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Our records indicate that two of the communities at issue, the City of Cape Canaveral and the  x\Town of Palm Shores, are not certified to regulate basic cable rates. The remaining communities have  x\filed with the Commission to become certified. For those communities which are certified to regulate""B,**886$"  S- xrates, we will resolve Time Warner's petition pursuant to Section 76.914 of the Commission's rules>[ yOh-ԍ47 C.F.R.  76.914.> which  xpermits a cable operator to petition the Commission to revoke the certification of a local franchising authority.  S`- ` x3.` ` Section 623(a)(4) of the Communications Act permits local franchising authorities to  S8- x become certified to regulate the basic cable service and associated equipment rates of cable operators  S- xwithin their jurisdictions who are not subject to effective competition.eX[ yO -ԍCommunications Act  623(a)(4), 47 U.S.C.  543(a)(4). e For purposes of the initial request  S- x[for certification, franchising authorities may rely on the presumption that cable operators are not subject  S- xto effective competition, unless the franchising authority has actual knowledge to the contrary.B[ yOH -ԍ47 C.F.R.  76.910(b). B  x Certification becomes effective 30 days from the date of filing, unless the Commission finds that the  Sp- xfranchising authority does not meet the statutory certification requirements.zpx[ yO- x.ԍ47 C.F.R.  76.910 (e). Certification becomes effective unless the Commission determines that: (1) the  xfranchising authority will not adopt and administer rate regulations that are consistent with the Commission's  xxregulations; (2) the franchising authority lacks the legal authority to adopt, and the personnel to administer, rate  xYregulation; (3) procedural laws and regulations, applicable to rate regulation proceedings by the franchising authority  xKdo not provide a reasonable opportunity for the consideration of the views of interested parties; or (4) the cable  {Op- xsystem in question is subject to effective competition. 47 C.F.R.  910(b). See also Communications Act   yO:-623(a)(4), 47 C.F.R.  543(a)(4).Ħ Cable operators may file  SH - xpetitions for reconsideration of the franchising authority's certification within 30 days from the date such  S - xLcertification becomes effective.g^ [ {Oz- xԍ47 C.F.R.  1.106, 76.911; Implementation of Sections of the Cable Television Consumer Protection and  {OD- xCompetition Act of 1992, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd 5631, 5693  {O-(1993) ("Rate Order").g Rate regulation is automatically stayed pending review of a timelyfiled  S - xpetition for reconsideration alleging effective competition.J [ yOx-ԍ47 C.F.R.  76.911(c)(1).J Under Section 76.914 of the Commission's  xrules, after the 30day deadline for filing petitions for reconsideration has elapsed, cable operators may  S -challenge the franchising authority's certification by filing a petition for revocation.G p[ yO-ԍ47 C.F.R. at  76.914.G  SX- ` x4.` ` Section 623(l)(1)(B) of the Communications Act provides that a cable operator is subject to effective competition if the franchise area is:  x` ` X (i) served by at least two unaffiliated multichannel video programming  distributors each of which offers comparable video programming to at least 50 percent of the households in the franchise area; and   x` ` X (ii) the number of households subscribing to programming services   offered by multichannel video programming distributors other than the"@ ,`(`(88"   largest multichannel video programming distributor exceeds 15 percent  S-of the households in the franchise area. [ {O@- x ԍCommunications Act of 1934, as amended, 623(l)(1)(B), 47 U.S.C. 543(l)(B); see also, 47 C.F.R. 76.905(b)(2). x` ` X  S-x III.` ` SUMMARY OF PLEADINGS  S8- ` x5.` ` Time Warner alleges that its cable systems serving the Communities are subject to  xjeffective competition and, therefore, are exempt from rate regulation pursuant to the Commission's rules.  