Sec.  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:

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    (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 
multichannel multipoint distribution service, 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 Sec.  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:

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    (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 Sec.  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 
%.

[58 10 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]