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(1) (a) (i) 1) a)D )DDDFrf(q Default Paragraph FoDefault Paragraph Font)11#XP\  P6QXP##C\  P6QP#toc 1toc 1*` hp x (#44` hp x (#2J+dB,D-F.Htoc 2toc 2+` hp x (#4 4 ` hp x (#toc 3toc 3,` hp x (#4 4 ` hp x (#toc 4toc 4-` hp x (#4 <4 <` hp x (#toc 5toc 5.` hp x (#4<4<` hp x (#2Q/K0v,M1M2Otoc 6toc 6/` hp x (#44` hp x (#toc 7toc 70 toc 8toc 81` hp x (#44` hp x (#toc 9toc 92` hp x (#44` hp x (#2.Y3R4.T5LV6jXindex 1index 13` hp x (#4 4 ` hp x (#index 2index 24` hp x (#4 4 ` hp x (#toatoa5` hp x (#` hp x (#captioncaption6;1#XP\  P6QXP##C\  P6QP#2]7`Y8Z9ZKf[_Equation Caption_Equation Caption711#XP\  P6QXP##C\  P6QP#endnote referenceendnote reference844#XP\  P6QXP##C\  P6QP#footnote referencefootnote reference94#XP\  P6QXP#"i~'^:DpddȨDDDdp4D48ddddddddddDDpppd|Ld|pȐD8DtdDdpXpXDdp8Dp8pdppXLDpdddXP,PhD4htDDD4DDDDDDdDp8dddddȐXXXXXJ8J8J8J8pddddppppddpddddzpdddXXhXXXXXdddhdptL8LpLDLpphhp8ZDP8pppddƐXXXpLpLpLphfDtppppppȐhXXXpDppLDd4ddC6CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxHjdDdddddd   Z%>   S -  MEMORANDUM OPINION AND ORDER TP  S8-X` hp x (#%'0*,.8135@8:  yO-ԍ47 C.F.R.  76.914.> has filed a petition with the Commissionn X yO-ԍPetition for Revocation filed by Falcon on April 7, 1998 ("Petition").n seeking a revocation  xof the certification of the City of Roseburg, Oregon (the "City" or "Roseburg") to regulate basic cable rates  S- x{based upon the presence of effective competition. yOX- xԍOn September 2, 1993, the City filed an FCC Form 328 to become certified to regulate the basic cable service rates in its franchise area. The City's certification became effective on October 3, 1993. Specifically, Falcon argues that it is subject to  xcompeting provider effective competition due to the competing programming services of various directto S- xhome service ("DBS") providers. The City submitted an opposition@ yO`- xԍOpposition to Petition for Revocation filed by the City of Roseburg, Oregon on June 3, 1998 ("Opposition").  xJOn April 29th, 1998, the City filed a Motion requesting an extension of time in which to file a response to Falcon's  xpetition. The City argued that it did not receive Falcon's petition until two weeks after it was filed and required  xYadditional time to prepare its response. The Motion states that the City notified counsel for Falcon of its intention  xto file the Motion, and that the counsel for Falcon indicated they would not oppose the Motion. In order to develop a complete record in this instance, the City's motion is granted. to which Falcon replied.}Z  yO$- xhԍReply to Opposition of the City of Roseburg, Oregon filed by Falcon on June 18, 1998 ("Reply"). Additionally,  {O%- xJCongressman DeFazio of Oregon's fourth district filed a letter urging dismissal of Falcon's petition. See Letter from Rep. DeFazio to William Kennard, Chairman, FCC (May 6, 1998).} For the reasons discussed below, the petition is denied.  S- ",**880"Ԍ S-II.xBACKGROUND  S- ` x2.` ` Section 623(a)(4) of the Communications Act permits local franchising authorities to  S- 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.e`] yO-ԍCommunications Act  623(a)(4), 47 U.S.C.  543(a)(4). e For purposes of the initial request  S8- 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.BX] yO -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  S- xfranchising authority does not meet the statutory certification requirements.z] yOH - xԍ47 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  {O0- 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).ĥ Cable operators may file  xpetitions for reconsideration of the franchising authority's certification within 30 days from the date such  Sp- xLcertification becomes effective.g ^p* ] {O:- xԍ47 C.F.R.  1.106, 76.911; Implementation of Sections of the Cable Television Consumer Protection and  {O- 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  SH - xpetition for reconsideration alleging effective competition.J H P ] yO8-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 - x.challenge the franchising authority's certification by filing a petition for revocation.D ] yOx-ԍ47 C.F.R.  76.914.D While the petition  xfor revocation is pending, the franchising authority may continue to regulate the basic cable rates of its  S -franchisees.A p] yO-ԍ47 C.F.R.  76.914(d).A  SX- ` x3.