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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 ) ) Heritage Cablevision, Inc., ) CUID No. IA0521 d/b/a TCI of the Heartlands ) ) Petition for Revocation of Certification) for the City of Harlan, Iowa to Regulate) Basic Cable Service and Equipment Rates) MEMORANDUM OPINION AND ORDER Adopted: August 11, 1998 Released: August 13, 1998 By the Acting Chief, Cable Services Bureau: I. INTRODUCTION 1. In the above-captioned proceeding, Heritage Cablevision, Inc., d/b/a TCI of the Heartlands ("TCI-IA") filed a petition for revocation of the certification of the City of Harlan, Iowa ("Harlan") to regulate basic cable service and equipment rates. No oppositions were filed. 2. Section 623 of the Communications Act of 1934, as amended ("Communications Act"), provides that subscriber rates of cable television systems are subject to either local or federal regulation only where effective competition is absent. Section 623(l)(1)(C) of the Communications Act provides that a cable operator is subject to effective competition where: a multichannel video programming distributor operated by the franchising authority for that franchise area offers video programming to at least 50 percent of the households in the franchise area. Section 623(a)(4) of the Communications Act allows franchising authorities to become certified to regulate basic cable service rates of cable operators which are not subject to effective competition. Certification becomes effective 30 days from the date of filing, unless the Commission finds that the authority does not meet the statutory certification requirements. Cable operators may file petitions for reconsideration of the franchising authority's certification within 30 days from the date such certification becomes effective. Rate regulation is automatically stayed pending review of a timely-filed petition for reconsideration alleging the presence of effective competition. Once the period for filing petitions for reconsideration has elapsed, cable operators may challenge a franchising authority's certification by filing a petition for revocation. Regardless of its grounds, however, the filing of a petition for revocation does not automatically trigger a stay of a franchising authority's ability to regulate basic cable rates. II. DISCUSSION 3. TCI-IA asserts that its cable system serving Harlan is subject to municipal provider effective competition from the cable system operated by Harlan Municipal Utilities ("HMU"). TCI-IA states that HMU satisfies all three elements of the municipal provider effective competition test. First, TCI-IA asserts that HMU qualifies as a multichannel video programming distributor ("MVPD") because it makes available for purchase, by subscribers or customers, multiple channels of video programming. Second, TCI-IA states that the citizens of Harlan voted in May 1995 to authorize HMU to begin operating a cable system in competition with TCI-IA. TCI-IA states that HMU's cable system became operational in October 1996. TCI-IA provides several newspaper articles on HMU's operations as evidence that HMU is municipally owned, and that HMU operates a cable system within TCI-IA's Harlan franchise area. 4. Third, with regard to the requirement that the municipally-owned cable system offer service to at least 50 percent of the households in the franchise area, TCI-IA notes that HMU's overbuild of TCI-IA in Harlan is 100 percent complete and its cable plant passes approximately 2, 592 households. TCI-IA also submits that, based on current figures, the City of Harlan has approximately 2,670 households (i.e., occupied, non-seasonal housing units). Thus, according to TCI-IA, HMU's cable service is available to 97 percent of the households in the Harlan franchise area. HMU also filed a letter with the Commission indicating that as of August 27, 1997, HMU's cable system exceeded 1000 subscribers. TCI-IA also provides a copy of HMU's channel line-up which indicates that HMU offers 54 channels, including at least seven broadcast channels and numerous non-broadcast channels. 5. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition. The cable operator bears the burden of rebutting the presumption that effective competition does not exist with evidence that effective competition, as defined by Section 76.905 of the Commission's rules, is present within its franchise area. TCI-IA has met this burden. 6. The municipal provider test requires that at least 50 percent of the households in the franchise area be offered service by a municipally-owned cable system. TCI-IA's evidence clearly establishes that HMU is owned by the City of Harlan, and that HMU operates in TCI-IA's Harlan franchise area. With regard to the requirement that HMU offer service to at least 50 percent of the households in Harlan, TCI-IA's evidence indicates that there are approximately 2, 670 households in Harlan. To satisfy the 50 percent passage requirement, TCI-IA must establish that HMU's system offers service to at least 1,335 households in Harlan (50 percent of 2,670 households). TCI-IA provides evidence that HMU offers service to 2,592 households, or 97 percent of the total households in Harlan -- significantly above the 1,335 households necessary to establish that HMU offers service to at least 50 percent of the households in the franchise area. Although not a requirement of the municipal provider test, we also note TCI-IA's evidence that HMU actually provides service to 1,000 households, or 37 percent of the households in the Harlan franchise area. 7. Although the municipal provider test does not contain a comparable programming requirement, we note that the programming of TCI-IA and HMU are comparable. Each provider offers at least 12 channels of video programming, including at least one non-broadcast channel. 8. As TCI-IA has submitted sufficient evidence demonstrating that its cable system serving the City of Harlan is subject to municipal provider effective competition, its petition is granted. III. ORDERING CLAUSES 9. Accordingly, IT IS ORDERED that the petition for revocation filed by Heritage Cablevision, Inc., d/b/a TCI of the Heartlands ("TCI-IA") challenging the certification of the City of Harlan, Iowa to regulate TCI-IA's basic cable service and equipment rates IS GRANTED. 10. IT IS FURTHER ORDERED that the certification granted to the City of Harlan, Iowa to regulate Heritage Cablevision, Inc.'s basic cable service and equipment rates IS REVOKED. 11. This action is taken pursuant to delegated authority pursuant to Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Acting Chief, Cable Services Bureau