2011-10782. Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming

AGENCY:

Federal Communications Commission.

ACTION:

Notice.

SUMMARY:

In this document, the Commission is required to report annually to Congress on the status of competition in markets for the delivery of video programming. This document is soliciting additional information from the public that will allow the Commission to enhance its analysis of the state of competition in the delivery of video programming. Comments and data submitted in response to this document in conjunction with publicly available information and filings submitted in relevant Commission proceedings will be used for a report to Congress.

DATES:

Interested parties may file comments on or before June 8, 2011, and reply comments on or before July 8, 2011.

ADDRESSES:

Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:

Dan Bring, Media Bureau [phone], TTY [phone], or e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

This is a synopsis of the Commission's Annual Assessment of the Status of Competition in the Market for Diversity of Video Programming, Further Notice of Inquiry (FNOI), in MB Docket No. 07-269, FCC-11-65, released April 21, 2011. The complete text of the document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554, and may also be purchased from the Commission's copy contractor, BCPI, Inc., Portals II, 445 12th Street, SW., Washington, DC 20054. Customers may contact BCPI, Inc. at their Web site http://www.bcpi.com or call 1-800-378-3160.

Synopsis of Further Notice of Inquiry

1. Section 628(g) of the Communications Act of 1934, as amended (the Act) requires the Commission to report annually on “the status of competition in the market for the market for the delivery of video programming.” This FNOI solicits data, information, and comment on the state of competition in the delivery of video programming for the Commission's Fourteenth Report (14th Report). Using the information collected pursuant to this FNOI, we seek to enhance our analysis of competitive conditions, better understand the implications for the American consumer, and provide a solid foundation for Commission policy making with respect to the delivery of video programming to consumers.

2. Pursuant to its statutory mandate, in 2009, for the 14th Report, the Commission released a Notice of Inquiry, released January 16, 2009, to solicit data, information, and comment for 2007 and a Supplemental Notice of Inquiry, released April 9, 2009, to request data, information and comment for 2008, and 2009, similar to that which had been requested for earlier years. However, since that time, the Commission has initiated a comprehensive review of the way in which it uses data, including data used for its statutory competition reports. In the course of that review, we determined that the data submitted in response to the notices of inquiry for the 14th Report are insufficient to produce an adequate report. We are therefore requesting additional data for 2009 and for the first time asking for data for 2010. In submitting additional data for 2009 and new data for 2010, to the extent that it is not unduly burdensome, we encourage commenters to also submit comparable historical data for 2007 and 2008, which will facilitate the Commission's analysis of trends.

3. We intend to adopt a number of changes to our analytic framework to ensure that we are collecting and presenting the most useful information concerning competition in the video programming market. Of particular note, in the 14th Report, we plan to include online video distributors (OVDs) for the first time, in light of the growing importance of online video distribution to consumers. An OVD is any entity that provides video programming by means of the Internet or other Internet Protocol (IP) based transmission path provided by a person or entity other than the OVD. Under our new analytic framework, we first will categorize entities that deliver video programming into one of three groups: multichannel video programming distribution (MVPDs), broadcast television stations, and OVDs. Second, we will examine industry structure, conduct, and performance. Third, we will look upstream and downstream to examine the influence of industry inputs and consumer behavior on the delivery of video programming. We expect to discuss three key upstream industry inputs: Video content creators, video content aggregators, and consumer premises equipment. We seek comment on whether this proposed analytic framework is a useful way for the Commission to assess and report on the status of video programming competition.

4. The data reported in previous reports on the status of competition for the delivery of video programming were derived from various sources, including data the Commission collects in other contexts (e.g., FCC Form 477 and FCC Form 325), comments filed in response to notices of inquiry and other Commission proceedings; publicly available information from industry associations; company filings and news releases; Security and Exchange Commission filings; trade and industry publications; research firms' publicly-available data; equity analysts' reports; scholarly publications; and vendor product releases and white papers. We seek comment on whether there are additional data sources available for our analysis. What other sources of data, especially quantitative data, should we use to perform a comprehensive analysis of the delivery of video programming? Are there certain stakeholders that should be reached out to in order to diversify the data and further supplement the record? We also ask commenters to suggest how we can best use this information to report on competition for the delivery of video programming.