` ` Under Section 76.914 of the Commission's rules, pursuant to which Falcon filed this  xpetition, a franchising authority's certification shall be revoked if one of the conditions for certification  S- xzis not fulfilled.D ] yO#-ԍ47 C.F.R.  76.914(a)(2).D Section 76.910 required that for a franchising authority to be certified to regulate the  xbasic service tier of a cable system within its jurisdiction, the cable system must not be subject to effective  S- xcompetition. In the absence of a demonstration to the contrary, cable systems are presumed not to be" ,`(`(88"  S- xsubject to effective competition.>] yOh-ԍ47 C.F.R.  76.906.> A finding of effective competition will exempt a cable operator from  S-rate regulation under the Commission's rules.KX] {O-ԍSee 47 C.F.R.  76.905(a).K  S-  S- ` ~x4.` ` One basis upon which a cable operator may be deemed subject to effective competition  x[is the competing provider test. Under the test, contained in Section 623(l)(1)(B) of the Communications Act, a cable system is subject to effective competition if the franchise area is:   0Xx(i) served by at least two unaffiliated multichannel video programming distributors each of which  S-  offers comparable video programming] yOJ - xkԍFor this test, programming is considered "comparable" if it consists of "at least 12 channels of video programming, including at least one channel of nonbroadcast service programming." 47 C.F.R.  76.905(g). to at least 50 percent of the households in the franchise area; and(#   0Xx(ii) the number of households subscribing to programming services offered by multichannel video   programming distributors other than the largest multichannel video programming distributor  S -exceeds 15 percent of the households in the franchise area. B] {O- xԍCommunications 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). (#  S -  S - III.xSUMMARY OF PLEADINGS  S -  S - ` Bx5.` ` Falcon alleges that its cable system serving the City of Roseburg is subject to effective  xcompetition and, therefore, is exempt from rate regulation. Falcon bases its contention on the availability  xof various DBS video programming services in the City. Falcon claims that both prongs of the competing  xprovider effective competition test in Section 623(1)(1)(B) of the Communications Act are satisfied  S- x\because the various DBS providers] yO- xԍFalcon's subscribership figures includes various DBS service providers including DISH Network and Primestar. Petition at 2. each offer comparable programming to at least 50 percent of the  xhouseholds in the Communities and the number of actual subscribers to DBS, in the aggregate, exceeds 15 percent of the households in the City.  S@- ` x6.` ` The first prong of the competing provider test requires that at least two unaffiliated  S- x[multichannel video programming distributors ("MVPDs") each offer comparable programming to at least  S- x50 percent of the households in the franchise area.\ ] yO"- xԍThe Commission has stated that, for purposes of effective competition, the term "households" the same meaning  {OL#- xZas found in the 1990 Census. Implementation of Cable Act Reform Provisions of the Telecommunications Act of  {O$-1996, Third Order on Reconsideration, 9 FCC Rcd 4316, 4324 (1994). Falcon maintains that several DBS providers offer  S- xcomparable programming to at least 50 percent of the households in the City.<] yO&-ԍPetition at 5.< Falcon states that the",`(`(88"  S- xCommission has recognized that DBS is available nationwidek\] {Oh- xԍId., citing Reexamination of the Effective Competition Standard for the Regulation of Cable Television Basic  {O2- xKService Rates, MM Docket No. 904, 6 FCC Rcd 4545, 4554 n.52 (1991) (DBS service presumed to be available nationwide when any one DBS licensee begins operations). k and has presumed that  S- xyDBS providers satisfy the 50 percent threshold.] {Od-ԍId., citing Time Warner EntertainmentAdvanced/Newhouse Partnership, 12 FCC Rcd 13801, 13806 (1997). Thus, Falcon maintains that it satisfies the 50 percent availability requirement of the first prong of the competing provider test.  S`- ` x7.` ` The first prong of the competing provider test also requires that at least two competing  S8- xyproviders offer comparable programming.