HomeMy WebLinkAboutComcast Reply to oppositionBefore the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of Comcast Cable )
Communications, LLC, on behalf of its )
Subsidiaries and affiliates )
CSR - 7856-E
For Determination of Effective Competition in: )
9 Algona, Washington - Area Franchise Areas )
To: Chief, Media Bureau
REPLY TO OPPOSITION
Comcast Cable Communications, LLC, on behalf of its subsidiaries and affiliates
(together "Comcast" or the "Company"), by its attorneys, hereby replies to the opposition
("Opposition") filed by three local franchising authorities, in the above-referenced proceeding.'
The LFAs claim that Comcast has failed to meet its burden of establishing "effective
competition" in the Franchise Areas. The LFAs also claim that Comcast has failed to show that
a determination of "effective competition" would be in the public interest. But the LFAs offer
no credible basis to reject the figures presented by Comcast for Des Moines and Maple Valley
and otherwise misconstrue the legal requirements regarding "effective competition" showings.
The LFAs simply are opposed to a result that is compelled by fact and by law. Accordingly, the
Commission should grant Comcast's Petition and find that Comcast is subject to effective
competition in the Franchise Areas.
' In a separate filing submitted contemporaneously herewith, Comcast is moving to withdraw the
Auburn Franchise Area from the Petition in order to re-evaluate political boundaries and
associated data. Auburn's recent annexations pose a unique situation. Comcast is maintaining
its Petition for the remaining 8 franchise areas in the above-captioned proceeding, including the
communities of Des Moines and Maple Valley (the "Franchise Areas"). This Reply will
hereinafter refer to the Cities of Des Moines and Maple Valley as the "LFAs."
I. Comeast's Allocation Methodology Adequately Supports a Prima Facie Case of
Effective Competition.
The LFAs criticize Comcast's allocation methodology in calculating DBS penetration as
"unreliable," based upon the LFAs' assertion that "Comcast could have and should have used the
zip+4 data available from the MBC ...." 2 According to the LFAs, Comcast's allocation
methodology only provides an "[a]pproximation of the actual DBS subscribers in the Cities
because it uses an imprecise and artificial allocation factor. ,3 The Treich Declaration further
complains that "[i]t would be virtually impossible to recreate the methodology used by MBC or
to test the accuracy of the methodology."4 The Commission has, of course, repeatedly relied
upon a similar allocation methodology in dozens of other cases.5 In fact, the Commission issued
an order in Comcast Cable Communications, LLC, - California, in which it accepted the cable
2 Opposition at 5. See also "Declaration of Richard D. Treich in Support of Opposition to
Comcast's Petition for Special Relief Filed by the Cities of Auburn, Des Moines, and Maple
Valley, Washington" ("Treich Declaration") at 2-4.
3 Opposition at 5.
4 Treich Declaration at 3. The Opposition and Mr. Treich complain that Comcast did not
respond to the Cities' request for information supporting Comcast's allocation methodology. As
the Cities are no doubt aware, there are no "discovery" rights in the Commission's effective
competition procedures and, as noted below, MBC's allocation methodology has been relied
upon by the Commission countless times in granting effective competition petitions.
5 See, e.g., Charter Communications, Inc., et al., Petition for Determination of Effective
Competition in Eight Virginia Communities, 19 FCC Rcd. 6878, ¶T 8-11 (2004) (holding that
cable operator "met its initial burden of coming forward with evidence relative to effective
competition in the Communities at issue, by presenting DBS subscriber penetration levels
developed from subscriber allocation figures based on the five digit Zip Code data"); Bright
House Networks, LLC Petition for Determination of Effective Competition in Unincorporated
Hillsborough County, Florida, 20 FCC Rcd. 16823, ¶ 6 (2005); Texas Cable Partners, L.P.,
Petition for Determination of Effective Competition in Eleven Texas Communities, 19 FCC Rcd.
6213, T¶ 7-9 (2004); Amzak Cable Midwest, Inc. and Minnesota Cable Properties, Inc. Petition
for Determination of Effective Competition in Eleven Minnesota Communities, 19 FCC Rcd.
6208, ¶¶ 6, 11-13 (2004).
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operator's allocation methodology over the same speculative "precision" and "unreliability"
arguments.6
Mr. Treich himself concedes, "As a general matter, the FCC has previously accepted the
methodology used by Comcast and Media Business Corp.... in approving other petitions for
special relief submitted by Comcast."7 Mr. Treich's preference for an alternative methodology
does not change the fact that the Commission has considered similar arguments in multiple cases
over multiple years and consistently and unequivocally upheld the methodology Comcast
employed in this case. Mr. Treich offers no compelling reason to vary from well-established
Commission precedent here.
The burden of proof initially may lie on the cable operator to demonstrate the presence of
"effective competition," but Comcast has made its prima facie case. Despite the LFAs'
suggestion to the contrary, Comcast should not be required to make additional efforts and incur
the costs they entail, based on nothing more than the unsupported speculation that an alternative
methodology might be more accurate. If the LFAs want to rebut Comcast's showing, they must
shoulder that responsibility themselves, rather than imposing additional evidentiary burdens on
the cable operator.8 If the LFAs were truly concerned with the accuracy and reliability of
Comeast's methodology, they could have obtained "zip+4 data" directly from SBCA.
