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In addition, Long Beach argues that the present and future  xviability of PBVS's cable service is so doubtful that it cannot be considered effective competition to  xCharter's cable service. In support of this contention, Long Beach cites numerous articles which it claims  x.raise questions about the commitment of SBC Communications Inc. (PBVS's new owner) to its wireless" B,p(p(88e""  xcable service. Long Beach warns that if Charter's petition is granted and PBVS's services are  xsubsequently discontinued, residents in Long Beach and Norwalk would be left with no competitive choice in the provision of cable service and no regulatory authority to ensure reasonable rates.  S`- ` ~x9.` ` In reply, Charter asserts that PBVS does "offer" service to the Communities within the  xmeaning of Commission rules. Charter contends that the Commission's Order, implementing the Cable  S- xAct Reform Provisions of the Telecommunications Act of 1996,d {Ox-ԍ Cable Act Reform Order, 11 FCC Rcd 5937 (1996).d does not require petitioners to provide  xspecific evidence of actual, current service reception in each community, but only requires a demonstration  xthat the captioned communities are physically able to receive that service. Charter states that it provided  xinformation in its petition demonstrating that the Communities are within PBVS's 35mile service area.  xlCharter contends that the 35mile protected service zone is the presumed service area for MMDS  xoperators. Charter further notes that none of the opponents submitted specific evidence establishing that  xMany entire community is physically unable to receive service from PBVS. In response to opponents'  xconcerns regarding subscriber awareness of PBVS, Charter states that it has submitted to the Commission  x=numerous examples of PBVS's direct mail marketing materials which identify PBVS's service area as Los  xAngeles and Orange counties, and not select communities within those counties. Charter asserts that it  x[has also included articles from local and national press sources on the launch of PBVS. Charter contends  x\that unlike the other effective competition tests, the LEC affiliate competition test does not include a  x percentage pass or penetration rate. As to Long Beach's argument concerning the viability of PBVS, Charter replies that such speculation is irrelevant to this proceeding.  S-x10.` ` In a supplement, Charter provides PBVS subscribership information with respect  S- xjto the communities at issue."Z {O- xԍSee Supplement to Charter's petition dated February 9, 1998. It appears that one of the five Los Angeles  xcommunities listed in Charter's petition may not be included in the supplement. It is difficult to determine whether  x=this is the case, however, because the communities listed in Charter's petition are identified by CUID number whereas the communities contained in the supplement are identified by zip code. Specifically, Charter submits a letter from PBVS to Charter responding to  Sh-a request for subscriber count information.hD yOL- xԍLetter from Steven M. Harris, VicePresident, Pacific Bell Video Services, to John R. McFerron, Charter Communications, dated December 2, 1997, attached to Charter's supplement. The PBVS letter includes a chart  x/showing that PBVS has some subscribers in all of the Communities and 50 or more subscribers in 19  S- x/communities. The exact number of subscribers in the 19 communities is not provided.qX yOT- xԍIndividualized subscriber counts for the six communities with less than 50 PBVS subscribers are provided as  xfollows: Azusa 15; Huntington Park 36; Walnut 4; Los Angeles (zip codes 91722, 91724, 91791, and 91702) 27; Los Angeles (zip codes 91702 and 91722) 15; and Signal Hill 14.q In a second  S- xsupplement, Charter includes an article stating that PBVS has over 16,000 subscribers.n  {OL#-ԍSee Second Supplement to Charter's petition dated March 2, 1998.n Charter reiterates  xthat it is not required to submit such specific subscriber information but is only doing so in the interest of expediting review of its petition. "xN ,p(p(88"Ԍ S- III.xANALYSIS  S- ` x11.` ` In the absence of a demonstration to the contrary, cable systems are presumed not to be  S- xsubject to effective competition.> yO-ԍ47 C.F.R.  76.906.> The cable operator bears the burden of rebutting the presumption that  xeffective competition does not exist with evidence that effective competition, as defined by Section 76.905  S8- xof the Commission's rules, is present within the franchise area.T8X yO0-ԍ47 C.F.R.  76.905 and  76.911(b)(1).T Charter has failed to meet this burden.  x=While Charter partially satisfies the LEC test for effective competition by demonstrating that PBVS is a  xLEC affiliate that provides comparable programming, Charter fails to establish that PBVS "offers" service as contemplated by the statute and our rules.  Sp- ` x12.