5. In previous Notice of Inquiries, we have requested data as of June 30 of the relevant year to monitor trends on an annual basis. To continue our time-series analysis, we request data as of June 30, 2009, and June 30, 2010. We also recognize that a significant amount of data and information are reported on a calendar year basis, and, as such, we ask commenters to provide year-end 2009 and year-end 2010, when readily available and relevant.

6. We request data, information, and comment from entities that provide delivered video programming directly to consumers. These entities include MVPDs, broadcast television stations, and OVDs. We also seek data, information, and comment from entities that provide key inputs into video programming distribution. These include content creators, content aggregators, and manufacturers of consumer premises equipment, including equipment that enables consumers to view programming on their television sets as well as on other devices (e.g., smartphones and tablets). In addition, we request data, information, and comment from consumers and consumer groups. We will augment reported information with submissions in other Commission proceedings and from publicly available sources.

Providers of Delivered Video Programming

Multichannel Video Programming Distributors

7. MVPD Structure. Previously, we reported separately on many types of competitors in the market for the delivery of video programming including: incumbent cable operators, direct broadcast satellite (DBS), home satellite dishes (HSD), broadband service providers (BSPs), local exchange carriers (LECs), open video systems (OVS), electric and gas utilities, wireless cable systems, private cable operator (PCO) systems, also known as satellite master antenna (SMATV) systems, commercial mobile radio service (CMRS) and other wireless providers.

8. For each type of MVPD, we seek data on the number of MVPD providers, the number of households passed, the number of subscribers for delivered video programming, and the number of linear channels offered. For each type of MVPD, we seek comment on the geographic area in which individual providers offer service. In addition, we seek comment on the most appropriate unit of measurement for assessing geographic coverage. We note that different types of MVPDs may report data regarding availability and use that is not standardized to a common geographic unit. This greatly hinders our ability to assess the competitive alternatives available to households and to identify where MVPDs are engaged in head-to-head competition. For purposes of determining whether the 70/70 benchmark specified in section 612(g) of the Act has been met, in the 13th Report, the Commission determined that delivered video subscriber data should be collected on a zip code basis. Is it appropriate to use zip code level data to evaluate the structure of MVPD markets? Is there a significant difference in the data collected if a 5-digit versus a 9-digit zip code is used? We note that we collect data from broadband providers using census tracts. We seek comment on the feasibility of collecting MVPD data on a census tract basis.

9. Previously, we reported on cable overbuilders and LECs that have overbuilt incumbent cable systems. We seek data and information on the number of households that are passed by one wireline MVPD, two wireline MVPDs, and three or more wireline MVPDs. We wish to identify markets and geographic areas where head-to-head wireline competition exists, where wireline entry is likely in the near future, and where wireline competition once existed but failed. We are particularly interested in identifying areas that have access to either Verizon FiOS and AT&T U-verse.

10. Certain wireless providers—DBS, wireless cable systems, HSDs and PCOs—are included within the statutory definition of MVPDs to the extent that they make available for purchase multiple channels of video programming. We seek data and information that explain the principal factors contributing to DBS's growth in the market for delivery of video programming. What factors influence cable subscribers' decisions to switch to DBS and vice versa? We request information identifying differences between DBS subscribers and cable subscribers. For example, are DBS subscribers more likely to reside in rural areas or areas not served by cable systems? We seek updated information on the geographic characteristics of DBS subscribership. What percentage of households cannot receive DBS service because they are not within the line-of-site of the satellite signal? We request updated information on the number of markets where DBS operators provide local-into-local broadcast service. Is DBS penetration higher in areas where local-into-local service is available? What effect, if any, does the inability of DBS operators to directly provide broadband and voice service along with their video service have on competition among MVPDs?

11. In addition, several operators of wireless cable systems in the 2.5 GHz band continue to provide multiple channels of video programming under the Commission's rules for opting out of the transition of this band. We seek comment on how and to what extent these wireless cable systems are competing with other MVPDs. Finally, we seek comment on other wireless MVPDs such as HSDs and PCOs.

