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("RCN"), an affiliate of a local exchange carrier ("LEC")\@@q yO-ԍThe Communications Act defines the term "local exchange carrier" as:   #XX` ` any person that is engaged in the provision of telephone exchange service or exchange   #access. Such term does not include a person insofar as such person is engaged in the   #3provision of a commercial mobile service under Section 332(c), except to the extent that the Commission finds that such service should be included in the definition of such term. ` Communications Act  3(26), 47 U.S.C.  153(26).\ that is offering cable service in   zSomerville. In addition, Time Warner filed two supplements to its petition. No oppositions to Time Warner's submissions were filed.  S-  32.` ` 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  SP-  !operators which are not subject to effective competition.dPq yO"-ԍCommunications Act  623(a)(4), 47 U.S.C.  543(a)(4).d For purposes of the initial request for   kcertification, local franchising authorities may rely on a presumption that cable operators within their  S-  jurisdiction are not subject to effective competition unless they have actual knowledge to the contrary.P` q yO&-ԍ47 C.F.R.  76.906, 76.910(b)(4).P   Certification becomes effective 30 days from the date of filing unless the Commission finds that the" ,))ZZ."  S-  authority does not meet the statutory certification requirements.V( {Oh-ԍ47 C.F.R.  76.910(e); 47 C.F.R.  76.910(b); see also Communications Act  623(a)(4), 47 U.S.C.  543(a)(4). In Implementation of Cable Act Reform  S-  ?Provisions of the Telecommunications Act of 1996 ("Cable Act Reform Order"),EZV( yO-ԍ11 FCC Rcd 5937, 5944 (1996).E the Commission   instructed cable operators believing themselves subject to LEC effective competition under Section   623(l)(1)(D) of the Communications Act to file a petition for determination of effective competition  Sd-  pursuant to Section 76.7 of the Commission's rules.<dV( yO-ԍ47 C.F.R.  76.7.< Section 623(l)(1)(D) of the Communications Act provides that a cable operator is subject to effective competition where:   #XX` ` 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 directto  #Thome 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   #Fprogramming services so offered in that area are comparable to the video  S -programming services provided by the unaffiliated cable operator in that area.j zV( yO-ԍCommunications Act  623(l)(1)(D), 47 U.S.C.  543(l)(1)(D).j `  S - II.THE PLEADINGS  S\-  3.` ` Time Warner argues that it faces LEC effective competition in its Somerville,   Massachusetts franchise area from RCN, a LECaffiliated franchised cable operator. Time Warner   explains that in the time between the filing of its petition and its supplement, RCN's status changed from  S-  Lopen video system ("OVS") operator to cable operator.2  V( yO-  YԍAt the time that Time Warner filed its Petition, RCN was authorized by the Commission to be an OVS operator  {OV-  yin Somerville.  See In the Matter of RCNBETG, LLC, DA 97454, 12 FCC Rcd 2480 (rel. February 27, 1997)   (granting RCN's application for OVS certification covering 48 service areas in and around Boston, Massachusetts,   including Somerville). RCN was also operating pursuant to an Interim OVS Agreement permitting RCN to provide  {O-  ;OVS service to Somerville. See Petition, Exhibit I (Interim OVS Agreement). At the same time, however, as Time   Warner explains in its Petition and Supplement (dated January 13 1998) RCN was pursuing a cable franchise from  {OB-  /the City, which it eventually received on December 16, 1997. See Cable Television Provisional License   ("Provisional License") included with Time Warner's Supplement dated January 13, 1998. Accordingly, on   ;December 17, 1997, RCN filed a letter with the Commission withdrawing Somerville from its list of authorized OVS  {O -  service areas. See Supplement (dated January 13, 1998), Exhibit B (Letter from Jean L. Kiddoo and Kathy L.  {Of!-  xCooper, counsel for RCN, to Magalie R. Salas, Secretary, F.C.C., dated December 17, 1997); see also Supplement   x(dated January 13, 1998), Exhibit B (F.C.C.'s Public Notice regarding RCN's letter, DA 972672, dated December 22, 1997). With regard to the LEC affiliation requirement,   ]Time Warner contends that RCN currently markets both telephone and cable television service to  S-  Somerville residents. V( yO8&-  ԍIn support of this contention, Time Warner provides a RCN marketing brochure entitled "Join the Solidarity  {O'-Movement," which advertises RCN's telephone, cable and internet services.  