Mediacom FCC Petition Reply for Special Releif
DU~~E
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MEMORANDUM
May 9,2005
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Reply in Opposition to Mediacom FCC Petition
Cable Franchise Administrator Merrill Crawford is submitting information on the filing of
a Reply in Opposition to Mediacom's FCC Petition for Special Relief.
0J~~
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Merrill Crawford, Cable Franchise Administrator
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MEMORANDUM
April 28, 2005
MEMO TO: Michael C. Van Milligen, City Manager
FROM: Merrill Crawford, Cable Franchise Administrat~
SUBJECT: Reply in Opposition to Mediacom FCC Petition
INTRODUCTION: The purpose of this memorandum is to report on the filing of a Reply
in Opposition to Mediacom's FCC Petition For Special Relief
BACKGROUND: On March 1, 2005, Mediacom filed a Petition For Special Relief with
the Federal Communications Commission, claiming that its cable systems in Dubuque
and several surrounding communities are subject to "Effective Competition" under
federal standards,by virtue of Direct Broadcast Satellite viewership in the respective
franchise areas. It is one of numerous such petitions being filed by Mediacom and other
cable operators across the country.
At their March 21, 2005 meeting, the City Council authorized the Miller and Van Eaton
law firm to file a Reply on behalfdf the City, in opposition to Mediacom's Petition.
Attorney Rick Ellrod made the filing April 20, 2005, which was the deadline under FCC
rules. A copy is attached.
As noted in my March 17 memo, the FCC typically grants these "Effective Competition"
requests by cable operators, rarely giving much credence to the arguments of those few
cities that oppose the operator's request. As applied by the FCC, both the "Effective
Competition" standard and the "Special Relief' filing process strongly favor the cable
operator while arguably flying in the face of practical experience.
I also noted in the earlier memo that the granting of Mediacom's request should not
cause any immediate problem or change for the City or for Dubuque cable subscribers.
Nevertheless, the City is now on record as rejecting on several grounds the claim that
Mediacom's Dubuque cable system faces true effective competition. This may prove in
the future to have been an important stance.
RECOMMENDED ACTION: This memorandum is for information purposes only.
cc: Barry Lindahl, Corporation Counsel
Randy Gehl, Public Information Officer
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
RECEIVED
APR 2 0 2005
Federal Communlcatlons Commission
OffIce 01 Secretary
In re Petition of
CSR-
-E
MCCIOWALLC
Asbury, IA
Dubuque, IA
Epworth, IA
Farley, IA
SageviIIe, IA
Galena, IL
CUID No. IA0055
cum No. IAOOll
CUID No. IA01l5
CUID No. IA01l4
CUID No. IA0689
CUID No. IL0026
For Determination of
Effective Competition and
Revocation of Certification
OPPOSITION OF THE CITY OF DUBUQUE, IOWA,
TO MEDIACOM'S PETITION FOR SPECIAL RELIEF
Frederick E. Ellrod III
Marci L. Frischkom
Miller & Van Eaton, P.L.L.C.