xTime Warner bases its allegation that it is subject to effective competition on the availability of WBS's  xwireless cable service in the Communities. Time Warner claims that both prongs of the competing  xprovider effective competition test in Section 623(1)(1)(B) of the Communications Act are satisfied  Sp- xbecause WBS and direct broadcast satellite ("DBS") providersf p"[ yO2 -ԍTime Warner does not specify individual DBS service providers.f each offer comparable programming to  x50 percent of the households in the Communities and the number of subscribers to WBS, which is the smallest of the systems, exceeds 15 percent of the households in the Communities.  S - ` x6.` ` The first prong of the competing provider test requires that at least two unaffiliated  x[multichannel video programming distributors ("MVPDs") each offer comparable programming to at least  S - x50 percent of the households in the communities at issue. \ [ yO- xԍThe Commission has stated that, for purposes of effective competition, the term "households" the same  {O- xmeaning as found in the 1990 Census, Implementation of Cable Act Reform Provisions of the Telecommunications  {Od-Act of 1996, Third Order on Reconsideration, FCC 9440, 9 FCC Rcd 4316, 4324 (1994). Time Warner argues that it and WBS each  SX- x>offers comparable programming to at least 50 percent of the households in the Communities.X[ yO- xiԍSection 76.905(e) of the Commission's rules state that, for purposes of effective competition, service by an  xMVPD is deemed offered "when the [MVPD] is physically able to deliver service to potential subscribers, with the  xaddition of no or only minimal additional investment by the distributor, in order for an individual subscriber to  xreceive service; and (2) [w]hen no regulatory, technical, or other impediments to households taking service exist,  xand potential subscribers in the franchise area are reasonably aware that they may purchase the services of the [MVPD]." 47 C.F.R.  76.905(e). Time  x[Warner argues that the Commission has determined that wireless cable is deemed to be offered anywhere  xwithin a 35mile interference free contour zone. With regard to WBS, Time Warner provides the  S- xgeographic coordinates of WBS' transmitter and states that the transmitter is in place and operational.6N [ yO-ԍPetition at 3.6  xTime Warner states that the Communities are all located within 35 miles of WBS' transmitter site and line S- xofsight area.y[ {O#-ԍId. Time Warner provides a shadow map of the franchise area at Exhibit A. y Time Warner further states that there are no regulatory impediments to receipt of WBS'  Sh- xservice in the franchise area and that WBS currently has over 10,000 subscribers in the Communities.6hp[ yOx%-ԍPetition at 4.6  x]Time Warner further states that subscribers are reasonably aware of WBS' services because of the  S- xpresence of WBS subscribers and WBS marketing materials which appear in Florida Today, a local",`(`(88b"  S- xnewspaper, and are distributed throughout the franchise area.?[ {Oh-ԍId. at Exhibit D.? As a result, Time Warner argues that WBS clearly offers service to more than 50 percent of the households in the Communities.  S- ` Ax7.` ` Time Warner maintains that DBS providers also offer comparable programming to at least  S`- xl50 percent of the households in the Communities.7`Z[ {OZ-ԍId. at 7.7 Time Warner states that the Commission has  S8- xrecognized that DBS is available nationwides\8[ {O - xԍId. citing Reexamination of the Effective Competition Standard for the Regulation of Cable Television Basic  {O - x.Service Rates, MM Docket No. 904, 6 FCC Rcd 4545 (1991) at  42 and n.52 (DBS service presumed to be available nationwide when any one DBS licensee begins operations). s and has presumed that DBS providers satisfy the 50 percent  S- xLthreshold.[ {O - xԍId. citing Time Warner, DA 971984, (Cab. Serv. Bur. rel. Sept. 18, 1997) and Time Warner, DA 971970 (Cab. Serv. Bur. rel. Sept. 12, 1997) at  10. Thus Time Warner maintains that it satisfies the requirements of this part of the first prong of the competing provider test.  S- ` x8.