Concerning Effective Competition; Implementation of Section 111 of the STELA Reauthorization Act, 38001-38013 [2015-15806]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 80, Number 127 (Thursday, July 2, 2015)]
[Rules and Regulations]
[Pages 38001-38013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15806]


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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.

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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, Diana.Sokolow@fcc.gov, 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 https://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 fcc504@fcc.gov 
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.
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    \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).
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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:
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    \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.
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     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.
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    \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).
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    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.
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    \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.
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    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.
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    \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.
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    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.
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    \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.
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    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

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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.
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    \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 https://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.
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    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.
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    \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.
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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\
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    \18\ See NCTA Reply at 8.
    \19\ See ITTA Comments at 7.
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    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.
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    \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.'').
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    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.
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    \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.
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    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.
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    \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.
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    \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.
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    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.
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    \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.
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    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.
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    \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.
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    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.
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    \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).
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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, Diana.Sokolow@fcc.gov, 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