80 FR 38001 - Concerning Effective Competition; Implementation of Section 111 of the STELA Reauthorization Act
FEDERAL COMMUNICATIONS COMMISSION Federal Register Volume 80, Issue 127 (July 2, 2015)
Federal Register Volume 80, Issue 127 (July 2, 2015)
| Page Range | 38001-38013 | |
| FR Document | 2015-15806 |
[Federal Register Volume 80, Number 127 (Thursday, July 2, 2015)] [Rules and Regulations] [Pages 38001-38013] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-15806] ======================================================================= ----------------------------------------------------------------------- FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 76 [MB Docket No. 15-53; FCC 15-62] Concerning Effective Competition; Implementation of Section 111 of the STELA Reauthorization Act AGENCY: Federal Communications Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: In this document, the Commission improves and expedites the Effective Competition process by adopting a rebuttable presumption that cable operators are subject to Competing Provider Effective Competition. This action implements section 111 of the STELA Reauthorization Act of 2014, which directs the Commission to adopt a streamlined Effective Competition process for small cable operators. DATES: The FCC will publish a document in the Federal Register announcing the effective date of this final rule after OMB approval. FOR FURTHER INFORMATION CONTACT: For additional information on this proceeding, contact Diana Sokolow, [email protected], of the Policy Division, Media Bureau, (202) 418-2120. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Effective Competition Order, FCC 15-62, adopted on June 2, 2015 and released on June 3, 2015. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW., Room CY-A257, Washington, DC 20554. This document will also be available via ECFS at http://fjallfoss.fcc.gov/ecfs/. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. Copies of the materials can be obtained from the FCC's Reference Information Center at (202) 418-0270. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to [email protected] or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). Summary of the Order I. Introduction 1. In this Report and Order (``Order''), we improve and expedite the effective competition process by adopting a rebuttable presumption that cable operators are subject to ``Effective Competition.'' \1\ Specifically, we presume that cable operators are subject to what is commonly referred to as ``Competing Provider Effective Competition.'' As a result, each franchising authority \2\ will be prohibited from regulating basic cable rates unless it successfully demonstrates that the cable system is not subject to Competing Provider Effective Competition. This change is justified by the fact that Direct Broadcast Satellite (``DBS'') service is ubiquitous today and that DBS providers have captured almost 34 percent of multichannel video programming distributor (``MVPD'') subscribers. This Order also implements section 111 of the STELA Reauthorization Act of 2014 (``STELAR''), which directs the Commission to adopt a streamlined Effective Competition process for small cable operators.\3\ By adopting a rebuttable presumption of Competing Provider Effective Competition, we update our Effective Competition rules, for the first time in over 20 years, to reflect the current MVPD marketplace, reduce the regulatory burdens on all cable operators, especially small operators,\4\ and more efficiently allocate the Commission's resources. --------------------------------------------------------------------------- \1\ Effective Competition is a term of art that the statute defines by application of specific tests. \2\ A ``franchising authority'' is ``any governmental entity empowered by Federal, State, or local law to grant a franchise.'' See 47 U.S.C. 522(10). \3\ See Public Law 113-200, section 111, 128 Stat. 2059 (2014); 47 U.S.C. 543(o)(1) (``Not later than 180 days after December 4, 2014, the Commission shall complete a rulemaking to establish a streamlined process for filing of an effective competition petition pursuant to this section for small cable operators, particularly those who serve primarily rural areas.''). Accordingly, this rulemaking must be completed by June 2, 2015. \4\ Congress applied the definition of ``small cable operator'' as set forth in section 623(m)(2) of the Communications Act of 1934, as amended (the ``Act''), which is ``a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.'' See 47 U.S.C. 543(m)(2), (o)(3). --------------------------------------------------------------------------- II. Background 2. In the Cable Television Consumer Protection and Competition Act of 1992 (``1992 Cable Act''), Congress adopted a ``preference for competition,'' pursuant to which a franchising authority may regulate basic cable service tier rates [[Page 38002]] and equipment only if the Commission finds that the cable system is not subject to Effective Competition.\5\ Section 623(l)(1) of the Act defines the four types of Effective Competition, as follows: --------------------------------------------------------------------------- \5\ Cable Television Consumer Protection and Competition Act of 1992, Public Law 102-385, 106 Stat. 1460 (1992); 47 U.S.C. 543(a)(2)(A). This Order contains references to the Commission's role in the franchising authority certification process. Although our rules refer to the Commission as having these responsibilities, the Media Bureau has delegated authority to act on certification matters pursuant to the rules established by the Commission, and in practice the Media Bureau evaluates certifications and related pleadings on behalf of the Commission. See 47 CFR 0.61. ---------------------------------------------------------------------------Low Penetration Effective Competition, which is present if fewer than 30 percent of the households in the franchise area subscribe to the cable service of a cable system; Competing Provider Effective Competition, which is present if the franchise area is (i) served by at least two unaffiliated MVPDs each of which offers comparable video programming to at least 50 percent of the households in the franchise area; and (ii) the number of households subscribing to programming services offered by MVPDs other than the largest MVPD exceeds 15 percent of the households in the franchise area; Municipal Provider Effective Competition, which is present if an MVPD operated by the franchising authority for that franchise area offers video programming to at least 50 percent of the households in that franchise area; and Local Exchange Carrier (LEC) Effective Competition, which is present if 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. Section 623 of the Act does not permit franchising authorities to regulate any cable service rates other than the basic service tier rate and equipment used to receive the signal. 3. In 1993, when the Commission implemented the statute's Effective Competition provisions, the existence of Effective Competition was the exception rather than the rule. Incumbent cable operators had captured approximately 95 percent of MVPD subscribers. In the vast majority of franchise areas only a single cable operator provided service and those operators had ``substantial market power at the local distribution level.'' \6\ DBS service had not yet entered the market, and local exchange carriers (``LECs''), such as Verizon and AT&T, had not yet entered the MVPD business in any significant way. Against this backdrop, the Commission adopted a presumption that cable systems are not subject to Effective Competition, and it provided that a franchising authority that wanted to regulate a cable operator's basic service tier rates must be certified by filing FCC Form 328 with the Commission. A cable operator that wishes to challenge the franchising authority's right to regulate its basic service tier rate bears the burden of rebutting the presumption and demonstrating that it is in fact subject to Effective Competition. --------------------------------------------------------------------------- \6\ Implementation of section 19 of the Cable Television Consumer Protection & Competition Act of 1992, First Report, 9 FCC Rcd 7442, 7449, paragraph 13 (1994). --------------------------------------------------------------------------- 4. As described in the Notice of Proposed Rulemaking (``NPRM'') in this proceeding, the MVPD marketplace has changed in ways that substantially impact the test for Competing Provider Effective Competition. After the NPRM was released, the Commission adopted its most recent video competition report containing many of the same statistics cited in the NPRM. Specifically, the video competition report reached the following conclusions, among others: Slight increase in DBS subscribership. The number of DBS subscribers increased from year-end 2012 (34.1 million, or 33.8 percent of MVPD subscribers) to year-end 2013 (34.2 million, or 33.9 percent of MVPD subscribers). Significant increase in telephone MVPD subscribership. The number of telephone MVPD subscribers increased from year-end 2012 (9.9 million, or 9.8 percent of MVPD subscribers) to year-end 2013 (11.3 million, or 11.2 percent of MVPD subscribers). Widespread availability of DBS video service. DIRECTV provides local broadcast channels to 197 markets representing over 99 percent of U.S. homes, and DISH Network provides local broadcast channels to all 210 markets. Consumer access to multiple MVPDs. Approximately 99.7 percent of homes in the U.S. have access to at least three MVPDs, and nearly 35 percent have access to at least four MVPDs. As described in the NPRM, the Commission has found Effective Competition in more than 99.5 percent of the communities evaluated since the start of 2013. As stated in the NPRM, the Commission has issued affirmative findings of Effective Competition in the country's largest cities, in its suburban areas, and in its rural areas where subscription to DBS is particularly high. 5. The Commission released the NPRM in this proceeding seeking comment on adopting a presumption of Competing Provider Effective Competition. The Commission sought to establish a streamlined Effective Competition process for small cable operators and to adopt policies that would reduce unnecessary regulatory burdens on the industry as a whole while ensuring the most efficient use of Commission resources. III. Discussion A. Rebuttable Presumption That Cable Systems are Subject to Effective Competition 6. We adopt a rebuttable presumption that cable operators are subject to Competing Provider Effective Competition, finding that such an approach is warranted by market changes since the Commission adopted the presumption of no Effective Competition over 20 years ago. When the Commission adopted the presumption of no Effective Competition, incumbent cable operators had approximately a 95 percent market share of MVPD subscribers and only a single cable operator served the local franchise area in the vast majority of franchise areas, which is very different from today's marketplace. As explained above, the two-pronged test for a finding of Competing Provider Effective Competition requires that (1) the franchise area is ``served by at least two unaffiliated [MVPDs] each of which offers comparable video programming to at least 50 percent of the households in the franchise area;'' and (2) ``the number of households subscribing to programming services offered by [MVPDs] other than the largest [MVPD] exceeds 15 percent of the households in the franchise area.'' \7\ Below we explain [[Page 38003]] how the current state of competition in the MVPD marketplace, particularly with regard to DBS, supports a rebuttable presumption that the two-part test is met. --------------------------------------------------------------------------- \7\ 47 U.S.C. 543(l)(1)(B). The statute establishes the applicable test for each type of Effective Competition, and we thus cannot modify the tests, as some commenters request, nor can we base an Effective Competition decision on vague allegations of large cable operators' dominance. In addition, while some commenters state that the basic service tier rate increases more rapidly in communities with a finding of Effective Competition than in those without such a finding, we emphasize that the average rate for basic service is actually lower in communities with a finding of Effective Competition than in those without a finding, demonstrating that basic service tier rates remain reasonable where there is a Commission finding of Effective Competition. See Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act of 1992: Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment, Report on Cable Industry Prices, 29 FCC Rcd 14895, 14902, paragraph 15 (2014). In addition, contrary to NAB's assertion, there is no evidence in the record that a finding of Effective Competition causes cable operators to increase their other fees or equipment rental charges. We also clarify that while commenters characterize their statistics as a comparison between communities with Effective Competition and communities without Effective Competition, the statistics in fact involve communities where the Commission has made a finding of Effective Competition and communities where the Commission has yet to make such a finding even though Effective Competition may be present. --------------------------------------------------------------------------- 7. At the outset, we note that out of the 1,440 Community Unit Identification Numbers (``CUIDs'') \8\ for which the Commission has made an Effective Competition determination since the start of 2013, it found that 1,433 CUIDs (or more than 99.5 percent of the CUIDs evaluated) have satisfied one of the statutory Effective Competition tests.\9\ For the vast majority of the CUIDs evaluated (1,150, or approximately 80 percent), this decision was based on Competing Provider Effective Competition.\10\ Franchising authorities filed oppositions to only 18 (or less than 8 percent) of the total of 228 Effective Competition petitions considered during this timeframe.\11\ Some commenters object to an analysis of data based on filed Effective Competition petitions, asserting that cable operators do not file petitions where they know the filings would be denied based on a lack of Effective Competition. However, given data that indicates a ubiquitous DBS presence nationwide, we have no reason to believe that the number of Effective Competition petitions granted in recent years is not representative of the marketplace on the whole. Marketplace realities cause us to believe that in nearly all communities where cable operators have declined to file Effective Competition petitions, Effective Competition is present but the cable operator has not found it worthwhile to undertake the expense of filing an Effective Competition petition, perhaps because the vast majority of franchising authorities have chosen not to regulate rates despite the existing presumption of no Effective Competition. --------------------------------------------------------------------------- \8\ A CUID is a unique identification code that the Commission assigns a single cable operator within a community to represent an area that the cable operator services. A CUID often includes a single franchise area, but it sometimes includes a larger or smaller area. CUID data is the available data that most closely approximates franchise areas. \9\ The IAC's suggestion that the Commission has made incorrect Effective Competition findings is unsubstantiated. Intergovernmental Advisory Committee to the FCC, Advisory Recommendation No. 2015-7, at 2-3 (filed May 15, 2015) (``IAC Recommendation''). We clarify that any Commission grant of an Effective Competition petition, including an unopposed petition, is based on satisfaction of the statutory Effective Competition tests. Id. at 3. \10\ Of the total number of CUIDs in which the Commission granted a request for a finding of Effective Competition during this timeframe, 229 (nearly 16 percent) were granted due to Low Penetration Effective Competition, and 54 (nearly 4 percent) were granted due to LEC Effective Competition. None of the requests granted during this timeframe was based on Municipal Provider Effective Competition. Where a finding of Effective Competition was based on one of the other types of Effective Competition besides Competing Provider Effective Competition, it does not necessarily mean that Competing Provider Effective Competition was not present. Rather, it means that the pleadings raised one of the other types of Effective Competition, and the Commission thus evaluated Effective Competition in that context. In fact, cable operators often file Effective Competition petitions arguing that they are subject to more than one type of Effective Competition within a single franchise area. In such cases, if the Bureau finds that a cable operator has met its burden under one of the statutory tests, it forgoes making a finding under the alternate tests for Effective Competition. \11\ The IAC argues that a franchising authority may not oppose an Effective Competition petition for various reasons, including administrative delays. We emphasize, however, that the exceedingly small number of opposed petitions is just one of many factors that support a rebuttable presumption of Competing Provider Effective Competition, as detailed above. --------------------------------------------------------------------------- 8. With regard to the first prong of the Competing Provider Effective Competition test as related to the new presumption, we find that the ubiquitous nationwide presence of DBS providers, DIRECTV and DISH Network, presumptively satisfies the requirement that the franchise area be served by two unaffiliated MVPDs each of which offers comparable programming to at least 50 percent of the households in the franchise area. Neither DIRECTV nor DISH Network is affiliated with each other.\12\ To offer comparable programming, the Commission's rules provide that a competing MVPD must offer at least 12 channels of video programming, including at least one channel of non-broadcast service programming.