}8~] {OV -ԍ47 U.S.C.  543(1)(l)(B). See supra n.16 discussing comparable programming.} Falcon states that DBS providers such as the DISH network  xyand Primestar have already been found to offer comparable programming in accordance with Commission  S- xrules.z] {O-ԍPetition at 4, citing Media One of Georgia, DA 97550 (rel. March 17, 1996).z Falcon provides programming lineups indicating the DISH network offers over 50 video channels,  S-and Primestar offers over 150 channels.E] yO-ԍPetition at Exhibits B and C.E  Sp- ` x8.` ` The second prong of the competing provider test requires that at least 15 percent of the  SH - xhouseholds in the City be subscribers to an MVPD other than the largest MVPD.DH 2 ] yO-ԍ47 C.F.R.  76.905(b)(2).D Falcon asserts that it  xis the largest MVPD serving the City and subscribers to DBS in the aggregate satisfy the 15 percent penetration requirement.  S - ` Ax9.` ` In its petition, Falcon relied upon 1990 Census data for the zip code 97470 as the starting  xpoint of its analysis and developed a growth factor to update that data and arrive at an estimate of the  SX- xapproximate total number of current households in the City.X ] yO- x[ԍPetition at 7 and Exhibit H. The 1990 Census counted 16,054 households in zip code 97470 and 6,750 households in the City of Roseburg. The City of Roseburg is located entirely  S0- xwithin the zip code of 97470.D0] yO-ԍPetition at 6 and Exhibit H.D Falcon used data from the 1990 census because no other source of  S- xjhousehold data for the franchise area is available.3] yOR!-ԍReply at 5.3 Falcon calculated the growth factor by comparing the  x1990 Census data in the zip code 97470 to the current household information for the zip code provided  S- xby SkyTRENDS.n":] yO$- xԍSkyTRENDS is a partnership between the Satellite Broadcasting and Communities Association ("SCBA") and  xMedia Business Corp. which was established for the purpose of providing current economic and subscriber trends  {O"&- xin the DBS marketplace. SCBA ex parte Comments at 2. SkyTRENDS maintains a database of home satellite  x-subscribers counts by zip code. Sky TRENDS obtains its household count from the United States Postal Service. "&,`(`('" Petition at Exhibit I.n The result of this comparison produces a household growth rate of approximately"X,`(`(88"  S- x=21%._X] yO-ԍ16,054 household to 19,452 household is a 21% increase._ Falcon assumed that the household growth rate was the same for the City as the entire zip code,  xzand multiplied the 21 percent household growth rate multiple to the 1990 Census data for the City to  S-determine the approximate current number of households in the City totals 8,179.X ] yO8-ԍA 21% increase in 6,750 households equals 8,179.X  S`- ` x10.` ` Falcon asserts that because the City contained 42% of the households in the zip code in  S8- x1990, it must also presently contain 42% of the DBS subscribers in the zip code. Using SkyTRENDS'  xestimate of 4,143 DBS subscribers in the entire zip code, Falcon calculates that there are 1,740 DBS  S- xlsubscribers in the City.;!x] yO -ԍ8,179/19,452 = 42%.; Based on its assumptions regarding the number of households and DBS  xsubscribers in the City, Falcon maintains that the DBS providers have collectively achieved a 21%  S-penetration among households in the City.f"] yO@-ԍ1,740 DBS subscribers/8,179 households = 21% penetration rate.f  SH - ` ԋx11.` ` In opposition, the City argues that Falcon's petition is procedurally defective. The City  S - xmaintains that a cable operator that believes it has become subject to effective competition must follow  xthe procedures of Section 76.915 of the Commission's rules rather than Section 76.914, pursuant to which  S - xjFalcon filed.#  {O- x-ԍSee 47 C.F.R.  76.915 ("A cable operator that becomes subject to effective competition may petition the franchising authority for a change in its regulatory status."). In this regard, the City argues that a cable operator may only file a petition for revocation  xwith the Commission after it petitions a local franchise authority for a change in regulatory status.  