6 See Comcast Cable Communications, LLC, Petition for Determination of Effective Competition
in forty-two California Franchise Areas, 22 FCC Red 694 at $¶ 5-6, 11-12 (2007) ("Comcast
Cable Communications, LLC - California").
7 Treich Declaration at 2.
8 See Comcast Cable Communications, LLC - California at ¶ 14 ("[O]nce Comcast has satisfied
its burden of proof, the City can no longer simply rely on the presumption of no effective
competition. While the Commission understands that filing an opposition can be a time-
consuming and costly endeavor, such a requirement does not imply that the petitioner's filing is
viewed with deference.").
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IL Comeast Properly Relied Upon the 2000 Census to Demonstrate the Number of
Occupied Households in the Franchise Areas.
The LFAs suggest that Comcast's reliance on the 2000 U.S. Census information
regarding households is flawed due to potential changes in population in the Franchise Areas
since 2000.9 Specifically, the LFAs assert that "Census data from 2000 is simply too old to
provide meaningful analysis."10 The LFAs' position with respect to the use of the 2000 Census
occupied household data is unsupported and should, therefore, be rejected.
The Commission has indicated that it will consider more recent household data if it is
"demonstrated to be reliable."11 In the absence of such data, the Commission has consistently
approved cable operators' reliance on decennial Census data in effective competition cases, and
has upheld its use long after the data was compiled. 12 Beyond the general suggestion that the
2000 Census data is "too old," the LFAs provide no alternative household data for either Des
Moines or Maple Valley, whatsoever. Instead, the Opposition relies entirely upon evidence of
recent annexations (and any accompanying increases in households) by the City of Auburn to
indict the use of 2000 Census household figures for the Des Moines and Maple Valley Franchise
9 See Opposition at 4
10 Id.
11 Bright House, 20 FCC Rcd. 16823, ? 10 (citing In the Matter ofAdelphia Cable
Communications, 20 FCC Rcd. 4979, 4982 (2005)).
12 See, e.g., Mediacom Minnesota, 18 FCC Red, 12768, ¶ 8 (denying city's objection that 2000
Census data does not reflect most current data and attempt to substitute city building permits);
Thompson Cable Vision Company, 17 FCC Red. 22679, 13 (2002) (affirming Commission's
acceptance of U.S. Census occupied housing unit data as proper measure of households in a
franchise area); Texas Cable Partners, LP Memorandum Opinion and Order, DA 01-510 (rel.
Feb. 27, 2001) (accepting 1990 Census data until the 2000 replacement data becomes available)
Tri-Lakes Cable, Monument, Colorado, Memorandum Opinion and Order, 12 FCC Red. 13170
(1997).
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Areas .13 As noted above, however, Comcast is withdrawing the City of Auburn from the
Petition to evaluate the impact of very recent annexations on the DBS penetration calculation for
that community. Auburn's annexations present a unique situation. 14 Any variation associated
with annexations by Auburn says nothing about Des Moines, Maple Valley, or any other
community. The LFAs do not claim that there is any similar issue with annexations in Des
Moines or Maple Valley or otherwise offer any basis for rejecting the occupied household figures
reported in the 2000 Census. In the absence of such data, the 2000 Census should be deemed
reliable.
111. The Opposition Misconstrues the Technical Requirements Regarding Effective
Competition Showings.
The Opposition ultimately challenges Comcast for failing to demonstrate that a
determination of effective competition would be in the "public interest." 15 The challenge is
misplaced. Further, it is wrong for the LFAs to suggest that Comcast is effectively precluded
from making a public interest statement in this case, based on its reliance on DBS competition as
evidence of effective competition. The LFAs never explain how their contention can be
reconciled with the controlling statutory language and a long body of cases, which are directly
contrary to the LFAs' position.
13 See Opposition at 4. See also Treich Declaration at 4-5.
14 Nearly all of the additional households referenced in The State of Washington Office of
Financial Management ("OFM") report attached as Exhibit A to the Treich Declaration are
attributable to annexations occurring in the first quarter of 2008. It is not clear that the
information regarding the annexation was posted or otherwise readily available at the time the
Petition was being prepared for filing on April 2, 2008.
15 See Opposition at 5-8.
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The LFAs contend that Comcast's Petition is deficient, because "Comcast never
addressed how its Petition would serve the public interest." 16 According to the LFAs, the
Commission's procedural rules require petitioners to include a separate showing that a
determination of effective competition is in the public interest.
The LFAs' suggestion that such a public interest showing must be included in effective
competition petitions is absolutely wrong. Section 76.7(a)(4) provides that:
(i) The petition or complaint shall state the relief requested. It shall state fully
and precisely all pertinent facts and considerations relied on to demonstrate the
need for the relief requested and to support a determination that a grant of such
relief would serve the public interest. [47 C.F.R. § 76.7(a)(4)(i)(Emphasis
supplied))
Section 76.7 is a procedural rule applicable to special relief petitions in general, not just
to those petitions pertaining to effective competition. This procedural rule requires petitioners to
"state fully and precisely all pertinent facts and considerations relied on," to support a
determination by the Commission that a grant of such relief would serve the public interest. 17 It
does not, however, require a specific statement or a separate showing within the petition that
such a grant would be in the public interest, as the LFAs suggest.