\13\ The programming lineups of DIRECTV and DISH Network satisfy this requirement. In addition, the widespread presence of DIRECTV and DISH Network justifies a rebuttable presumption that they each offer MVPD service to at least 50 percent of households in all franchise areas. As stated above, DIRECTV provides local broadcast channels to 197 markets representing over 99 percent of U.S. homes, and DISH Network provides local broadcast channels to all 210 markets.\14\ In the most recent video competition report, the Commission assumed that DBS MVPDs are available to all homes in the U.S., while recognizing that this slightly overstates the actual availability of DBS. Further, the Commission has held in hundreds of Competing Provider Effective Competition decisions that the presence of DIRECTV and DISH Network satisfies the first prong of the test. Notably, the Commission has never determined that the presence of DIRECTV and DISH Network failed to satisfy the first prong of the competing provider test. --------------------------------------------------------------------------- \12\ We recognize that DIRECTV and AT&T Inc. have filed applications for consent to assign or transfer control of licenses and authorizations. See MB Docket No. 14-90. That proceeding remains pending. Even if the DIRECTV and AT&T applications are granted, DIRECTV and DISH Network still will not be affiliated with each other and both of them may be considered as competing providers for purposes of the Competing Provider Effective Competition test. \13\ The NPRM did not seek comment on revisiting the meaning of ``comparable'' programming in this context, and thus we reject commenters' requests that we do so here. \14\ Even in the 13 markets where DIRECTV does not provide local broadcast channels, its channel lineup still satisfies the comparable programming requirement because its channel lineup contains substantially more than 12 channels including at least one channel of non-broadcast service programming. --------------------------------------------------------------------------- 9. With regard to the second prong of the test, we will presume that more than 15 percent of the households in a franchise area subscribe to programming services offered by MVPDs other than the largest MVPD. Based on the data presented above, on a nationwide basis competitors to incumbent cable operators have captured approximately 34 percent of U.S. households, or more than double the percentage needed to satisfy the second prong of the competing provider test.\15\ Nationally, DBS service alone has close to twice the necessary subscribership.\16\ Further, NCTA has found that competing MVPDs have a penetration rate of more than 15 percent in each of the 210 Designated Market Areas (``DMAs'') in the United States, and most DMAs have a DBS penetration rate above 20 percent. NAB argues that a presumption based on national market share data lacks a [[Page 38004]] rational nexus to the question of whether more than 15 percent of the households in a specific franchise area actually subscribe to programming services offered by MVPDs other than the largest MVPD. We disagree, finding instead that, as NCTA states, ``an average figure is not conclusive evidence of the specific penetration in every community'' but ``it undeniably supports the Commission's proposed rebuttable presumption'' and ``is a strong predictor that competitors have garnered far in excess of the market share Congress deemed necessary to free cable operators from the vestiges of rate regulation.'' The level of competing MVPD penetration in all of the DMAs, along with their ubiquitous service availability, justifies placing the burden on franchising authorities to show a lack of Effective Competition. Under the rebuttable presumption adopted in this Order, local franchising authorities will be able to attempt to demonstrate that the Competing Provider Effective Competition test is not met in a given area. Thus, we will not be basing our finding on the nationwide statistics alone. --------------------------------------------------------------------------- \15\ At year-end 2013 there were 34.2 million DBS subscribers and 11.3 million telephone MVPD subscribers, which yields a total of 45.5 million subscribers to competitors to incumbent cable operators. SNL Kagan estimates that there were 133.8 million households in this country in 2013. See http://www.snl.com/interactivex/MultichannelIndustryBenchmarks.aspx?startYear=2012&endYear=2013 (visited Mar. 31, 2014). If we divide 45.5 million by 133.8 million, the data shows that competitors to incumbent cable operators have captured approximately 34 percent of U.S. households. \16\ If we divide 34.2 million by 133.8 million, the data shows that DBS operators have captured approximately 25.6 percent of U.S. households. --------------------------------------------------------------------------- 10. For all of the above reasons, we conclude that adopting a rebuttable presumption of Competing Provider Effective Competition is consistent with the current state of the video marketplace. We do not, however, find that market changes since the adoption of the original presumption would support a presumption that any of the other Effective Competition tests (low penetration, municipal provider, or LEC) is met. Although some commenters have asked that we also establish a rebuttable presumption of LEC Effective Competition in any franchise area where an LEC MVPD offers video service, we decline to do so at this time. The record lacks evidence to support a presumption that the service area of an LEC MVPD substantially overlaps that of the incumbent cable operator in a sufficient number of franchise areas where an LEC MVPD offers video service to make such a presumption supportable. Accordingly, our presumption of Effective Competition is limited to Competing Provider Effective Competition. Absent a demonstration to the contrary, we will continue to presume that cable systems are not subject to Low Penetration, Municipal Provider, or LEC Effective Competition. 11. Adoption of the presumption of Competing Provider Effective Competition is consistent with section 623 of the Act, which prohibits a franchising authority from regulating basic cable rates ``[i]f the Commission finds that a cable system is subject to effective competition.'' Contrary to the suggestion of some commenters, we see no statutory bar to applying a nationwide rebuttable presumption of Competing Provider Effective Competition in making this finding. In fact, the NPRM in the proceeding implementing section 623 of the Act initially proposed to require franchising authorities to demonstrate that Effective Competition was not present in the franchise area, explaining that such an approach would be reasonable because the Act ``makes the absence of effective competition a prerequisite to regulators' legal authority over basic rates.'' Specifically, the statute provides that ``[i]f the Commission finds that a cable system is not subject to effective competition, the rates for the provision of basic cable service shall be subject to regulation by a franchising authority, or by the Commission . . . .'' Although the Commission ultimately took a different course, that decision was based on what was most efficient given the state of the marketplace at the time the presumption was adopted and it was not mandated by statute. Given the state of the video marketplace today, we find that it is appropriate to presume the presence of Competing Provider Effective Competition on a nationwide basis, provided that franchising authorities have an opportunity to rebut that presumption and demonstrate that the Competing Provider Effective Competition test is not met in a specific area. The franchising authority's ability to file a revised Form 328 pursuant to the procedures discussed below will ensure that the Commission will continue to receive evidence regarding a specific franchise area where the franchising authority deems it relevant. The fact that Effective Competition decisions apply to specific franchise areas does not preclude the Commission from adopting a rebuttable presumption of Competing Provider Effective Competition today based on the pervasive competition to cable from other MVPDs, just as it did not prevent the Commission from adopting a rebuttable presumption of no Effective Competition based on cable's national 95 percent share of the MVPD marketplace in 1993. In the NPRM, we sought comment on whether there were certain geographic areas in which we should not adopt a presumption of Competing Provider Effective Competition. No commenter addressed this issue, and thus we will not adopt different rules for any specific geographic areas. 12. We are not persuaded by commenters who argue that we should not adopt a rebuttable presumption of Competing Provider Effective Competition because of the potential impact of findings of Effective Competition on the basic service tier requirement found in section 623 of the Act. Several commenters argue that our action would enable cable operators to move broadcast stations that elect retransmission consent and public, educational, and governmental access (``PEG'') channels to a higher tier, leading to higher consumer prices. If a finding of Effective Competition results in elimination of the basic service tier requirement--a statutory interpretation issue that we do not address here--that conclusion would apply not only in communities where the new presumption of Effective Competition is not successfully rebutted but also in the thousands of communities in which we have already issued findings of Effective Competition. Despite these widespread findings of Effective Competition, commenters have not pointed to a single instance in which cable operators have even attempted to move broadcast stations or PEG channels off the basic service tier.\17\ NAB argues that cable operators may not have moved broadcast stations or PEG channels to a higher tier in communities with a finding of Effective Competition at least in part because they do not wish to do so on a fragmented ``patchwork'' basis but they have provided no support for this assertion. Moreover, a patchwork of communities with and without Effective Competition will continue to exist after the adoption of this Order if any franchising authorities are able to rebut the new presumption and remain certified. We thus find that the concerns [[Page 38005]] expressed by commenters in this regard are unpersuasive. Moreover, they do not speak to the key issue in this proceeding: whether maintaining a presumption of no Effective Competition is consistent with the current state of the MVPD marketplace. Accordingly, we do not believe that they provide a sound basis to retain rules that are no longer justified by marketplace realities and that place unwarranted burdens on cable operators and the Commission. --------------------------------------------------------------------------- \17\ Similarly, while the IAC contends that consumers will be harmed because the uniform pricing provision and the tier buy- through provision do not apply following a finding of Effective Competition, they have not pointed to any instances of cable operators in the thousands of communities with Effective Competition findings using this flexibility to the detriment of subscribers in these communities. The IAC also claims that ``use of public rights of ways by [Satellite Master Antenna Television (``SMATV'')] operators serving individual properties may be allowed if there is a finding of effective competition.'' IAC Recommendation at 3; 47 CFR 76.501. IAC has failed to explain the significance of this or why such a possibility would be a reason to refrain from updating our processes to reflect market realities. Further, a SMATV issue has not manifested itself in the thousands of communities that the Commission has already determined are subject to Effective Competition. We also emphasize that both the prohibition against negative option billing and cable customer service standards, as a general matter, survive a finding of Effective Competition, per Time Warner Entertainment Co., L.P., v. FCC, 56 F.3d 151, 192-196 (D.C. Cir. 1995). See IAC Recommendation at 3; 47 CFR 76.981, 76.309. --------------------------------------------------------------------------- B. Implementation of Section 111 of STELAR 13. For the reasons stated above, section 623 of the Act provides the Commission with ample authority to adopt a rebuttable presumption of Competing Provider Effective Competition for both large and small cable operators. However, additional support for our decision today is found in STELAR. Specifically, we conclude that adopting a rebuttable presumption of Competing Provider Effective Competition fully effectuates the Commission's responsibilities under section 111 of STELAR. Section 111 directs the Commission ``to establish a streamlined process for filing of an effective competition petition pursuant to this section for small cable operators, particularly those who serve primarily rural areas.'' The new presumption of Competing Provider Effective Competition will establish a streamlined process for all cable operators, including small operators, by reallocating the burden of providing evidence of Effective Competition in a manner that better comports with the current state of the marketplace. The existing presumption of no Effective Competition requires cable operators to produce information about competing providers' service areas and numbers of subscribers, and to petition the Commission for an affirmative finding of the requisite competition in particular franchise areas. Changing the presumption--which is merely a procedural device--will streamline the process by shifting the burden of producing evidence with respect to Effective Competition. Under our modified rule, franchising authorities remain free to rebut the presumption by presenting community-specific evidence, which the cable operator would then have the burden to overcome based on its own evidence. The new process is streamlined for cable operators because they will be required to file only in response to a showing by a franchising authority that an operator does not face Competing Provider Effective Competition in the franchise area. The burden would then shift to the cable operator to prove Effective Competition. As ACA states: Despite widespread and obvious competition, many cable operators, particularly small operators, have not availed themselves of effective competition relief because of the burdens of overcoming the current presumption against effective competition. These burdens include the costs of purchasing the required zip code and competing provider penetration information, preparing a formal legal filing for submission to the Commission, paying a filing fee, and then waiting an uncertain amount of time for a decision. Congress recognized these burdens when it enacted Section 111 of STELAR and adoption of the Commission's proposal is the most effective and rational way to reduce these burdens and ensure that cable operators of all sizes that face effective competition obtain the relief to which they are entitled. 14. We agree with commenters that there is no statutory restriction on extending the same revised rebuttable presumption of Competing Provider Effective Competition to all cable systems. Section 111 of STELAR directs the Commission to establish streamlined measures for small cable operators within a certain deadline, but it ``neither expands nor restricts the scope of the Commission's authority to administer the effective competition process.'' \18\ As commenters observe, ``reducing regulatory burdens on all cable operators, large and small,'' will ensure that Commission procedures ``reflect marketplace realities and allow for a more efficient allocation of Commission and industry resources.'' \19\ --------------------------------------------------------------------------- \18\ See NCTA Reply at 8. \19\ See ITTA Comments at 7. --------------------------------------------------------------------------- 15. We recognize that STELAR provides that ``[n]othing in this subsection shall be construed to have any effect on the duty of a small cable operator to prove the existence of effective competition under this section.'' NAB argues that this provision ratifies the Commission's placement of the burden of proving Effective Competition on the cable operators, and prevents the Commission from shifting the burden. We do not read this language as limiting the Commission's authority to eliminate or modify the presumption for cable operators, large or small. The Commission adopted the presumption of no Effective Competition as a procedural mechanism, based in large part on the premise that ``the vast majority of cable systems'' in 1993 were ``not subject to effective competition.'' \20\ The presumption was never mandated by Congress, and there is nothing in STELAR's provisions that suggests that Congress intended to withdraw the Commission's general rulemaking power to revisit its rules and modify or repeal them if it finds such action is warranted. In the clause that NAB relies on, Congress merely disavows any intent to alter or interfere with the Commission rule requiring proof of the existence of Effective Competition, as applied to small cable operators. It does not require the Commission to maintain the presumption of no Effective Competition. Rather, Congress only requires the Commission to streamline the process for ``small cable operators.'' Thus, Congress did not ``ratify'' or lock in place the current presumption. Indeed, if this provision were read to restrict the Commission from changing the presumption for small operators, as NAB urges, it would have the perverse effect of permitting the Commission to reduce burdens on larger operators but not on smaller ones, contrary to the clear intent and narrow focus of section 111. Thus, we find unpersuasive NAB's argument that section 111 of STELAR prohibits the rule modifications adopted in this Order. --------------------------------------------------------------------------- \20\ See Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd 5631, 5670, paragraph 43 (1993) (``1993 Rate Order''). See also id. at 5640, paragraph 10 (``We anticipate that the regulations we adopt today will change over time. In accordance with the statute, we will review and monitor the effect of our initial rate regulations on the cable industry and consumers, and refine and improve our rules as necessary.''). --------------------------------------------------------------------------- 16. In the NPRM, the Commission sought