12. The Commission has not addressed the extent to which wireless providers offering video programming to mobile phones and other wireless devices should be classified as MVPDs under the Act, and we do not intend to do so within this proceeding. For the 14th Report, we seek comment on the competitive impact that these wireless providers have on MVPDs and on competition in the provision of video programming generally. How and to what extent are wireless technologies being used to provide video programming today, and what trends should we anticipate for the future? To what extent do these services compete with the video programming services offered by MVPDs and by other providers of video programming?

13. We seek comment on the appropriate methodology for calculating concentration in delivered video services. Should we continue to consider MVPDs a separate product market, or are there narrower or broader product segments we should consider? What are the appropriate geographic markets associated with these product markets (e.g., individual households, zip codes, census tracts, cable franchise areas, or metropolitan areas)? Instead of assessing concentration on a national level as we have done in the past, should we instead follow the methodology used in 14th Mobile Wireless Report to assess horizontal concentration at a finer level of granularity? In the 14th Report, we also propose to identify the geographic areas and number of households having a choice of no MVPDs, one MVPD, two MVPDs, three MVPDs, four MVPDs, and five or more MVPDs to assess consumer choice at the local level. We seek comment on the value of our proposed approach and request data, or recommendations for data we can acquire, that will enable us to perform this analysis. We invite analysis regarding the relationship between horizontal concentration and competition. To what extent does horizontal concentration affect price or quality?

14. In previous reports, we have discussed vertical integration in terms of ownership affiliations between cable programming networks and cable operators. For our 14th Report, we request data, information, and comment on vertical integration between MVPDs and video programming networks. We request information on satellite and terrestrially delivered national and regional networks. How should we measure such vertical integration? For purposes of analyzing vertical integration, how should we determine affiliation? Should we use a minimum ownership share or apply the attribution rules? Should we simply note which MVPDs are integrated with program networks, or should we also measure the fraction of programming revenues accounted for by firms affiliated with an MVPD? What data should we collect to analyze affiliation and revenue? To measure the extent to which MVPDs and cable networks are vertically integrated, we seek comment on whether to count a standard definition (SD) and a high definition (HD) version of the same programming network as one or more networks. We also seek comment on how to evaluate multiplexed programming networks.

15. A number of provisions of the Act and the Commission's rules affect MVPD operators in the market for the delivery of video programming. These include, for example, regulations governing program access, program carriage, must carry, retransmission consent, franchising, access to multiple dwelling units, inside wiring, customer service, leased access, ownership, and public interest programming. We seek comment on the impact of these regulations and other Commission rules on MVPD entry and rivalry among MVPDs in markets for the delivery of video programming. We also seek comment on specific actions the Commission could take to facilitate MVPD entry and rivalry among MVPDs and thereby to increase consumer choice in the delivery of video programming. In addition, we seek comment on any state or local regulations that affect MVPD entry and rivalry among MVPDs.

16. We seek information and comment on non-regulatory conditions affecting MVPD entry and rivalry. Do these conditions include supply-side economies of scale, where large MVPDs can spread fixed costs over more subscribers or negotiate lower prices for video content? Do these conditions also include expected retaliation, where potential MVPD entrants believe incumbents will lower prices to any household considering switching to the new MVPD entrant? Does bundling MVPD services with broadband, and bundling channels into tiers rather than selling channels à la carte, affect entry and rivalry? Do long-term contracts with penalties for early termination affect entry and rivalry? What other non-regulatory conditions affect MVPD entry and rivalry?

17. MVPD Conduct. What is the capacity being used for public, educational, and governmental (PEG) channels by MVPDs? What tier are these channels on and is extra equipment required to view them? Are there more or fewer PEG channels carried on your systems than last year? What data sources are available to track availability of PEG programming, and changes to PEG availability?

18. We seek descriptions of the varied business models and strategies used by MVPDs for the delivery of video programming. What are key differences among the business models and strategies in terms of services offered to consumers? How do providers distinguish their delivered video services from their rivals? Are cable and DBS comparable services? Is there a discernable distinction between the type of service that is delivered at a local level or at a national level? Does DBS “local-into-local” delivery of broadcast television signals make it a closer substitute for cable than it would be otherwise? What significance, if any, do distinctions between cable and DBS operators have for Commission precedent concluding that the two transmission technologies compete in the same MVPD product market? To what extent do MVPD offer unique services (e.g., multi-room DVR service), more channels, more high definition, or a variety of bundles to consumers? How do MVPDs advertise their services to existing and potential subscribers? What delivered video services do they feature in their advertising?

