Mediacom Reply to City's FCC Opposition Filing
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MEMORANDUM
May 28,2005
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Mediacom Reply to the City's FCC Opposition Filing
Cable Franchise Administrator Merrill Crawford is transmitting information on
Mediacom's latest filing regarding its FCC Petition to declare the presence of "Effective
Competition" in Dubuque.
(l1j 0:17 fJ1ll
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
May 12, 2005
MEMO TO: Michael C. Van Milligen, City Manager
FROM: Merrill Crawford, Cable Franchise Administrator ~
SUBJECT: Mediacom Reply to the City's FCC Opposition Filing
INTRODUCTION: The purpose of this memorandum is to transmit Mediacom's latest
filing re: its FCC Petition to declare the presence of "Effective Competition" in Dubuque.
BACKGROUND: As previously reported, attorneys for MCC Iowa LLC (Mediacom) on
March 1, 2005 filed with the Federal Communications Commission a Petition For
Special Relief seeking a declaration that their cable systems in Dubuque and in
surrounding communities are subject to "Effective Competition".
On April 20, 2005, attorney Frederick Ellrod III of the Miller and Van Eaton law firm filed
the City of Dubuque's Opposition to that petition, pursuant to City Council authorization.
On May 6,2005, Mediacom's attorneys filed a Reply to the City's Opposition. A copy of
their filing is attached.
As previously reported, such "Effective Competition" petitions have become common for
Mediacom and other cable operators in recent years. Most of these requests are
granted by the FCC, due primarily to the combined prejudice of the "Effective
Competition" standards and the FCC's Special Relief process in favor of operators.
If the FCC grants Mediacom's Petition for Dubuque, we should not expect any
immediate practical impact upon the new cable franchise or upon Dubuque subscribers.
However, the City now stands on record as opposing the claim that Mediacom's cable
system is subject to true effective competition in Dubuque. Also, we have specifically
identified the defects in both the standard and the process by which we believe an FCC
endorsement of Mediacom's claim would be erroneous.
RECOMMENDED ACTION: This memorandum is for information purposes only. No
further action is recommended at this time.
cc: Randy Gehl, Public information Officer
Barry Lindahl, Corporation Counsel
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WASHINGTON, D.C. 20554
BEFORE THE
:Jf eberal <<:ommunttltton' QCommt"t
In re Petition of ) CSR-6600-E
)
MCC IOWA LLC ) Asbury, IA CUID No. IA0555
) Dubuque, IA CUID No. lAOO 11
For Determination of ) Epworth, IA CUlD No. IAO 155
Effective Competition and ) Farley, IA cum No. IA0144
Revocation of Certification ) Sageville, IA CUID No. IA0689
) Galena,IA CUID No. IA0026
To: Chief, Media Bureau
REPLY
MCC Iowa LLC ("Mediacom"), by its attorneys, and pursuant to Section 76.7 of the
Commission's rules, hereby replies to the Opposition filed by the City of Dubuque ("City") in
response to Mediacom's Petition for Special Relief requesting a determination that Mediacom's
cable television system serving several Iowa communities, including the City, is subject to
effective competition under Section 623(1)(1)(B) of the Communications Act (the "SO/15" testV
Because the Opposition fails to provide any evidence or valid legal arguments contradicting
MediacOlll'S evidence establishing the presence of effective competition, the Commission should
grant the Petition without further delay.
147 V.S.C. 9 543(l)(1)(B); ~ also 47 C.F.R. 976.905(b)(2).
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DISCUSSION
On March 1, 2005, Mediacom filed with the Commission, and served on the City, a
PetitiQll for Special Relief containing evidence establishing the presence of effective competition
in the City based on the "50/15" test, as specified in Section 623(1)(1)(B) ofthe
Communications Act and section 76.905(b)(2) of the Commission's rules. Mediacom's Petition
was placed on Public Notice 30 days later, on March 31, 2005.2 On April 20, 2005, the City of
Dubuque filed its Opposition to Mediacom's Petition. The City's Opposition makes virtually no
effort to rebut the factual showing contained in Mediacom's Petition. Instead, the City uses its
Opposition to launch a collateral attack on the definition of effective competition enacted by
Congress and on the Commission"s implementing rules. As described below, the City's
arguments are utterly lacking in factual or legal merit.