` ` With regard to the first part of the LEC test, which requires that the alleged competitive  xservice be provided by a LEC or its affiliate (or any multichannel video programming distributor using  x\the facilities of such LEC or its affiliate), Charter has provided sufficient evidence demonstrating that  S - xPBVS is LECaffiliated under the Commission's interim rules.j  {O-ԍCable Act Reform Order, 11 FCC Rcd at 59385945, 59615964. j The corporate relationships that exist  xbetween PBVS, PTG and PTE establish PBVS's LEC affiliation. We note too that PTG merged with SBC  x\Communications Inc. in April of 1997. Additionally, we find that Charter is unaffiliated with PBVS, PTG, PTE or SBC.  S0- `  x13.` ` We also find that Charter has submitted sufficient evidence demonstrating that PBVS  xprovides programming comparable to Charter's channel lineup in the Communities. PBVS's most basic  xservice consists of 49 channels of video programming, including 13 local television broadcast channels, which satisfies the programming comparability criteria.  Sh- ` Bx14.` ` As to the requirement that the LEC competitor "offer" service, Charter has not met its  x>burden. Charter has failed to establish that PBVS "offers" service because Charter has not presented  x.sufficient evidence that subscribers in the Communities are reasonably aware that they may take service  xLfrom PBVS. Cable operators seeking to prove that they are subject to effective competition from a LEC  xzor its affiliate must not only show that the competitor is physically able to deliver service free of any  xkregulatory, technical or other impediments but that subscribers are "reasonably aware" that they may  Sx- xpurchase the competitor's service.Nxz {O-ԍSee 47 C.F.R.  76.905(e)(2).N Consumer awareness of a competing service is an essential element of the offer requirement of the LEC effective competition test.  S- ` x15.` ` We have stated that potential subscribers may be made reasonably aware of the availability  S- xof a competing service through, for example, advertising in the media or direct mail.V  {O$-ԍCable Act Reform Order, 11 FCC Rcd 5942.V We have also  xstated that cable operators seeking to prove that they face effective competition may rely on marketing",p(p(88-"  S- x\information to demonstrate consumer awareness of the competing service.V  {Oh-ԍCable Act Reform Order, 11 FCC Rcd 5942.V In this instance, Charter  x submits examples of PBVS's direct mail marketing materials. Charter does not present evidence that PBVS has engaged in any type of mass media marketing.  S`- ` x16.` ` The direct mail materials submitted by Charter are not sufficient to demonstrate that  xzpotential subscribers in all of the Communities are aware of PBVS's service. Although Charter claims  x.that the marketing materials were distributed "throughout Los Angeles and Orange counties," there is no  x=evidence in the record defining the scope of the direct mail campaign. Specifically, there is no proof that  xthe mailings were made to subscribers in all of the Communities and there is no information concerning  S- xhow many subscribers in the Communities were actually sent mailings.k!ZZ {O - xԍSee also Los Angeles Times, "PacBell Digital TV Venture Begins in L.A., Orange Counties," Marla Matzer,  x,May 30, 1997 ("SBC representative declined to say how many people are being targeted or on what basis customers would be selected, should demand outweigh SBC's ability to deliver.")k It appears that some subscribers  xwere targeted for the mailings while many other potential subscribers were not solicited. Former PBVS  xLVice President and General Manager Jeff Carlson has said that the company is purposely controlling the  S - xnumber of subscribers to "contain demand."" | {O<-ԍElectronic Media "Pacific Bell Pushes On With Cable," Michael Schneider, September 1, 1997. According to Carlson, the company will add new customers  S - xgradually to ensure highquality service.~#  {O- x-ԍThe San Francisco Chronicle, Business, "L.A. Gets 'Wireless Cable' TV/ Pac Bell's Bay Area service still on  {Op- xhold," Jonathan Marshall, May 30, 1997. See also Multichannel News, "PacBell Taking Cable's Best Subs in S.  xKCalif. Has signed up 10,000 customers since launching cable services," Linda Haugsted, October 6, 1997 ("PBVS  x;is still not ready for the increase in demand that a widespread campaign might engender: Each installation still takes one hour and 50 minutes, on average, executives said.")~ Carlson has also stated that "[a]s for the advertising, we are  xdoing a very controlled rollout; it is conservative by design. We have limited our marketing to very  S - xspecific demographics."$  {O - x<ԍBroadcasting & Cable, "Pac Bell's lowkey digital: Company is quietly building California wireless system," Jon Schlosser, October 6, 1997. Charter points to articles on the launch of PBVS as evidence that subscribers  x]are reasonably aware of PBVS's service. These articles, for the most part, simply corroborate the  xstatements made by Carlson and describe the launch of PBVS's video service as a "gradual rollout" and  S0- xas "low key."%j 0 {O- xԍSee e.g., The Wall Street Journal, "PacTel Launches Wireless CableTV On ScaledBack Basis in California,"  xZLeslie Cauley, May 30, 1997 ("SBC yesterday said it has begun a limited commercial rollout of video services in  x.Los Angeles and Orange counties, but it will wait to see how customers respond before proceeding further.");  {OF!