19. For each type of MVPD, we seek data on the prices charged for delivered video programming. What prices are subscribers paying for MVPD service? To what extent do MVPDs use promotional or reduced pricing as a competitive strategy? Can consumers easily find the prices of MVPD video packages and services on their monthly bill and/or MVPDs' Web sites and other promotional materials? To what extent do providers of MVPD service use a strategy of reducing prices to attract and retain subscribers? To what extent do MVPDs offer new subscribers price discounts for an introductory period? Do prices change at the end of the introductory period, and, if so, how? Are introductory and long-term prices listed and fixed, or do providers negotiate with individual subscribers over prices before and after introductory periods? Do households that subscribe to the same delivered video services, from the same provider, in the same geographic area, pay different prices? How do bundles of service (i.e., double- or triple-play offerings) change the price of delivered video services? To what extent have MVPDs been adding linear channels and non-linear VOD programming and raising prices as a result? Are there any providers of delivered video programming with a business strategy of offering fewer channels of programming and lowering prices as a result? Are MVPDs packaging programming by offering tiers of programming by genre (e.g., family tiers, sports tiers)? If so, how are they priced? We also seek information on the competitive strategies of MVPDs in providing VOD programming. Specifically, we are interested in learning about any competitive issues MVPDs encounter when acquiring VOD content from video content aggregators.

20. We are particularly interested in learning whether an increase in the number of MVPD rivals affects pricing strategies. For example, do DBS firms price uniformly across large regions or do they, for example, charge lower prices (or use different pricing strategies) for households that have access to a cable provider than for households that do not have access to a cable provider? Do DBS and cable firms charge lower prices (or use different pricing strategies) for households that have access to more than one wireline MVPD? For its Annual Cable Price Survey, the Commission collects price data from a sample of cable systems, but does not collect price data for other types of MVPDs (e.g., DBS and AT&T U-verse). We seek price data for DBS, AT&T U-verse and other MVPDs not included in the Annual Cable Price Survey. What additional data sources on MVPD prices are available for our 14th Report?

21. In addition to offering bundles of video with voice and/or high-speed Internet, some MVPDs tie video products. We seek data, information, and comment on trends regarding the tying of access to some online programming to a subscription to an MVPD. For example, online programming available through TV Everywhere is available only to subscribers of specific MVPDs. In addition, some MVPDs, such as AT&T and Comcast, make video programming available on mobile wireless networks and mobile devices. We seek comment on these and other developments in tying arrangements for video programming delivered over different delivery technologies.

22. We seek data and comment on the provision of local news by MVPDs as a competitive strategy in the delivery of video programming and the extent to which local news programming is available. What other types of local programming do MVPDs offer? What data sources are available to help in our analysis of MVPD provision of local news and other local programming?

23. Have horizontal and/or vertical mergers contributed to, or provided incentives for, the possible exercise of market power by incumbent MVPDs, both downstream to subscribers and upstream to creators and aggregators of video content? Has any MVPD acquired sufficient market power to impair competition? Has the possible exercise of market power by an MVPD adversely affected consumers of video programming, such as by increasing price or restricting quantity of service available to consumers? Has the possible exercise of market power by an MVPD adversely affected creators and aggregators of video programming, such as by decreasing the price paid for video programming?

24. MVPD Performance. We seek comment on the information and time-series data we should collect for the analysis of various MVPD performance metrics, including quantity and quality; subscribership and penetration rates; financial performance; and investment and innovation. Are there any other quantitative or qualitative metrics that would enhance our analysis of MVPD performance?

25. We seek data, information, and comment on trends in the number of linear video channels and video on demand (VOD) programs offered by MVPDs. Has the number of linear channels and VOD programs available increased? What are the most popular MVPD programming packages? Describe these packages in terms of the total number of analog and SD channels, number of HD channels, and number of VOD offerings. What effect has the entry of an additional MVPD had on programming choices and quality of service? What effect has the growth in OVD services had on the quantity and quality of MVPD service?

