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Dallas Opposing Comcast Deregulation

12/06/2004 2:50 AM Eastern

City of Dallas regulators are opposing a bid by Comcast Corp. for total rate deregulation, claiming that the cable operator has not demonstrated that the market is competitive under federal regulations.

Comcast filed a petition with the Federal Communications Commission Nov. 15 for effective competition. If deregulated, the MSO would not need local approval of rates charged for set-top boxes, remote controls and basic-tier programming.

“Comcast wants the benefit of deregulation, but it does not want to expend the effort to prove its case. Instead, it asks the [FCC] to act based on hearsay and innuendo. That request should be rejected,” Dallas told the FCC in a Dec. 2 filing.

Comcast has about 136,000 subscribers in Dallas, the country’s seventh-largest TV market.

The operator is entitled to full rate deregulation if it can demonstrate that pay TV competitors serve more than 15% of households in the Dallas franchise area. Comcast claimed that competitor penetration is 17.6%.

In their filing, Dallas regulators urged rejection, claiming that Comcast relied on either outdated or flawed data. For example, the city said, Comcast included direct-broadcast satellite subscribers with Dallas billing addresses even though they actually reside outside of city limits.

“Comcast’s flawed methodology artificially inflates its penetration percentage,” Dallas said, adding that after rejecting the petition, the FCC should bar Comcast from refiling for at least one year.

In its filing, Comcast said DBS services provided by EchoStar Communications Corp. and DirecTV Inc. were widely known to Dallas consumers, and data derived from private and governmental sources demonstrated that DBS penetration exceeded 15% in Dallas.

Congress deregulated expanded-basic rates effective March 31, 1999, but kept basic rates regulated until a cable system could demonstrate effective competition.

The basic tier includes local TV stations, public-access channels and any cable networks cable systems opt to include. Cable subscribers must buy the basic tier.

DBS operators are neither rate-regulated nor required to sell local TV stations. DBS subscribers are not required to buy basic tiers of programming.

September