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Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming

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Federal Communications Commission.




The Commission is required to report annually to Congress on the status of competition in markets for the delivery of video programming. This document solicits information from the public for use in preparing the competition report that is to be submitted to Congress in December 2001. The document will provide parties with an opportunity to submit comments and information to be used in conjunction with publicly available information and filings submitted in relevant Commission proceedings to assess the extent of competition in the market for the delivery of video programming.


Comments are due on or before August 3, 2001, and reply comments are due on or before September 5, 2001.


Office of the Secretary, Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554.

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Marcia Glauberman, Cable Services Bureau, (202) 418-7200, TTY (202) 418-7172 or via Internet at

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This is a synopsis of the Commission's Notice of Inquiry in CS Docket No. 01-129, FCC 01-191, adopted June 20, 2001, and released June 25, 2001. The complete text of this Notice is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257) at its headquarters, 445 12th Street, SW, Washington, DC 20554, and may be purchased from the Commission's copy contractor, International Transcription Service, (202) 857-3800, 1231 20th Street, NW, Washington, DC 20036, or may be viewed via Internet at​csb/​.Start Printed Page 35432

Synopsis of Notice of Inquiry

1. Section 628(g) of the Communications Act of 1934, as amended, directs the Commission to report annually to Congress on the status of competition in the market for the delivery of video programming. This Notice of Inquiry (“Notice”) solicits data and information on the status of competition in the market for the delivery of video programming for our eighth annual report (“2001 Report”). The Commission will report on the current state of competition and report on changes in the competitive environment since our 2000 Report.

2. We seek information, comment and analyses that will allow us to compare video delivery technologies and to evaluate the status of competition in the video marketplace, prospects for new entrants to that market, and its effect on the cable television industry and consumers. The accuracy and the usefulness of the 2001 Report are directly related to the information we receive from commenters. To the extent feasible, we request data as of June 30, 2001, to facilitate our analysis of competitive trends over time. Comments submitted in this proceeding will be augmented with information from publicly available sources.

Competition in the Market for the Delivery of Video Programming

3. Video distributors using both wired and wireless technologies serve the market for the delivery of video programming. Video programming distributors include cable systems, direct broadcast satellite (“DBS”) service, home satellite dish (“HSD”) service, private cable or satellite master antenna television (“SMATV”) systems, open video systems (“OVS”), multichannel multipoint distribution service (“MMDS”), and over-the-air broadcast television service.

4. Congress and the Commission have sought to eliminate barriers to competitive entry and establish market conditions that promote competition to foster more and better options for consumers at reasonable prices. The Telecommunications Act of 1996 (“1996 Act”) extended the pro-competitive provisions of the Cable Television Consumer Protection and Competition Act of 1992 (“1992 Act”) and established a “pro-competitive de-regulatory national policy framework” for the telecommunications industry. For this year's report, we seek comment and information on the extent to which changes in the Communications Act and the Commission's rules have encouraged new competitors in the market for the delivery of video programming. We also seek comment on any remaining, or impending, statutory or regulatory barriers to new entrants in the video market.

5. One goal of the 1992 and 1996 Acts is to promote competitive choices for consumers. To what extent do consumers have multiple options for video programming services? We seek data regarding areas where head-to-head competition exists between cable and other video programming distributors, or among various types of video programming distributors. As in previous Reports, we request information for case studies on the effects of competition in local markets where consumers have a choice among video programming distributors.

6. For consumers to have access to competitive alternatives for video services, video programming distributors must have access to programming and other services as well as the facilities needed to distribute these services. We seek information regarding video programming distributors' ability to acquire or license programming. We also note that the prohibition on exclusive contracts in the program access rules ceases to be effective on October 5, 2002, unless the Commission finds that the prohibition continues to be necessary. We seek suggestions on the methods we should use to evaluate whether this provision of the program access rules is still needed.

7. We also recognize that new service offerings (e.g., data access, telephony, video-on-demand, interactive television) and new ways of offering service (e.g., personal video recorders, streaming video) are being deployed by a number of different video delivery technologies. Are there economic, technical or regulatory factors influencing the ability of providers to include these services along with more video programming? We also request comment on whether the ability to offer advanced services (e.g., telephony, data access) affects competition in the video marketplace?