1. Mediacom's Prima Facie Case Under the 50/15 Test Does Not Shift the Burden
of Proof, But It Does Impose On the City a Burden of Producing Countervailing
Evidence That the City Has Failed to Meet.
The City's first argument is that the Commission, in resolving 50/15 effective competition
petitions based on the availability and penetration ofDBS service, has unlawfully "shifted the
burden of proof' from cable operators to local franchising authorities ("LF As") by accepting
allegedly "unverified" satellite data from satellite industry sources and by requiring LF As to
provide specific information to counter such data.~
The City's argument reveals a fundamental misunderstanding of evidentiary practice and
procedure. Under the Commission's rules, cable operators are presumed not to be subject to
2 Public Notice, Report No. 0138 (March 31, 2005).
3 Opposition at 4-5, 8.
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effective competition.A In order to overcome this rebuttable presumption, a cable operator must
present evidence from which the Commission can conclude that effective competition exists in
the operator's franchise area.s If this prima facie showing of effective competition goes
unanswered, the operator is deemed to have satisfied its burden of persuasion and the petition
must be granted. The fact that the LFA bears the burden of producing credible evidence
rebutting a cable operator's prima facie showing of effective competition does not shift the
burden of persuasion, wh.ich remains with the cable operator.
Mediacom's Petition established the requisite prima facie case by supplying census
household data and zip code + 4-based DBS subscribership information demonstrating that both
prongs of the 50/15 test are met in the City. Because the City's response presents absolutely no
specific countervailing factual evidence, Mediacom's unrebutted prima facie case is sufficient to
satisfy its burden of persuasion.
In particular, with respect to the 50 percent prong of the 50/15 test, the City submitted a
declaration from the City's Cable Franchise Administrator asserting that "[mJuch of the City is
located on and around a series of steep bluffs overlooking the Mississippi River" and that "[t]his
4 47 C.F.R. 976.907(b). Contrary to the City's assertion, this presumption is not mandated by
the Communications Act. Rather, the Commission adopted it as an administrative convenience
given the fact that, at the time (i.e., 1992-1993), the "vast majority" of cable systems were not
subject to effective competition. Report and Order and Further Notice of Rulemaking, MM
Docket No. 92-266, 8 FCC Rcd 5631 (1993) at ~~ 41-43. As the Commission has recognized,
the competitive environment in which cable operates has changed dramatically in the intervening
twelve years. Annual Assessment of the Status of Competition in the Marketfor the Delivery of
Video Programming, Eleventh Annual Report, MB Docket No. 04-227, FCC 05-13 (reI. Feb. 4,
2005) at ~ 4 (while cable opemtors served almost 100 percent of the nation's multichannel video
subscribers at the time of the 1992 Act, almost all consumers now have a choice between a cable
operator and at least two DBS providers).
5 Opposition at 4-5.
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terrain makes it nearly impossible to receive broadcast signals."6 Based on nothing more than
this declaration, the Opposition suggests that "it may well be" that many City residents "may be
geographically located in places" where they can't "see" satellite signals."7
The Commission has established a presumption that DBS signals are technically
available to at least 50 percent of a franchise area due to their nationwide footprint.s The City's
unsubstantiated speculation that some Dubuque households "may well" not be able to "see"
satellite signals due to the local terrain is completely insufficient to rebut this presumption. For
example, the Declaration submitted by the City makes no effort to quantify the number of
households that "may" be unable to receive DBS signals Of to correlate, as a technical matter, the
ability of a household to receive an over-the-air signal from a terrestrial broadcast transmitter to
that household's ability to receive a DBS signal from a satellite in a geostationary orbit
approx.imately 23,300 miles above the earth. The City's utter failure to produce specific
evidence rebutting the presumption that DBS is available to 50 percent of the homes in the
franchise area does not constitute a "shift" in the burden ofproot.9
61d. at Exhibit 1.
