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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: ) CSR 5104-E ) Tribune-United Cable of Oakland County- ) Troy, MI d/b/a TCI Cablevision of ) CUID No. MI0836 Oakland County, Inc. ) ) Petition for Special Relief ) MEMORANDUM OPINION AND ORDER Adopted: February 2, 1998 Released: February 5, 1998 By the Deputy Chief, Cable Services Bureau: I. INTRODUCTION 1. Tribune-United Cable of Oakland County d/b/a TCI Cablevision of Oakland County, Inc. ("TCI") has filed a Petition for Special Relief seeking a determination of effective competition. TCI asserts that it is subject to effective competition in Troy, Michigan because of the presence of Ameritech New Media's cable service in that City. This petition is unopposed. For the reasons discussed below, the Petition is granted. 2. Section 623(a)(4) of the Communications Act of 1934, as amended ("Communications Act") allows franchising authorities to become certified to regulate basic cable service rates of cable operators which are not subject to effective competition. For purposes of the initial request for certification, local franchising authorities may rely on a presumption that cable operators within their jurisdiction are not subject to effective competition unless they have actual knowledge to the contrary. Certification becomes effective 30 days from the date of filing unless the Commission finds that the authority does not meet the statutory certification requirements. 3. In Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996 ("Cable Act Reform Order"), the Commission instructed cable operators believing themselves subject to local exchange carrier ("LEC") effective competition under Section 623(l)(1)(D) of the Communications Act to file a petition for determination of effective competition pursuant to Section 76.7 of the Commission's rules. A finding that a cable system is subject to effective competition precludes regulation of its cable rates by the local franchising authority. Section 623(l)(1)(D) of the Communications Act provides that a cable operator is subject to effective competition where: a local exchange carrier or its affiliate (or any multichannel video programming distributor using the facilities of such carrier or its affiliate) offers video programming services directly to subscribers by any means (other than direct-to- home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area. II. THE PLEADINGS 4. TCI asserts that it is subject to LEC effective competition in its Troy, Michigan franchise area. With regard to the LEC affiliation requirement, TCI asserts that Ameritech New Media ("Ameritech") is a competing franchised cable operator wholly owned by Ameritech Corporation, a local exchange carrier serving customers in Illinois, Indiana, Ohio, Michigan, and Wisconsin. 5. With regard to the requirement that the LEC competitor offer video programming service in the unaffiliated cable operator's franchise area, TCI asserts that Ameritech has completed more than 70% of an overbuild of Troy and is now providing service to more than 2,500 customers. TCI adds that Ameritech has heavily marketed the availability of its cable service through local media and other means. TCI asserts there are no regulatory, technical, or other impediments to households taking service from Ameritech. 6. TCI also asserts that Ameritech offers comparable programming to Troy subscribers. Specifically, TCI provides Ameritech's channel line-up which demonstrates that Ameritech offers over 70 channels, of which at least 8 are local television broadcasting signals. TCI offers 100 channels of programming in Troy, of which at least 8 are local television broadcast signals. 7. Finally, TCI states that it has made several pricing and marketing changes in response to competition from Ameritech. TCI notes that it recently: (1) reduced rates for basic service; (2) added channels to its basic and expanded tiers; and (3) moved the Disney Channel from premium to expanded basic. III. ANALYSIS 8. In the absence of a demonstration to the contrary, cable systems are presumed not to be subject to effective competition as defined in the Communications Act. The cable operator bears the burden of rebutting the presumption that such effective competition does not exist and must provide evidence sufficient to demonstrate that effective competition, as defined by Section 76.905 of the Commission's rules, is present in the franchise area. TCI has met this burden. 9. With regard to the first part of the LEC effective competition test, which requires that the alleged competitive service be provided by a LEC or its affiliate (or any multi-channel video programming distributor ("MVPD") using the facilities of such LEC or its affiliate), we find that TCI has provided sufficient evidence demonstrating that Ameritech is an MVPD wholly owned by a LEC. Ameritech Corporation is a LEC as defined by the Communications Act, and Ameritech meets the Commission's definition of MVPD. Therefore, we find that TCI demonstrates that Ameritech satisfies the affiliation prong of the LEC effective competition test. TCI is unaffiliated with both Ameritech and Ameritech Corporation. 10. We also find that TCI has submitted sufficient evidence to show that the programming of Ameritech is comparable to the programming which it provides. The channel information for Ameritech submitted by TCI establishes that Ameritech offers more than 80 channels of programming, including 8 local broadcast channels. This offering satisfies the programming comparability criterion. 11. In addition, we find that based on the information before us, Ameritech is offering service in TCI's franchise area sufficient to demonstrate the presence of effective competition. Ameritech has nearly completed its overbuild of TCI's system in Troy and is now competing for customers with TCI in the area at issue. We find that Ameritech's rapid construction, and its undisputed recruitment of 2,500 subscribers in the franchise area are indicia that Ameritech is physically able to offer service in the cable community. 12. We note that Ameritech's extensive marketing efforts and the press coverage of Ameritech's construction and service offerings in the local media ensure that potential subscribers are reasonably aware of the availability of Ameritech's service. In those areas wired and marketed by Ameritech, potential subscribers need only contact Ameritech to activate service. Moreover, those subscribers are able to receive Ameritech's cable service for little or no additional investment and without encountering regulatory or technical obstacles. We also note that TCI has lowered its rates and added new channels for the benefit of its subscribers. Consistent with Congressional intent in adopting Section 623(l)(1)(D) of the Communications Act, under the circumstances we find "effective competition" to be present. IV. ORDERING CLAUSES 13. Accordingly, IT IS ORDERED that the Petition for Special Relief seeking a determination of effective competition filed by Tribune-United Cable of Oakland County d/b/a TCI Cablevision of Oakland County, Inc. IS GRANTED. 14. IT IS FURTHER ORDERED that the certification of the Intergovernmental Cable Communications Authority to regulate the basic cable rates of TCI in Troy, Michigan IS REVOKED. 15. This action is taken pursuant to the interim rules adopted in Implementation of Cable Reform Provisions of the Telecommunications Act of 1996, and is without prejudice to any further action taken by the Commission in adopting final rules pursuant to the Notice of Proposed Rulemaking contained therein. 16. This action is taken pursuant to delegated authority under Section 0.321 of the Commission's rules, as amended. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau