§ 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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