******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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: ) ) CENTURY CABLE OF NORTHERN ) CUID No. CA0024 CALIFORNIA, INC. ) ) Petition for Revocation of the Certification of ) the City of San Buenaventura, California ) to Regulate Basic Cable Service Rates ) ) Petition for Reconsideration ) MEMORANDUM OPINION AND ORDER Adopted: November 1, 1999 Released: November 3, 1999 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. Century Cable of Northern California Inc. ("Century") filed a Petition for Reconsideration pursuant to Section 1.106 of the Commission's rules of Century Cable of Northern California Inc. ("San Buenaventura Order"). The San Buenaventura Order denied Century's Petition for Revocation of the certification by the City of San Buenaventura, California ("City") of its authority to regulate Century's basic cable service and associated equipment rates. The City filed an Opposition to Petition for Reconsideration, and Century filed a Reply. II. BACKGROUND 2. Pursuant to Section 623 of the Communications Act of 1934, as amended ("Communications Act"), local franchising authorities may obtain certification to regulate the basic cable service rates, provided the cable operator is not deemed to be subject to effective competition within the particular franchise area. Following Commission procedures for implementation of Section 623, the City filed a "Certification of Franchising Authority to Regulate Basic Cable Service Rates and Initial Finding of Lack of Effective Competition," which became effective on October 12, 1993. On April 2, 1998, Century filed a Petition for Revocation of that certification, which the San Buenaventura Order denied on the grounds that Century failed to satisfy the competing provider test set forth in Section 76.906 of the Commission's rules and therefore is not subject to effective competition. The City implemented its rate authority certification by adopting rate orders requiring Century to reduce its basic service tier rates, make certain adjustments to its equipment and installation rates, and make refunds to subscribers. Century's revocation petition amounts to an attack on the City's authority to adopt those rate orders. Century also filed petitions for stay and review of the City's rate orders. This order addresses only Century's petition for reconsideration of the San Buenaventura Order. 3. In Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, First Order On Reconsideration, the Commission construed the effective competition provisions set forth in Section 623 as requiring that effective competition be demonstrated on the basis of a franchise area, which is defined as the area a cable operator is authorized to serve in its franchise. The Commission stated that a more restricted definition of a franchise area may be appropriate in some circumstances: An affirmative decision by a system operator to restrict service logically redefines its franchise area in terms of the objectives of this provision. Accordingly, we will permit franchise authorities to demonstrate the boundaries of such a redefined franchise area. Such a showing, however, will be limited to situations in which a system operator has itself, through its own conduct, self-defined the areas to be served to such an extent that this redefined area accurately portrays the operator's "franchise area." The fact that a franchise area has not as yet been filled out by construction of a system would not by itself be taken as redefining the service area. 4. The San Buenaventura Order examined the existence of effective competition in Century's franchise area by comparing cable system service area maps filed with the City by Century and by another cable operator, Avenue TV Cable Services, Inc., as part of the franchise renewal process in 1983, with maps filed with the City in 1998. Citing the Commission's decisions in Valley Center and Daniels, Century had argued that the absence of any expansion of its cable system into the portion of San Buenaventura served by Avenue is not relevant in determining whether effective competition exists in San Buenaventura. The Order disagreed, noting that "[t]he important difference between the two cases, however, is that in Daniels the cable operator, while not expanding into its competitor's service area, did, in fact, submit evidence demonstrating that it had substantially expanded its cable system and service area since receiving its franchise. In the instant proceeding, Century has submitted no evidence that it continues to expand its service area or that it has not affirmatively redefined its franchise area. . . ." The Order found that Century's current subscribers were located in portions of the franchise area not served by Avenue, and that Century had not expanded its service area since 1983. Based on those findings, the Order concluded that Century had not shown any intention to fill out its franchise area, and that Century, through such conduct, had self-defined its franchise area to include only the portion of the franchise area not served by Avenue and held that Century was not subject to effective competition within the redefined franchise area. III. DISCUSSION AND ANALYSIS 5. The Petition for Reconsideration presents information showing that Century has constructed more than 26 miles of cable plant extensions in San Buenaventura, passing 2,067 additional homes and providing service to 1,333 additional subscribers since 1990. Century argues that this evidence of system expansion demonstrates that the San Buenaventura Order erred in assuming that its cable system has not been extended since the 1983 franchise renewal. Century argues further that such additional construction eliminates the "important difference" which the San Buenaventura Order found between the facts in