1155 Connecticut Avenue, N. W. # 1000
Washington, D.C. 20036-4306
202-785-0600
Counsel for the City of Dubuque, Iowa
April 20, 2005
TABLE OF CONTENTS
SUMMARy........ ........................... ............. ....... ................................ .............. ....... ......................... i
I. MEDIACOM BEARS THE BURDEN OF SHOWING EFFECTIVE
COMPETITION. ......... ....... .... ...... ................ ......................... ............... .............................. 2
II. THE BUREAU'S PAST TREATMENT OF EVIDENCE IN EFFECTIVE
COMPETITION CASES, WHEN COMBINED WITH THE COMMISSION'S
PROCEDURE, VIOLATES DUE PROCESS AND EFFECTIVEL Y PREVENTS
THE CITY FROM ADDRESSING MEDIACOM'S CLAIM. .......................................... 3
A. The Bureau's Automatic Acceptance of SBCA Data and Rejection of
Countervailing Local Information Shifts the Burden of Proof and Requires
Extensive Factual Investigation. . ...................... ................... ........ .................. ................. 3
B. The Deadline Set By the Commission Makes Such Factual Investigation
Impossible for the City. ..... ......... ................... ...................... ........................................... 6
III. THE BUREAU'S TREATMENT OF EFFECTIVE COMPETITION DATA
REPRESENTS AN IMPROPER DELEGATION OF GOVERNMENTAL
AUTHORITY TO A PRIVATE ENTITY, AND THUS PREVENTS THE
CITY FROM EFFECTIVELY ADDRESSING MEDIACOM'S CLAIM. ....................... 7
IV. DBS~ONL Y COMPETITION CANNOT REASONABLY BE TREATED AS
CONSTITUTING EFFECTIVE COMPETITION. ............................................................ 8
V. CONCLUSION.. ....... ........................................ ............ ......................... ............. ...... ........ 11
SUMMARY
Mediacom argues that direct broadcast satellite ("DBS") service alone provides effective
competition in the City. The Bureau has consistently accepted at face value the factual
conclusions about DBS penetration provided by a private trade association, SBCA, although the
Commission has never conducted any independent investigation of the reliability of the SBCA
data. Moreover, the Bureau has consistently rejected relevant information provided by local
franchising authorities to qualify or question SBCA's conclusions. Thus, the only way a local
franchising authority can possibly oppose an effective competition filing is to conduct an
intensive factual investigation. This effectively shifts the burden of proof from the cable
operator to the community, in contravention ofthe statute and Commission rules.
The twenty-day time frame for response set by the Commission makes it effectively
impossible for a community to undertake the kind of factual investigation that would be
necessary to affect the Bureau's decision. Thus, under the Commission's procedures and the
Bureau's evidentiary policies, the City has no meaningful opportunity to oppose Mediacom's
Petition and is denied due process of law.
Because the Bureau accepts SBCA data as con9lusive, the Bureau has essentially
delegated to a private industry entity the regulatory task of determining the facts on which the
City's authority depends. Such a delegation to a private entity is unsound and improper.
DBS penetration alone cannot curb Mediacom's market power. The General Accounting
Office has found that satellite providers alone have at most a minuscule effect on cable rates. As
long as there is a differential between cable rates in DBS-only "competitive" areas and those in
areas enjoying wireline competition, the Commission cannot assume that DBS competition
fulfills the purpose of the statute - to ensure reasonable rates. Moreover, the City questions
11
whether DBS offerings should properly be regarded as comparable with respect to the basic
service tier.
iii
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In re Petition of
CSR-
-E
MCC IOWA LLC
Asbury,IA
Dubuque, IA
Epworth, IA
Farley, IA
Sageville, IA
Galena, IL
CUID No. IAOOSS
CUID No. IAOOll
CmD No. IAOllS
CUID No. IAOll4
CUID No. IA0689
CUID No. IL0026
For Determination of
Effective Competition and
Revocation of Certification
OPPOSITION OF THE CITY OF DUBUQUE, lOW A,
TO MEDIACOM'S PETITION FOR SPECIAL RELIEF
Pursuant to 47 C.F.R. S 76.7, the City of Dubuque, Iowa ("City"), by its attomeys,
opposes the petition ("Petition") of MCC Iowa LLC ("Mediacom") in the above-captioned
proceeding. Mediacom has not met its statutory burden of showing that its rates are subject to
competitive restraints in the City. Thus, the Bureau should deny Mediacom's petition.
1. MEDIACOM BEARS THE BURDEN OF SHOWING EFFECTIVE
COMPETITION.
Congress instituted the law from which Mediacom seeks relief based on the finding of
Congress that the cable industry enjoyed market power.l In the absence of a robust competitive
market that would effectively prevent the exercise of cable's market power, such rules are
necessary to protect subscribers - a duty with which the Commission is charged under law?