comment on alternate streamlined procedures that it could adopt for small cable operators pursuant to section 111. Some commenters proposed that we could implement section 111 through small cable operator Effective Competition reforms other than reversing the presumption, for example, by eliminating filing fees, automatically granting certain petitions, adopting a time limit for Commission review, or otherwise streamlining existing Effective Competition procedures. We have evaluated all of the alternate proposals set forth in the record and we conclude that, while some are already implemented, others would not have a sufficient impact on the costs that burden cable operators, particularly small cable operators, under the existing Effective Competition regime, including the costs of purchasing data indicating what zip codes make up the local franchising area, using the resulting list of zip codes to purchase penetration data, and preparing a formal legal filing. Accordingly, we have concluded that [[Page 38006]] adopting a rebuttable presumption of Competing Provider Effective Competition is the best approach to streamline the process for small cable operators. C. Procedures To Implement the New Presumption 17. In this section, we adopt new procedures to implement the rebuttable presumption of Competing Provider Effective Competition. With certain exceptions discussed below, we adopt procedures largely comparable to those discussed in the NPRM. In short, a franchising authority will obtain certification to regulate a cable operator's basic service tier and associated equipment by filing a revised Form 328, which will include a demonstration rebutting the presumption of Competing Provider Effective Competition. A cable operator may continue to oppose a Form 328 by filing a petition for reconsideration of the form. 18. Specifically, as under our existing procedures, a franchising authority that seeks certification to regulate a cable operator's basic service tier and associated equipment will file Form 328. We will revise Question 6 of that form to include a new Question 6a, which will state the new presumption of Competing Provider Effective Competition. Question 6a will ask a franchising authority to provide an attachment containing evidence adequate to satisfy its burden of rebutting the presumption with specific evidence. A franchising authority may continue to rely on the current presumption that Low Penetration, Municipal Provider, and LEC Effective Competition are not present unless it has actual knowledge to the contrary. Hence, a franchising authority need not submit evidence regarding a lack of Effective Competition under those three tests; it need only submit evidence regarding the lack of Competing Provider Effective Competition. Question 6b of the revised form will state the presumption that cable systems are not subject to any other type of Effective Competition excluding Competing Provider Effective Competition, and it will retain the question in the current form asking the franchising authority to indicate whether it has reason to believe that this presumption is correct. We will revise the instructions for completing Form 328 to reflect the changes to Question 6. In addition, we note that instruction number 2 to the form was not previously updated to reference LEC Effective Competition, even though the form itself contains such an update. For accuracy and completeness, we will revise instruction number 2 to reference LEC Effective Competition. 19. Except as otherwise discussed, we will retain the existing provisions in section 76.910 of our rules governing franchising authority certifications. As stated in current section 76.910, the certification will become effective 30 days after the franchising authority files Form 328 unless the Commission notifies the franchising authority otherwise.\21\ We find that this approach is consistent with a presumption of Competing Provider Effective Competition, because the franchising authority is required to submit a rebuttal of that presumption with Form 328. This approach also is consistent with the statutory requirement that in general, a franchising authority's certification must become effective 30 days after the date filed.\22\ Once a franchising authority files revised Form 328, the Commission may deny a certification based on failure to meet the applicable burden, consistent with the Commission's authority to dismiss a pleading that fails on its face to satisfy applicable requirements. Accordingly, if a franchising authority files a revised Form 328 that fails to meet the required standards to regulate rates, we will promptly deny the filing and it thus will not become effective 30 days after filing. We see no need to require a franchising authority to wait one year before filing a new Form 328 after one is denied, as ACA requests; we believe that franchising authorities should remain able to file a new Form 328 at any time if circumstances change such that they can submit new data rebutting the presumption of Competing Provider Effective Competition. --------------------------------------------------------------------------- \21\ See 47 CFR 76.910(e). The franchising authority may not, however, regulate a cable system's rates unless it meets certain procedural requirements. See id. (``Unless the Commission notifies the franchising authority otherwise, the certification will become effective 30 days after the date filed, provided, however, That the franchising authority may not regulate the rates of a cable system unless it: (1) Adopts regulations: (i) Consistent with the Commission's regulations governing the basic tier; and (ii) Providing a reasonable opportunity for consideration of the views of interested parties, within 120 days of the effective date of certification; and (2) Notifies the cable operator that the authority has been certified and has adopted the regulations required by paragraph (e)(1) of this section.''). See also 47 U.S.C. 543(a)(4). \22\ See id. Given this statutory provision, we cannot grant ACA's request that we provide cable operators with 30 days to oppose a revised Form 328 and franchising authorities with 15 days to respond, or that we automatically deny a Form 328 not acted on within 180 days. --------------------------------------------------------------------------- 20. We also find that deeming a certification effective 30 days after it is filed is consistent with STELAR's requirement that we streamline the Effective Competition process for small cable operators. We expect that few franchising authorities will file the revised Form 328 because they will be unable to produce the necessary evidence to rebut the presumption of Competing Provider Effective Competition in most franchise areas, due to the ubiquity of DBS service. Cable operators thus will likely need to address only a small number of filed Form 328s. In fact, if the Commission finds that the attachment accompanying a franchising authority's Form 328 fails to show the evidence required to rebut the presumption, and the Commission thus dismisses the form based on failure to meet the applicable burden, then the cable operator will not need to take any affirmative action. The new approach adopted herein thus will streamline the Effective Competition process for all cable operators, including small ones. The NPRM sought comment on whether a cable operator should have an opportunity before the 30-day period expires to respond to a franchising authority's showing. Commenters did not address this issue and we find it unnecessary to do so, given that a cable operator may file a petition for reconsideration that would automatically stay the imposition of rate regulation, as discussed below. 21. As discussed in the NPRM, under our current rules a cable operator may oppose a certification by filing a petition for reconsideration pursuant to section 76.911 of our rules, demonstrating that it satisfies any of the four tests for Effective Competition.\23\ Similarly, under the new rules, the cable operator may file a petition for reconsideration in which it either (a) disagrees with a franchising authority's rebuttal of the presumption of Competing Provider Effective Competition, or (b) attempts to demonstrate the presence of one of the other types of Effective Competition (low penetration, municipal provider, or LEC). We see no need to make any revisions to existing section 76.911. The procedures set forth in section 1.106 of our rules for the filing of petitions for reconsideration will continue to govern petitions for reconsideration of Form 328 and responsive pleadings.\24\ In addition, a cable operator's filing of a [[Page 38007]] petition for reconsideration alleging that Effective Competition exists will continue to automatically stay the imposition of rate regulation pending the outcome of the reconsideration proceeding. Although the NPRM sought comment on whether we should deem a petition for reconsideration granted if the Commission does not act on it within six months, we find that such an approach is unnecessary given the automatic rate regulation stay. --------------------------------------------------------------------------- \23\ We see no benefit to eliminating the distinctions between petitions for reconsideration, petitions for revocation, petitions for recertification, and petitions for a determination of Effective Competition, as ACA advocates. \24\ 47 CFR 1.106(f), 76.911(a). Accordingly, the 30-day period for a cable operator to file its petition for reconsideration begins to run from the 30th day after the Form 328 is filed with the Commission. 1993 Rate Order, 8 FCC Rcd at 5693, paragraph 88. See also 47 CFR 1.106(f). --------------------------------------------------------------------------- 22. Our rules currently permit cable operators to request information from a competitor about the competitor's reach and number of subscribers, if the evidence necessary to establish Effective Competition is not otherwise available. We will retain that provision, while adding a similar provision to benefit franchising authorities now that they will bear the burden of demonstrating the lack of Competing Provider Effective Competition. Specifically, we will amend our rules to provide that, if a franchising authority filing Form 328 wishes to demonstrate a lack of Competing Provider Effective Competition and necessary evidence is not otherwise available, the franchising authority may request directly from an MVPD information regarding the MVPD's reach and number of subscribers in a particular franchise area. As currently required for such requests by cable operators, we will require the MVPD to respond to such a request within 15 days, and we will permit such responses to be limited to numerical totals related to subscribership and reach. Third-party MVPDs must timely respond to these requests, and the Commission may use its enforcement power to ensure compliance. We understand that currently, third-party MVPDs or their agents sometimes charge cable operators for access to this data. We will revisit the issue of the cost of the data if we receive complaints that the cost of such data makes the filing of Form 328 cost-prohibitive to franchising authorities. 23. Even under the new approach to Effective Competition adopted herein, we expect that cable operators still on occasion may wish to file petitions for a determination of Effective Competition pursuant to section 76.907 of our rules. In particular, if a franchising authority is certified under the new rules and procedures, a cable operator may at a later date wish to file a petition demonstrating that circumstances have changed and one of the four types of Effective Competition exists. Accordingly, we will retain existing section 76.907, but we will revise section 76.907(b) to reflect the new presumption. Once a franchising authority is certified under the new rules adopted herein, after having demonstrated a lack of Competing Provider Effective Competition, we agree with ACA that it would not make sense for a cable operator filing a decertification petition to benefit from the presumption of Effective Competition; rather, in this instance the cable operator must demonstrate that circumstances have changed and Effective Competition is now present in the franchise area.\25\ We will clarify in revised section 76.907(b) that the new presumption of Competing Provider Effective Competition does not apply in this instance. --------------------------------------------------------------------------- \25\ Thus, it would be inappropriate to automatically grant cable operator petitions for decertification that are not acted on within a certain timeframe, as ACA suggests, given that the franchising authority would have previously put forth evidence of a lack of Competing Provider Effective Competition in order to become certified in the first place. --------------------------------------------------------------------------- 24. All of the new rules and procedures for Effective Competition will go into effect once the Commission announces approval by the Office of Management and Budget (``OMB'') of the rules that require such approval and of revised Form 328. Although some of the rules, such as the new rebuttable presumption of Competing Provider Effective Competition itself, do not require OMB approval, we conclude that none of the rules should go into effect until the OMB approval is obtained. Although some commenters have argued that cable operators generally should benefit from the new presumption as soon as it is adopted, we find that tying the effective date to the OMB approval is appropriate where, as here, all of the rules are so closely tied to the submission of a revised form that requires OMB approval. 25. Overall, we find that the new rules and procedures discussed above will create an Effective Competition process that is more efficient for cable operators, especially small cable operators, than the current approach. Cable operators will not be required to file petitions for a determination of Effective Competition in the first instance; instead, franchising authorities will have to rebut the presumption of Competing Provider Effective Competition in those limited locations in which the statutory test is not met. The record demonstrates that filing Effective Competition petitions has forced cable operators to incur significant costs, such as the cost of purchasing zip code and competing provider penetration data and preparing formal legal filings, merely to confirm what the marketplace data already suggests about the likely application of the statutory Effective Competition tests in almost all communities. According to ACA, only one cable operator with fewer than 1,000,000 total subscribers has filed an Effective Competition petition since December 30, 2011, even though such operators are likely subject to Effective Competition to the same degree as other, larger operators. Given the ubiquitous nationwide presence and penetration levels of DBS, we find that it no longer makes sense to burden cable operators with the costs of filing an Effective Competition petition in the first instance. It is far more efficient to require franchising authorities to rebut the presumption in those relatively rare instances where there may not be Effective Competition. Contrary to NAB's suggestion, the burdens imposed on cable operators under the current presumption, which is no longer supportable by marketplace data, justify adoption of the new presumption as the most efficient approach. The fact that cable operators benefit from a finding of Effective Competition does not alter this analysis. We expect that the volume of new Form 328s filed by franchising authorities will be far less than the volume of cable operator Effective Competition petitions currently filed, which will conserve resources of cable operators as well as the Commission. Contrary to the suggestion of some commenters, we do not expect franchising authorities in thousands of communities to file new Form 328s. Rather, we anticipate that few franchising authorities will be able to present data to rebut the presumption of Competing Provider Effective Competition, given the ubiquity and penetration of DBS. In this regard, we agree with NCTA that, ``[g]iven competitive conditions throughout the country and the relatively few [franchising authorities] that currently rate regulate, shifting the presumption is extraordinarily unlikely to unleash an avalanche of [franchising authority] filings.'' 26. We recognize that franchising authorities, including small franchising authorities, will face additional burdens in preparing revised Form 328 with an attachment rebutting the presumption of Competing Provider Effective Competition, and we also recognize that some franchising authorities have limited resources. We conclude that any such burdens are justified by the efficiency gained by conforming the presumption to marketplace realities. In 1993, the Commission stated that it was ``mindful of franchising authorities' concern that they do not have access to [[Page 38008]] the information or the resources necessary to show the absence of effective competition as a threshold matter of jurisdiction.'' \26\ Today, in contrast, Effective Competition exists in the vast majority of franchise areas and we anticipate few franchising authorities will have a basis for filing a revised Form 328 demonstrating a lack of Competing Provider Effective Competition. In addition, we have ensured that franchising authorities will have access to the information needed to demonstrate a lack of Competing Provider Effective Competition by implementing procedures pursuant to which a franchising authority may request directly from an MVPD information regarding the MVPD's reach and number of subscribers in a particular franchise area. With regard to the burden on the franchising authorities, ACA explains that unlike cable operators, governmental entities can receive zip code data from the post office free of charge, and governmental entities likely know all of the zip codes within their jurisdiction in any event. Overall, the costs to franchising authorities will be outweighed by the significant cost-saving benefits of a presumption that is consistent with market data showing that the vast majority of communities would satisfy the Competing Provider Effective Competition standard. We will monitor the marketplace to determine whether the burdens of filing a revised Form 328 are dissuading franchising authorities from filing, and if so, we will reconsider whether changes should be made to reduce their costs. --------------------------------------------------------------------------- \26\ 1993 Rate Order, 8 FCC Rcd at 5668, paragraph 41. --------------------------------------------------------------------------- D. Current Certifications and Pending Effective Competition Proceedings 27. Many franchising authorities were certified over 20 years ago to regulate the basic service tier rates and equipment based on the existing presumption of no Effective Competition. Based on the changes in the marketplace that have occurred in the last 20 years, discussed above, we believe that the factual foundation for those findings is no longer valid in most cases. Therefore, all franchising authorities with existing certifications that wish to remain certified must file revised Form 328, including the attachment rebutting the presumption of Competing Provider Effective Competition, within 90 days of the effective date of the new rules.