xyAdditionally, the City asserts that Falcon's calculations are based on unsupportable factual assumptions,  xand therefore has not met its burden of demonstrating the presence of effective competition. The City  S0- x-does not dispute that the 50% prong of the competing provider test is met.8$0  yO-ԍOpposition at 5.8 The City argues that Falcon's  xassumptions regarding the distribution of household growth between the city and noncity areas in the zip  xcode are not supported by the record. The City maintains that the percentage of DBS subscribers is higher  xNoutside the City because that area contains homes not passed by a cable operator, and it has been  S- xrecognized that DBS penetration is higher in areas unserved by cable.8%  {O -ԍId. at 11.8 Based on assumptions it argues  Sh- xare more plausible, the City calculates that there are 1,173 DBS subscribers in the franchise area.&h yO#- xԍThe City estimates that only half of the DBS subscribers in the 97470 zip code are in areas passed by Falcon's  xcable system (4,143/2 = 2072). The City estimates that Falcon passed a total of 14,441 households in the vicinity  xof the City, of which 56.6% are in the franchise area (8,179 (Falcon's current estimate of households in the franchise  x.area)/14,441 = 56.6). Assuming that the DBS subscribers passed by Falcon's system are allocated in the same  xproportion, the City to calculates the number of DBS subscribers in the franchise area as 1,173 (56.6% of 2,072 is 1,173). Opposition at 12. Under"h&,`(`(88"  S-the City's calculation, 14.3% of the households in the City subscribe to DBS.h' yOh-ԍ1,173 DBS subscribers/8,179 households = 14.3% penetration rate.h  S- ` #x12.` ` In reply, Falcon argues its petition was correctly brought before the Commission. Falcon  x=argues that Section 76.915 is phased in permissive terms, and does not require the cable operator to first  xpetition the franchising authority for change in regulatory status. Regarding its assertion that DBS  xMsubscribers exceed 15% of the households in the franchise area, Falcon argues that its calculations are  S- x/based on the most recent data, and assumptions most adverse to a finding of effective competition.3(X] yO -ԍReply at 8.3  x.Falcon acknowledges that it was required to extrapolate some information in making its calculations, but  xkargues that its assumptions are reasonable. Falcon maintains that if additional proof is required, DBS providers should provide subscriber information on a franchisespecific basis. T  SH - IV.x DISCUSSION  S -  S - ` x13.` ` As a threshold matter, we find that Falcon's petition for revocation of the City's  S - xycertification was properly brought with the Commission. The City incorrectly interprets Section 76.915  xLas requiring Falcon to first file a petition for change in regulatory status with the City. The Commission  xhas consistently accepted petitions for revocation without the cable operator first presenting its case to the  SX- xlocal franchising authority.n)X] {O-ԍSee e.g. TKR Cable of Northern Kentucky, 11 FCC Rcd 9974 (1996).n As we have stated previously, Section 76.915 creates an optional  S0- xderegulation procedure.*$0z] {OJ- xԍ See Daniels Cablevision, Inc. d/b/a/ North County Cablevision, L.P., Order on Reconsideration, 12 FCC Rcd  {O- xi17410 (1997) citing 47 C.F.R.  76.915(a) (holding that the Commission's regulations clearly contemplate cable  xoperators bringing petitions for revocation based on the presence of effective competition directly to the Commission). The language of Section 76.914 permits cable operators to seek deregulation  S-directly from the Commission.c+Xf ] yO- xhԍId. ("The fact that Section 76.915 is intended as optional is demonstrated by the provision which provides that  x,'[a] cable operator that becomes subject to effective competition may petition the franchising authority for change  yO-in its regulatory status'") c  S- ` x14.