8. Video programming distributors must be able to deliver their services to consumers. In this regard, we seek comment and information regarding the ability of video programming distributors to have access to rights-of-way, pole attachments, conduits, and ducts for the delivery of their services to consumers. We also seek to update our information on video delivery competition for and within multiple dwelling units (“MDUs”), which we consider a separate submarket.

9. As in previous Reports, we seek factual information and statistical data about the current status of each type of video programming distributor and any changes that have occurred during the past year. For each video programming distribution technology, we seek information on: (1) The number of homes passed by wired technologies; (2) the number of homes capable of receiving service by wireless technologies; (3) the number of video distribution firms in a given industry; (4) the number of subscribers and penetration rates; (5) channel capacities and the number, type, and identity of video programming channels offered; (6) prices charged for the various programming packages offered; and (7) industry and firm financial information, such as revenues, in the aggregate and by source (e.g., programming, advertising), cash flow, and expenditures. Finally, we invite comment on a variety of issues associated with specific segments of the video programming distribution industry as well as any other relevant comments.

10. Cable Television. We seek to update and refine our report on the performance of the cable television industry. We invite comment and request data on cable television's financial performance, capital acquisition and disposition, system transactions, rates, channel capacity, programming costs, subscribership, viewership, and new service offerings.

11. Section 612(g) of the Communications Act provides that at such time as cable systems with 36 or more activated channels are available to 70 percent of households within the U.S. and are subscribed to by 70 percent of those households, the Commission may promulgate any additional rules necessary to provide diversity of information sources. In the 2000 Report, we found that both benchmarks had not been met. Have there been any developments in the last year that would change this determination? With respect to channel capacity, we request data on the distribution of cable systems and cable subscribers classified by channel capacity. We also seek information on the extent to which cable operators currently are using all their required set-aside channels for the carriage of local broadcast signals, pursuant to sections 614 and 615 of the Communications Act. We further note that, under 47 CFR 76.921, the exception to the “buy through prohibition” expires on October 5, 2002. Are there cable systems that will not meet the October 2002 deadline for the capability to allow “buy-through'?

12. We seek information on mergers, acquisitions, consolidations, swaps and Start Printed Page 35433trades, cross-ownership, and other structural development that affect the delivery of video programming. For the past several years, cable operators have engaged in a strategy of buying and/or swapping cable systems to create regional clusters cable systems. We request comment on the practice of clustering and its effect on competition in the video programming distribution market. We also are interested in learning whether noncable video programming distributors (e.g., MMDS, SMATV) cluster their systems.

13. We further seek comment on whether cable operators are changing the way they package programming. To what extent are cable operators offering smaller basic tiers (i.e., “lifeline” tiers) or shifting programming from the basic service tier (“BST”) to cable programming service tier (“CPST”) or from these tiers to digital tiers? To what extent are operators shifting services to create uniform program offerings across their regional or clustered systems?

14. Direct-to-Home Satellite Services. We seek updated information about direct-to-home (“DTH”) satellite services, which includes direct broadcast satellite (“DBS”) and home satellite dish (“HSD” or “C-Band”) services. Previous Reports have noted the continued growth of DBS subscribership and the increased proportion of video programming subscribers choosing alternatives to cable television. We also observed a decline in the number of HSD subscribers. Are these trends continuing? Are there identifiable differences between consumers who choose to subscribe to DBS rather than cable or another video programming distributor? We request data that will allow us to compare DBS and cable rates for programming packages and equipment.

15. Some of the increase in DBS's share of multichannel video programming distributor (“MVPD”) subscribers has been attributed to the carriage of local broadcast stations (“local-into-local service”) by DBS operators, pursuant to the Satellite Home Viewer Improvement Act of 1999 (“SHVIA”). We request updated information on the number of markets where local-into-local service is offered and the percent of DBS subscribers opting for such packages.

16. Broadcast Television. We seek information on the role of broadcast television in market for the delivery of video programming. We request information regarding the extent to which broadcast television competes as a distribution medium with multichannel video programmers for audiences and for advertising revenue. We seek information on the number and percentage of households that rely on over-the-air broadcast television reception for some or all the television sets in their homes.