26. We seek data and information regarding the number of households passed and the number of subscribers and penetration rate for MVPD service. We also seek subscription data for the channel lineup packages (including international, other specific genres, and premium) and other delivered video programming services that MVPDs currently market to consumers. What percentage of customers subscribe to these video packages and other delivered video programming services? How often do consumers switch providers (i.e., what is the level of “churn” and is it increasing or decreasing)?

27. We request information on various measures of MVPD financial performance, including data on MVPD revenues, cash flows, and margins. To the extent possible, we seek five-year time-series data to allow us to analyze trends. Specifically, what is the average revenue per MVPD subscriber? What are the major sources of video-related revenue for MVPDs? What percentage of total revenue is derived from each of these sources? What are the major video-related drivers of revenue growth? We seek data, information, and comments regarding profitability. What metrics and data should we use to measure profitability (e.g., return on invested capital, operating margins)? Are there any other quantitative or qualitative metrics that would add to our analysis of MVPD financial performance?

28. We seek comment on how investment affects competition among MVPDs. How has investment affected competition between MVPDs and other providers of delivered video programming? We seek information on deployment of next generation MVPD technologies. What MVPD services are driving the deployment of new MVPD technologies?

Broadcast Television Stations

29. Broadcast Television Structure. The Commission already collects data on the number of broadcast television stations in each designated market area (“DMA”) and ownership of broadcast television stations using our CDBS database and data purchased from BIA/Kelsey and The Nielsen Company. Is there a non-proprietary geographic area upon which the Commission could base its analysis? We seek additional data that would help us analyze trends in the number of households that rely exclusively on over-the-air broadcast television service rather than receiving broadcast programming from an MVPD. In addition to the number of households relying on over-the-air broadcast service, we request information regarding any demographic characteristics of such households. How many households routinely view broadcast programming over-the-air in addition to subscribing to an MVPD?

30. The Commission already collects data that we can use to assess the horizontal structure of the broadcast television stations, including the number of stations in each DMA, and the ownership of each station. We seek comment on how to best report this information in order to assess horizontal concentration.

31. We seek data on the vertical structure of the broadcast television. How many broadcast television stations, nationally and within each DMA, are vertically integrated with a broadcast network or a cable network? We seek comment on how to best report this information in order to assess vertical integration.

32. We note that the Commission's spectrum allocation policies, licensing policies, and spectrum interference rules affect the structure of broadcast television by limiting the number of stations that can be located in a geographic area. We seek comment on the effect of these policies and rules on entry and rivalry in broadcast television. Commission rules limit the number of broadcast television stations an entity can own in a DMA and also limit the national audience reach of commonly owned broadcast television stations. We seek data, information, and comment on the effect of ownership limits on entry and rivalry in broadcast television. Does the ability to provide more than one programming stream as a result of the digital transition increase the competitiveness of broadcast stations? What other regulations affect entry and rivalry of broadcast television stations? We ask commenters to provide data and examples for each regulation that effects entry and rivalry.

33. We seek information and comment on non-regulatory conditions affecting entry and rivalry. For example, are there supply-side economies of scale that enable commonly owned broadcast television stations to spread fixed costs over greater audiences? Are there demand-side economies of scale that enable commonly owned broadcast television stations to negotiate lower prices for video programming? We invite analysis of the relationship between the advertising market and entry and exit in broadcast television. What other non-regulatory conditions influence entry and rivalry? To what extent do they influence entry and rivalry? Does the ability to offer multiple programming streams since the digital transition enhance the ability of broadcasters to compete against MVPDs? Do broadcast television stations, collaborating in conjunction with OVDs or other media, have an increased ability to compete with MVPDs?

