Effective
Competition Filings
NATOA 2003 Annual Conference
Denver, Colorado
September 10-13, 2003
Prepared by:
BRIAN
T. GROGAN, ESQ.
Moss
& Barnett
A
Professional Association
4800
Wells Fargo Center
90
South Seventh Street
Minneapolis,
MN 55402-4129
Telephone: (612) 347-0340
Facsimile: (612) 339-6686
Email: groganb@moss-barnett.com
Web
Site:www.municipalcommunicationslaw.com
Under FCC regulations at 47 C.F.R.
§ 76.905 cable systems are subject to effective competition when any of
the following conditions are met:
1.
Fewer than 30% of the households in its franchise area
subscribe to the cable service of a cable system.
2.
The franchise area is:
i.
served by at least two unaffiliated multi-channel video
programming distributors (“MVPDs”) each of which offers comparable programming
to at least 50% of the households in the franchise area; and
ii.
the number of households subscribing to multi-channel video
programming other than the largest MVPD exceeds 15% of the households in the
franchise area.
3.
A MVPD, operated by the franchising authority for that
franchise area, offers video programming to at least 50% of the households in
the franchise area.
4.
A local exchange carrier or its affiliate (or any MVPD 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.
The key criteria which the cable
industry has been using in its petitions for effective competition is the
criteria outlined in #2 above.
Generally, the industry’s petitions argue that a direct broadcast satellite
(“DBS”) provider meets this criteria because it offers comparable programming
to the entire franchise area via its satellite delivered signal and its
penetration in the franchise area exceeds 15% of the households.
FCC regulations at 47 C.F.R. § 76.905
provide a few definitions which may be helpful when analyzing whether effective
competition is present in your community.
1.
Each separately billed or billable customer counts as a
“household” subscribing to or being offered video programming services, with
the exception of multiple dwelling buildings that are billed as a single
customer. Individual units of multiple
dwelling buildings count as separate households.
2.
The term “households”
does not include those dwellings that are used solely for seasonal,
occasional or recreational use.
3.
A MVPD is an entity such as, but not limited to, a cable
operator, a multi-channel multipoint distribution service, a DBS service, a
television receive-only satellite program distributor, a video dial tone
service provider or a satellite master antenna television service provider that
makes available for purchase, by subscribers or customers, multiple channels of
video programming.
4.
For purposes of determining the number of the households
subscribing to the services of a MVPD, other than the largest MVPD, the number
of subscribers of all MVPDs that offer service in the franchise area
will be aggregated.
5.
In order to offer comparable programming, as that term is
used above, a competing MVPD must offer at least 12 channels of video
programming, including at least one channel of non-broadcast service
programming.
Despite the cable industry’s efforts to
the contrary, 47 U.S.C. § 76.906 maintains that cable systems are presumed
not to be subject to effective competition absent a demonstration to the
contrary. In other words, your cable
operator must prove to the FCC that effective competition exists.
1.
If the FCC determines a cable operator is subject to
effective competition the local franchising authority can no longer regulate
rates for: a) the basic cable services tier, b) converters, c) remotes, d)
installation, and e) hourly service charges.
2.
Cable operators generally are prohibited from requiring
customers to subscribe to specified tiers of programming on their cable system,
other than the basic service tier (“BST”), as a condition of subscription to
video programming offered on a per channel or per program basis. Thus, a cable operator is not allowed to
force a customer to subscriber to expanded basic service or some level of
digital cable service before that customer is permitted to buy HBO or
pay-per-view movies. However, if the
cable operator is deemed subject to effective competition this prohibition
(found at 47 C.F.R. § 76.921) is no longer applicable.
3.
A cable operator is no longer required to maintain a low
priced BST if subject to effective competition.
Some cable operators have argued that maintaining a low priced BST
permits customers to buy DBS services and then receive local channels via the
BST offered by the cable operator. Many
cable operators have indicated that if subject to effective competition they
would consider eliminating the BST and moving to a single, unregulated, tier of
expanded basic programming so as to prevent DBS customers from obtaining local
channels at a low cost. The problem with
this approach is that those residents of the community on a fixed income or
otherwise unable to afford a greater price for cable service may be prevented
from receiving cable programming as no low priced options may be maintained
from any provider.
4.
A number of other provisions under the FCC regulations would
also no longer be enforceable against the cable operator including