17. Broadcasters are in the process of rolling out digital television (“DTV”). We request comment on the role of DTV in the market for the delivery of video programming. We request information regarding the amount and type of DTV programming currently being offered. We also seek information on the sales of DTV consumer equipment and factors affecting consumer adoption of DTV equipment. Further, in conjunction with the on-going consideration of issues relating to the carriage of DTV stations by cable operators, we seek information and comment on DTV carriage agreements between broadcasters and cable operators.

18. Wireless Cable. In the 2000 Report, we reported an almost 15 percent decline in MMDS video subscribers, a trend that has continued from previous years. We observed that the MMDS industry provides competition to the cable industry for MVPD service only in limited areas and that the industry is transitioning from offering video programming to offering data service. What effect will this transition have on the status of MMDS as a competitor in the market for the delivery of video programming and consumer choice?

19. Satellite Master Antenna Systems. Video distribution facilities that use closed transmission paths without using any public right-of-way, known as SMATV or private cable systems, primarily serve MDUs, such as apartment buildings. The 2000 Report noted that SMATV subscribership has remained relatively unchanged in recent years, but we recognized that our estimate of SMATV subscribership may be inexact since the SMATV industry consists of hundreds of small and medium size firms. To provide the most accurate and reliable estimate of SMATV subscribership, we request data for SMATV markets, including subscribership levels, service areas, the identities of the largest operators, types of services offered, and the price charged for those services.

20. Open Video Systems. We request data on the status of open video systems, including the number of homes passed, the number of subscribers, the types of services offered, the packaging of services, and the cost of services. To what extent are open video systems joint ventures between video service providers and other entities (e.g., utility companies, Internet service providers)? An OVS operator must make channel capacity available for use by unaffiliated programmers. We solicit information on unaffiliated programmers seeking carriage on open video systems and the number and types of such programming. Under the City of Dallas, Texas v. FCC decision, local governments have the ability to impose franchise requirements on OVS operators. What effect has this decision had on the growth of OVS?

21. Local Exchange Carriers and Utilities. For the 2001 Report, we request information regarding LECs, long distance telephone companies, and utility companies that provide video services. In the 2000 Report, we found that the rate of entry by LECs appeared to be slowing even by the most aggressive telephone companies, and several LECs have reduced or eliminated their MVPD efforts. With respect to LECs, we request information about the current status of their activities and any changes that have occurred since the 2000 Report.

22. Broadband Providers. In previous Reports, in the context of overbuilding, we mentioned several broadband providers, which are newer firms that are building state-of-the-art facilities-based networks to provide video, voice and data services over a single network. We note that some broadband providers offer video services as franchised cable operators and some have obtained OVS certification. We seek information regarding broadband providers, including data on the geographic locations of such systems, and whether they operate as franchised cable systems or some other model. We also ask for information regarding the number of homes passed, the number of subscribers, video service packages offered, non-video service offerings in combination with video services, and the rates charged for the various packages. What are the technical, economic and regulatory obstacles to the successful operation of systems of this type?

23. Home Video Sales and Rentals. The Commission has considered home video sales and rentals as part of the video marketplace because they offer services similar to premium and pay-per-view programming services. The home video marketplace includes videocassettes, DVDs, laser discs, and personal video recorders (“PVRs”). For the 2001 Report, we seek information and updated statistics regarding the home video sales and rental market.

Convergence of Services and Technologies

24. Convergence of Service Offerings. The 1996 Act removed barriers to LEC Start Printed Page 35434entry into the video marketplace in order to facilitate competition between incumbent cable operators and telephone companies. In the 2000 Report, as in previous years, we found that the expected technological convergence between telephone and cable companies had not yet occurred. However, we observed that the most significant convergence of service offerings has been the pairing of Internet service with video services by a wide range of companies throughout the communications industries. We request information on the current state of high-speed data offerings by each delivery technology and comparable statistics on the availability of such service, the cost of such service, the number of homes to which the service is available, and the number of subscribers of these services. What effect, if any, does the provision of these ancillary services have on competition in the video marketplace?

25. Convergence of Television and the Internet. A number of recent developments point to the convergence of television and the Internet. In recent Reports, we addressed Internet video, i.e., real-time and downloadable video accessible over the Internet. We seek comment as to if, and when, Internet video will become a viable competitor in the market for the delivery of video programming. We also solicit information on the technological, legal, and competitive factors that may promote or impede the provision of video over the Internet.

26. In the 2000 Report, we observed that interactive television (“ITV”) services were beginning to be offered through cable, satellite, and terrestrial technologies. ITV combines television with many of the functions of the personal computer (“PC”). We seek comment on the development and deployment of these services, specifically the types of services being offered and the technologies used to provide them to consumers. We also seek information on electronic program guides (“EPGs”), which are sometimes considered an ITV service.

Programming Issues

27. For the 2001 Report, we seek information that will allow us to update our information on existing and planned national and local/regional programming services and to assess the extent to which video programming services are affiliated with cable multiple system operators (“MSOs”). We also request data on the extent to which there are programming networks affiliated with noncable video programming distributors and whether such programming networks are available to competitors, including cable operators. We request comment on whether there are certain programming services (i.e., “marquee” program services) or types of services (e.g., movie, sports, or news channels) without which competitive video service providers may find themselves unable to effectively compete. We further seek information and comment regarding public, educational, and governmental (“PEG”) access and leased access channels.

28. In the 2001 Report, we will continue to report on the effectiveness of our program access, program carriage and channel occupancy rules that govern the relationships between cable operators and programming providers. In particular, we seek information on cases of video programming distributors being denied programming when a satellite-delivered service becomes terrestrially-delivered, or being denied programming by non-vertically integrated programmers?

Technical Advances

29. Cable operators and other video programming distributors continue to develop and deploy advanced technologies, especially digital compression techniques, to increase their capacities and to enhance the capabilities of their transmission systems. We request information on the various aspects of these technical advances, including information on investments in facilities and equipment upgrades by cable and other MVPDs. As digital services and other new technologies are deployed by video programming distributors, changes in consumer premises equipment design, function, and availability may affect consumer choice and competition between firms in the video programming market. We solicit updated information on the developments regarding consumer equipment.

Procedural Matters

Ex Parte

30. There are no ex parte or disclosure requirements applicable to this proceeding pursuant to 47 CFR 1.1204(b)(1).

Filing of Comments and Reply Comments

31. Pursuant to applicable procedures set forth in §§ 1.415 and 1.419 of the Commission's Rules, interested parties may file comments on or before August 3, 2001, and reply comments on or before September 5, 2001. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies.

32. Comments filed through the ECFS can be sent as an electronic file via the Internet to​e-file/​ecfs.html. Generally, only one copy of an electronic submission must be filed. If multiple docket or rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one electronic copy of the comments to each docket or rulemaking number referenced in the caption. In completing the transmittal screen, commenters should include their full name, Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to, and should include the following words in the body of the message, “get form <your e-mail address.” A sample form and directions will be sent in reply.

33. Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding commenters must submit two additional copies for each additional docket or rulemaking number. All filings must be sent to the Commission's Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 12th Street, SW., Room TW-A325, Washington, DC 20554. The Cable Services Bureau contact for this proceeding is Marcia Glauberman at (202) 418-7046, TTY (202) 418-7172, or at

34. Parties who choose to file by paper should also submit their comments on diskette. Parties should submit diskettes to Marcia Glauberman, Cable Services Bureau, 445 12th Street SW., Room 3-A738, Washington, DC 20554. Such a submission should be on a 3.5-inch diskette formatted in an IBM compatible form using MS DOS 5.0 and Microsoft Word, or compatible software. The diskette should be accompanied by a cover letter and should be submitted in “read only” mode. The diskette should be clearly labeled with the party's name, proceeding (including the lead docket number in this case [CS Docket No. 00-129]), type of pleading (comments or reply comments), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy—Not an Original.” Each diskette should contain only one party's pleadings, referable in a single electronic file. In addition, commenters must send diskette copies to the Start Printed Page 35435Commission's copy contractor, International Transcription Service, 1231 20th Street, NW., Washington, DC 20036.

Ordering Clause

35. This Notice is issued pursuant to authority contained in Sections 4(i), 4(j), 403, and 628(g) of the Communications Act of 1934, as amended.

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Federal Communications Commission.

Magalie Roman Salas,


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[FR Doc. 01-16792 Filed 7-3-01; 8:45 am]