34. Broadcast Television Conduct. We seek data, information, and comment on the use of multiple linear program streams as a business strategy to enhance a broadcaster's competitive position in the delivery of video programming. What types of programming are broadcasters carrying on their multiple streams? To what extent are broadcasters providing multiple linear streams of video programming to attract viewers to over-the-air video service and away from subscription MVPD service? Digital television allows broadcasters to use part of their digital bandwidth for subscription video, datacasting, and other pay services as long as they maintain their primary broadcast television service. Do broadcasters have business plans to combine and transition some of their digital capacity into a subscription service or to lease a portion of their digital spectrum capacity to others for a subscription service? Are broadcasters using HD programming as a strategy to attract viewers? Has digital transmission benefited television broadcasters? We seek comment on specific benefits that have accrued to broadcasters as a result of the transition. Has the transition benefited households that rely solely on over-the-air television service? If so, we seek information on specific advantages that have accrued to these households. Has the digital transition presented particular difficulties for broadcasters or viewers?

35. We seek data, information, and comment on the business strategies of broadcast television stations as they confront changes in the advertising market, both long-term changes and recent changes brought on by the economic downturn. We also seek information regarding any business strategies to grow revenue through retransmission consent fees paid by MVPDs to broadcast stations for the rights to carry their stations. We seek data on trends in prices for spot and local advertising on broadcast television stations. What prices (per subscriber) are broadcast stations receiving from MVPDs for retransmission consent?

36. To what extent is local broadcast programming available online? How does placing video content online benefit broadcasters? To what extent are broadcast stations tying retransmission consent negotiations with MVPDs for linear programming to online programming?

37. We seek data and comment on the provision of local news as a competitive strategy in the delivery of video programming and the extent to which local news programming is available. We seek comment on the strategies broadcast television stations use to remain the primary distributor of broadcast television network programming, as well as the strategies and partnerships they use to deliver news online. Does the ability to distribute programming online lead some broadcasters to increase their investment in news and information programming or provide news to consumers that might not otherwise be available?

38. What competitive strategies do broadcast television stations use to distinguish themselves from other broadcast television stations? For example, is there local programming other than news used to enhance the competitive position of broadcast stations? We seek data, information, and comment on these other business strategies broadcast television stations use to compete in the delivery of video programming.

39. We seek data, information, and comment on the use of horizontal and vertical mergers to improve the competitive position of broadcast television stations in the delivery of video programming. We seek comment on whether commonly owned stations have a competitive advantage in the delivery of video programming. Do joint sales agreements (JSAs), local marketing agreements (LMAs) and shared services agreements (SSAs) have an effect on independent stations to remain competitive? Does business strategy favor group ownership within a DMA to increase advertising revenue? Does group ownership across DMAs lower prices for video content? Are broadcast television stations that are vertically integrated with a broadcast television network better able to compete in the delivery of video programming?

40. Broadcast Television Performance. We seek information and time-series data for the analysis of various performance metrics for broadcast television. These metrics should include the quantity and quality of broadcast television station programming, viewership from over-the-air, viewership from carriage on MVPDs, prices of advertising, revenue from advertising, revenue from retransmission consent fees, other revenue, investment and innovation, and rate of return/profitability.

41. We seek data, information, and comment on the impact of the transition to digital television on the number of linear broadcast television channels available in each DMA, counting both primary stations and additional multicast programming streams. How many broadcast television stations offer video content in HD? What percentage of their programming is in HD?

42. We seek data, information, and comment on the viewership of broadcast television stations both from over-the-air reception and carriage by MVPDs. What is the trend in total viewership in total household terms? With respect to linear programming, what is the trend in the share of the total audience that broadcast television stations receive relative to the share received by cable networks carried by MVPDs. Some broadcast stations also place some of their programming online. How many households view broadcast television stations online? What share of online viewership are broadcasters receiving?

43. We seek data on broadcast television station revenues, cash flows, and margins. To the extent possible, we seek five-year time-series data to allow us to analyze trends. Specifically, what is the average revenue earned per broadcast television station? We realize that some broadcast stations are integrated with other businesses but are only interested in financial data related directly to the delivered video programming of the broadcast television station, such as the sale of advertising tied to the video programming and retransmission consent fees. What are the major drivers of revenue growth? We also seek data regarding the profitability of broadcast television stations. What metrics and data should we use to measure profitability (e.g., return on invested capital, operating margins)? Are there any other quantitative or qualitative metrics that would add to our analysis of the financial performance of the broadcast television station group?

