[Federal Register Volume 63, Number 40 (Monday, March 2, 1998)]
[Notices]
[Pages 10222-10224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5236]
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FEDERAL COMMUNICATIONS COMMISSION
[CS Docket No. 97-141, FCC 97-423]
Annual Assessment of the Status of Competition in Markets for the
Delivery of Video Programming
AGENCY: Federal Communications Commission.
ACTION: Notice.
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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
http://www.fcc.gov/Bureaus/Cable/Reports/fcc97423.html.
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.
[[Page 10223]]
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
[[Page 10224]]
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