71d. at 5. The City also alleges that, in other cases, the Commission has "summarily" refused to
consider "relevant" information submitted by LF As regarding recent residential growth in a
franchise area. Id., citing Adelphia Cable Communications, DA 05-545 (MB, reI. March 7, 2005)
and Mediacom Minnesota, LLC, DA 05-546 (MB, reI. March 7, 2005). In fact, in both of the
cited cases, the Commission did 110t act "summarily"; rather, the Commission weighed the
evidence submitted by the LF A and found it to be insufficient to rebut the cable operator's prima
facie case. In any event, Mediacom notes that the City nowhere suggests that there are any
deficiencies in the household data submitted with Mediacom's Petition.
s MediaOne of Georgia, 12 FCC Rcd 19406 (CSB, 1997) at '15, n.16.
C) The suggestion that there is a correlation between the ability to receive an over-the-air
broadcast signal and the ability to receive a DBS signal also is called into question by tbe fact
that DBS penetration is growing steadily in all parts of the country. See United States General
Accounting Office, Report to the Subcommittee on Antitrust, Competition Policy and Consumer
Rights, Committee on the Judiciary, U.S. Senate, Telecommunications: Direct Broadcast
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The City's Opposition is equally unconvincing in its attempt to rebut Mediacom's
evidence with respect to the 15 percent prong of the 50/15 test. Indeed, the City has not
submitted any factual evidence regarding the 15 percent prong, choosing instead to level a
generalized attack on Mediacom's DBS subscribership data based on the Commission's alleged
failure to "conduct any independent investigation" of the data's reliability. III The Commission
previously has considered and rejected this very argument, finding it to be significant that the zip
code-based subscribership data submitted in support of 50/15 petitions is compiled and provided
by the DBS industry in satisfaction of its obligation under section 76.907(c) of the Commission's
rules. II Furthermore, it is clear from the Commission's decisions that, in fact, the agency has
reviewed the steps taken by SBCA to ensure the accuracy of its data.12
2. The City Has Not Been Denied Due Process of Law.
The City's second argument contendc; that the twenty-day deadline established by the
Commission for the submission of oppositions to effective competition petitions deprives the
City of its "fundamental right of due process oflaw."1J This argument is so lacking in legal or
factllal merit that it borders on the frivolous.
Satellite Subscribership Has Grown Rapidly. but Varies across Different Types of Markets,
GAO-05-257, April 2005.
10 Opposition at 4.
11 Corn east Cablevision of Maryland, Inc., 19 FCC Red 7130 (MB, 2004) at,r,/5.7 The DBS
operators that are the source of the subscribership data provided by SBCA are COUlmission
licensees and, thus, are under a duty to provide truthful and accurate information for use by the
Commission. See generally 47 C.F.R. ~ 1.17.
12 See, e.g., Adelphia, DA 05-545 at ~ 10 (discussing the methodology used in tracking DBS
subscribership ).
I~ Opposition at 6-7.
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At tbe outset, it is not entirely clear whether the City is arguing that it is being deprived
of its procedural due process rights or its substantive due process rights. Moreover, it is not clear
what liberty or property interest the City claims is being impaired by the Commission's pleading
schedule.14 In any event, the twenty-day deadline for opposing an effective competition petition:
is not constitutionally infinn, either on its face or as applied in this case.
As a general matter, it is well-settled that the Commission has wide discretion in
fashioning procedural rules. IS The procedural rules established by the Commission with respect
to petitions for spccial relief, of which effective competition petitions are an example, give
parties twenty days from the date on which the Commission gives "public notice" of the petition
to submit oppositions. 16 In the instant case, Mediacom's Petition was filed with the Commission
and served on the City on or around March 1,2005, but the Public Notice regarding the Petition
was not published until March 31,2005.17 Thus, the Commission's rules actually gave the City a
total of 50 days to prepare and :fi Ie its Opposition - two and one-half times the period allowed for
responding to civil complaints under the Federal Rules of Civil Procedure and ten times the
period aJIowed for parties to file comments or oppositions to an Open Video System
certification. IS
14 Mediacom's uncertainty about the exact nature of the City's argument is not surprising given
that the City has failed to cite any cases or offer any other legal support for its supposed.
constitutional claim.
