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CA0653 and CA0757  S( -#Xj\  P6G;9XP##&a\  P6G;&P#  S -  MEMORANDUM OPINION AND ORDER lU  S - Adopted: February 2, 1998hh, V ppReleased: February 5, 1998 By the Deputy Chief, Cable Services Bureau:  S- I.INTRODUCTION  S-  1.` ` TCI of Ventura County, Inc. ("TCI") has filed a Petition for Special Relief seeking a   Mdetermination of effective competition. TCI asserts that it is subject to competing provider effective   competition in the City of Thousand Oaks, California and the City of Camarillo, California because of the   cable service provided by GTE Media Ventures, Inc. in those cities. This petition is unopposed. For the reasons discussed below, the Petition is granted.  S-  2.` ` The Communications Act of 1934, as amended ("Communications Act") provides that only  S-  the rates of cable systems that are not subject to effective competition may be regulated.F~ {O-  #X\  P6G;P#эPub. L. No. 102385, 106 Stat. 1460 (1992); Communications Act  623(a)(2), as amended, 47 U.S.C.   {O-543(a)(2) (1992).  See also 47 C.F.R. 76.905(a). The Act permits   [local franchising authorities to become certified to regulate the basic cable service rates of cable operators  S0-  that do not face effective competition.MZ0$F~ {O-  ԍCommunications Act 623(a)(3) and (a)(4), 47 U.S.C. 543(a)(3) and (4). See also 47 C.F.R. 76.910. The   City of Thousand Oaks and the City of Camarillo have been certified to regulate the rates of the cable system serving their franchise areas.M The Commission's rules presume that effective competition does  S-  not existdFF~ yO!-#X\  P6G;P#э47 C.F.R. 76.906.d and place the burden on the cable operator to show that it faces effective competition in a given  S-  franchise area.UF~ {OV$-  #X\  P6G;P#эSee Report and Order in MM Docket No. 92266, Implementation of Sections of the Cable Television Consumer  {O %-Protection and Competition Act of 1992, 8 FCC Rcd 5631, 5669 (1993). See also 47 C.F.R. 76.911(b)(1).U Cable operators must prove that they are subject to effective competition under one of  S-the four tests set forth in Section 76.905(b) of the Commission rules.@2 F~ yO'-ԍ47 C.F.R. 76.905(b).@ " ,((88"Ԍ S-  ԙ3.` ` One basis upon which a cable system may be deemed subject to effective competition is  S-  the competing provider test._2 yO@-ԍ47 U.S.C. 543(l)(1)(B); 47 C.F.R. 76.905(b)(2)._ Under the competing provider test, a cable system is subject to effective   competition if the franchise area is (1) served by at least two unaffiliated multichannel video programming  S-  distributors ("MVPD") each of which offers comparable programmingX2 yO-  >ԍFor this test, programming is considered "comparable" if it consists of "at least 12 channels of video programming, including at least one channel on nonbroadcast service programming." 47 C.F.R. 76.905(g).  to at least 50 percent of the  S`-  >households in the franchise area; and (2) the number of households subscribing to multichannel video   programming other than from the largest MVPD exceeds 15 percent of the households in the franchise  S-area._2 yO` -ԍ47 U.S.C. 543(l)(1)(B); 47 C.F.R. 76.905(b)(2)._  S-  34.` ` Alternatively, a cable system may be deemed subject to local exchange carrier ("LEC")  S-  effective competition, as defined in Section 623(l)(1)(D) of the Communications Act. @2 yOx-  ԍ47 U.S.C.(1)(l)(D). The LEC effective competition test was adopted by Congress as part of the Telecommunications Act of 1996, Pub. L. No. 104104, 100 Stat. 56 (1996). Section 623(l)(1)(D) provides that a cable system is subject to LEC effective competition where:  Xa local exchange carrier or its affiliate (or any multichannel video programming distributor  S - %using the facilities of such carrier or its affiliate) offers video programming services  S - directly to subscribers by any means (other than directtohome satellite services) in the  franchise area of an unaffiliated cable operator which is providing cable service in that  pfranchise area, but only if the video programming services so offered in that area are  SX- comparable |X2 yO-  ЍThe Commission observed that Congress specified a different definition of comparable programming for