Thus, Mediacom bears the burden of showing that the legislative finding of Congress is now
incorrect as to the City of Dubuque.3
The showing Mediacom seeks to make in the Petition is based solely on its claim that
direct broadcast satellite ("DBS") service provides effective competition in the City.4
Mediacom's claim, however, does not fit with the City's experience. If Mediacom faced real
competition, the effects of that competition, such as lower rates, would be visible in the City -
and they are not. For this reason, the City is skeptical of the claims advanced in the Petition.
The City is aware that under Media Bureau precedent, an effective competition claim is
essentially decided once a cable operator has produced DBS penetration data. However, the City
objects to this approach, and respectfully suggests that applying that historical criterion in this
case is both constitutionally infinn and contrary to the intent of the statute.
1 See 47 V.S.C. 9 543(a)-(f), (h)-G), (1)-(n) (provisions of federal law related to finding of
effective competition); Cable Television Consumer Protection and Competition Act of 1992,
Pub. L. No. 102-385, 106 Stat. 1460, SS 2(a)(I) and 2(a)(2) (1992).
2 47 V.S.C. S 543(b)(I). See also id at 9543(h) (Commission is responsible for
preventing evasions).
347 C.F.R. 9976.906, 76.907(b).
4 Petition at 2.
2
II. THE BUREAU'S PAST TREATMENT OF EVIDENCE IN EFFECTIVE
COMPETITION CASES, WHEN COMBINED WITH THE COMMISSION'S
PROCEDURE, VIOLATES DUE PROCESS AND EFFECTIVELY PREVENTS
THE CITY FROM ADDRESSING MEDIACOM'S CLAIM.
A. The Bureau's Automatic Acceptance of SBCA Data and Rejection of
Countervailing Local Information Shifts the Burden of Proof and Requires
Extensive Factual Investigation.
In seeking to address Mediacom's effective competition claim, the City has reviewed
recent decisions by the Media Bureau in similar cases. Those decisions reveal that the Bureau's
treatment of evidence in such matters, when combined with the time period allowed by the
Commission for response to an effective competition filing, deprives a local community of any
meaningful opportunity to respond to a cable operator's claim. Thus, at the threshold the City
faces an impossible task.
Mediacom's Petition, like many others filed by the cable industry in recent years, relies
solely on DBS "competition" to meet the statutory standards.s In past effective competition
cases, the Bureau has consistently accepted at face value the factual conclusions about DBS
penetration provided to the cable industry by a private trade association, the Satellite
Broadcasting & Communications Association ("SBCA"), and its predecessors.6 The Bureau has
5 Petition at 6-7.
6 See, e.g., Mediacom Minnesota, LLC, DA 05-546, 2005 WL 524913 at" 8-10 (March
7, 2005) ("Mediacom Minnesota"); In the Matter of Time Warner Entertainment Company,
L.P., Time Warner Cable of Southeast Wisconsin, L.P., Century Venture Corporation,
Memorandum Opinion and Order, DA 03-2172,18 FCC Red. 13,043,' 10 (Media Bur. July 2,
2003) ("Time Warner Wisconsin"); In the Matter of Cable One, Inc., Memorandum Opinion
and Order, DA 03-2102, 18 FCC Red. 12,792," 7-8 (Med. Bur. July 7,2003).
Previously, SkyTrends, a subsidiary of SBCA, was the sole provider of DBS subscriber
information. In recent years, SBCA itself has taken over this role. In addition, Media Business
Corp., apparently an affiliate of SBCA, seems to play some role in such determinations. See,
e.g., In the Matter of Adelphia Communications, Memorandum Opinion and Order, DA 05-545,
2005 WL 524912, , 8 (Media Bur. March 7, 2005) ("A de lphia"). For convenience, this
Opposition will refer simply to SBCA when SBCA and its predecessor(s) or affiliates are meant.