\27\ If a franchising authority with an existing certification does not file a new certification (Form 328) during the 90-day timeframe, its existing certification will expire at the end of that timeframe as long as there is not pending for the franchise area an opposed Effective Competition petition or an opposed or unopposed petition for reconsideration of certification, petition for reconsideration of an Effective Competition decision, or application for review of an Effective Competition decision.\28\ The Media Bureau will issue a public notice at the conclusion of the 90-day timeframe identifying all franchising authorities that filed a revised Form 328 as well as those franchising authorities that are party to one of the above-listed pending proceedings, and stating its finding of Competing Provider Effective Competition applicable to all other currently certified franchising authorities. This public notice will address commenters' concerns that the Act requires the Commission to make a franchise area-specific finding of Effective Competition before revoking existing certifications. The Media Bureau's finding of Competing Provider Effective Competition will be based on the new presumption coupled with the franchising authority's failure to attempt to retain its certification by resubmitting Form 328 accompanied by the requisite showing of no Competing Provider Effective Competition. We thus find that the approach adopted herein, which the NPRM sought comment on in the alternative, is preferable to administratively revoking all existing certifications since it will afford franchising authorities an opportunity to rebut the new presumption while their existing certification is still in effect and requires a Commission finding of Effective Competition for each franchise area. --------------------------------------------------------------------------- \27\ ACA and NCTA support a comparable procedure. ACA claims that with regard to small cable operators the procedure should only apply to ``active'' franchising authorities, meaning those that have adopted a rate order in the previous 12 months. We find that such a limitation would be difficult for the Commission to administer and would not provide an offsetting benefit to small cable operators. We find further that the approach adopted here is preferable to the approach advocated by some commenters, in which all previously adjudicated Effective Competition decisions would remain valid until either the franchising authority or the cable operator affirmatively demonstrates a change. The approach adopted here will enable us to ensure more promptly that franchising authority certifications correspond to the current marketplace. \28\ We recognize that, while the franchising authority remains certified, it is possible that the Commission's rate regulation rules may require a rate filing in the normal course of business. Unless the franchising authority and cable operator reach an agreement to the contrary, the cable operator should continue to make any such required filing. --------------------------------------------------------------------------- 28. Where currently certified franchising authorities file revised Form 328, their certifications will remain valid unless and until the Media Bureau issues a decision denying the new certification request.\29\ We will not automatically deny a Form 328 that we do not act on within a certain timeframe, finding that doing so would be inconsistent with the statutory requirement that franchising authority certifications become effective 30 days after the date filed and with the procedures adopted above. If a currently certified franchising authority files revised Form 328 and there is a pending cable operator Effective Competition petition, petition for reconsideration of certification, petition for reconsideration of an Effective Competition decision, or application for review of an Effective Competition decision applicable to the franchise area, the Media Bureau will consider the record from that filing along with the new certification in making its determination regarding whether the franchising authority has overcome the presumption of Competing Provider Effective Competition.\30\ If a currently certified franchising authority files revised Form 328 but there is no applicable pending proceeding, the Media Bureau may consider the form itself as well as other relevant data available to the Bureau in making its determination. --------------------------------------------------------------------------- \29\ Accordingly, a currently certified franchising authority that wishes to remain certified and to make use of its basic service tier rate regulation authority may do so pursuant to these procedures. The franchising authority's ability to regulate rates, however, would be automatically stayed if the filing of revised Form 328 impels the cable operator to file a petition for reconsideration of certification alleging the presence of Effective Competition. The Media Bureau will promptly dismiss cable operator petitions for reconsideration that do not rebut a franchising authority's demonstration that Competing Provider Effective Competition is not present in the franchise area. \30\ Prior to the effective date of the rules adopted herein, we note that the Media Bureau has authority to continue processing pending petitions for a determination of Effective Competition, petitions for reconsideration of certification, and petitions for reconsideration of an Effective Competition decision in the normal course of business pursuant to existing rules. --------------------------------------------------------------------------- 29. Where existing franchising authority certifications expire pursuant to the procedures discussed above, the Commission itself will not regulate rates. Section 76.913(a) of the Commission's rules, which generally directs the Commission to regulate rates upon revocation of a franchising authority's certification, will not apply upon the expiration of existing certifications discussed above. The Act precludes a franchising authority or the Commission from regulating rates where Effective Competition is present, and the expirations will be based on just [[Page 38009]] such a finding. Section 623(a)(6) of the Act does not apply to this situation because it requires the Commission to ``exercise the franchising authority's regulatory jurisdiction'' over cable basic service tier rates if the Commission either (1) ``disapproves a franchising authority'' due to specified legal or procedural infirmities, or (2) revokes the franchising authority's jurisdiction to regulate rates following petition by a cable operator or other interested party based upon a finding ``that the State and local laws and regulations are not in conformance with'' the Commission's basic service tier rate regulations. The expiration of existing franchising authority certifications based on a rebuttable presumption of Competing Provider Effective Competition combined with the franchising authority's subsequent failure to attempt to retain its certification is distinguishable from a Commission finding of legal or procedural infirmities following an initial certification submission. Contrary to NAB's suggestions, the expiration of existing franchising authority certifications is justified for the reasons discussed above, and it does not matter that the expirations will be unrelated to a petition by a cable operator or other interested party. 30. There are currently 58 pending cable operator petitions seeking a finding of Effective Competition, and a total of 17 pending petitions for reconsideration of certification, petitions for reconsideration of an Effective Competition decision, and applications for review of an Effective Competition decision. As explained above, if one of these pending proceedings involves a currently certified franchising authority that files revised Form 328, the record from the pending proceeding will be considered along with the revised Form 328 submission when the Media Bureau makes its certification determination. If, however, the pending proceeding involves a franchising authority that does not file revised Form 328 during the 90-day timeframe but either (i) the proceeding is an opposed cable operator Effective Competition petition, or (ii) the proceeding is a petition for reconsideration of certification, petition for reconsideration of an Effective Competition decision, or application for review of an Effective Competition decision, then the Media Bureau or the Commission will adjudicate the pending proceeding based on the record before it. With regard to pending unopposed cable operator Effective Competition petitions where the franchising authority does not file revised Form 328, the Media Bureau will grant such petitions based on a finding that the new presumption of Competing Provider Effective Competition applies and the franchising authority has not attempted to rebut it. The Media Bureau will issue a public notice at the conclusion of the 90-day timeframe for filing revised Form 328, granting all pending unopposed cable operator Effective Competition petitions where the franchising authority has not filed revised Form 328, with the grant based on a finding of Competing Provider Effective Competition. That finding will be premised on the new presumption of Competing Provider Effective Competition, as well as the franchising authority's failure to oppose the cable operator Effective Competition petition in the first instance. IV. Procedural Matters A. Final Regulatory Flexibility Analysis 31. As required by the Regulatory Flexibility Act of 1980, as amended (``RFA''), an Initial Regulatory Flexibility Analysis (``IRFA'') was incorporated in the Notice of Proposed Rulemaking in this proceeding. The Federal Communications Commission (``Commission'') sought written public comment on the proposals in the NPRM, including comment on the IRFA. The Commission received no comments on the IRFA, although some commenters discussed the effect of the proposals on smaller entities, as discussed below. This present Final Regulatory Flexibility Analysis (``FRFA'') conforms to the RFA. 1. Need for, and Objectives of, the Report and Order 32. In the Report and Order (``Order''), the Commission improves and expedites the effective competition process by adopting a rebuttable presumption that cable operators are subject to ``Effective Competition.'' \31\ Specifically, we presume that cable operators are subject to what is commonly referred to as ``Competing Provider Effective Competition.'' As a result, each franchising authority \32\ will be prohibited from regulating basic cable rates unless it successfully demonstrates that the cable system is not subject to Competing Provider Effective Competition. This change is justified by the fact that Direct Broadcast Satellite (``DBS'') service is ubiquitous today and that DBS providers have captured almost 34 percent of multichannel video programming distributor (``MVPD'') subscribers. The Order also implements section 111 of the STELA Reauthorization Act of 2014 (``STELAR''), which directs the Commission to adopt a streamlined Effective Competition process for small cable operators.\33\ By adopting a rebuttable presumption of Competing Provider Effective Competition, we update our Effective Competition rules, for the first time in over 20 years, to reflect the current MVPD marketplace, reduce the regulatory burdens on all cable operators, especially small operators,\34\ and more efficiently allocate the Commission's resources. --------------------------------------------------------------------------- \31\ Effective Competition is a term of art that the statute defines by application of specific tests. \32\ A ``franchising authority'' is ``any governmental entity empowered by Federal, State, or local law to grant a franchise.'' See 47 U.S.C. 522(10). \33\ See Public Law 113-200, section 111, 128 Stat. 2059 (2014); 47 U.S.C. 543(o)(1) (``Not later than 180 days after December 4, 2014, the Commission shall complete a rulemaking to establish a streamlined process for filing of an effective competition petition pursuant to this section for small cable operators, particularly those who serve primarily rural areas.''). Accordingly, this rulemaking must be completed by June 2, 2015. \34\ Congress applied the definition of ``small cable operator'' as set forth in section 623(m)(2) of the Communications Act of 1934, as amended (the ``Act''), which is ``a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.'' See 47 U.S.C. 543(m)(2), (o)(3). --------------------------------------------------------------------------- 2. Summary of Significant Issues Raised By Public Comments in Response to the IRFA 33. No comments were filed in response to the IRFA. In response to the NPRM, some commenters discussed the effect of the proposals on smaller entities. Specifically, while some commenters advocated the benefits that a presumption of Competing Provider Effective Competition would have on cable operators, including small cable operators, other commenters expressed concern about the burdens that would be imposed on franchising authorities, including small franchising authorities. In addition, as explained above, section 111 of STELAR directs the Commission to adopt a streamlined Effective Competition process for small cable operators. While some commenters expressed their view that adopting a presumption of Competing Provider Effective Competition would best fulfill section 111, others advocated alternate ways to reform the Effective Competition process for small cable operators. [[Page 38010]] 3. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply 34. The RFA directs the Commission to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted in the Order. The RFA generally defines the term ``small entity'' as having the same meaning as the terms ``small business,'' ``small organization,'' and ``small governmental jurisdiction.'' In addition, the term ``small business'' has the same meaning as the term ``small business concern'' under the Small Business Act. A small business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. Below, we provide a description of such small entities, as well as an estimate of the number of such small entities, where feasible. 35. Small Governmental Jurisdictions. The term ``small governmental jurisdiction'' is defined generally as ``governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.'' Census Bureau data for 2011 indicate that there were 89,476 local governmental jurisdictions in the United States. We estimate that, of this total, a substantial majority may qualify as ``small governmental jurisdictions.'' Thus, we estimate that most governmental jurisdictions are small. 36. Wired Telecommunications Carriers. The 2007 North American Industry Classification System (``NAICS'') defines ``Wired Telecommunications Carriers'' as follows: ``This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.'' The SBA has developed a small business size standard for wireline firms within the broad economic census category, ``Wired Telecommunications Carriers.'' Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. Census data for 2007 shows that there were 3,188 firms that operated for the entire year. Of this total, 2,940 firms had fewer than 100 employees, and 248 firms had 100 or more employees. Therefore, under this size standard, we estimate that the majority of businesses can be considered small entities. 37. Cable Companies and Systems. The Commission has developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rate regulation rules, a ``small cable company'' is one serving 400,000 or fewer subscribers, nationwide. According to SNL Kagan, there are 1,258 cable operators. Of this total, all but 10 incumbent cable companies are small under this size standard. In addition, under the Commission's rules, a ``small system'' is a cable system serving 15,000 or fewer subscribers. Current Commission records show 4,584 cable systems nationwide. Of this total, 4,012 cable systems have fewer than 20,000 subscribers, and 572 systems have 20,000 subscribers or more, based on the same records. Thus, under this standard, we estimate that most cable systems are small. 38. Direct Broadcast Satellite (``DBS'') Service. DBS service is a nationally distributed subscription service that delivers video and audio programming via satellite to a small parabolic ``dish'' antenna at the subscriber's location. DBS, by exception, is now included in the SBA's broad economic census category, ``Wired Telecommunications Carriers,'' which was developed for small wireline firms. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. Census data for 2007 shows that there were 3,188 firms that operated for the entire year. Of this total, 2,940 firms had fewer than 100 employees, and 248 firms had 100 or more employees. Therefore, under this size standard, the majority of such businesses can be considered small. However, the data we have available as a basis for estimating the number of such small entities were gathered under a superseded SBA small business size standard formerly titled ``Cable and Other Program Distribution.'' The 2002 definition of Cable and Other Program Distribution provided that a small entity is one with $12.5 million or less in annual receipts. Currently, only two entities provide DBS service, which requires a great investment of capital for operation: DIRECTV and DISH Network. Each currently offers subscription services. DIRECTV and DISH Network each report annual revenues that are in excess of the threshold for a small business. Because DBS service requires significant capital, we believe it is unlikely that a small entity as defined by the SBA would have the financial wherewithal to become a DBS service provider. 