` ` The first prong of the competing provider test also requires that at least two competing  x=providers offer comparable programming. Time Warner states that WBS' programming is comparable to  xits own because WBS currently offers 34 channels of programming, including numerous nonbroadcast  S - xprogramming services j [ {O*-ԍTime Warner states that these channels include ESPN, Home Box Office, and CNN. Petition at 6. and numerous local television broadcast stations." [ yO- xZԍTime Warner states that these channels include WESH (Channel 2, Daytona BeachOrlando, NBC), WOFL  x(Channel 35, Orlando, Fox), WFMETV (Channel 24, Orlando, PBS), WKCF (Channel 18, ClermontOrlando, WB),  xWCPXTV (Channel 6, Orlando, CBS), WFTV (Channel 9, OrlandoDaytona BeachMelbourne, ABC) and others.  {O-Id.  Time Warner further states  xjthat DBS offers comparable programming in accordance with Commission rules. Time Warner maintains  S - xthat, because of the similar channel lineups offered by itselfTX [ yOV- xԍTime Warner's channel lineups show that it offers local television stations WESH (NBC, Daytona Beach x,Orlando), WOFL (Fox, Orlando), WCPX (CBS, Orlando), WFTV (ABC, Orlando), and WKCF (Ind., Clermont) and nonbroadcast channels such as ESPN, Home Box Office, and CNN. T and WBS, the communities are being served by at least two unaffiliated MVPDs each of which offers comparable programming.  SX- ` x9.` ` The second prong of the competing provider test requires that at least 15 percent of the  S0- xhouseholds in the Communities be subscribers to the smaller of the MVPDs.D0[ yO"-ԍ47 C.F.R.  76.905(b)(2).D Time Warner maintains  xLthat WBS, the smallest of the MVPDs, meets that requirement. Time Warner submitted data comparing  xits current subscribers with 1990 Census data to show that the following percentages of households  xsubscribe to WBS: 17 percent in Cape Canaveral; 26 percent in Indiatlantic; 21.4 percent in Malabar; 18.3",`(`(88"  S- xpercent in Melbourne; 17.3 percent in Palm Bay; 373.0 percent [ yOh- x,ԍWith regard to the percentage of WBS subscribers in the community of Palm Shores, Time Warner shows that  xWBS currently serves 332 subscribers while the U.S. Census data indicates that there were only 89 households in  yO- xI that community in 1990. Time Warner attributes this statistical distortion to intervening population growth. Petition at 9. in Palm Shores; 19 percent in Satellite  xBeach. Time Warner argues that, because it has shown that the requirements of the competing provider effective competition test have been satisfied, its request for deregulation of cable rates should be granted.  S`- ` 3x10.` ` Time Warner further argues that the Commission should modify application of certain  S8- xprovisions of the Social Contract to its cable service in the Communities. The effect of Time Warner's request would be that Time Warner cable service in the Communities would:  S-  Xx(1) no longer be subject to a price cap on either its basic service tier ("BST")Q[ {O -ԍSocial Contract at Section III.A.2.Q or its cable  S-programming service tier ("CPST");EB[ {O|-ԍId. at Section III.F.4.E(#  Sr-Xx(2) be permitted to add additional channels to its BST at any time;Gr[ {O-ԍId. at Section III.A.3. G(#   |Xx(3) be permitted to establish its equipment rates without regard to regional equipment costs or  S" -blended rates;C" f [ {O(-ԍId. at Section III.B.C(#   $x(4) no longer be subject to price caps or a limit on the number of channels migrated to  S -Xxits Migrated Product Tiers ("MPT"); [ {Oj- xԍId. at Section III.D. The Social Contract defines an MPT to mean "(a) a tier consisting of up to four services  xmoved from a system's existing BST or CPST(s) ... or (b) any Superstation Tier or any tier consisting of those  {O- xservices remaining on a Preferred Tier ... after any excess channels have been shifted to CPST."  