§ 76.905   Standards for identification of cable systems subject to effective
competition.

   (a)  Only the rates of cable systems that are not subject to effective
   competition may be regulated.

   (b) A cable system is subject to effective competition when any one of the
   following conditions is met:

   (1) Fewer than 30 percent of the households in its franchise area subscribe
   to the cable service of a cable system.

   (2) The franchise area is:

   (i) Served by at least two unaffiliated multichannel video programming
   distributors each of which offers comparable programming to at least 50
   percent of the households in the franchise area; and

   (ii) the number of households subscribing to multichannel video programming
   other than the largest multichannel video programming distributor exceeds 15
   percent of the households in the franchise area.

   (3)  A  multichannel  video  programming  distributor, operated by the
   franchising authority for that franchise area, offers video programming to
   at least 50 percent of the households in the franchise area.

   (4) A local exchange carrier or its affiliate (or any multichannel video
   programming  distributor  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.

   (c) For purposes of paragraphs (b)(1) through (b)(3) of this section, each
   separately billed or billable customer will count as a household subscribing
   to  or being offered video programming services, with the exception of
   multiple dwelling buildings billed as a single customer. Individual units of
   multiple dwelling buildings will count as separate households. The term
   “households” shall not include those dwellings that are used solely for
   seasonal, occasional, or recreational use.

   (d) A multichannel video program distributor, for purposes of this section,
   is  an entity such as, but not limited to, a cable operator, a BRS/EBS
   provider, a direct broadcast satellite service, a television receive-only
   satellite program distributor, a video dialtone service provider, or a
   satellite master antenna television service provider that makes available
   for  purchase, by subscribers or customers, multiple channels of video
   programming.

   (e) Service of a multichannel video programming distributor will be deemed
   offered:

   (1) When the multichannel video programming distributor is physically able
   to deliver service to potential subscribers, with the addition of no or only
   minimal additional investment by the distributor, in order for an individual
   subscriber to receive service; and

   (2) When no regulatory, technical or other impediments to households taking
   service  exist,  and  potential  subscribers in the franchise area are
   reasonably aware that they may purchase the services of the multichannel
   video programming distributor.

   (f) For purposes of determining the number of households subscribing to the
   services of a multichannel video programming distributor other than the
   largest  multichannel  video  programming distributor, under paragraph
   (b)(2)(ii) of this section, the number of subscribers of all multichannel
   video programming distributors that offer service in the franchise area will
   be aggregated.

   (g) In order to offer comparable programming as that term is used in this
   section, a competing multichannel video programming distributor must offer
   at least 12 channels of video programming, including at least one channel of
   nonbroadcast service programming.

   (h)  For  purposes  of  paragraph (b)(2) of this section, entities are
   affiliated if either entity has an attributable interest in the other or if
   a third party has an attributable interest in both entities. Attributable
   interest shall be defined by reference to the criteria set forth in Notes 1
   through 5 to § 76.501.

   (i)  For  purposes  of  paragraph (b)(4) of this section, entities are
   affiliated if either entity has an attributable interest in the other or if
   a third party has an attributable interest in both entities. Attributable
   interest shall be defined as follows:

   (1) A 10% partnership or voting equity interest in a corporation will be
   cognizable.

   (2) Subject to paragraph (i)(3), a limited partnership interest of 10% or
   more shall be attributed to a limited partner unless that partner is not
   materially involved, directly or indirectly, in the management or operation
   of the media-related activities of the partnership and the relevant entity
   so  certifies.  An  interest in a Limited Liability Company (“LLC”) or
   Registered Limited Liability Partnership (“RLLP”) shall be attributed to the
   interest holder unless that interest holder is not materially involved,
   directly or indirectly, in the management or operation of the media-related
   activities  of  the  partnership and the relevant entity so certifies.
   Certifications must be made pursuant to the guidelines set forth in Note
   2(f) to § 76.501.

   (3)  Notwithstanding paragraph (i)(2), the holder of an equity or debt
   interest or interests in an entity covered by this rule shall have that
   interest attributed if the equity (including all stockholdings, whether
   voting or nonvoting, common or preferred, and partnership interests) and
   debt interest or interests, in the aggregate, exceed 33 percent of the total
   asset value (all equity plus all debt) of that entity.

   (4) Discrete ownership interests held by the same individual or entity will
   be aggregated in determining whether or not an interest is cognizable under
   this section. An individual or entity will be deemed to have a cognizable
   investment if the sum of the interests other than those held by or through
   “passive investors” is equal to or exceeds 10%.

   [ 58 FR 29753 , May 21, 1993, as amended at  59 FR 17972 , Apr. 15, 1994;  61 FR 18978 , Apr. 30, 1996;  62 FR 6495 , Feb. 12, 1997;  64 FR 35950 , July 2, 1999;
    64 FR 67196 , Dec. 1, 1999;  69 FR 72046 , Dec. 10, 2004]

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