I' See. e.g., City of Angels Broadcasting. Inc. v. FCC. 745 F. 2d 656,664 (D.C.Cir. 1984); see
also 47 U.S.C. ~~ 154(i) and G) (empowering the Commission to "make such mles and
regulations. . . as may be necessary in the execution of its functions" and to "conduct its
proceedings in such manner as will best conduce to the proper dispatch of business and the ends
of justice")
1647 C.F.R. ~ 76.7(b)(l).
17 Public Notice, Report No. 0138 (March 31, 2005).
IS Fed. R. Civ. P. Rule 12(a); 47 C.F.R. 976.1502(e)(1). The Commission has expressly rejected
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More importantly, the twenty-day rule is not immutable. On several occasions during the
past few months, the Commission has granted requests by LFAs for extensions of the deadline
for opposing an effective competition petition, even where the cable operator objected. 19 The
fact that extensions of time are available and the City did not seek one is a complete answer to
the City's claim that the Commission's rules deprive it of due process.20
3. The Commission Has Not Unlawfully Delegated Governmental Authority To a
Private Entity.
The City's third argument claims that the Commission's acceptance ofDBS
subscribership data compiled by SBCA is "arguably unlawful."21 The City bases this argument
claims that the 5-day period for commenting on or opposing OVS petitions denies local
governments due process of law. See, e.g. Digital Broadcasting OVS, 13 FCC Rcd 13349 (CSB,
1998) at 1[9.
III See, e.g., Corneas! Cable Communications, LLC (Opa-Locka, FL), DA 04-3642 (MB, reI. Nov.
19, 2004); Comcast Cable Communications, LLC (Hialeah, FL), DA 04-3641 (MB, reI. Nov. 19,
2004); Com cast Cable Communications, LLC (Miami-Dade County, FL), DA 04-3605 (MB, reI.
Nov. 17,2004); Com east Cable Communications, LLC (Coral Gables, FLJ, DA 04-3604 (MB,
reI. Nov. 17,2004); Adelphia Cable Communications (Boca Raton, FL), DA 04-3247 (MB, reI.
Oct. 15,2004).
20 The City suggests that obtaining infonnation to rebut an effective competition petition may
require separate budgetary action by the LF A in some cases. Opposition at 6. However, the City
offers no evidence that this is one of those cases; in any event, there was ample opportunity for
the City Council, which met four times between the filing of Mediacom's Petition and the date
on which the Opposition was filed, to take action if any was in fact needed. See
h uP:/ /www.citvofdubuoue.on!/index.cfm?pageid=690.
Mediacom also wishes to respond to the City's completely unfounded suggestion that Mediacom
sought to inconvenience the City by filing its Petition while it was in the midst of tranchise
renewal negotiations with the City. Opposition at note 15. First, it was the City that refused
Mediacom's requests for an extension of certain deadlines during the franchise renewal process.
Second, the fact that an effective competition petition would be filed during a franchise renewal
process is hardly surprising since, absent a determination of effective competition by the
Commission, LF As often refuse to accept a cable operator's assertion that ce11ain proposed
franchisc tcmlS are unreasonable in light of the transformation of the video marketplace into a
highly competitive environment.
21 Opposition at 7-8.
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on its assertion that the Commission has not confirmed the accuracy ofSBCA's information and
that the Commission's reliance on such information as "conclusive" is (Con a par with setting the
fox to guard the henhouse.nI2
As discussed above, the City is mistaken insofar as it claims that the Commission has
blindly accepted the methodology used to compile DBS subscribership data.23 Moreover, the
Commission does not treat such information as "conclusive" - LF As can and do submit
additional evidence in an effort to rebut effective competition showings based on DBS
subscribership and the Commission retains ultimate authority to weigh this evidence and decide
whether the operator has made the requisite showing.24 And the suggestion that the DBS
industry has an interest in assisting cable operators in establishing that they are subject to
effective competition ignores the fact that DBS providers have strongly opposed efforts by the
cable industry to persuade the Commission to streamline the process by which effective
competition petitions are resolved.l~
22/d.
23 See note 12 supra.
24 See, e.g., Tirne Warner - Advance Newhouse Partnership, DA 05-646 (MB, reI. March 11,
2005) at ~ 7 (to verify accuracy of operator's calculations, Commission made its own calculation
ofDBS penetration).