the   LEC effective competition test from that adopted for the other three effective competition tests. Although soliciting   <comment as to the revised definition, the Commission on an interim basis determined that it will apply this new   comparable programming standard which "includes access to at least 12 channels of programming, at least some of  {O-  which are television broadcasting signals" to the LEC effective competition test. See Implementation of Cable Act  {Oz-  Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937, 5942 (1996) (quoting 1996 Act Conference Report, S. Rep. 104230 at 170 (Feb. 1, 1996)). to the video programming services provided by the unaffiliated cable operator in that area.  47 U.S.C. 543(l)(1)(D).  S-  Sh- II.THE PLEADINGS  S-  P5.` ` TCI states that it is subject to effective competition under the competing provider test set   forth in Section 623(l)(1)(B) of the Communications Act due to the presence of GTE New Ventures, Inc.   ("GTE"), a competing franchised cable operator in its City of Thousand Oaks and City of Camarillo" ,p(p(88"  S-  .franchise areas.: X2 yOh-  -ԍThe City of Thousand Oaks awarded a cable franchise to GTE on February 6, 1990. The City of Camarillo   Yawarded a cable franchise to GTE on August 28, 1996. Petition for Special Relief ("Petition") filed by TCI on Sept. 17, 1997 at 78.: TCI notes it has two franchise areas serving the City of Camarillo, designated by FCC   community identification numbers CA0653 and CA0757. CA0653 serves western Camarillo and CA0757 serves eastern Camarillo.  S`-  }6.` ` To demonstrate that the first prong of the competing provider test is satisfied, TCI asserts  S8-  -that it passes 94 percent? Z82 yO -  ԍ37,190 households passed  39,408 households in franchise area = 94 percent passage rate.   Petition at 15. TCI states that it obtained this household count from the official City update to the 1990 census.  {OP -Id. at 12.? of the households in the City of Thousand Oaks, and estimates that GTE passes  S-  over 90 percent.8  2 {O -ԍId. at 15.8 In CA0653, TCI states it passes 94 percent>Z2 yOL-  ԍ14,628 households passed  15,514 households in franchise area = 94 percent passage rate.   Petition at 17. TCI states that it obtained this household count from the official City update to the 1990 census.  {O-Id. at 8.> of the households, and estimates GTE   [passes 95 percent. In CA0757, TCI states it passes all of the households, and estimates GTE passes 94  S-  percent. 2 yO-  ԍThis estimate of GTE system buildout for the City of Camarillo is based on field observations and inquiries by TCI personnel. Petition at 8. TCI adds that in all three franchise areas, GTE and it meet the relevant programming   >comparability criterion because each offers at least 12 channels of video programming, at least one of which is nonbroadcast programming.  S -  7.` ` In regards to satisfaction of the second prong of the competing provider test, TCI   represents that the number of households subscribing to multichannel video programming other than to   the largest MVPD exceeds the 15 percent penetration requirement in all three franchise areas. TCI   Lcontends that GTE, the smaller MVPD of the two systems, has approximately a 26 percent penetration  S -  rate in the City of Thousand Oaks, 2 yO6-ԍ10,250 GTE subscribers  39,408 households in franchise area = 26 percent penetration. Petition at 15. and a 23 percent penetration rate in CA0653. 2 yO-  ԍ612 GTE subscribers + 396 DirecTV subscribers  4,101 households in franchise area = 25 percent penetration. Petition at 17. In CA0757, TCI  SX-asserts that the combined penetration rate of GTE and DirecTV, another MVPD is 25 percent.X2 yO!-  lԍ3,578 GTE subscribers  15,514 households in franchise area = 23 percent penetration. Petition at 18.  S-  8.` ` TCI asserts that, in the alternative, it is subject to LEC effective competition. With   Lregard to the LEC affiliation requirement, TCI asserts that GTE is a competing franchised cable operator wholly owned by GTE Corporation, a local exchange carrier serving customers in 28 states. "V,p(p(88"Ԍ S-  9.