3
established this pattern of automatic acceptance even though the Commission has never
conducted any independent investigation of the reliability of the SBCA data. This failure to
provide any independent verification of the crucial industry data is particularly surprising in light
of the fact that the Bureau has in the past recognized problems and errors in the industry data,
which shows that the industry's subscriber counts are not immune from error or distortion.7
Moreover, the Bureau has consistently rejected relevant information provided by local
franchising authorities to qualify or question SBCA's conclusions. For example, when a local
community has presented evidence indicating recent residential growth in a franchise area, and
thus indicating that the total population (for purposes of measuring penetration as a percentage)
may be larger than the figure used in the cable operator's calculation based on prior year data,
the Bureau has summarily dismissed such evidence.8 Similarly, the Bureau has rejected
questions raised as to the validity of the SBCA data on the ground that the communities'
questions were not themselves based on specific countervailing data.9 Thus, for example, it may
well be that in Dubuque, where the local terrain - steep bluffs overlooking the Mississippi River
- has historically made it nearly impossible for residents to receive broadcast signals, many
residents may be geographically located in places where they will never be able to "see" satellite
7 See, e.g., Time Warner-Advance/Newhouse Partnership D/B/A Time Warner Cable,
Memorandum Opinion and Order, DA 05-646, 2005 WL 579037, ~ 11 (Media Bur. March 11,
2005) See generally Comments of the National Association of Telecommunications Officers and
Advisors, the National League Of Cities, and the Miami Valley Cable Council, MB Docket No.
02-144, MM Docket No. 92-266, MM Docket No. 93-215, CS Docket No. 94-28, and CS Docket
No. 96-157, at 31-33 (filed Nov. 4, 2002).
8 See, e.g., Adelphia, DA 05-545 at ~ 9; Mediacom Minnesota, DA 05-546 at ~ 8.
Information on household growth over time could well establish a trend in population growth
even in cases where the Bureau might have reason to suppose that physical residences, rather
than specifically occupied households, were being counted.
9 See, e.g., Adelphia, DA 05-545 at ~ 4.
4
transmitters.lo But to provide evidence on this point meeting the lofty standards of the Bureau
would require a detailed, time-consuming, and expensive factual investigation by the City.
The Bureau's rubber-stamp acceptance of SBCA data and rejection of contrary
information suggests that the most productive avenue of investigation for a local franchising
authority may be to obtain and investigate the SBCA data directly to determine its reliability.
Here, however, the community encounters a financial barrier. SBCA is the sole provider ofDBS
penetration data - it has no competitors. It offers this information to localities for sale at the
same prices it charges to the cable industry. The Bureau has thus imposed on a local franchising
authority the burden of paying sole-source market prices for the only possible data on which it
might oppose a cable operator's petition. Nothing in the statute or in the Commission's rules
authorizes the imposition of this burden on local communities seeking to preserve their statutory
rights.
The only way a local franchising authority can possibly oppose an effective competition
filing is thus to conduct an intensive factual investigation: either to obtain detailed data from
SBCA and conduct its own statistical analysis to determine the validity of that infonnation, or to
conduct independent investigations to obtain other factual data (such as household counts or
geographical exposure to satellite signals) that might be considered relevant by the Bureau. The
Bureau's evidentiary policies thus effectively shift the burden of proof from the cable operator to
the community, in contravention of the statute and of 47 C.F.R. SS 76.906 and 76.907.11
10 For this reason, cable penetration has historically been unusually high in Dubuque. See
Declaration of Merrill Crawford in Support of Opposition of the City of Dubuque, Iowa, to
Petition for Special Relief at ~ 4 (attached as Exhibit 1) ("Crawford Declaration").
11 See, e.g., Time Warner Wisconsin, DA 03-2172 at ~ 10 (requiring local franchising
authority to produce "evidence to call into question the validity of the SkyTrends report,"
although without any information as to what sort of evidence could do so).
5
B. The Deadline Set By the Commission Makes Such Factual Investigation
Impossible for the City.