2S See, e.g., Annual Assessment of the State of Competition in the Marketfor the Delivery of
Video Programming, MB Docket No. 04-227, Ex Parte Written Presentation of Echo Star
Satellite L.L.C. (Dec. 9, 2004);
8
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The City has cited two cases in support of its "unlawful delegation" argument and
Mediacom commends them both to the Commission's attention.2ei In National Park and
Conservation Ass'n v. Stanton, 54 F. Supp. 2d 7 (D.D.C. 1999), the court specifically noted that
a federal agency's delegation ofa statutorily-imposed duty to a private party is valid if the
federal agency retains final reviewing authority. [d. at 19. There is no question that it is the
Commission, not SHCA that makes the ultimate decision to grant or deny an effective
competition petition. And in United States Telecom Association v. FCC, 359 F. 3d 554 (D.C.
Cir. 2004), the court explained that a government agency's reliance on fact gathering conducted
by a private entity constitutes legitimate outside party input into agency decision-making
processes and does not even raise the issue of an unlawful delegation of authority. Id. at 566-67.
4. Section 623(1)(I)(B) Allows a Cable Operator to Establish the Presence of
Effective Competition On the Basis ofDBS Penetration.
The City's fourth and final argument challenges Mediacom's Petition on the grounds that
"DBS penetration alone cannot suffice to constitute effective competition. "27 According to the
City, Congress did not intend its statutory effective competition standard to apply without
specific evidence that such competition was restraining rates.28
The flaw with the City's argument is that it is contradicted by the plain language of
section 623(1)(I)(B) of the Communications Act, which states that the SOilS test applies to
competition from "unaffiliated multichannel video programming distributors," a term that
Congress expressly defined to include "direct broadcast satellite service."z9 Moreover, the
2/, Opposition at note 16.
Z7 Id. at 8-11.
2$ [d. at 8-9.
2') 47 U.S~c. 9 543(1)(1)(8); 47 U.S.c. S 522( 13).
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specific exclusion of direct-to-home service from the LEC competitor test, which was added to
section 623(1)(1) in 1996, demonstrates that when Congress wants to exclude DBS competition
from consideration, it knows how to do so. The fact that Congress left the 50/15 test unchanged
in 1996 totally undermines the City's arglmlent.
Finally, as something of an afterthought, the City also argues that DBS programming is
not "comparable" to the programming offered by Mediacom and, thus, Mediacom has failed to
satisfy all essential element of the 50/15 test.30 By the City's own admission, however,
"Mediacom's Petition may track the Commission's current rule with respect to comparability."JI
Since the Commission's "current" rule is the only rule, Mediacom submits that the City has
effectively and completely rebutted its own argument.
CONCLUSION
Because Mediacom has demonstrated that it is subject to eftective competition in the City
pursuant to Section 623(1)(1)(B) of the Act and Section 76.905(b) of the Commission's rules,
and because the City '5 Opposition fails to provide any valid basis for denying the Mediacom
Petition, the Commission should expeditiously issue an order declaring that Mediacom is subject
to effective competition in the City and revoking the City's certification to regulate Mediacom's
basic service, equipment and installation rates.
Undersigned counsel has read the foregoing Reply, and to the best of such counsel's
knowledge, infonnation and belieffomled after reasonable inquiry, it is well grounded in fact
~o Opposition at 10-11.
31 Id. at 11.
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and is warranted by existing law or a good faith argument for the extension, modification or
reversal of existing law. and is not interposed for any improper purpose.
Respectfully submitted,
:~CI~~ ~
Seth A. Davidson
Fleischman and Walsh. L.L.P.
1919 Pennsylvania Avenue, N.W., Suite 600
Washington, D.C. 20006
(202) 939-7900
Its Attorneys
Dated: May 4, 2005
t 72036
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CERTIFICATE OF SERVICE
I, Nellie Zore, a secretary at the law firm of Fleischman and Walsh, L.L.P., hereby certifY
that, on this 4th day of May, 2005, copies of the foregoing "Reply" were sent via first~class mail,
postage prepaid. upon the following:
Steven Broeckaert, Esq. *
Deputy Division Chief, Policy Division
Media Bureau
Federal Communications Commission
445 12th Street, S.W.
Room 4-A865
Frederick E. Ellrod III
Miller & Van Eaton, P .L.L.C.
1155 Connecticut Avenue, N.W. #1000
Washington, D.C. 20036-4306
~.dkr
Nellie Zore
"'Via hand delivery
TOTAL P. 13