See Petition at Exhibit D. Time Warner explains that RCN is a joint venture between RCN Telecom Services,"^ ,N(N(ZZ"   >Inc. ("RCNTS") and Boston Edison Company. Time Warner states that RCNTS is a whollyowned  S-  ksubsidiary of CTEC, "V( yO@-  ԍCTEC is a holding company with wholly and majorityowned subsidiaries engaged in the provision of   competitive local exchange services and cable television. CTEC operates as a local exchange carrier in  {O-  Pennsylvania, offering service to a 19county, 5067 square mile service territory in the state. See Petition at Exhibit B (CTEC Corporation SEC Form 10K, filed with the Securities and Exchange Commission on March 31, 1997). a local exchange carrier, and that RCNTS, itself, is engaged in the provision of  S-  local exchange service. V( yO-  ԍTime Warner notes that CTEC's SEC Form 10K states that RCNTS is a provider of "local and long distance  {O-  telephone service, video programming and internet access to households located in New York City and Boston." See   Petition at Exhibit B (CTEC Corporation SEC Form 10K, Item 1, Business Operations, RCN Telecom Services   Group). Time Warner further points out that the CTEC 10K states that in "Massachusetts, RCN is registered to  {O$ -  ,offer local exchange carrier services." Id.  See also Petition at Exhibit C (Peter Kiewit Sons', Inc. SEC Form 10K, Item 1, Business RCN Telecom Services, filed March 28, 1997). Time Warner additionally asserts that RCN is affiliated with MFS  S-  Communications Company, Inc. ("MFS"), another local exchange carrier. \. V( yOV-  ԍMFS is a holding company with subsidiaries providing "local and long distance switched service" and "local  {O-  Yaccess" service. See Petition at Exhibit E (MFS Communications Company, Inc. SEC Form 10K, Item 1, Business,  {O-filed May 16, 1997). MFS is now a whollyowned subsidiary of WorldCom, Inc. ("Worldcom").  Id.ĺ Time Warner explains that   MFS, RCN, and CTEC were, at one time, all owned by Peter Kiewit Sons, Inc., but that MFS was spun  off from Kiewit in September, 1995 and merged with WorldCom in 1996. Time Warner, states, however,  S-  =that RCN is still affiliated with MFS, through Kiewit, for purposes of the LEC affiliation requirement. R V( yO-  ԍTime Warner assumes that Kiewit shareholders retained their MFS stock after the spinoff and that the post  merger portion of WorldCom shares held by Kiewit stockholders would be approximately 315 million, or roughly   35% of all WorldCom shares. Time Warner also cites RCN's OVS Application which states that RCN "shares   wcertain affiliations through a number of common officers, directors and individual shareholders with WorldCom, Inc.  {O"-  <and/or certain of its subsidiaries." See Petition at Exhibit A (RCN's FCC Form 1275, filed Feb. 18, 1997, exhibit 1, p.2).   In sum, Time Warner argues that RCN's own LEC operations, as well as its affiliations with CTEC, MFS and WorldCom, clearly render RCN a LEC affiliate.  Sp-  P4.` ` With regard to the requirement that the LEC competitor offer( pV( yO-  ԍIn implementing the LEC effective competition test on an interim basis, the Commission determined that its   preexisting definition of the term "offer" as used in the three effective competition definitions set forth in the 1992  yOl-  Cable Act would apply to the LEC test. 11 FCC Rcd at 5942. The Commission previously determined that service of a multichannel video programming distributor will be deemed offered:   #CXX` ` (1) When the multichannel video programming distributor is physically able to deliver   #5service to potential subscribers, with the addition of no or only minimal additional   #investment by the distributor, in order for an individual subscriber to receive service; and   #(2) When no regulatory, technical or other impediments to households taking service exist,   #and potential subscribers in the franchise area are reasonably aware that they may purchase the services of the multichannel video programming distributor. ` 47 C.F.R.  76.905(e).  video programming service   kin the unaffiliated cable operator's franchise area, Time Warner asserts that RCN is physically able to"H ,N(N(ZZ "   deliver service to potential subscribers in Somerville. Time Warner contends that RCN has already   constructed its video programming distribution facility throughout most of the City and that construction  S-  to serve all parts of the City is proceeding rapidly.'V( yO-  ԍ Petition at 89; Supplement (dated August 19, 1998) at 1. Time Warner submits maps showing the extent of  {O-RCN's construction in Somerville. See Petition at Exhibit K; Supplement (dated August 19, 1998) at Exhibit A.' Time Warner states that there are at least 1,200 RCN  S-  subscribers in