Social Contract  xKat 3. A Superstation Tier is defined as "lowpriced collective offerings, containing primarily superstations, at an  {O- xKaverage price of less than $0.29 per channel, excluding copyright fees". Id. at 9. A Preferred Tier is defined as  xJ"a lowpenetrated collective offerings predominately containing channels which had been affirmatively marketed as  {O -a separate tier before offered on an  a la carte basis." Id.  and,(#   Xx(5) not be subject to any regulations established by the Commission governing annual adjustments  S -to BST or CPST rates;C @[ {Ob -ԍId. at Section III.G.C (#  xTime Warner states that, regardless of its request for modification, it will remain bound by all other  S -applicable provisions of the Social Contract, including the infrastructure upgrade requirement.7! [ yO|$-ԍPetition at 11.7 "b!,`(`(88 "Ԍ S- IV.xDISCUSSION  S-  S-x A.` ` Effective Competition  S- x  S`- ` x11.` ` In the absence of a demonstration to the contrary, cable systems are presumed not to be  S8- xLsubject to effective competition,>"8[ yO-ԍ47 C.F.R.  76.906.> as that term is defined by Section 76.905 of the Commission's rules.D#8X[ yO0-ԍ47 C.F.R.  76.905.D  x The cable operator bears the burden of rebutting the presumption that effective competition does not exist  xywith evidence that effective competition is present within the relevant franchise area. In the instant case,  xTime Warner seeks to demonstrate that it is subject to competing provider effective competition as a result  xof the competing services provided by WBS' wireless cable service and the service offered by DBS  xproviders in the cable communities at issue. We find that Time Warner has provided sufficient proof to  x demonstrate that WBS is a competing provider offering comparable programming by showing that it  xsatisfies both prongs of the competing provider test. We conclude that Time Warner is subject to effective  x competition in the Communities and therefore is exempt from the Commission's rules governing rate  S - x>regulation of cable systems. With regard to the Social Contract, we find that Time Warner is exempt  xyfrom those provisions which impose rate regulation on its cable systems serving the Communities but, in  S -all other respects, remains bound to the terms and conditions of the Social Contract.  S4- ` 3x12.` ` With regard to the first prong of the competing provider test, Time Warner introduced  xevidence from the 1990 Census to show that WBS as well as DBS providers offer service to at least 50  xpercent of the households in the Communities. We find that Time Warner has demonstrated that an  x alternative MVPD offers service to at least 50 percent of the households in the franchise area. Time  x.Warner relied on the Commission's presumption that the nationwide availability of DBS satisfies the 50  Sl- x>percent threshold. The Commission has stated that, in the absence of evidence to the contrary, DBS  xjservice providers are presumed to satisfy the requirement of offering service to 50 percent of households  S-in the franchise area.$[ {O- xԍFollowing the decision in Time Warner Co., L.P. et al. v. FCC, 56 F.3d 151 (D.C. Cir. 1995), the Commission revised its interpretation of the competing provider test to recognize the service offered by DBS providers.  S-  S- ` ax13.` ` With regard to service offered by WBS, the Commission has stated that an MMDS  S- xlicensee is protected from electrical interference within a 35mile interference free contour zone.r%\B[ {O- xxԍImplementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, Section 301 of the  x<1996 Telecommunications Act: Section 623 of the Communications Act of 1934, Order and Notice of Proposed  {O!-Rulemaking, FCC 96154, 11 FCC Rcd 5937 (1996) at 10.r The  xCommission has further stated that the cable operator, in addition to information regarding the location  x\of its transmitter site and the 35mile protected zone, should provide "any other reasonably available  x^technical and geographic information, as well as information about the geographic scope of the  xcompetitor's marketing efforts, to help establish that service is being offered to subscribers in the franchise  S- xarea."1&f [ {O&-ԍId.1 While the information Time Warner has provided regarding the offering of WBS' service is" &,`(`(88."  