` ` With regard to the requirement that the LEC competitor offer video programming service   in the unaffiliated cable operator's franchise area, TCI asserts that GTE has completed an overbuild of   Nmore than 90 percent of the City of Thousand Oaks and approximately 95 percent of the City of   LCamarillo. TCI believes that GTE is now providing service to more than 10,250 customers in Thousand   >Oaks and more than 4,000 customers in Camarillo and can provide service to potential subscribers in   =either of these areas with only minimal additional investment. TCI adds that GTE 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 GTE. XX` ` `  S-  Q10.` ` TCI also asserts that GTE offers comparable programming to subscribers in Thousand   Oaks and Camarillo. Specifically, TCI provides GTE's channel lineup which demonstrates that GTE   offers over 75 channels, of which at least 11 are local television broadcasting signals. TCI offers 60   channels of programming in its Thousand Oaks franchise area and over 70 channels in each of its Camarillo franchise areas.  S - III.ANALYSIS  S -  SX-  11.` ` In the absence of a demonstration to the contrary, cable systems are presumed not to be  S0-  subject to effective competition as defined in the Communications Act.=02 yO-ԍ47 C.F.R. 76.906.= The cable operator bears the  S-  Mburden of rebutting the presumption that such effective competition does not exist and must provide   Nevidence sufficient to demonstrate that effective competition, as defined by Section 76.905 of the  S-  Commission's rules, is present in the franchise area.MX2 yO-Ѝ47 C.F.R. 76.911(b)(1).M TCI has met this burden by satisfying the   competing provider test for effective competition. In light of this finding, we will not address TCI's  Sh-contention that it is also subject to effective competition under the LEC effective competition test.  S-  12.` ` The first part of the competing provider test requires that the franchise area be served by   [at least two unaffiliated MVPDs, each of which offers comparable programming to at least 50 percent of   the households in the franchise area. We find that TCI has provided sufficient evidence demonstrating   that it is unaffiliated with GTE, and that both offer service to the requisite percentage of households. TCI   koffers cable service to at least 50 percent of the households in all three franchise areas. GTE's service   [is also technically available to over 50 percent of households in each of the franchise areas. With respect   to the issue of programming comparability, we find that the programming of TCI and GTE is comparable   ?because they offer at least 12 channels of video programming, including at least one nonbroadcast  S-channel.J2 {O`!-ԍSee 47 C.F.R. 76.905(g).J We conclude, therefore, that TCI has satisfied the first part of the competing provider test.  S-  o13.` ` The second part of the competing provider test requires that the number of households   subscribing to an MVPD other than to the largest MVPD exceeds 15 percent of the households in the   1franchise area. In all three franchise areas, this rate exceeds 20 percent. We find that TCI has   demonstrated that the smaller MVPD penetration rate in the franchise areas satisfies the requirement of   the second prong of the competing provider test. We conclude that TCI has established that both prongs  S!-of the competing provider effective competition test have been met."!z,p(p(88U#"Ԍ S-ԙ IV.ORDERING CLAUSES  S-  S-  &14.` ` Accordingly, IT IS ORDERED that the Petition for Special Relief seeking a  S-determination of effective competition filed by TCI of Ventura County, Inc. IS GRANTED .  S8-  ~15.` ` IT IS FURTHER ORDERED that the certification of the City of Thousand Oaks,  S-California to regulate the basic cable rates of TCI in Thousand Oaks, California IS REVOKED .  S-  16.` ` IT IS FURTHER ORDERED that the certification of the City of Camarillo, California  S-to regulate the basic cable rates of TCI in Camarillo, California IS REVOKED .  SH -  17.` ` This action is taken pursuant to delegated authority under Section 0.321 of the  S -Commission's rules, as amended.; 2 yO -ԍ47 C.F.R 0.321.; ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,William H. Johnson ` `  hh,Deputy Chief, Cable Services Bureau