- xxElectronic Media, "Pacific Bell Pushes On With Cable," Michael Schneider, September 1, 1997 ("Pacific Bell has  xquietly started rolling out the system," and quoting Carlson, "[w]e have not used any media [to market the service]  {O"- xand have no plans to do so."); Multichannel News, "SBC tiptoes into L.A. cable market; SBC Communications,  xInc.," Kent Gibbons, June 2, 1997 ("Pacific Bell Video Services has quietly started signing up paying customers"  xand "PacBell said it plans a 'gradual' rollout to make sure that the service quality is high and to test market  {O2%- xKacceptance."); Broadcasting & Cable, "Pac Bell's lowkey digital: company is quietly building California wireless  xsystem," Joe Schlosser, October 6, 1997 ("company officials acknowledged that there are no plans for a marketing  {O&- x-blitz anytime soon."); Los Angeles Times, "PacBell Digital TV Venture Begins in L.A., Orange Counties," Marla  xMatzer, May 30, 1997 ("Though the company said the service is available now, it's not clear where or how quickly"'$,p(p((" consumers can subscribe."). We also note that several thousand PBVS employees were used to test market the service. "0X%,p(p(88"  xyThat certain specific subscribers are aware of PBVS because they are employees of the company or were  xjspecifically targeted does not mean that subscribers in the Communities generally are informed that there  xis an alternative video service provider to the cable operator. The cable operator must submit evidence  xKdemonstrating that potential subscribers in the Communities, not only segments of the population that may  xhave been specifically targeted or handpicked for solicitation, are reasonably aware that they may purchase  xservices from a video provider other than the cable operator. Because evidence of a broad awareness of  xthe existence and availability of PBVS's service is lacking, we find that Charter has failed to prove that PBVS "offers" service in the Communities.  S- ` x17.` ` As a general matter, we note that evidence presented by cable operators regarding the  xnumber and location of subscribers to the competing service shows that the competitor is physically able  x\to deliver service. Such evidence, in most cases, can also reflect the degree subscribers are reasonably  xaware of the competing service since they are, in fact, receiving it. However, in this instance, the PBVS  xysubscriber figures submitted by Charter do not persuade us that consumers in the Communities generally  S - x=are knowledgeable about PBVS's service. If totalled, the number of subscribers in the Communities who  S - xMCharter claims are definitively aware of PBVS's service because they receive it is 1,061 subscribers.1&X X yO- xԍWe derived the 1,061 figure by multiplying the 19 communities said to have 50 or more subscribers by 50 and  xadding the specific subscriber numbers for the six communities with less than 50 subscribers as listed in footnote 25 above. 1  xThis figure represents a minuscule percent of the total number of subscribers served by Charter through  SX- xkits Los Angeles and Long Beach systems (1,061195,500) = .54%). While Charter submits an article  xkstating that PBVS has over 16,000 subscribers, Charter does not identify in which communities these  S- xsubscribers are located.'x yO - xԍThe 16,000 figure cited represents only .03 percent of the television households in the Los Angeles television market (Nielsen DMA) or .4 percent of the households in Los Angeles and Orange Counties. Given the lack of information concerning the scope of PBVS's direct mail  x>campaign as well as what appears to be PBVS's incremental marketing strategy, that PBVS has some  xsubscribers in the Communities does not convince us that subscribers throughout the Communities are reasonably aware of the availability of PBVS's service.  S@- ` x18.` ` We find that Charter has failed to submit sufficient evidence demonstrating that its cable  xsystem serving communities in Los Angeles and Long Beach counties is subject to LEC effective competition from PBVS. Charter's petition is denied. " ',p(p(88"  S- IV.xORDERING CLAUSES  S-  S- ` %x19.` ` Accordingly, IT IS ORDERED that the Petition for Determination of Effective  xCompetition filed by Charter Communications Entertainment II, L.P., d/b/a Charter Communications, and  xLong Beach Acquisition Corp., d/b/a Charter Communications, challenging the certification of local  S8-franchising authorities in the abovereferenced communities IS DENIED.  S- ` x 20.` ` This action is taken pursuant to the interim rules adopted in Implementation of Cable  S- x Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 (1996), and is without  xprejudice to any further action taken by the Commission in adopting final rules pursuant to the Notice of  St-Proposed Rulemaking contained therein.i(t {O -ԍCable Act Reform Order, 11 FCC Rcd at 59385945, 59615964.i  S$ - ` x21.` ` This action is taken pursuant to delegated authority under Section 0.321 of the  S -Commission's rules, as amended.<) Z yO-ԍ47 C.F.R  0.321.< x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhJohn E. Logan x` `  hhActing Chief, Cable Services Bureau x x x x  XT- #Xj\  P6G;ynXP#