xlimited, we nevertheless conclude that this element of the test has been satisfied. Accordingly, whether  xmby virtue of the service WBS provides or because of the DBS service presumed to be available  x]nationwide, we conclude that Time Warner has satisfied the requirements of the first prong of the competing provider test.  S`-  S8- ` x14.` ` We find that Time Warner, WBS, and DBS service providers'"8[ yO- xԍIn evaluating the second prong of the competing provider test, we have found that DBS service providers like  xDIRECTV and USSB provide comparable programming because they offer at least 12 channels of video  {O0- xprogramming, including at least one nonbroadcast channel. See TELCOM, Inc., DA 961213 (Cab. Serv. Bur. rel. August 8, 1996) at 10. each meets the  xCommission's definition of "comparable programming" contained in Section 76.905(g) because each offers  S- x"at least twelve channels of programming, including at least one channel of nonbroadcast programming."G([ yO: -ԍ47 C.F.R. 76.905(g). G  xTime Warner's and WBS' channel lineups indicate that each is offering more than the minimum number  S- x=of channels of both broadcast and nonbroadcast channels in the Communities.D)B[ yOz-ԍPetition at Exhibit F.D We conclude therefore  x\that at least two MVPDs in the franchise area are offering comparable programming and that the first  SH -prong of the competing provider test is satisfied.  S - ` x15.` ` The second prong of the competing provider test requires that the number of households  xsubscribing to WBS, an MVPD other than the largest MVPD, exceeds 15 percent of the households in  S - xeach of the Communities.* [ yO- xԍThe United States Court of Appeals for the District of Columbia Circuit held invalid the Commission's  yO- x<interpretation of the competing provider effective competition test set forth in the Communications Act.  The  {O- xCommission, in its Rate Order, interpreted the statute to mean that only MVPDs that offer service to at least 50%  xof the households in a franchise area under the first prong of the competing provider test can be considered in the  yO<- xaggregate MVPD subscribership count of the second prong of the test.  The District of Columbia Circuit held that  xeach prong of the competing provider test may be satisfied independently using separate groups of competing  {O- xMVPDs.  As a result of the Time Warner decision, as long as two MVPDs offer comparable programming to at least  xi50% of the households in a franchise area, the subscribership of all MVPDs other than the largest MVPD may be  xaggregated to satisfy the second prong of the competing provider test regardless of whether they offer service to at  xleast 50% of the households in the franchise area. In light of this decision, the Commission has revised its  {O- xinterpretation of the competing provider test to accord with the District of Columbia Circuit's decision. See Blue  {O- xRidge Cable Television, Inc., 10 FCC Rcd 2186 (1994) (Bureau will examine totality of the evidence in evaluating effective competition claims).  Time Warner submitted a table which shows the percentage of households  S - xwhich subscribe to WBS' service in the cable communities.M+ [ {O"-ԍSee  8,  supra.M We find that Time Warner has demonstrated  xthat WBS' penetration rate in the Communities satisfies the requirement of the second prong of the  xcompeting provider test. We conclude that Time Warner has established that both prongs of the  xcompeting provider effective competition test have been met and, accordingly, we grant Time Warner's  xpetition for a change in its regulatory status and revoke the certifications of the Cities of Melbourne, Palm Bay, and Satellite Beach and the Towns of Indiatlantic and Malabar. "$+,`(`(88"Ԍ S-ԙx` ` B. Social Contract  S-  S- ` 3x16.` ` The Commission and Time Warner negotiated the Social Contract in order "to provide  xupgrade incentives for Time Warner and to provide rate stability and increased quality of service for its  Sb- x.consumers.",b[ {O- x<ԍSocial Contract, 11 FCC Rcd at 2790. The Social Contract also resolved numerous rate cases and provided refunds to subscribers. The Social Contract provides that Time Warner may, in the event of any relevant change  x>in applicable laws, regulations or circumstances, petition the Commission to modify or terminate the  S- xjSocial Contract."