` ` With respect to determining whether Falcon is subject to effective competition under the  xcompeting provider test, we find that Falcon has not meet its burden. Under the first prong of the test,  x[the City does not dispute, and we find that at least 50 percent of the households in the franchise area are  S@- xserved by at least two unaffiliated MVPDs each offering comparable video programming.8,@ ] yOf"-ԍOpposition at 5.8 Regarding  x<the 15 percent penetration requirement, both Falcon and the City have submitted data purporting to update  xMthe 1990 Census data to show the number of households receiving video services other than from the  xjlargest MVPD. We have stated that "where both the cable operator and the franchising authority submit  S- x household numbers more current than the most recent available census data, it is the cable operator's",,`(`(88"  xburden to demonstrate that its more current household numbers are more accurate and reliable than the  S-household numbers submitted by the franchising authority."h-] {O@-ԍTCI Cablevision, Inc., 10 FCC Rcd 2925, 2927 (1995).h Falcon has not met this burden.  S- ` ~x15.` ` Falcon's showing fails to demonstrate that its assumptions regarding growth for the zip  xcode can be used as a statistically accurate basis to calculate current household and DBS subscriber  S8- xnumbers in the franchise area.>.X8Z] yO2- xiԍFalcon's calculations are based on approximating household growth in the franchise area based on household  xgrowth in the zip code encompassing the franchise area, although the franchise area encompasses only 10% of the total area in the zip code.> Falcon assumes that from 1990 to 1997, the growth in households was  xat an equal rate in both the City and the zip code, although population growth was much greater in the  S- xCity of Roseburg than in surrounding areas during that time period./z] yO - xԍThe City is currently growing at 1.5% per annum compared to a growth rate of 1% in surrounding Douglas County. Opposition at 7. Falcon argues that population  xgrowth has no correlation to household growth, but offers no explanation as to why its extrapolation of  x?growth in the zip code is an accurate means to determine the current number of households in the  xfranchise area. Similarly, without a clear explanation, Falcon assumes that DBS penetration is equal  xthroughout the zip code, although it recognizes some parts of the zip code are not served by cable and  S - xpresumably would have higher DBS penetration.0 ] yO- x-ԍFalcon states as a fact that in an area where cable service is actively competing against DBS, subscribers to both services will be evenly distributed in proportion to the number of households. Reply at 6.  Falcon has failed to demonstrate that the assumptions  xsupporting its household and DBS penetration calculations are reliable. Accordingly, Falcon has failed  xto meet its burden of proving that its cable system serving the City of Roseburg is subject to competing provider effective competition.  SX- ` Qx16.` ` Falcon suggests that DBS operators should be required to track and provide subscriber  xnumbers on a franchisespecific basis instead of providing information based on zip code in instances such  S- xas this when zip code data is not dispositive.:1Z* ] {O- xjԍPetition at 7 n. 19. See 47 C.F.R.  76.911(a)(2), requiring a competitor of a cable operator to provide  xinformation regarding its reach and number of subscribers within 15 days of a request for such information by a cable operator.: We note that the mechanisms for identifying the physical  xlocations of DBS subscribers from their street addresses have been improving and that the socalled  xy"geocoding" process that is available from several commercial entities provides a potential means of more  xyclosely associating DBS subscribers with specific franchise areas. However, the information on which to  x=conclude that effective competition exists in Roseburg is not now before us so that this petition must be  xdenied. This denial is without prejudice to Falcon refiling a petition with more reliable information  S-obtained from the relevant cable competitor pursuant to Section 76.911(a)(2) of the Commission's rules.D2L ] yO$-ԍ47 C.F.R.  76.911(a)(2).D  Sx-"x2,`(`(88"Ԍ S- V. x ORDERING CLAUSES  S-  S- ` x17.` ` Accordingly, IT IS ORDERED that the petition for revocation of the certification of the  x.City of Roseburg, Oregon to regulate basic cable rates filed by Falcon Community Ventures I, L.P. d/b/a Falcon Cable TV IS DENIED.  S- ` ax18.` ` This action is taken pursuant to delegated authority under Section 0.321, 47 C.F.R. 0.321, of the Commission's rules as amended. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhDeborah A. Lathen x` `  hhChief, Cable Services Bureau