by the County of San Diego, California  S - IS DENIED. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton  S-x` `  hhActing SecretaryT#Xj\  P6G; W XP#