-$"[ {O - xԍId. at 2824. Time Warner may also elect not to be bound by the relevant portions of the Social Contract  xishould there by any material change in the 1992 Cable Act or the Commission rules that would favorably impact  xZTime Warner. However, even if the statutory or regulatory provisions concerning rate regulation change, Time  {O0 -Warner remains bound to the nonrate provisions of the Social Contract.  Time Warner is required to serve any such petition to modify or terminate the Social  S-Contract on the local franchising authorities for the affected systems.3.[ {O-ԍId. 3  S- ` x17.` ` Time Warner's petition for a change in regulatory status is based upon a change in  xcircumstance, i.e., the presence of effective competition in the Communities. We have found that Time  xWarner has demonstrated that its cable systems serving the Communities face effective competition from  xWBS, a competing provider of wireless cable service and the service offered by DBS providers. Under  xthe Commission's rules governing rate regulation, the rates of cable systems that are found to be subject  S - xto effective competition are not regulated.>/ [ yO-ԍ47 C.F.R.  76.906.> Time Warner has requested that the Commission waive  S - xcertain rate provisions of the Social Contract, namely, Sections III.A.2 (price cap on the BST); III.A.3  x=(additions to the BST); III.B (equipment rates); III.D (price caps on the MPT); III.F.4 (price cap on the  Sb- xCPST); and III.G (annual rate adjustments to the BST and CPST). Each of those provisions of the Social  S<- xjContract pertain to regulation of service and equipment rates on a regulated tier of cable service. We find  xjthat Time Warner's systems serving the Communities have experienced a change in circumstance, i.e., the  xpresence of effective competition, which has relieved Time Warner of its duty to comply with the rate  S- xregulation provisions of the Social Contract in the Communities. We further find that Time Warner has  S- xymet the notice requirement contained in the Social Contract by serving its petition on each local franchise  Sz- xauthority affected by its actions.T0z0 [ {OJ-ԍ See Petition, Certificate of Service.T In light of the foregoing, we grant Time Warner's request to be relieved  SR- xof Sections III.A.2, III.A.3, III.B, III.D, III.F.4, and III.G of the Social Contract with regard to the  S,- xCommunities.>1, [ {O!-ԍSupra at  9.> All other provisions of the Social Contract remain valid and enforceable and the  S-Commission retains oversight authority with regard to those nonrate provisions.S2z [ {O $-ԍSocial Contract, 11 FCC Rcd. at 2825.S " 2,`(`(88$"Ԍ S- `V. x ORDERING CLAUSES  S-  S- ` x18.` ` Accordingly, IT IS ORDERED that the Petition for Change in Regulatory Status filed  x`by Time Warner EntertainmentAdvance/Newhouse Partnership d/b/a Time Warner Communications,  S`-pursuant to Section 76.905(b)(2) of the Commission's rules, 47 C.F.R.  76.905(b)(2), IS GRANTED .  S- ` |x19.` ` IT IS FURTHER ORDERED that, for purposes of the Social Contract for Time Warner,  S- x>Time Warner's request to be relieved of compliance with certain provisions therein, namely, Sections  x{III.A.2, III.A.3, III.B, III.D, III.F.4, AND III.G governing cable rates offered in the Cities of Cape  xCanaveral, Melbourne, Palm Bay, and Satellite Beach and the Towns of Indiatlantic, Malabar, and Palm  Sr-Shores IS GRANTED .  S" - ` _x20.` ` IT IS FURTHER ORDERED that the certifications of the Cities of Melbourne, Palm  S - xBay, and Satellite Beach and the Towns of Indiatlantic and Malabar to regulate cable rates ARE  S -REVOKED .  S -  S - ` ax21.` ` This action is taken pursuant to delegated authority under Section 0.321, 47 C.F.R.  $@ 0.321, of the Commission's rules. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhJohn E. Logan x` `  hhActing Chief, Cable Services Bureau x