SomervilleP"V( yOJ-ԍSupplement (dated August 19, 1998) at 2.P and references an article from the Boston Globe confirming that RCN began  Sb-  serving subscribers in the City in October of 1997.bV( {O -ԍPetition at Exhibit M ("2d Cable Company Phasing in Service," Boston Globe, November 16, 1997). According to Time Warner, Somerville residents need   only contact RCN to activate service. Moreover, Time Warner points to the fact that RCN has a franchise   with the City of Somerville to provide cable television service as evidence that there are no regulatory,   technical or other impediments to households taking service from RCN. Time Warner also asserts that   the Commission's grant of RCN's OVS application, covering 48 service areas in and around Boston,  S-  Massachusetts, including Somerville,DV( {O~-ԍIn the Matter of RCNBETG, LLC, DA 97454, 12 FCC Rcd 2480 (rel. Feb. 27, 1997). and RCN's Interim OVS Agreement with the City of Somerville,  Sr-  permitting RCN to provide OVS service to the City,rV( {O-  ԍSee Petition at Exhibit I (Interim Open Video Systems Agreement between the City of Somerville, Massachusetts and RCNBecoCom, L.L.C., July 23, 1997). further demonstrate that there are no regulatory   impediments to receipt of RCN's service by Somerville residents. Finally, Time Warner contends that   RCN's intense advertising and marketing efforts as well as local newspaper reports ensure that Somerville   residents are reasonably aware that they may purchase RCN's service. Time Warner states that RCN has   /aggressively marketed the availability of its cable service to Somerville residents through local media,  S -doortodoor canvassing, direct mail, and telemarketing.$ 0 V( {Oz-  ԍSee Petition at Exhibit D attaching: (1) RCN's marketing brochures distributed to Somerville residents; (2)   advertisements for RCN's cable service appearing in local newspapers serving Somerville and surrounding areas; and  {O -  i(3) newspaper articles regarding RCN's video service entry in Somerville. See also Supplement (dated August 19, 1998) at Exhibit B.  SZ-  5.` ` Time Warner also asserts that RCN offers programming comparableTzZV( yO-  ԍThe Commission observed that Congress specified a different definition of comparable programming for the   LEC effective competition test from that adopted for the first three effective competition tests enacted as part of the   1992 Cable Act. Although soliciting comment as to the revised definition, the Commission on an interim basis   ydetermined that it will apply this new comparable programming standard which "includes access to at least 12   channels of programming, at least some of which are television broadcasting signals" to the LEC effective  {O!-  competition test. See Cable Act Reform Order at 12 (quoting 1996 Act Conference Report, S. Rep. 104230 at 170 (Feb. 1, 1996)).T to that offered by  S2-  Time Warner in Somerville. Time Warner provides RCN's channel lineup which demonstrates that RCN  S -  offers 95 channels of video programming, 12 of which are local television broadcast signals.x ^V( {O&-ԍSee Petition at Exhibit S (attaching RCN's channel lineup in Somerville).x Time" ,N(N(ZZ"   Warner also includes its own channel lineup which indicates that it offers 80 channels of video  S-programming in Somerville.V( {O@-ԍSee Petition at Exhibit T (attaching Time Warner's channel lineup in Somerville).  S- III.ANALYSIS  S`-  S8-  6.` ` In the absence of a demonstration to the contrary, cable systems are presumed not to be  S-  subject to effective competition.>ZV( yO -ԍ47 C.F.R.  76.906.> 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  S-of the Commission's rules, is present within the franchise area.TV( yOJ -ԍ47 C.F.R.  76.905 and  76.911(b)(1).T Time Warner has met this burden.  Sp-  A7.` ` 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 multichannel video programming   {distributor using the facilities of such LEC or its affiliate), we find that Time Warner has provided   sufficient evidence, through SEC documents and other material, demonstrating that RCN is LECaffiliated  S -  /under the Commission's interim rules.^ zV( {O-  ԍCable Act Reform Order, 11 FCC Rcd at 59385945, 59615964. In fact, David McCourt, CEO of RCN, has  {O-  stated that RCN is a "phone company that offers cable service." See Tony Munroe, "Firm Offering OneStop  {O~-Shopping for Cable, Phone," Boston Herald, August 14, 1996 at p. 24.  Therefore, we find that Time Warner satisfies the affiliation   prong of the LEC effective competition test. In addition, we note that Time Warner is unaffiliated with RCN or any of RCN's partners.  S0-  8.