The time frame set by the Commission makes it effectively impossible for a community
to undertake such an investigation in the time available. The Commission has chosen to handle
effective competition requests under the "special relief' procedure set out in ~ 76.7 of the
Commission's rulesY Under that procedure, a local community's opposition is due twenty days
after the Commission places the operator's petition on public notice. 13 Thus, the community has
a little less than three weeks to review the cable operator's filing, determine the issues involved,
conduct factual investigations, obtain SBCA data as necessary (a decision which may itself
involve a separate budgetary action by the legislative body, given the costs involved), carry out
statistical or mathematical analyses, and prepare its response. 14
It should be noted that the statute does not require this time period. Rather, it is basically
an accident of the Commission's having utilized the special relief process for this particular
purpose. (In fact the original scheme for handling effective competition claims, embodied in
fonner 47 C.F.R. ~ 76.915, was quite different, requiring the operator to petition the local
franchising authority first, which would have allowed a community much more opportunity to
investigate the facts. The Commission eliminated that rule in 1999.)
12 See 47 C.F.R. ~ 76.907(a).
13 47 C.F.R. ~ 76.7(b)(1).
14 Some unpredictable amount of additional time may be gained from the time lag
between the Commission's receipt of the filing and its issuance of public notice. On the other
hand, a community is unlikely to receive the filing on the sanle day it arrives at the Commission.
Here, some delay was introduced because Mediacom filed its petition with the mayors of all the
affected cities, as indicated by the Certificate of Service, rather than with the City Manager as
required by ~ 10.7 of Mediacom's franchise agreement with the City. See Crawford Declaration
at~ 2.
6
It is patently unrealistic to expect a community to mount a serious factual investigation in
twenty days, particularly when the key information is in the hands of a private organization
making it available only for a price. Thus, the interaction of the Bureau's evidentiary policies
with the Commission's procedural choices deprives the City of any meaningful opportunity to
oppose Mediacom's Petition in any way that might be expected to affect the Bureau's decisionY
The City's right to respond to the Petition is oflittle real value if the City is required, because of
time constraints, to rely solely on the calculations and data provided by Mediacom. In such a
case, the Commission's special relief procedure cannot be said to afford the City its fundamental
right to due process of law.
III. THE BUREAU'S TREATMENT OF EFFECTIVE COMPETITION DATA
REPRESENTS AN IMPROPER DELEGATION OF GOVERNMENTAL
AUTHORITY TO A PRIVATE ENTITY, AND THUS PREVENTS THE CITY
FROM EFFECTIVELY ADDRESSING MEDIACOM'S CLAIM.
A further issue with respect to the Bureau's handling of effective competition claims
follows from the points made above. Once a cable operator has submitted SBCA data favoring
its DBS penetration claim, the matter is essentially over, from the Bureau's point of view. But
because the Bureau accepts and relies on the SBCA data as conclusive, the Bureau has
15 The problem is exacerbated in the current case because during the pendency of
Mediacom's Petition the City has been entirely occupied by renewal negotiations with
Mediacom, based on a deadline for action demanded by Mediacom. See Crawford Declaration at
'3.
Curiously, the Mediacom petition is dated February 4, and the signature page appears to
indicate that it was signed on that date, although the Certificate of Service indicates that the
document was not filed with the Commission until almost a month later, March 1. This
discrepancy, whatever its explanation in this particular case, highlights a further general problem
with the Commission's process: The short time frame for response makes it possible for a cable
operator to conduct extensive factual investigations of its own, taking months or years to prepare
its filing, then schedule its filing at a time of maximum inconvenience or difficulty for the local
community. A longer time period for response would mitigate this potential for manipulation.
7
essentially delegated to a private industry entity the regulatory task of determining the facts on
which the City's authority depends. Such delegation of federal authority to an interested private
party is arguably unlawful.I6 At the very least, it is bad policy, on a par with setting the fox to
guard the henhouse.
If the Commission had carefully reviewed SBCA's database in detail at some point and
confirmed that the information was accurate and sound, one might imagine that the Commission
could reasonably rely on such a privately-held database in the future, assuming that the agency
exercised continuing oversight to ensure that the data remained valid. But the Commission has
never conducted any independent investigation of the validity or accuracy of SBCA's data.