39. Open Video Systems. The open video system (``OVS'') framework was established in 1996, and is one of four statutorily recognized options for the provision of video programming services by local exchange carriers. The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services, OVS falls within the SBA small business size standard covering cable services, which is ``Wired Telecommunications Carriers.'' The SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or fewer employees. Census data for 2007 shows that there were 3,188 firms that operated for the entire year. Of this total, 2,940 firms had fewer than 100 employees, and 248 firms had 100 or more employees. Therefore, under this size standard, the majority of such businesses can be considered small. In addition, we note that the Commission has certified some OVS operators, with some now providing service. Broadband service providers (``BSPs'') are currently the only significant holders of OVS certifications or local OVS franchises. The Commission does not have financial or employment information regarding the entities authorized to provide OVS, some of which may not yet be operational. Thus, at least some of the OVS operators may qualify as small entities. 40. Small Incumbent Local Exchange Carriers. We have included small incumbent local exchange carriers in this present RFA analysis. A ``small business'' under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and ``is not dominant in its field of operation.'' The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field of operation because any such dominance is not ``national'' in scope. We have therefore included small incumbent local exchange carriers in this RFA analysis, although we [[Page 38011]] emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts. 41. Incumbent Local Exchange Carriers (``ILECs''). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2007 shows that there were 3,188 firms that operated for the entire year. Of this total, 2,940 firms had fewer than 100 employees, and 248 firms had 100 or more employees. Therefore, under this size standard, the majority of such businesses can be considered small entities. 4. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements 42. Certain rule changes adopted in the Order will affect reporting, recordkeeping, or other compliance requirements. Pursuant to the rules and policies adopted in the Order, the Commission will presume that cable operators are subject to Competing Provider Effective Competition, with the burden of rebutting this presumption falling on the franchising authority. A franchising authority seeking certification to regulate a cable operator's basic service tier and associated equipment will file revised FCC Form 328, including an attachment containing evidence adequate to satisfy its burden of rebutting the presumption with specific evidence. Franchising authorities are already required to file Form 328 to obtain certification to regulate a cable system's basic service tier, but the attachment rebutting the presumption of Competing Provider Effective Competition will be a new requirement. Cable operators, including small cable operators, will retain the burden of demonstrating the presence of any other type of Effective Competition, which a cable operator may seek to demonstrate if a franchising authority rebuts the presumption of Competing Provider Effective Competition. A cable operator opposing a certification will be permitted to file a petition for reconsideration pursuant to section 76.911 of our rules, as is currently the case, demonstrating that it satisfies any of the four tests for Effective Competition. The procedures set forth in section 1.106 of our rules for the filing of petitions for reconsideration will continue to govern petitions for reconsideration of Form 328 and responsive pleadings. While a certification will become effective 30 days after the date filed unless the Commission notifies the franchising authority otherwise, the filing of a petition for reconsideration based on the presence of Effective Competition will automatically stay the imposition of rate regulation pending the outcome of the reconsideration proceeding. All of the new rules and procedures will go into effect once the Commission announces approval by the Office of Management and Budget (``OMB'') of the rules that require such approval and of revised Form 328. 43. All franchising authorities with existing certifications that wish to remain certified must file revised Form 328, including the attachment rebutting the presumption of Competing Provider Effective Competition, within 90 days of the effective date of the new rules. At the conclusion of the 90-day timeframe, the Media Bureau will issue a public notice identifying all franchising authorities that filed a revised Form 328 as well as those franchising authorities that are party to a pending opposed Effective Competition petition or a pending opposed or unopposed petition for reconsideration of certification, petition for reconsideration of an Effective Competition decision, or application for review of an Effective Competition decision. The public notice will state the Media Bureau's finding of Competing Provider Effective Competition applicable to all other currently certified franchising authorities. Where currently certified franchising authorities file revised Form 328, their certifications will remain valid unless and until the Media Bureau issues a decision denying the new certification request. If a currently certified franchising authority files revised Form 328 and there is a pending cable operator Effective Competition petition, petition for reconsideration of certification, petition for reconsideration of an Effective Competition decision, or application for review of an Effective Competition decision applicable to the franchise area, the Media Bureau will consider the record from that filing along with the new certification in making its determination regarding whether the franchising authority has overcome the presumption of Competing Provider Effective Competition.\35\ If a pending proceeding involves a franchising authority that does not file revised Form 328 during the 90-day timeframe but either (i) the proceeding is an opposed cable operator Effective Competition petition, or (ii) the proceeding is a petition for reconsideration of certification, petition for reconsideration of an Effective Competition decision, or application for review of an Effective Competition decision, then the Media Bureau or the Commission will adjudicate the pending proceeding based on the record before it. With regard to pending unopposed cable operator Effective Competition petitions where the franchising authority does not file revised Form 328, the Media Bureau will issue a public notice granting the petitions based on a finding of Competing Provider Effective Competition. --------------------------------------------------------------------------- \35\ Prior to the effective date of the rules adopted in the Order, we note that the Media Bureau has authority to continue processing pending petitions for a determination of Effective Competition, petitions for reconsideration of certification, and petitions for reconsideration of an Effective Competition decision in the normal course of business pursuant to existing rules. --------------------------------------------------------------------------- 5. Steps Taken To Minimize Significant Economic Impact on Small Entities and Significant Alternatives Considered 44. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): ``(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance, rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.'' The NPRM invited comment on the benefits and burdens of the approach we adopt herein on all entities, including small entities. 45. Overall, we expect that the approach the Commission adopts today will lessen the number of Effective Competition determinations addressed by the Commission and thus will reduce regulatory burdens on cable operators, and will more efficiently allocate the Commission's resources. In paragraph 25 of the Order, the Commission finds that the new rules and procedures will create an Effective Competition process that is more efficient for cable operators, especially small cable operators, since they will not be required to file petitions for a determination of Effective Competition in the first instance. The Commission explains the significant costs imposed on cable operators by the current Effective Competition process, [[Page 38012]] and it explains how the new presumption will alleviate those costs. 46. In paragraph 26 of the Order, the Commission discusses the impact of the new rules and procedures on franchising authorities, including small franchising authorities. The Commission concludes that the burdens of filing revised Form 328 are justified by the efficiency gained by conforming the presumption to marketplace realities. The Commission also anticipates that few franchising authorities will have a basis for filing a revised Form 328 demonstrating a lack of Competing Provider Effective Competition as a result of the presence of Effective Competition in the vast majority of franchise areas. In addition, the Commission states that it has ensured that franchising authorities will have access to the information needed to demonstrate a lack of Competing Provider Effective Competition.\36\ Overall, the costs to franchising authorities will be outweighed by the significant cost- saving benefits of a presumption that is consistent with market data showing that the vast majority of communities would satisfy the Competing Provider Effective Competition standard. The Commission states that it will monitor the marketplace to determine whether the burdens of filing a revised Form 328 are dissuading franchising authorities from filing, and if so, it will reconsider whether changes should be made to reduce their costs. --------------------------------------------------------------------------- \36\ In addition, in paragraph 22 of the Order, the Commission explains that third-party MVPDs or their agents sometimes charge cable operators for access to subscribership and reach data. The Commission states that it will revisit the issue of the cost of the data if it receives complaints that the cost of such data makes the filing of Form 328 cost-prohibitive to franchising authorities. --------------------------------------------------------------------------- 47. Finally, we note that the Commission considered alternate means to implement section 111 of STELAR. After evaluating all of the alternate proposals set forth in the record, in paragraph 16 the Commission concludes that while some proposals are already implemented, others would not have a sufficient impact on the costs that burden cable operators, particularly small cable operators, under the existing Effective Competition regime. Accordingly, the Commission has concluded that adopting a rebuttable presumption of Competing Provider Effective Competition is the best approach to streamline the process for small cable operators. 6. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rule 48. None. 7. Report to Congress 49. The Commission will send a copy of the Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act.\37\ In addition, the Commission will send a copy of the Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. The Order and FRFA (or summaries thereof) will also be published in the Federal Register.\38\ --------------------------------------------------------------------------- \37\ See 5 U.S.C. 801(a)(1)(A). \38\ See id. 604(b). --------------------------------------------------------------------------- B. Final Paperwork Reduction Act of 1995 Analysis 50. We analyzed this Order with respect to the Paperwork Reduction Act of 1995 (``PRA''),\39\ and it contains modified information collection requirements.\40\ It will be submitted to the Office of Management and Budget (``OMB'') for review under section 3507(d) of the PRA.\41\ The Commission, as part of its continuing effort to reduce paperwork burdens, will invite OMB, the general public, and other interested parties to comment on the information collection requirements contained in this document in a separate published Federal Register notice. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002,\42\ we previously sought specific comment on how the Commission might ``further reduce the information collection burden for small business concerns with fewer than 25 employees.'' --------------------------------------------------------------------------- \39\ The Paperwork Reduction Act of 1995 (``PRA''), Public Law 104-13, 109 Stat. 163 (1995) (codified in Chapter 35 of title 44 U.S.C.). \40\ Relevant information collections include those pertaining to Form 328 and the franchising authority certification (OMB Control No. 3060-0550), and to petitions for reconsideration of certifications (OMB Control No. 3060-0560). \41\ 44 U.S.C. 3507(d). \42\ The Small Business Paperwork Relief Act of 2002 (``SBPRA''), Public Law 107-198, 116 Stat. 729 (2002) (codified in Chapter 35 of title 44 U.S.C.); see 44 U.S.C. 3506(c)(4). --------------------------------------------------------------------------- C. Congressional Review Act 51. The Commission will send a copy of this Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). D. Additional Information 52. For additional information on this proceeding, contact Diana Sokolow, [email protected], of the Policy Division, Media Bureau, (202) 418-2120. V. Ordering Clauses 53. Accordingly, it is ordered that, pursuant to the authority found in sections 4(i), 4(j), 303(r), and 623 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 543, and section 111 of the STELA Reauthorization Act of 2014, Public Law 113- 200, section 111, this Order is adopted, effective upon announcement in the Federal Register of OMB approval and the effective date of the rules. 54. It is ordered that, pursuant to the authority found in sections 4(i), 4(j), 303(r), and 623 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 543, and section 111 of the STELA Reauthorization Act of 2014, Public Law 113-200, section 111, the Commission's rules are hereby amended as set forth in Appendix A. 55. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. 56. It is further ordered that the Commission shall send a copy of this Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). List of Subjects in 47 CFR Part 76 Administrative practice and procedure, Cable television, Reporting ad recordkeeping requirements. Federal Communications Commission. Gloria J. Miles, Federal Register Liaison Officer. Final Rules For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 76 as follows: PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE 0 1. The authority citation for part 76 continues to read as follows: Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573. 0 2. Revise Sec. 76.906 to read as follows: [[Page 38013]] Sec. 76.906 Presumption of effective competition. In the absence of a demonstration to the contrary cable systems are presumed: (a) To be subject to effective competition pursuant to section 76.905(b)(2); and (b) Not to be subject to effective competition pursuant to section 76.905(b)(1), (3) or (4). 0 3. Amend Sec. 76.907 by revising paragraph (b) to read as follows: Sec. 76.907 Petition for a determination of effective competition. * * * * * (b) If the cable operator seeks to demonstrate that effective competition as defined in Sec. 76.905(b)(1), (3), or (4) exists in the franchise area, it bears the burden of demonstrating the presence of such effective competition. Effective competition as defined in Sec. 76.905(b)(2) is governed by the presumption in Sec. 76.906, except that where a franchising authority has rebutted the presumption of competing provider effective competition as defined in Sec. 76.905(b)(2) and is certified, the cable operator must demonstrate that circumstances have changed and effective competition is present in the franchise area. Note to paragraph (b): The criteria for determining effective competition pursuant to Sec. 76.905(b)(4) are described in Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, Report and Order in CS Docket No. 96-85, FCC 99-57 (released March 29, 1999). * * * * * 0 4. Amend Sec. 76.910 by revising paragraph (b)(4) to read as follows: Sec. 76.910 Franchising authority certification. * * * * * (b) * * * (4) The cable system in question is not subject to effective competition. The franchising authority must submit specific evidence demonstrating its rebuttal of the presumption in Sec. 76.906 that the cable operator is subject to effective competition pursuant to section 76.905(b)(2). Unless a franchising authority has actual knowledge to the contrary, the franchising authority may rely on the presumption in Sec. 76.906 that the cable operator is not subject to effective competition pursuant to section 76.905(b)(1), (3), or (4). The franchising authority bears the burden of submitting evidence rebutting the presumption that competing provider effective competition, as defined in Sec. 76.905(b)(2), exists in the franchise area. If the evidence establishing the lack of effective competition is not otherwise available, franchising authorities may request from a multichannel video programming distributor information regarding the multichannel video programming distributor's reach and number of subscribers. A multichannel video programming distributor must respond to such request within 15 days. Such responses may be limited to numerical totals. * * * * * [FR Doc. 2015-15806 Filed 7-1-15; 8:45 am] BILLING CODE 6712-01-P
![Federal Register / Vol. 80, No. 127 / Thursday, July 2, 2015 / Rules and Regulations 38001
period until such information has been By the Commission. Summary of the Order
received from the requestor. The 20-day Karen V. Gregory,
I. Introduction
processing period will recommence Secretary.