` ` We also find that Time Warner has submitted sufficient evidence showing that RCN's   program service offering is comparable to Time Warner's channel lineup in Somerville. The channel   information for RCN submitted by Time Warner establishes that RCN offers more than 95 channels of   kprogramming, including 12 local broadcast channels, in satisfaction of the programming comparability criterion.  S@-  #9.` ` In addition, we conclude that, based on the information before us, RCN is offering service   in Time Warner's franchise area sufficient to demonstrate the presence of effective competition. RCN has   already constructed its video distribution facility throughout most of Somerville and is actively signing  S-  up customers. Maps submitted by Time Warner show the substantial extent of RCN's construction|V( {O!-ԍSee Petition at Exhibit K and Supplement (dated August 19, 1998) at Exhibit A.| and  S-  Time Warner reports that there are at least 1,200 RCN subscribers in Somerville.P2 V( yOr#-ԍSupplement (dated August 19, 1998) at 2.P We further believe  Sx-  that RCN's Cable Television Provisional License, received from the City on December 16, 1997,  SP-  jdemonstrates RCN's commitment to provide video programming service to Somerville residents now and"P ,N(N(ZZ"  S-  in the future.'"V( yOh-  =ԍSupplement (dated January 13, 1998) attaching Cable Television Provisional License. The term of the   Provisional License runs from December 16, 1997 until December 16, 1998. Provisional License at Section 2.2.   According to the terms of the Provisional License, at such time that the Licensee (RCN) complies with all applicable  {O-requirements, the Mayor of the City of Somerville shall grant the Licensee a 10 year Final License. Id.' As noted by Time Warner in one of its supplements, the license requires RCN to complete   construction of its cable system and make its cable service available to all residents of the City within 8  S-  .months of the Execution Date of the Final License.yV( yO-ԍSupplement (dated January 13, 1998), Provisional License at Sections 4.1 and 4.2.y Under the Provisional License, RCN is required to  S-  maintain a performance bond running to the City in the sum of $300,000@BV( {Oj -ԍId. at Section 9.2@ and a letter of credit for  S`-  $60,000A `V( {O -ԍId. at Section 9.3.A to ensure that RCN performs its obligations under the Final License. Finally, the Provisional  S8-  License contains a liquidated damages section providing for the assessment of financial penalties against  S-  RCN should it default in the performance of obligations imposed by the Final License.B!f V( {O-ԍId. at Section 11.2.B We find that the   City's grant to RCN of a Provisional License to provide cable service and the requirements and obligations   lcontained therein are clear evidence of RCN's commitment to providing such service to Somerville residents.  SH -  B10.` ` We note that RCN's extensive marketing efforts and the wide press coverage of RCN's   construction activity in the local media ensure that potential subscribers are reasonably aware of the   availability of RCN's service. Generally, subscribers in wired areas are able to receive RCN's cable   ?service for only a minimal additional investment and without encountering regulatory or technical obstacles.  SX-  11.` ` We find that Time Warner has submitted sufficient evidence demonstrating that its cable  S0-  >system serving Somerville, Massachusetts is subject to LEC effective competition from RCN. Time Warner's petition is hereby granted and the certification of the City of Somerville is revoked.  S- IV.ORDERING CLAUSES  S-  Sh-  %12.` ` Accordingly, IT IS ORDERED that the Petition for Determination of Effective   Competition filed by Time Warner Cable challenging the certification of the City of Somerville,  S-Massachusetts IS GRANTED.  S-  13.` ` IT IS FURTHER ORDERED that the certification of the City of Somerville,  S-  Massachusetts to regulate the basic cable rates of Time Warner Cable in Somerville, Massachusetts IS  Sx-REVOKED .  S(-  14.` ` This action is taken pursuant to the interim rules adopted in Implementation of Cable  S-  Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 (1996), and is without" !,N(N(ZZk"   prejudice to any further action taken by the Commission in adopting final rules pursuant to the Notice of  S-Proposed Rulemaking contained therein.i"V( {O@-ԍCable Act Reform Order, 11 FCC Rcd at 59385945, 59615964.i  S-  S-  15.` ` This action is taken pursuant to delegated authority under Section 0.321 of the  S`-Commission's rules, as amended.<#`ZV( yOZ-ԍ47 C.F.R  0.321.< ` `  hh,FEDERAL COMMUNICATIONS COMMISSION ` `  hh,Deborah A. Lathen  S -` `  hh,Chief, Cable Services Bureau      X"- #Xj\  P6G;9XP#