When will the Telecos offer Video Services?,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
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Cable has few rivals in video
By George Leopold
WASHINGTON -- New wireless technologies are making little headway into the multichannel video market, a U.S. study finds, leaving the cable industry with little competition in the delivery of video programming.
In a recent report surveying competition in video markets, the Federal Communications Commission (FCC) said "it remains difficult to predict the extent to which competition will constrain cable systems' position as the dominant multichannel video provider in the future."
The FCC study finds that direct-broadcast satellite services made some subscription gains over the last year. However, it said emerging digital technologies like multichannel multipoint distribution services (MMDS) have failed to erode the cable industry's dominance. Still, MMDS developers have begun testing digital technology "that has the potential to improve the competitiveness of their services," regulators said.
When Congress overhauled telecommunications laws in 1996, legislators predicted a burst of competition in video services. The law cleared the way for phone companies to enter the video market, but failed efforts, like the Bell Atlantic-led Tele-TV service, have chilled telco interest in providing video services.
The FCC report describes phone-company entry into the video business as "uneven."
Speaking at a cable-industry conference last month, FCC commissioner Susan Ness acknowledged that the telecom overhaul has so far failed to spur new digital video services. "We certainly haven't seen competition [to the cable industry] emerge," she said.
The relative lack of cable competition and rising cable rates that have increased beyond the rate of inflation have fueled calls here for renewed regulation of the cable industry. The FCC estimated that rates for regulated cable programming and equipment rose 8.5 percent during the 12-month period ending July 1997. However, the telecom law calls for cable-rate regulation to end in March 1999.
"Less than 15 months away from the sunset of most cable rate regulation, it is clear that broad-based, widespread competition to the cable industry has not developed and is not imminent," said William Kennard, chairman of the FCC.
While full-blown competition to cable has yet to emerge, the FCC found that other video distributors, such as satellite and, to a lesser extent, MMDS, have increased their share of subscribers by 2 percent since 1996, to 13 percent of the U.S. market. Still, Kennard said, DBS "remains primarily a high-end product or a way to receive multichannel video service in areas cable does not reach."
Cable operators often point to soaring programming costs, particularly for sports, as the reason for rate increases. Kennard said one answer was to offer customized programming packages that would let customers avoid paying for programming they don't want. One hurdle to programming flexibility is whether cable operators are technically equipped to offer custom services, and Kennard asked in a statement whether "customization [would] require set-top boxes and other equipment, the cost of which would nullify the gains."
Buying spree
Cable operators have been on a set-top buying spree in recent weeks, but reducing the cost of digital set-tops with PC features has proved difficult.
With services like MMDS slow to take off, regulators have been looking to cable operators to speed the transition to digital technologies. Ness told the cable industry last month that she views the industry as a "vehicle for rolling out technology."
Clinton administration officials, meanwhile, have expressed concern about the lack of competition to cable and the industry's failure to take on regional phone companies. Larry Irving, assistant secretary of Commerce and director of the National Telecommunications and Information Administration, said earlier this month there are "very troubling questions" about why there is so little competition in the multichannel video market.
Eye on mergers
Irving said the administration is also studying the impact of cable-industry mergers on consumers but declined to say what actions may be taken to slow industry consolidation.
The FCC report praised the cable industry's "open standards" initiative for set-top boxes. The effort has so far resulted in industry leader Tele-Communications Inc.'s selecting both Java and Windows CE as operating systems for its digital boxes.
"The industry shift from proprietary technology to an open standard may lead to more manufacturers of the boxes, may spur a retail distribution market and may prompt new high-speed-data- and Internet-service providers," the FCC report predicts. |