after receipt of the requested 1. In this Report and Order (‘‘Order’’),
[FR Doc. 2015–16101 Filed 7–1–15; 8:45 am]
information. we improve and expedite the effective
BILLING CODE 6731–AA–P
competition process by adopting a
* * * * *
rebuttable presumption that cable
(d) Multitrack processing of requests.
operators are subject to ‘‘Effective
The Secretary uses multitrack FEDERAL COMMUNICATIONS Competition.’’ 1 Specifically, we
processing of FOIA requests. Requests COMMISSION presume that cable operators are subject
which seek and are granted expedited
47 CFR Part 76 to what is commonly referred to as
processing are put on the expedited
‘‘Competing Provider Effective
track. All other requests are designated [MB Docket No. 15–53; FCC 15–62] Competition.’’ As a result, each
either simple or complex requests based
franchising authority 2 will be
on the amount of time and/or Concerning Effective Competition; prohibited from regulating basic cable
complexity needed to process the Implementation of Section 111 of the rates unless it successfully demonstrates
request. A request may be considered STELA Reauthorization Act that the cable system is not subject to
simple if it involves records that are
AGENCY: Federal Communications Competing Provider Effective
routinely requested and readily
Commission. Competition. This change is justified by
available.
ACTION: Final rule. the fact that Direct Broadcast Satellite
(e) Expedited processing of requests.
(‘‘DBS’’) service is ubiquitous today and
(1) The Secretary will provide for SUMMARY: In this document, the that DBS providers have captured
expedited processing of requests for Commission improves and expedites the almost 34 percent of multichannel video
records when the person requesting the Effective Competition process by programming distributor (‘‘MVPD’’)
records can demonstrate a compelling adopting a rebuttable presumption that subscribers. This Order also implements
need. cable operators are subject to Competing section 111 of the STELA
* * * * * Provider Effective Competition. This Reauthorization Act of 2014
(4) The Secretary shall determine action implements section 111 of the (‘‘STELAR’’), which directs the
whether to provide expedited STELA Reauthorization Act of 2014, Commission to adopt a streamlined
processing, and provide notice of the which directs the Commission to adopt Effective Competition process for small
determination to the person making the a streamlined Effective Competition cable operators.3 By adopting a
request, within ten (10) calendar days process for small cable operators. rebuttable presumption of Competing
after the receipt date of the request. DATES: The FCC will publish a Provider Effective Competition, we
* * * * * document in the Federal Register update our Effective Competition rules,
■ 10. Amend § 503.34 by revising announcing the effective date of this for the first time in over 20 years, to
paragraph (a) to read as follows: final rule after OMB approval. reflect the current MVPD marketplace,
FOR FURTHER INFORMATION CONTACT: For reduce the regulatory burdens on all
§ 503.34 Annual report of public additional information on this cable operators, especially small
information request activity. operators,4 and more efficiently allocate
proceeding, contact Diana Sokolow,
(a) On or before February 1 of each Diana.Sokolow@fcc.gov, of the Policy the Commission’s resources.
year, the Commission must submit to Division, Media Bureau, (202) 418–
the Attorney General of the United II. Background
2120.
States, in the format required by the 2. In the Cable Television Consumer
SUPPLEMENTARY INFORMATION: This is a Protection and Competition Act of 1992
Attorney General, a report on FOIA
activities which shall cover the summary of the Commission’s Effective (‘‘1992 Cable Act’’), Congress adopted a
preceding fiscal year pursuant to 5 Competition Order, FCC 15–62, adopted ‘‘preference for competition,’’ pursuant
U.S.C. 552(e). on June 2, 2015 and released on June 3, to which a franchising authority may
2015. The full text of this document is regulate basic cable service tier rates
* * * * * available for public inspection and
Subpart I—Public Observation of copying during regular business hours 1 Effective Competition is a term of art that the
Federal Maritime Commission in the FCC Reference Center, Federal statute defines by application of specific tests.
Meetings and Public Access to Communications Commission, 445 12th 2 A ‘‘franchising authority’’ is ‘‘any governmental
Street SW., Room CY–A257, entity empowered by Federal, State, or local law to
Information Pertaining to Commission grant a franchise.’’ See 47 U.S.C. 522(10).
Meetings Washington, DC 20554. This document 3 See Public Law 113–200, section 111, 128 Stat.
will also be available via ECFS at http: 2059 (2014); 47 U.S.C. 543(o)(1) (‘‘Not later than
■ 11. Amend § 503.87 by revising //fjallfoss.fcc.gov/ecfs/. Documents will 180 days after December 4, 2014, the Commission
paragraph (b) to read as follows: be available electronically in ASCII, shall complete a rulemaking to establish a
Microsoft Word, and/or Adobe Acrobat. streamlined process for filing of an effective
competition petition pursuant to this section for
§ 503.87 Effect of provisions of this Copies of the materials can be obtained small cable operators, particularly those who serve
asabaliauskas on DSK5VPTVN1PROD with FRONTMATTER
subpart on other subparts. from the FCC’s Reference Information primarily rural areas.’’). Accordingly, this
* * * * * Center at (202) 418–0270. Alternative rulemaking must be completed by June 2, 2015.
4 Congress applied the definition of ‘‘small cable
(b) Nothing in this subpart shall formats are available for people with
operator’’ as set forth in section 623(m)(2) of the
permit the withholding from any disabilities (Braille, large print, Communications Act of 1934, as amended (the
individual to whom a record pertains electronic files, audio format), by ‘‘Act’’), which is ‘‘a cable operator that, directly or
any record required by this subpart to be sending an email to fcc504@fcc.gov or through an affiliate, serves in the aggregate fewer
maintained by the agency which record calling the Commission’s Consumer and than 1 percent of all subscribers in the United
States and is not affiliated with any entity or
is otherwise available to such an Governmental Affairs Bureau at (202) entities whose gross annual revenues in the
individual under the provisions of 418–0530 (voice), (202) 418–0432 aggregate exceed $250,000,000.’’ See 47 U.S.C.
subpart H of this part. (TTY). 543(m)(2), (o)(3).
VerDate Sep<11>2014 23:22 Jul 01, 2015 Jkt 235001 PO 00000 Frm 00079 Fmt 4700 Sfmt 4700 E:\FR\FM\02JYR1.SGM 02JYR1](https://thefederalregister.org/doc/80_FR_38128/page/1.svg)
![38002 Federal Register / Vol. 80, No. 127 / Thursday, July 2, 2015 / Rules and Regulations
and equipment only if the Commission vast majority of franchise areas only a of the communities evaluated since the
finds that the cable system is not subject single cable operator provided service start of 2013. As stated in the NPRM, the
to Effective Competition.5 Section and those operators had ‘‘substantial Commission has issued affirmative
623(l)(1) of the Act defines the four market power at the local distribution findings of Effective Competition in the
types of Effective Competition, as level.’’ 6 DBS service had not yet entered country’s largest cities, in its suburban
follows: the market, and local exchange carriers areas, and in its rural areas where
• Low Penetration Effective (‘‘LECs’’), such as Verizon and AT&T, subscription to DBS is particularly high.
Competition, which is present if fewer had not yet entered the MVPD business 5. The Commission released the
than 30 percent of the households in the in any significant way. Against this NPRM in this proceeding seeking
franchise area subscribe to the cable backdrop, the Commission adopted a comment on adopting a presumption of
service of a cable system; presumption that cable systems are not Competing Provider Effective
• Competing Provider Effective subject to Effective Competition, and it Competition. The Commission sought to
Competition, which is present if the provided that a franchising authority establish a streamlined Effective
franchise area is (i) served by at least that wanted to regulate a cable Competition process for small cable
two unaffiliated MVPDs each of which operator’s basic service tier rates must operators and to adopt policies that
offers comparable video programming to be certified by filing FCC Form 328 with would reduce unnecessary regulatory
at least 50 percent of the households in the Commission. A cable operator that burdens on the industry as a whole
the franchise area; and (ii) the number wishes to challenge the franchising while ensuring the most efficient use of
of households subscribing to authority’s right to regulate its basic Commission resources.
programming services offered by service tier rate bears the burden of
MVPDs other than the largest MVPD III. Discussion
rebutting the presumption and
exceeds 15 percent of the households in demonstrating that it is in fact subject to A. Rebuttable Presumption That Cable
the franchise area; Effective Competition. Systems are Subject to Effective
• Municipal Provider Effective 4. As described in the Notice of Competition
Competition, which is present if an Proposed Rulemaking (‘‘NPRM’’) in this
MVPD operated by the franchising 6. We adopt a rebuttable presumption
proceeding, the MVPD marketplace has that cable operators are subject to
authority for that franchise area offers changed in ways that substantially
video programming to at least 50 Competing Provider Effective
impact the test for Competing Provider Competition, finding that such an
percent of the households in that Effective Competition. After the NPRM
franchise area; and approach is warranted by market
was released, the Commission adopted changes since the Commission adopted
• Local Exchange Carrier (LEC) its most recent video competition report
Effective Competition, which is present the presumption of no Effective
containing many of the same statistics Competition over 20 years ago. When
if a local exchange carrier or its affiliate cited in the NPRM. Specifically, the
(or any MVPD using the facilities of the Commission adopted the
video competition report reached the presumption of no Effective
such carrier or its affiliate) offers video following conclusions, among others:
programming services directly to Competition, incumbent cable operators
• Slight increase in DBS had approximately a 95 percent market
subscribers by any means (other than subscribership. The number of DBS
direct-to-home satellite services) in the share of MVPD subscribers and only a
subscribers increased from year-end single cable operator served the local
franchise area of an unaffiliated cable 2012 (34.1 million, or 33.8 percent of
operator which is providing cable franchise area in the vast majority of
MVPD subscribers) to year-end 2013 franchise areas, which is very different
service in that franchise area, but only (34.2 million, or 33.9 percent of MVPD
if the video programming services so from today’s marketplace. As explained
subscribers). above, the two-pronged test for a finding
offered in that area are comparable to • Significant increase in telephone
the video programming services of Competing Provider Effective
MVPD subscribership. The number of Competition requires that (1) the
provided by the unaffiliated cable telephone MVPD subscribers increased
operator in that area. franchise area is ‘‘served by at least two
from year-end 2012 (9.9 million, or 9.8 unaffiliated [MVPDs] each of which
Section 623 of the Act does not permit percent of MVPD subscribers) to year-
franchising authorities to regulate any offers comparable video programming to
end 2013 (11.3 million, or 11.2 percent at least 50 percent of the households in
cable service rates other than the basic of MVPD subscribers).
service tier rate and equipment used to the franchise area;’’ and (2) ‘‘the number
• Widespread availability of DBS of households subscribing to
receive the signal. video service. DIRECTV provides local
3. In 1993, when the Commission programming services offered by
broadcast channels to 197 markets [MVPDs] other than the largest [MVPD]
implemented the statute’s Effective representing over 99 percent of U.S.