Thus, it is unsound and improper for the Bureau to give SBCA the unquestioned authority that
private entity currently enjoys in effective competition matters.
IV. DBS-ONL Y COMPETITION CANNOT REASONABLY BE TREATED AS
CONSTITUTING EFFECTIVE COMPETITION.
It is thus unclear whether the Bureau can reasonably accept the unverified SBCA data as
overcoming Mediacom's burden of proof under the statute. In addition, however, even if
Mediacom succeeded in showing that DBS penetration in the City exceeded fifteen percent, DBS
penetration alone cannot suffice to constitute effective competition and curb Mediacom's market
power.
Congress did not choose arbitrarily to have rate regulation (along with related consumer
protections such as the buy-through rule and the negative option rule) cease when effective
competition appeared. Rather, Congress relied on an essential relationship between competition
and rates. In a robust competitive market, where many companies vie for customers, some are
16 See, e.g., US. Telecom Ass 'n v. FCC, 359 F.3d 554, 555-56 (D.C. Cir. 2004); National
8
bound to compete by offering lower prices. This will then give their competitors an incentive to
lower their prices, and hence drive the price to equilibrium at a point where each seller covers its
costs and makes an acceptable return on investment, but without additional monopoly profits.
Congress thus used "effective competition" as a criterion not because "competition" is a
magic wand of some sort, a single wave of which somehow makes everything right, but rather
because Congress assumed such competition would hold rates to reasonable levels via market
pressures (and for similar reasons protect consumers in other respects), making regulation
unnecessary.17 But if some form of ersatz competition doe~ not in fact restrain rates through the
discipline of the market, then whether or not it can be made to look like "competition" in some
sense of the word, it will not fulfill the purpose of the statute - to protect consumers from cable's
market power.
DBS represents just such a form of ersatz "competition" that does not effectively control
rates. The General Accounting Office has found that satellite providers alone have at most a
minuscule effect on cable rates.
See United States General Accounting Office,
Telecommunications: Wire-Based Competition Benefited Consumers i1i Selected Markets,
Report to the Subcommittee on Antitrust, Competition Policy and Consumer Rights, Committee
on the Judiciary, U.S. Senate, GAO 04-241 (February 2004); Telecommunications: Issues
Related to Competition and Subscriber Rates in the Cable Television Industry, Report to the
Chairman, Committee on Commerce, Science, and Transportation, U.S. Senate, GAO-04-8 (Oct.
24, 2003); Telecommunications: Issues in Providing Cable and Satellite Television Services,
Report to the Subcommittee on Antitrust, Competition, and Business and Consunler Rights,
Park and Conservation Ass 'n v. Stanton, 54 F. Supp. 2d 7, 20 (D.D.C. 1999).
17 See, e.g., S. Rep. 102-92 at 11-12, reprinted at 1992 U.S.C.C.A.N. 1133, 1144 (1991).
9
Committee on the Judiciary, U.S. Senate, GAO-03-130 (Oct. 15, 2002).18 These findings bear
out the common experience of subscribers and regulators: DBS is not equivalent to wireline
competition in terms of controlling unreasonable rates. As long as there is a differential between
cable rates in DBS-only "competitive" areas and those in areas enjoying wire line competition,
the Commission cannot assume that DBS competition fulfills the purpose of the statute - to
ensure reasonable rates.
There is an additional reason to be skeptical about Mediacom's claim that DBS alone will
restrain its market power. Mediacom states that DBS providers offer programming
"comparable" to that of Mediacom's cable system, because they offer "at least twelve channels
of programming, including at least one channel of non-broadcast programming.,,19 The
Commission's rule on this point, however, originated in an era when both basic and CPS tiers
were subject to regulation. In regulating the combined basic and CPS tiers, using such criteria-
simple number of channels and the presence of at least one non-broadcast, "cable programming"
channel - had a certain plausibility. Now, however, when only the basic tier is regulated, these
criteria do not seem relevant to the question of what offerings are "comparable" to the basic tier.
