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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In The Matter of: ) Aguas BuenasPR0058 ) Aibonito PR0067 ) BarranquitasPR0064 ) Caguas PR0014 TCI Cablevision de ) Cayey PR0062 Puerto Rico, Inc. ) Ciales PR0053 ) Cidra PR0059 ) Comerio PR0065 ) Corozal PR0054 ) Florida PR0056 ) Gurabo PR0040 ) Humacao PR0060 ) Juncos PR0039 ) Lares PR0049 ) Las Piedras PR0057 ) Morovis PR0052 ) Naranjito PR0066 For Revocation of the ) Orocovis PR0055 Certification of the Puerto Rico ) San Lorenzo PR0038 Telecommunications Regulatory Board ) San Sebastian PR0050 ) Utuado PR0051 ) Yabucoa PR0063 MEMORANDUM OPINION AND ORDER Adopted: April 29, 1998 Released: May 1, 1998 By the Acting Chief, Cable Services Bureau: I. INTRODUCTION 1. TCI Cablevision de Puerto Rico, Inc. ("TCI-PR"), pursuant to section 76.914 of the Commission's rules, has filed a petition with the Commission for revocation of the certification of the Puerto Rico Telecommunications Regulatory Board (the "Board") to regulate basic cable rates. TCI-PR argues that in the Caguas franchise consisting of the communities of Aguas Buenas, Aibonito, Barranquitas, Caguas, Cayey, Cidra, Comerio, Gurabo, Humacao, Juncos, Las Piedras, Naranjito, San Lorenzo, and Yabucoa, and in the Florida franchise consisting of the communities of Ciales, Corozal, Florida, Lares, Morovis, Orocovis, San Sebastian, and Utuado (collectively, the "Communities"), the cable operator is subject to low penetration effective competition because fewer than 30 percent of the households in the franchise areas in which the Communities are located subscribe to cable service. No opposition has been filed. II. BACKGROUND 2. Section 623(a)(4) of the Communications Act permits local franchising authorities to become certified to regulate the basic cable service and associated equipment rates of cable operators within their jurisdictions who are not subject to effective competition. For purposes of the initial request for certification, franchising authorities may rely on the presumption that cable operators are not subject to effective competition, unless the franchising authority has actual knowledge to the contrary. Certification becomes effective 30 days from the date of filing, unless the Commission finds that the franchising authority does not meet the statutory certification requirements. Cable operators may challenge the certification of a local franchising authority by filing a petition for revocation. While a petition for revocation is pending, and absent a grant of stay, the franchising authority may continue to regulate the basic service rate of its franchisees. Section 623(l)(1)(A) of the Communications Act provides that a cable operator is subject to effective competition if fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable system. III. SUMMARY OF PLEADINGS 3. TCI-PR states that on June 12, 1997, the Board filed with the Commission its "Certification of Franchising Authority to Regulate Basic Cable Service Rates and Initial Finding of Effective Competition" on FCC Form 328 to become certified to regulate the cable rates in the Communities. Pursuant to Section 76.910(e) of the Commission's rules, certification became effective on July 12, 1997. TCI-PR further states that it has two franchises, Caguas and Florida, which serve all of the cable communities at issue. TCI-PR states that the Board, on its Form 328, did not list TCI-PR's Florida cable system as being potentially subject to rate regulation. TCI-PR thus requests that its petition be treated as a petition for a change in regulatory status should the Commission find that the Board is not certified to regulate rates in the Florida franchise area. TCI-PR maintains that it meets the requirements of the low penetration effective competition test in each of the franchise areas because fewer than 30 percent of the households subscribe to cable service. 4. In its petition, TCI-PR states that, in order to determine the number of current households in the franchise areas, it employed the same methodology used by the Board and approved by the Commission in an earlier low penetration effective competition case involving franchise areas in Puerto Rico. TCI-PR calculated an updated household estimate for each community in the franchise areas based upon the 1996 Census population estimates and the 1990 Census population-per-household figures for each community. TCI-PR then used its customer billing records to show the number of current subscribers to its cable systems serving the Communities. 5. TCI-PR's submitted evidence to show the 1996 population estimate for each community in the Caguas franchise. TCI-PR then divided each community's population estimate by the corresponding 1990 population-per-household figure taken from 1990 Census data to arrive at an estimate of current households. TCI-PR shows that, in the Caguas franchise, there were 177,197 estimated 1996 households. Based upon TCI-PR's 32,672 subscribers in the Caguas franchise area, TCI-PR calculates its penetration rate to be 18.4 percent. TCI-PR further shows that in the Florida franchise, there were 65,049 estimated 1996 households and that TCI-PR served 14,460 subscribers in the cable communities located therein. TCI-PR thus calculates its penetration rate in the Florida franchise to be 22.2 percent. TCI-PR argues that because its penetration rate is less than 30 percent in each of the franchise areas at issue, it should not be subject to regulation of its basic cable service rates. IV. DISCUSSION 6. We will grant TCI-PR's petition. With regard to the Florida franchise, we note that the Board's FCC Form 328 does not list TCI as a cable system subject to regulation. Form 328 requires a franchising authority to list the cable system or systems for which it seeks to become certified to regulate. In cases where a local franchising authority has not been certified to regulate rates, a cable operator who believes that it is subject to effective competition may petition the Commission for a change in its regulatory status. Accordingly, pursuant to Section 76.915(f) of the Commission's rules, we will treat TCI-PR's petition as a request for a change in regulatory status with respect to the Florida franchise. 7. We have previously stated that updated household data can approximate actual current penetration rates more closely than 1990 Census data. TCI-PR, using 1996 population estimates for each community, submitted data more current than the 1990 Census data to show the current number of households in the franchise areas at issue. TCI-PR showed that the Caguas franchise had 177,197 estimated households in 1996 and 32,672 subscribers which results in a penetration rate of 18.4 percent. With regard to the Florida franchise, TCI-PR shows that there were 65,049 estimated households in 1996 and 14,460 subscribers which results in a penetration rate of 22.2 percent. Accordingly, we find that TCI-PR's Caguas system and its Florida system are each subject to low penetration effective competition. V. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED that, pursuant to Section 76.914 of the Commission's rules, 47 C.F.R. 76.914 and with regard to the Caguas franchise, the petition filed by TCI Cablevision of Puerto Rico, Inc. to revoke the certification of the Puerto Rico Telecommunications Regulatory Board to regulate basic cable rates IS GRANTED for its Caguas cable system serving the communities of Aguas Buenas, Aibonito, Barranquitas, Caguas, Cayey, Cidra, Comerio, Gurabo, Humacao, Juncos, Las Piedras, Naranjito, San Lorenzo, and Yabucoa. 9. IT IS FURTHER ORDERED that the certification granted to the Puerto Rico Telecommunications Regulatory Board to regulate TCI-PR's basic cable rates in the Caguas franchise IS REVOKED. 10. IT IS FURTHER ORDERED that, pursuant to Section 76.915(f) of the Commission's rules, 47 C.F.R. 76.915(f) and with regard to the Florida franchise, TCI-PR's request for a change in its regulatory status IS GRANTED for its Florida franchise serving the communities of Ciales, Corozal, Florida, Lares, Morovis, Orocovis, San Sebastian, and Utuado. 11. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, as amended, 47 C.F.R. 0.321. FEDERAL COMMUNICATIONS COMMISSION John E. Logan, Acting Chief, Cable Services Bureau