Competition provisions, the existence of exceeds 15 percent of the households in
homes, and DISH Network provides the franchise area.’’ 7 Below we explain
Effective Competition was the exception local broadcast channels to all 210
rather than the rule. Incumbent cable markets. 7 47 U.S.C. 543(l)(1)(B). The statute establishes
operators had captured approximately • Consumer access to multiple the applicable test for each type of Effective
95 percent of MVPD subscribers. In the MVPDs. Approximately 99.7 percent of Competition, and we thus cannot modify the tests,
asabaliauskas on DSK5VPTVN1PROD with FRONTMATTER
homes in the U.S. have access to at least as some commenters request, nor can we base an
5 Cable Television Consumer Protection and Effective Competition decision on vague allegations
Competition Act of 1992, Public Law 102–385, 106 three MVPDs, and nearly 35 percent of large cable operators’ dominance. In addition,
Stat. 1460 (1992); 47 U.S.C. 543(a)(2)(A). This Order have access to at least four MVPDs. while some commenters state that the basic service
contains references to the Commission’s role in the As described in the NPRM, the tier rate increases more rapidly in communities
franchising authority certification process. Commission has found Effective with a finding of Effective Competition than in
Although our rules refer to the Commission as those without such a finding, we emphasize that the
having these responsibilities, the Media Bureau has Competition in more than 99.5 percent average rate for basic service is actually lower in
delegated authority to act on certification matters communities with a finding of Effective
pursuant to the rules established by the 6 Implementation of section 19 of the Cable Competition than in those without a finding,
Commission, and in practice the Media Bureau Television Consumer Protection & Competition Act demonstrating that basic service tier rates remain
evaluates certifications and related pleadings on of 1992, First Report, 9 FCC Rcd 7442, 7449, reasonable where there is a Commission finding of
behalf of the Commission. See 47 CFR 0.61. paragraph 13 (1994). Effective Competition. See Implementation of
VerDate Sep<11>2014 23:22 Jul 01, 2015 Jkt 235001 PO 00000 Frm 00080 Fmt 4700 Sfmt 4700 E:\FR\FM\02JYR1.SGM 02JYR1](https://thefederalregister.org/doc/80_FR_38128/page/2.svg)
![38004 Federal Register / Vol. 80, No. 127 / Thursday, July 2, 2015 / Rules and Regulations
rational nexus to the question of finds that a cable system is subject to 12. We are not persuaded by
whether more than 15 percent of the effective competition.’’ Contrary to the commenters who argue that we should
households in a specific franchise area suggestion of some commenters, we see not adopt a rebuttable presumption of
actually subscribe to programming no statutory bar to applying a Competing Provider Effective
services offered by MVPDs other than nationwide rebuttable presumption of Competition because of the potential
the largest MVPD. We disagree, finding Competing Provider Effective impact of findings of Effective
instead that, as NCTA states, ‘‘an Competition in making this finding. In Competition on the basic service tier
average figure is not conclusive fact, the NPRM in the proceeding requirement found in section 623 of the
evidence of the specific penetration in implementing section 623 of the Act Act. Several commenters argue that our
every community’’ but ‘‘it undeniably initially proposed to require franchising action would enable cable operators to
supports the Commission’s proposed authorities to demonstrate that Effective move broadcast stations that elect
rebuttable presumption’’ and ‘‘is a Competition was not present in the retransmission consent and public,
strong predictor that competitors have franchise area, explaining that such an educational, and governmental access
garnered far in excess of the market approach would be reasonable because (‘‘PEG’’) channels to a higher tier,
share Congress deemed necessary to free the Act ‘‘makes the absence of effective leading to higher consumer prices. If a
cable operators from the vestiges of rate finding of Effective Competition results
competition a prerequisite to regulators’
regulation.’’ The level of competing in elimination of the basic service tier
legal authority over basic rates.’’
MVPD penetration in all of the DMAs, requirement—a statutory interpretation
Specifically, the statute provides that
along with their ubiquitous service issue that we do not address here—that
‘‘[i]f the Commission finds that a cable conclusion would apply not only in
availability, justifies placing the burden
on franchising authorities to show a lack system is not subject to effective communities where the new
of Effective Competition. Under the competition, the rates for the provision presumption of Effective Competition is
rebuttable presumption adopted in this of basic cable service shall be subject to not successfully rebutted but also in the
Order, local franchising authorities will regulation by a franchising authority, or thousands of communities in which we
be able to attempt to demonstrate that by the Commission . . . .’’ Although the have already issued findings of Effective
the Competing Provider Effective Commission ultimately took a different Competition. Despite these widespread
Competition test is not met in a given course, that decision was based on what findings of Effective Competition,
area. Thus, we will not be basing our was most efficient given the state of the commenters have not pointed to a single
finding on the nationwide statistics marketplace at the time the presumption instance in which cable operators have
alone. was adopted and it was not mandated even attempted to move broadcast
10. For all of the above reasons, we by statute. Given the state of the video stations or PEG channels off the basic
conclude that adopting a rebuttable marketplace today, we find that it is service tier.17 NAB argues that cable
presumption of Competing Provider appropriate to presume the presence of operators may not have moved
Effective Competition is consistent with Competing Provider Effective broadcast stations or PEG channels to a
the current state of the video Competition on a nationwide basis, higher tier in communities with a
marketplace. We do not, however, find provided that franchising authorities finding of Effective Competition at least
that market changes since the adoption have an opportunity to rebut that in part because they do not wish to do
of the original presumption would presumption and demonstrate that the so on a fragmented ‘‘patchwork’’ basis
support a presumption that any of the Competing Provider Effective but they have provided no support for
other Effective Competition tests (low Competition test is not met in a specific this assertion. Moreover, a patchwork of
penetration, municipal provider, or area. The franchising authority’s ability communities with and without Effective
LEC) is met. Although some to file a revised Form 328 pursuant to Competition will continue to exist after
commenters have asked that we also the procedures discussed below will the adoption of this Order if any
establish a rebuttable presumption of ensure that the Commission will franchising authorities are able to rebut
LEC Effective Competition in any continue to receive evidence regarding a the new presumption and remain
franchise area where an LEC MVPD specific franchise area where the certified. We thus find that the concerns
offers video service, we decline to do so franchising authority deems it relevant.
at this time. The record lacks evidence The fact that Effective Competition
17 Similarly, while the IAC contends that
to support a presumption that the consumers will be harmed because the uniform
decisions apply to specific franchise pricing provision and the tier buy-through
service area of an LEC MVPD
areas does not preclude the Commission provision do not apply following a finding of
substantially overlaps that of the Effective Competition, they have not pointed to any
from adopting a rebuttable presumption
incumbent cable operator in a sufficient instances of cable operators in the thousands of
number of franchise areas where an LEC of Competing Provider Effective communities with Effective Competition findings
MVPD offers video service to make such Competition today based on the using this flexibility to the detriment of subscribers
pervasive competition to cable from in these communities. The IAC also claims that
a presumption supportable. ‘‘use of public rights of ways by [Satellite Master
Accordingly, our presumption of other MVPDs, just as it did not prevent Antenna Television (‘‘SMATV’’)] operators serving
Effective Competition is limited to the Commission from adopting a individual properties may be allowed if there is a
Competing Provider Effective rebuttable presumption of no Effective finding of effective competition.’’ IAC
Competition based on cable’s national Recommendation at 3; 47 CFR 76.501. IAC has
Competition. Absent a demonstration to
asabaliauskas on DSK5VPTVN1PROD with FRONTMATTER
failed to explain the significance of this or why
the contrary, we will continue to 95 percent share of the MVPD such a possibility would be a reason to refrain from
presume that cable systems are not marketplace in 1993. In the NPRM, we updating our processes to reflect market realities.
subject to Low Penetration, Municipal sought comment on whether there were Further, a SMATV issue has not manifested itself
certain geographic areas in which we in the thousands of communities that the
Provider, or LEC Effective Competition. Commission has already determined are subject to
11. Adoption of the presumption of should not adopt a presumption of Effective Competition. We also emphasize that both
Competing Provider Effective Competing Provider Effective the prohibition against negative option billing and
Competition is consistent with section Competition. No commenter addressed cable customer service standards, as a general
matter, survive a finding of Effective Competition,
623 of the Act, which prohibits a this issue, and thus we will not adopt per Time Warner Entertainment Co., L.P., v. FCC,
franchising authority from regulating different rules for any specific 56 F.3d 151, 192–196 (D.C. Cir. 1995). See IAC
basic cable rates ‘‘[i]f the Commission geographic areas. Recommendation at 3; 47 CFR 76.981, 76.309.
VerDate Sep<11>2014 23:22 Jul 01, 2015 Jkt 235001 PO 00000 Frm 00082 Fmt 4700 Sfmt 4700 E:\FR\FM\02JYR1.SGM 02JYR1](https://thefederalregister.org/doc/80_FR_38128/page/4.svg)
![Federal Register / Vol. 80, No. 127 / Thursday, July 2, 2015 / Rules and Regulations 38005
expressed by commenters in this regard franchise area. The burden would then presumption was never mandated by
are unpersuasive. Moreover, they do not shift to the cable operator to prove Congress, and there is nothing in
speak to the key issue in this Effective Competition. As ACA states: STELAR’s provisions that suggests that
proceeding: whether maintaining a Despite widespread and obvious Congress intended to withdraw the
presumption of no Effective competition, many cable operators, Commission’s general rulemaking
Competition is consistent with the particularly small operators, have not availed power to revisit its rules and modify or
current state of the MVPD marketplace. themselves of effective competition relief repeal them if it finds such action is
Accordingly, we do not believe that they because of the burdens of overcoming the warranted. In the clause that NAB relies
provide a sound basis to retain rules current presumption against effective on, Congress merely disavows any
that are no longer justified by competition. These burdens include the costs intent to alter or interfere with the
of purchasing the required zip code and
marketplace realities and that place competing provider penetration information,
Commission rule requiring proof of the
unwarranted burdens on cable operators preparing a formal legal filing for submission existence of Effective Competition, as
and the Commission. to the Commission, paying a filing fee, and applied to small cable operators. It does
then waiting an uncertain amount of time for not require the Commission to maintain
B. Implementation of Section 111 of
a decision. Congress recognized these the presumption of no Effective
STELAR burdens when it enacted Section 111 of Competition. Rather, Congress only
13. For the reasons stated above, STELAR and adoption of the Commission’s requires the Commission to streamline
section 623 of the Act provides the proposal is the most effective and rational the process for ‘‘small cable operators.’’
Commission with ample authority to way to reduce these burdens and ensure that
cable operators of all sizes that face effective
Thus, Congress did not ‘‘ratify’’ or lock
adopt a rebuttable presumption of in place the current presumption.
competition obtain the relief to which they
Competing Provider Effective are entitled. Indeed, if this provision were read to
Competition for both large and small restrict the Commission from changing
cable operators. However, additional 14. We agree with commenters that
the presumption for small operators, as
support for our decision today is found there is no statutory restriction on
NAB urges, it would have the perverse
in STELAR. Specifically, we conclude extending the same revised rebuttable
effect of permitting the Commission to
that adopting a rebuttable presumption presumption of Competing Provider
reduce burdens on larger operators but
of Competing Provider Effective Effective Competition to all cable
not on smaller ones, contrary to the
Competition fully effectuates the systems. Section 111 of STELAR directs
clear intent and narrow focus of section
Commission’s responsibilities under the Commission to establish streamlined
111. Thus, we find unpersuasive NAB’s
section 111 of STELAR. Section 111 measures for small cable operators
argument that section 111 of STELAR
directs the Commission ‘‘to establish a within a certain deadline, but it ‘‘neither
prohibits the rule modifications adopted
streamlined process for filing of an expands nor restricts the scope of the
in this Order.
effective competition petition pursuant Commission’s authority to administer 16. In the NPRM, the Commission
to this section for small cable operators, the effective competition process.’’ 18 As
sought comment on alternate
particularly those who serve primarily commenters observe, ‘‘reducing
streamlined procedures that it could
rural areas.’’ The new presumption of regulatory burdens on all cable
adopt for small cable operators pursuant
Competing Provider Effective operators, large and small,’’ will ensure
to section 111. Some commenters
Competition will establish a streamlined that Commission procedures ‘‘reflect
proposed that we could implement
process for all cable operators, including marketplace realities and allow for a
section 111 through small cable operator
small operators, by reallocating the more efficient allocation of Commission
Effective Competition reforms other
burden of providing evidence of and industry resources.’’ 19
than reversing the presumption, for
Effective Competition in a manner that 15. We recognize that STELAR
example, by eliminating filing fees,
better comports with the current state of provides that ‘‘[n]othing in this
automatically granting certain petitions,
the marketplace. The existing subsection shall be construed to have
adopting a time limit for Commission
presumption of no Effective any effect on the duty of a small cable
review, or otherwise streamlining
Competition requires cable operators to operator to prove the existence of
existing Effective Competition
produce information about competing effective competition under this
procedures. We have evaluated all of the
providers’ service areas and numbers of section.’’ NAB argues that this provision
alternate proposals set forth in the
subscribers, and to petition the ratifies the Commission’s placement of
record and we conclude that, while
Commission for an affirmative finding the burden of proving Effective
some are already implemented, others
of the requisite competition in Competition on the cable operators, and
would not have a sufficient impact on
particular franchise areas. Changing the prevents the Commission from shifting
the costs that burden cable operators,
presumption—which is merely a the burden. We do not read this
particularly small cable operators, under
procedural device—will streamline the language as limiting the Commission’s
the existing Effective Competition
process by shifting the burden of authority to eliminate or modify the
regime, including the costs of
producing evidence with respect to presumption for cable operators, large or
purchasing data indicating what zip
Effective Competition. Under our small. The Commission adopted the
codes make up the local franchising
modified rule, franchising authorities presumption of no Effective
area, using the resulting list of zip codes
remain free to rebut the presumption by Competition as a procedural
to purchase penetration data, and
asabaliauskas on DSK5VPTVN1PROD with FRONTMATTER
presenting community-specific mechanism, based in large part on the
preparing a formal legal filing.
evidence, which the cable operator premise that ‘‘the vast majority of cable
Accordingly, we have concluded that
would then have the burden to systems’’ in 1993 were ‘‘not subject to
overcome based on its own evidence. effective competition.’’ 20 The
5631, 5670, paragraph 43 (1993) (‘‘1993 Rate
The new process is streamlined for Order’’). See also id. at 5640, paragraph 10 (‘‘We
18 See
NCTA Reply at 8.
cable operators because they will be anticipate that the regulations we adopt today will
19 See
ITTA Comments at 7.
required to file only in response to a change over time. In accordance with the statute,
20 See Implementation of Sections of the Cable we will review and monitor the effect of our initial
showing by a franchising authority that Television Consumer Protection and Competition rate regulations on the cable industry and
an operator does not face Competing Act of 1992: Rate Regulation, Report and Order and consumers, and refine and improve our rules as
Provider Effective Competition in the Further Notice of Proposed Rulemaking, 8 FCC Rcd necessary.’’).