Most notably, the basic tier in the City includes public, educational and governmental ("PEG")
access channels, which are not carried on satellite. While Mediacom' s Petition may track the
Commission's current rule with respect to comparability, the City would suggest that not every
18 The Commission itself has reported that "the presence of effective competition due to
DBS overbuild status has no significant effect on cable rates." See, e.g., In the Matter of
Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act
0[1992, Report on Cable Industry Prices, 17 FCC Rcd. 6301, ~ 45 (2002).
19 Petition at 5, citing 47 C.F.R. g 76.905(g).
10
consumer may see DBS as substitutable for basic cable service - and thus, again, the presence of
ostensibly "competitive" offerings may not serve to restrain Mediacom's market power.20
V. CONCLUSION
Regulation is a poor second best to competition as a means of ensuring reasonable rates
and ensuring that a cable operator does not abuse rate-related policies such as buy-through
requirements and negative options. The City would be very pleased to find that there was true
competition in the City, sufficient to restrain Mediacom's market power. In light of the above
considerations, however, the City does not believe that Mediacom has made the necessary
demonstration that legal protections are no longer necessary for consumers. To deprive
consumers of statutory protections based only on a vague hope or casual assumption that
competition exists would be irresponsible and capricious.
20 In this connection it is noteworthy that Mediacom itself has recently stated it does not
expect DBS penetration to increase further: "This gives us some reason to believe that the worst
is behind us with respect to the local-into-Iocal launches by DBS and that customer erosion has
stabilized." Mediacom chief financial officer Mark Stephan, quoted in Mike Farrell, A1ediacom
Cuts Sub Losses; 4Q Sluggish, Multichannel News Web site (article dated Feb. 22, 2005)
(attached as Exhibit 2).
11
For the reasons indicated above, the Bureau should deny Mediacom's Petition for Special
Relief.
Respectfully submitted,
d~~ z: ~9-J;::-
Frederick E. Ellrod III
Miller & Van Eaton, P.L.L.C.
1155 Connecticut Avenue, N.W. #1000
Washington, D.C. 20036-4306
202-785-0600
Counsel for the City Of Dubuque, Iowa
April 20, 2005
12
CERTIFICATION PURSUANT TO 47 C.F.R. ~ 76.6(a)( 4)
The below-signed signatory has read the foregoing Opposition of the City of Dubuque,
Iowa, to Mediacom's Petition For Special Relief, and, to the best of my knowledge, information
and belief formed after reasonable inquiry, it is well grounded in fact and is warranted by
existing law or a good faith argument for the extension, modification or reversal of existing law;
and it is not interposed for any improper purpose.
Respectfully submitted,
tJj~ 2-01 2-0~
Date
/?~z:~~
Frederick E. Ellrod III, Esq.
Marci L. Frischkom, Esq.
Miller & Van Eaton, P.L.L.C.
1155 Connecticut Avenue, N.W. Suite 1000
Washington, D.C. 20036-4306
202-785-0600
EXHIBIT 1
Declaration of Merrill Crawford
. APR.10. 2005 11: OOAM
C!TV HALL ANNEX
NO, 72 9
P. 2
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In re Petition of
CSR-
-E
MCC 10'V A LLC
Asbury, IA
Dubuque, IA
Epworth, IA
Farley,IA
SageviIle,IA
Galena,IL
CUID No. IA0055
CUID No. IAOOll
CUID No. IA0115
CUID No. IA0114
CUID No. IA0689
curn No. IL0026
For Determination of
Effective Competition and
Revocation of Certification
DECLARATION OF MERRILL eRA WFORD IN SUPPORT OF
OPPOSITION OF THE CITY OF DUBUQUE, IOWA,
TO PETITION FOR SPECIAL RELIEF
I, Merrill Crawford, do hereby declare and state under penalty of perjury as follows:
1. I am the Cable Franchise Administrator for the City of Dubuque, Iowa
("City'').
2. Under 9 10.7 of the franchise agreement between MCC Iowa, LLC
("Mediacom"), and the City, notices to the City are to be sent to the attention of the City
Manager.
3. During the period since Mediacom filed its Petition for Special Relief
C~Petition"), the City has been involved in intensive renewal negotiations with
. APR, 20. 2005 11: OOAM
C!TV HALL ANNEX
NO, 72 9
P. 3
Mediacom. based on a deadline for action by the City which was sought by Mediacom as
part of the negotiations.
4. Much of the City is located on and around a series of steep bluffs
overlooking the Mississippi River. This ten"ain makes it nearly impossible for residents
to receive broadcast signals. As a result, cable service pene:tration in the City has always
been unusually high.
~~J~
Date
4253\01\00) 08117.DOC
2
EXHIBIT 2
Mike Farrell, Mediacom Cuts Sub Losses; 4Q Sluggish, Multichannel News Web site (article
dated Feb. 22, 2005)
Page 1 of J
(j,. Reed BI.l9ness Information
.1 11mb ., NE'W"S I
rln i! Ie aune 1M
Jlediacom Cuts Sub Losses; 4Q Sluggish
3y Mike Farrell
2/22/20054:54:00 PM
i1ediacom Communications Corp. reported mixed results for the fourth quarter and full year,
,aring down its basic-subscriber losses but showing sluggish revenue and cash-flow growlh.
Aediacom lost about 3,000 basic subscribers in the quarter, its lowest quarterly decline in
iNO years. Revenue rose 2% in the period to $265 million and cash flow was flat at $102.5
nillion.
:or Ihe year, revenue rose 5.2% to $1.06 billion and cash flow increased 2% to $413.7
nillion.
ihe MSO was encouraged by the basic-subscriber numbers, claiming that it could be an
ndication thaI the losses of the past two years are beginning to stabilize.
-Aediacom has lost about 131,000 basic subscribers since the first quarter of 2003, mainly
lue to aggressive local-into-Iocallaunches by direct-broadcast satellite service providers in
ts markets. The operator said about 92% of its markets have local-into-Iocal DBS service.
This gives us some reason to believe that the worst is behind us with respect to the local-
nto-Iocallaunches by DBS and that customer erosion has stabilized," Mediacom chief
inancial officer Mark Stephan said on a conference call with analysts.
::xecutive vice president of operations John Pascarelli said on the call that the decline in
,ubscriber losses was due mainly to the MSO's decision to include subscription-video-on-
jemand service in the price of premium services like Home Box Office.
-Ie added that about 65% of digital homes now have access to VOD and SVOD and that
nore than one-half of its digital subscribers are watching 10 VOD-type events per month.
fhat VOD and SVOD penetration translated into stronger digital-customer growth --
Mediacom added about 14,000 digital subscribers during the quarter. High-speed-data
~ustomers increased by 17,000 during the period.
Mediacom also plans to begin rolling out its own telephony product, "Mediacom Digital
Phone," during the second quarter. The Middletown, N.Y.-based MSO said the service will
be available to 70% of its households by the second quarter of 2006.
The company issued its 2005 year-end guidance, expecting revenue for the full year to be
$1.09 billion-$1.11 billion and cash flow to range between $415 million-$425 million.
Capital expenditures for the year will be slightly up from the $181.4 million spent during 2004
-- to between $200 million-$210 million -- due to upgrades to its Florida properties as a result
of the hurricanes in the region last year and to the telephony rollout.
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4/20/20C
Certificate of Service
I hereby certify that I have caused to be mailed this 20th day of April, 2005,
copies of the foregoing Opposition of the City Of Dubuque, Iowa, to Mediacom' s Petition for
Special Relief, by first-class mail, postage prepaid, to the following persons:
Bruce Gluckman, Esquire
Vice President, Legal and Regulatory Affairs
MCC Iowa LLC
100 Crystal Run Road
Middletown, N.Y. 10941
Ms. Kathy McMullen
Mediacom
3033 Asbury Road
Dubuque, Iowa 52001
Washington, D.C.
April 20, 2005
4253\01 \00 I08039.DOC