There is no question that Comcast has set forth the "pertinent facts and considerations"
necessary for the Commission to find the existence of effective competition in each of the
Franchise Areas. Congress has already unequivocally answered the LFAs' purported "public
interest concern." Congress determined fifteen years ago that the public interest is best served
16 Opposition at 6.
17 47 C.F.R. § 76.7(a)(4)(i)
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when cable systems facing effective competition (as defined by statute) compete without the
extra burden of local rate regulation.18
The LFAs go so far as to contend that granting Comcast's Petition would be counter to
the public interest. Citing to the FCC's 2006 "Report on Cable Industry Prices," FCC 06-179
(rel. Dec. 27, 2006), the Opposition notes that "[t]his Commission has previously concluded, the
presence of DBS alone `does not appear to be restraining price ....... 19 The Opposition also
expresses concern that an effective competition ruling would liberate Comcast from the "uniform
pricing" and "anti-buy-through" rules and "potentially require subscibers to subscribe to a more
expensive tier of service other than basic service as a precondition to receiving cable service. "20
The LFAs' concerns are entirely speculative. In any event, they are irrelevant under the federal
regime established by Congress. The LFAs are asking the Commission to ignore the controlling
statutory language, along with fifteen years of precedent, and now deny DBS subscribership as a
legal basis for establishing effective competition under the Competing Provider Test.
Section 623(l)(1)(B) of the Communications Act clearly states that the Competing
Provider test applies to competition from "unaffiliated multichannel video programming
distributors" ("MVPDs").21 The statute expressly defines MVPDs to include "direct broadcast
satellite service."22 The Commission's long-established rules say the very same thing.23 The
18 47 U.S.C. § 543(a)(2) ("Preference for Competition. If the Commission finds that a cable
system is subject to effective competition, the rates for the provision of cable service by such
system shall not be subject to regulation by the Commission or by a State or franchising
authority under this section.").
19 Opposition at 7.
20 Opposition at 8.
21 47 U.S.C. § 543(1)(1)(13).
22 47 U.S.C. § 522(13).
23 See 47 C.F.R. §§ 76.905(b)(1); (d).
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LFAs are actually asking the Commission to re-write the controlling statute and regulations. Of
course, the Commission may not do so, and it is wrong for the LFAs to suggest otherwise.
CONCLUSION
Comcast has met its burden under Section 623 of the Communications Act and Section
76.905 of the Commission's implementing regulations. Comcast respectfully requests that the
Media Bureau promptly issue an order recognizing the existence of effective competition in each
of the 8 Franchise Areas encompassed by the Petition. When all is said and done, the LFAs
themselves have confirmed that there is no credible basis to deny the pending Petition for Special
Relief.
Respectfully submitted,
Comcast Cable Communications, LLC
On behalf of its subsidiaries and affiliates
By:
J. Horvitz
ck W. Giroux
Davis Wright Tremaine LLP
1919 Pennsylvania Avenue, N.W., Suite 200
Washington, D.C. 20006
(202) 973-4200
Its Attorneys
July 9, 2007
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CERTIFICATE OF SERVICE
I, Deborah D. Williams, do hereby certify on this 91h day of July, 2008 that a true
and correct copy of the foregoing "Petition for Special Relief' has been sent via U.S.
mail, postage prepaid to the following:
Steven A. Broeckaert, Esq.
Media Bureau Policy Division
Federal Communications Commission
445 12`h Street, S.W., Room 4-A865
Washington, DC 20554
Mr. Anthony Hemstad
City Manager
City of Maple Valley
22035 SE Wax Rd., Suite 5
Maple Valley, WA 98038
Ms. Diana Quinn
City Clerk/Treasurer
City of Algona
402 Warde St.
Algona, WA 98001
Ms. Mayene Miller
Finance Director
City of Black Diamond
24301 Roberts Drive
Black Diamond, WA 98010
Mr. Jon Funfar
Media Services Manager
City of Enumclaw
1339 Griffin Ave.
Enumclaw, WA 98022
Ms. Sandy Paul-Lyle
City Clerk
City of Pacific
100-3 d Ave, SE
Pacific, WA 98047
Bradley & Guzzetta, LLC
55 East Fifth Street
Suite 1220
Saint Paul, MN 55101
Mr. Derek Matheson
City Manager
City of Covington
16720 SE 27 - I" Street, Suite 100
Covington, WA 98042
Ms. Lorrie Rempher
Information Services Director
City of Aurburn
25 West Main Street
Auburn, WA 98001
Mr. Tony Piasecki
City Manager
City of Des Moines
21630 - I Ph Avenue South
Des Moines, WA 98198
Mr. Frank Iriarte
Public Works Coordinator
City of Tukwila
6200 Southcenter Blvd., Suite 100
Tukwila, WA 98188
Deborah D. Williams{.
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