VerDate Sep<11>2014 23:22 Jul 01, 2015 Jkt 235001 PO 00000 Frm 00083 Fmt 4700 Sfmt 4700 E:\FR\FM\02JYR1.SGM 02JYR1](https://thefederalregister.org/doc/80_FR_38128/page/5.svg)
![Federal Register / Vol. 80, No. 127 / Thursday, July 2, 2015 / Rules and Regulations 38007
petition for reconsideration alleging that authority is certified under the new suggests about the likely application of
Effective Competition exists will rules adopted herein, after having the statutory Effective Competition tests
continue to automatically stay the demonstrated a lack of Competing in almost all communities. According to
imposition of rate regulation pending Provider Effective Competition, we ACA, only one cable operator with
the outcome of the reconsideration agree with ACA that it would not make fewer than 1,000,000 total subscribers
proceeding. Although the NPRM sought sense for a cable operator filing a has filed an Effective Competition
comment on whether we should deem decertification petition to benefit from petition since December 30, 2011, even
a petition for reconsideration granted if the presumption of Effective though such operators are likely subject
the Commission does not act on it Competition; rather, in this instance the to Effective Competition to the same
within six months, we find that such an cable operator must demonstrate that degree as other, larger operators. Given
approach is unnecessary given the circumstances have changed and the ubiquitous nationwide presence and
automatic rate regulation stay. Effective Competition is now present in penetration levels of DBS, we find that
22. Our rules currently permit cable the franchise area.25 We will clarify in it no longer makes sense to burden cable
operators to request information from a revised section 76.907(b) that the new operators with the costs of filing an
competitor about the competitor’s reach presumption of Competing Provider Effective Competition petition in the
and number of subscribers, if the Effective Competition does not apply in first instance. It is far more efficient to
evidence necessary to establish Effective this instance. require franchising authorities to rebut
Competition is not otherwise available. 24. All of the new rules and the presumption in those relatively rare
We will retain that provision, while procedures for Effective Competition instances where there may not be
adding a similar provision to benefit will go into effect once the Commission Effective Competition. Contrary to
franchising authorities now that they announces approval by the Office of NAB’s suggestion, the burdens imposed
will bear the burden of demonstrating Management and Budget (‘‘OMB’’) of on cable operators under the current
the lack of Competing Provider Effective the rules that require such approval and presumption, which is no longer
Competition. Specifically, we will of revised Form 328. Although some of supportable by marketplace data, justify
amend our rules to provide that, if a the rules, such as the new rebuttable adoption of the new presumption as the
franchising authority filing Form 328 presumption of Competing Provider most efficient approach. The fact that
wishes to demonstrate a lack of Effective Competition itself, do not cable operators benefit from a finding of
Competing Provider Effective require OMB approval, we conclude Effective Competition does not alter this
Competition and necessary evidence is that none of the rules should go into analysis. We expect that the volume of
not otherwise available, the franchising effect until the OMB approval is new Form 328s filed by franchising
authority may request directly from an obtained. Although some commenters authorities will be far less than the
MVPD information regarding the have argued that cable operators volume of cable operator Effective
MVPD’s reach and number of generally should benefit from the new Competition petitions currently filed,
subscribers in a particular franchise presumption as soon as it is adopted, we which will conserve resources of cable
area. As currently required for such find that tying the effective date to the operators as well as the Commission.
requests by cable operators, we will OMB approval is appropriate where, as Contrary to the suggestion of some
require the MVPD to respond to such a here, all of the rules are so closely tied commenters, we do not expect
request within 15 days, and we will to the submission of a revised form that franchising authorities in thousands of
permit such responses to be limited to requires OMB approval. communities to file new Form 328s.
numerical totals related to 25. Overall, we find that the new rules Rather, we anticipate that few
subscribership and reach. Third-party and procedures discussed above will franchising authorities will be able to
MVPDs must timely respond to these create an Effective Competition process present data to rebut the presumption of
requests, and the Commission may use that is more efficient for cable operators, Competing Provider Effective
its enforcement power to ensure especially small cable operators, than Competition, given the ubiquity and
compliance. We understand that the current approach. Cable operators penetration of DBS. In this regard, we
currently, third-party MVPDs or their will not be required to file petitions for agree with NCTA that, ‘‘[g]iven
agents sometimes charge cable operators a determination of Effective competitive conditions throughout the
for access to this data. We will revisit Competition in the first instance; country and the relatively few
the issue of the cost of the data if we instead, franchising authorities will
receive complaints that the cost of such [franchising authorities] that currently
have to rebut the presumption of rate regulate, shifting the presumption is
data makes the filing of Form 328 cost- Competing Provider Effective
prohibitive to franchising authorities. extraordinarily unlikely to unleash an
Competition in those limited locations avalanche of [franchising authority]
23. Even under the new approach to in which the statutory test is not met.
Effective Competition adopted herein, filings.’’
The record demonstrates that filing
we expect that cable operators still on 26. We recognize that franchising
Effective Competition petitions has
occasion may wish to file petitions for authorities, including small franchising
forced cable operators to incur
a determination of Effective authorities, will face additional burdens
significant costs, such as the cost of
Competition pursuant to section 76.907 in preparing revised Form 328 with an
purchasing zip code and competing
of our rules. In particular, if a attachment rebutting the presumption of
provider penetration data and preparing
asabaliauskas on DSK5VPTVN1PROD with FRONTMATTER
franchising authority is certified under Competing Provider Effective
formal legal filings, merely to confirm
the new rules and procedures, a cable Competition, and we also recognize that
what the marketplace data already
operator may at a later date wish to file some franchising authorities have
a petition demonstrating that 25 Thus, it would be inappropriate to limited resources. We conclude that any
circumstances have changed and one of automatically grant cable operator petitions for such burdens are justified by the
the four types of Effective Competition decertification that are not acted on within a certain efficiency gained by conforming the
exists. Accordingly, we will retain timeframe, as ACA suggests, given that the presumption to marketplace realities. In
franchising authority would have previously put
existing section 76.907, but we will forth evidence of a lack of Competing Provider
1993, the Commission stated that it was
revise section 76.907(b) to reflect the Effective Competition in order to become certified ‘‘mindful of franchising authorities’
new presumption. Once a franchising in the first place. concern that they do not have access to
VerDate Sep<11>2014 23:22 Jul 01, 2015 Jkt 235001 PO 00000 Frm 00085 Fmt 4700 Sfmt 4700 E:\FR\FM\02JYR1.SGM 02JYR1](https://thefederalregister.org/doc/80_FR_38128/page/7.svg)
![Federal Register / Vol. 80, No. 127 / Thursday, July 2, 2015 / Rules and Regulations 38013
§ 76.906 Presumption of effective lack of effective competition is not required information in our electronic
competition. otherwise available, franchising database at http://permits.fws.gov/186A;
In the absence of a demonstration to authorities may request from a and (2) by hard copy, by submitting a
the contrary cable systems are multichannel video programming paper form 3–186A to the falconer’s
presumed: (a) To be subject to effective distributor information regarding the State, tribal, or territorial agency that
competition pursuant to section multichannel video programming governs falconry. The State of California
76.905(b)(2); and (b) Not to be subject to distributor’s reach and number of has developed and implemented an
effective competition pursuant to subscribers. A multichannel video online permitting and reporting system
section 76.905(b)(1), (3) or (4). programming distributor must respond that is compatible with the system we
■ 3. Amend § 76.907 by revising to such request within 15 days. Such use for reporting take of raptors from the
paragraph (b) to read as follows: responses may be limited to numerical wild for falconry (our electronic
totals. database at http://permits.fws.gov/
§ 76.907 Petition for a determination of
effective competition. * * * * * 186A). Allowing California residents to
[FR Doc. 2015–15806 Filed 7–1–15; 8:45 am]
use that State’s reporting system should
* * * * * result in a small savings of resources for
(b) If the cable operator seeks to BILLING CODE 6712–01–P
both the State and the Service.
demonstrate that effective competition
Therefore, with this rule, we change the
as defined in § 76.905(b)(1), (3), or (4)
web address for falconers in California
exists in the franchise area, it bears the DEPARTMENT OF THE INTERIOR to report takes, acquisitions, transfers,
burden of demonstrating the presence of
and losses of falconry birds.
such effective competition. Effective Fish and Wildlife Service
competition as defined in § 76.905(b)(2) Administrative Procedure
is governed by the presumption in 50 CFR Part 21 This action is administrative in
§ 76.906, except that where a nature. We are providing regulated
[Docket No. FWS–HQ–MB–2015–0032;
franchising authority has rebutted the entities and the general public with an
FF09M21200–156–FXMB1231099BPP0]
presumption of competing provider accurate web address to report take,
effective competition as defined in RIN 1018–BA90 loss, or transfers of raptors by falconers
§ 76.905(b)(2) and is certified, the cable in California. We delegated the State of
operator must demonstrate that Migratory Bird Permits; Update of
Falconry Permitting Reporting Address California permitting authority for
circumstances have changed and falconry under the regulations at 50 CFR
effective competition is present in the AGENCY: Fish and Wildlife Service, 21.29 (see 78 FR 72830, December 4,
franchise area. Interior. 2013). This rule facilitates that State’s
Note to paragraph (b): The criteria for
ACTION: Final rule. permitting and reporting requirements,
determining effective competition
and will enable reporting with our
pursuant to § 76.905(b)(4) are described SUMMARY: The State of California has system for reporting take, acquisition,
in Implementation of Cable Act Reform implemented an online permitting and loss, or transfer of any bird for falconry.
Provisions of the Telecommunications reporting system compatible with the The change should slightly reduce
Act of 1996, Report and Order in CS system that we, the U.S. Fish and administration costs for both the State
Docket No. 96–85, FCC 99–57 (released Wildlife Service (Service), use for and the Service. The delegation of
March 29, 1999). reporting take of raptors from the wild permitting authority to the State of
* * * * * for falconry. We change the Web California has already been subject to
■ 4. Amend § 76.910 by revising address for falconers in California to public notice-and-comment procedures,
paragraph (b)(4) to read as follows: report takes, acquisitions, transfers, and and this change simply adds an Internet
losses of falconry birds. address to the regulations at 50 CFR
§ 76.910 Franchising authority
certification. DATES: This rule is effective January 1, 21.29 to allow full use of California’s
2016. permitting and reporting system. Under
* * * * *
(b) * * * FOR FURTHER INFORMATION CONTACT: Ron 5 U.S.C. 553(b), rules of agency
(4) The cable system in question is not Kokel at 703–358–1967. organization, procedure, or practice may
subject to effective competition. The be made final without previous notice to
SUPPLEMENTARY INFORMATION:
franchising authority must submit the public. This is a final rule.
specific evidence demonstrating its Background
Required Determinations
rebuttal of the presumption in § 76.906 We published a final rule in the
that the cable operator is subject to Federal Register on October 8, 2008 (73 Regulatory Planning and Review
effective competition pursuant to FR 59448), to revise our regulations (Executive Orders 12866 and 13563)
section 76.905(b)(2). Unless a governing falconry in the United States, Executive Order 12866 provides that
franchising authority has actual found in title 50 of the Code of Federal the Office of Management and Budget’s
knowledge to the contrary, the Regulations (CFR) at § 21.29. In 2013, Office of Information and Regulatory
franchising authority may rely on the we added the State of California to the Affairs (OIRA) will review all significant
asabaliauskas on DSK5VPTVN1PROD with FRONTMATTER
presumption in § 76.906 that the cable list of States to which we delegate rules. OIRA has determined that this
operator is not subject to effective permitting for falconry to the State, as rule is not significant.
competition pursuant to section provided under the regulations (78 FR Executive Order (E.O.) 13563
76.905(b)(1), (3), or (4). The franchising 72830, December 4, 2013). reaffirms the principles of E.O. 12866
authority bears the burden of submitting while calling for improvements in the
evidence rebutting the presumption that This Rule nation’s regulatory system to promote
competing provider effective In the falconry regulations at 50 CFR predictability, to reduce uncertainty,
competition, as defined in 21.29, we offer two methods to submit and to use the best, most innovative,
§ 76.905(b)(2), exists in the franchise required reports or other information: and least burdensome tools for
area. If the evidence establishing the (1) Electronically, by entering the achieving regulatory ends. The
VerDate Sep<11>2014 23:22 Jul 01, 2015 Jkt 235001 PO 00000 Frm 00091 Fmt 4700 Sfmt 4700 E:\FR\FM\02JYR1.SGM 02JYR1](https://thefederalregister.org/doc/80_FR_38128/page/13.svg)
Document Created: 2015-12-15 13:15:48
Document Modified: 2015-12-15 13:15:48
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | The FCC will publish a document in the Federal Register announcing the effective date of this final rule after OMB approval. | |
| Contact | For additional information on this proceeding, contact Diana Sokolow, [email protected], of the Policy Division, Media Bureau, (202) 418-2120. | |
| FR Citation | 80 FR 38001 | |
| CFR Associated | Administrative Practice and Procedure; Cable Television and Reporting Ad Recordkeeping Requirements |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR