Annual Assessment of the Status of Competition in Markets for the Delivery of Video Programming
03/02/98
Federal Register
Page 10222
Copyright (c) 1998 Federal Information & News Dispatch, Inc. All rights reserved
SUMMARY: Section 628(g) of the Communications Act of 1934, as amended, 47 U.S.C. 548(g), requires the Commission to report annually to Congress on the status of competition in markets for the delivery of video programming. On January 13, 1998, the Commission released its fourth annual report (" 1997 Report "). The 1997 Report contains data and information that summarize the status of competition in markets for the delivery of video programming and updates the Commission's prior reports. The 1997 Report is based on publicly available data, filings in various Commission rulemaking proceedings, and information submitted by commenters in response to a Notice of Inquiry in this docket, summarized at 62 FR 38008, July 16, 1997.
FOR FURTHER INFORMATION CONTACT: Marcia Glauberman or Mark Menna, Cable Services Bureau (202) 418-7200, TTY (202) 418-7172.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 1997 Report in CS Docket No. 97-141, FCC 97-423, adopted December 31, 1997, and released January 13, 1998. The complete text of the 1997 Report is available for inspection and copying during normal business hours in the FCC Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C., 20554, and may also be purchased from the Commission's copy contractor, International Transcription Service ("ITS, Inc."), (202) 857-3800, 1231 20th Street, N.W., Washington, D.C. 20036. In addition, the complete text of the 1997 Report is available on the Internet at fcc.gov.
Synopsis of the 1997 Report
1. The Commission's 1997 Report to Congress provides information for the cable television industry and other multichannel video programming distributors ("MVPDs"), including direct broadcast satellite ("DBS") service, home satellite dishes ("HSDs"), multipoint distribution service ("MMDS"), local multipoint distribution service ("LMDS"), satellite master antenna television ("SMATV") systems, and broadcast television service. The Commission also considers several other existing and potential distributors of and distribution technologies for video programming including, the Internet, home video sales and rentals, interactive video and data services ("IVDS"), local exchange telephone carriers ("LECs"), and electric and gas utilities.
2. The Commission further examines market structure and issues affecting competition, such as horizontal concentration, vertical integration and technical advances. The fourth annual report addresses competitors serving multiple dwelling unit ("MDU") buildings and evidence of competitive responses by industry players that are beginning to face competition from other MVPDs. The 1997 Report further discusses issues relating to federal laws and regulations concerning the emergence of a competitive MVPD marketplace. Finally, the Commission reports on video description of video programming.
3. In the 1997 Report, the Commission concludes that the cable industry continues to occupy the dominant position in the multichannel video marketplace. As of June 1997, cable operators served 87% of households that receive multichannel video programming, down from 89% in September 1996. The Commission finds that there is a growing but still limited number of instances where incumbent cable system operators face competition from MVPDs offering similar services.
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For example, while DBS providers have made subscribership gains, MVPDs using other distribution technologies, such as MMDS, have not posted comparable increases in subscribership. However, digital technology, now being tested and implemented, has the potential to improve the competitiveness of these services. Furthermore, implementation of digital television by broadcast television stations, the primary source of programming for most viewers regardless of distribution medium, has the potential to allow broadcasters to become more effective competitors with cable and other MVPDs. In addition, while the Telecommunications Act of 1996 ("1996 Act") eliminated restrictions on entry by telephone companies into cable, the Commission finds LEC entry into video programming distribution has proceeded sporadically and is highly dependent on the business strategies of the individual companies.
4. Key Findings:
. Industry growth: A total of 73.6 million households subscribed to multichannel video programming services as of June 1997, up 2.8% over the 71.6 million households subscribing as of September 1996. The cable television industry has continued to grow in terms of subscribership (up to 64.2 million subscribers as of June 1997, a 1% increase from September 1996), revenues (a 12.2% increase between September 1996 and June 1997), and audience ratings (an 8.6% increase between September 1996 and June 1997, to an average 38 share for cable programming services). A Commission survey of cable industry prices indicates that the average monthly rate for a package consisting of the programming services offered on the basic and most popular cable programming service ("CPS") tiers and a converter and a remote increased from $26.57 on July 1, 1996 to $28.83 on July 1, 1997, an increase of 8.5%. In addition, DBS subscribership increased from 3.5 million at the end of September 1996 to 5.1 million homes at the end of June 1997 and SMATV subscribership increased from 1.1 million homes at the end of September 1996 to 1.2 million at the end of June 1997. However, HSD subscribership decreased from 2.3 million homes at the end of September 1996 to 2.2 million homes at the end of June 1997 and MMDS subscribership decreased from 1.2 millions to 1.1 million homes between September 1996 and June 1997. Moreover, two of the seven open video systems ("OVS") certified by the Commission have begun operation and, as of June 1997, served 3,000 subscribers.
. Horizontal concentration: Local markets for the delivery of video programming generally remain highly concentrated and characterized by barriers to both entry and expansion by competing distributors. DBS service, available in almost all areas, constitutes the most significant alternative to cable television. Competitive overbuilding by franchised cable operators remains minimal but is increasing, particularly by LECs and appears, to varying degrees, to improve service and/or pricing where it exists. Video distribution competition within and for MDU buildings appears to be developing as a distinct market separate from neighboring areas.
. Vertical integration: The proportion of national programming services that are vertically integrated with cable operators declined slightly from last year's total of 46% to 40% this year. Eight of the 16 national programming services launched since the 1996 Report have been vertically integrated with a cable multiple system operator.
. Promotion of entry and competition: The Commission has continued to take steps to eliminate obstacles to competition, including the adoption and enforcement of rules: prohibiting governmental and private restrictions that unreasonably interfere with a consumer's right to install the dishes and other antennas to receive programming services from DBS, wireless cable, and television broadcast; establishing procedures to use internal wiring installed in an MDU building by the incumbent provider, facilitating owners' and residents' choice among providers; and increasing the amount of spectrum available for wireless uses and eliminating restrictions on use, for the benefit of wireless providers. The Commission also has initiated proceedings intended to foster competition, including proposals to improve the efficiency of the rules requiring access to cable programming attributable to programmers that are vertically integrated with cable operators and a rulemaking, adopted pursuant to section 304 of the 1996 Act, seeking comment on rules to assure the commercial availability of navigation devices from manufacturers, retailers and other vendors not affiliated with any MVPDs.
. Technological advances: Advances in and development of digital technology will permit all distributors of video programming to increase the delivered quantity of service. Digital technology increases the number of programming channels that may be communicated over a given amount of bandwidth or spectrum space. MVPDs and broadcasters continue to pursue improved digital compression ratios and deployment of digital technology. In addition CableLabs recently announced its "open standards" initiative supporting development of advanced set - top 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.
. Convergence of cable and telephone service: At the time of the 1996 Act's passage, members of the local telephone industry indicated that they would begin to compete in video delivery markets, and cable television operators indicated that they would begin providing local telephone exchange service. The expectation was that there would be a technological convergence that would permit use of the same facilities for provision of the two types of service. This technological convergence has yet to take place. Almost all of the video service provided by LECs uses conventional cable television technology or wireless cable operations that stand alone from the provider's telephone facilities. The provision of telephone service by cable firms over integrated facilities remains primarily at an experimental stage. The one area in which many cable operators appear poised to compete head-to-head with local telephone companies is the provision of Internet access. Technology in this area appears to be rapidly advancing and service is being deployed on a commercial basis in a large number of cable systems.
5. Finally, in the 1997 Report, the Commission provides Congress with additional information regarding video description, which is an aural description of a program's key visual elements intended to benefit viewers with visual disabilities. The 1996 Act required the Commission to report to Congress on appropriate methods and schedules for phasing video description into the marketplace and other technical and legal issues related to the widespread deployment of video description. On July 29, 1996, the Commission submitted its first report to Congress, 61 FR 19214, August 14, 1996, and indicated that it would report further on this issue in its 1997 Report. The Commission now finds that economic barriers, technical limitations, and unresolved legal issues continue to limit the availability of video description. We conclude that continued public funding for video description could further its development such that widespread
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implementation could become feasible and create a commercial market for video description. In addition, advances in digital technology may allow the development and expansion of video description.
Ordering Clauses
6. This 1997 Report is issued pursuant to authority contained in sections 4(i), 4(j), 403 and 628(g) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 403 and 548(g).
7. It is Ordered that the Office of Legislative and Intergovernmental Affairs shall send copies of this 1997 Report to the appropriate committees and subcommittees of the United States House of Representatives and the United States Senate.
8. It is Further ordered that the proceeding in CS Docket No. 97-141 is terminated.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-5236 Filed 2-27-98; 8:45 am] BILLING CODE 6712-01-P |