Daniels and in this case and which supported the findings of lack of effective competition. Century contends that the San Buenaventura Order's assumption that no additional service area expansion occurred is shown to be without foundation, irrational and arbitrary. Century further argues that the system construction maps it submitted to the City contained no lines or other markings that may be construed as marking any service area boundary. Century also contends that, although maps submitted by Avenue contained marking that may be construed as defining a service boundary, Avenue's markings may not properly be attributed to Century as evidence that Century redefined its service area. Finally, Century asserts that the Commission's rulings in the First Order On Recon and Valley Center make it clear that the absence of head-to-head competition is immaterial to the issue of effective competition, and that the City failed to satisfy its burden of proving that Century redefined its franchise area as found in the San Buenaventura Order. The City points out that none of Century's system expansion described in the petition for reconsideration is within Avenue's service area, and that Century does not contend otherwise. 6. After further consideration of the record, including information submitted by Century showing system expansion only within that portion of its service area not served by Avenue, we affirm the San Buenaventura Order and its conclusion that Century is not subject to effective competition within the San Buenaventura franchise area not served by Avenue. We find the analysis in the San Buenaventura Order of the Commission's criteria for cable operator redefinition of its service area and its application of the competing provider test to be fully supported by the record of this proceeding. The findings and conclusions of the San Buenaventura Order are fully consistent with the Commission's analysis in the First Order On Recon of the effective competition provisions of Section 632 of the Act as well as the application of those provisions in Valley Center. 7. In construing Section 623, the Commission noted that there may be some limited situations where use of a more restricted definition of franchise area than the whole authorized franchise area may be appropriate in applying the statutory tests for effective competition, and mentioned as an example where a system operator has county-wide operating rights but has determined to serve only a specific named community within that area. We do not believe the Commission intended for that one example to represent the only factual situation in which it may reasonably be concluded that a cable operator has redefined its franchise area. The issue is whether Century, "through its own conduct, self-defined the areas to be served to such an extent that this redefined area accurately portrays the operator's 'franchise area.'" The evidence in this proceeding is clear that San Buenaventura has been divided into two discrete areas where cable television service is provided. The Century system, in operation since the early 1970s, has served the eastern portion and has not crossed the de facto dividing line between its service area and the western portion, served by Avenue TV Cable, during that period. The Commission has said that "The fact that a franchise area has not as yet been filled out by construction of a system would not by itself be taken as redefining the service area." Century, on reconsideration, provides information that it has continued to construct physical plant and add subscribers, suggesting that it has continued to expand its service area. However, the information provided demonstrates only that its additional construction has taken place only within the eastern portion of the franchise area. In this respect this case is unlike the cases Century cites. Thus, for example, in Valley Center the Commission specifically noted that additional construction had taken place "some twenty miles north of Valley Center." In Daniels Cablevision (Pala Mesa) the system had nearly doubled its subscriber base and physical plant over the preceding 10 years, including areas outside its "areas of primary responsibility." In Daniels Cablevision (Encinitas) it was uncontested that the operator had "built it system in several portions of Encinitas unconnected to its primary service area, including [overbuilt areas]." We do not believe the Commission intended in Valley Center to suggest that failure to expand into areas served by another cable operator may not constitute evidence of service area redefinition, particularly where as here the evidence, including that submitted with Century's petition for reconsideration, shows no system expansion outside its western service area since its franchise renewal in 1983, that is for more than a decade and a half. This record establishes more than merely that Century has not yet filled out its service area, it provides substantial evidence that Century has no intention to expand its system into the portions of San Buenaventura not now served and has thus redefined its service area to include that part of the City of San Buenaventura not served by Avenue. Accordingly, we affirm the findings of the San Buenaventura Order that Century fails to satisfy the second leg of the competing provider test within its redefined service area, and that Century is not subject to effective competition within that redefined service area. IV. ORDERING CLAUSES 8. Accordingly, IT IS ORDERED, that the Petition for Reconsideration of Century Cable of Northern California Inc., 13 FCC Rcd 24153 (CSB 1998), filed by Century Cable of Northern California Inc. IS DENIED. 9. This action is taken pursuant to delegated authority pursuant to Section 0.321 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen, Chief Cable Services Bureau