44. We seek comment on how investment in digital television affects competition among broadcast television stations and with the larger market for the delivery of video programming. We seek data on broadcast television station investment in digital television, the innovations related to this investment, and the financial returns on this investment. What has investment in digital television done to enhance the competitive position of broadcast television stations in the delivery of video programming?

Online Video Distributors

45. OVD Structure. Over the time period we plan to cover in the 14th Report—2007 to 2010—OVDs have made an increasing amount of video programming available to consumers over the Internet. We request, data, information, and comment on the number and size of OVDs. What data sources are available for analysis of the structure of OVDs? We also seek comment on whether individual OVDs view other OVDs as competitors. In addition, to what extent do OVDs compete with MVPDs and/or broadcast television stations?

46. OVD Conduct. What business models and competitive strategies do OVDs use to compete in the delivery of video programming? What challenges do OVDs face? Do OVDs highlight the availability of increasing amounts of online video to attract more viewers and/or subscribers? What media do OVDs use to advertise their service? To what extent is OVD service a substitute for MVPD service? Or, alternatively, is it a complement to MVPD service? How is OVD service advertised? Do OVDs that are not MVPDs have a different business strategy for attracting subscribers than OVDs that are also MVPDs? We seek data, information, and comment on business strategies that tie OVD service to subscription to MVPD service. We seek information on the extent to which OVDs rely on advertising, subscription fees, per-program fees or other sources of revenue, including information on the use of subscription fees. We also seek information on the prices for the programs or the subscriptions charged by OVDs that sell access to video content over the Internet. To what extent do OVDs rely on a combination of advertising and per-program, subscription, or other fees? Is there a trend among OVDs toward greater reliance on charging consumers?

47. OVD Performance. We seek comment on the total amount of video programming available online and the extent to which consumers are viewing video programming offered by OVDs. Has the entry of OVDs in the marketplace resulted in reduced viewership of video programming from MVPDs and broadcast television stations? What metrics should we use to compare OVD viewership, MVPD viewership, and broadcast television station viewership? In what ways have OVDs improved the quantity and the quality of their video programming since our 13th Report? Do OVDs provide local news or other local programming? What financial returns do OVDs earn on their investments? What data are available and what metrics should we use to analyze the extent to which OVDs' services are substitute or a complement to MVPD service?

Geographic Availability

48. Rural Versus Urban. As in previous reports, we expect to compare competition in the market for the delivery of video in rural markets with that in urban markets. For the purpose of measuring the availability of and competition among providers of video programming, how should we define “rural” and “urban”?

49. We seek data, information, and comment to analyze whether there are differences in the delivered video programming between rural and urban areas and the factors that affect these differences. How does competition differ between rural and urban areas? What are the demographic, geographic, and economic factors that drive differences in competition between rural and urban markets? Which, if any, delivered video programming services are most often lacking in rural areas? How does access to broadcast television stations differ between rural and urban areas? We recognize that most households have access to two DBS services—DIRECTV and DISH Network—that provide national service. How does access to other MVPD service differ between rural and urban areas? To what extent do rural areas lack access to a cable system or other wireline MVPD? How many households lack access to a cable system? What percentage of these households are in rural areas? Do rural areas have less access to high-speed Internet service and, therefore, less access to OVD services relative to urban areas?

50. We seek information, data, and comment regarding the differences in the availability and price of delivered video service in rural areas relative to urban areas. When cable service is available in rural areas, are prices higher or quality lower relative to urban markets? Are there examples of rural areas that receive delivered video programming service similar in price and quality to those found in urban areas?

51. Alaska and Hawaii. We seek information and comment regarding MVPD and OVD service in Alaska and Hawaii. We are interested in how the availability of MVPD and OVD services in these states differs from those that are available in the other states. Do consumers in Alaska and Hawaii have the same or similar access to MVPD, broadcast, and OVD services as consumers in the other 48 states? Are prices for subscription to MVPDs higher than those found in other states? Is the same quantity of video programming available and is it offered in programming packages similar to the services in other states? We request updated information on the delivery of video programming to consumers in Alaska and Hawaii relative to that provided in other states.

Key Industry Inputs

52. Video Content Creators. Because MVPDs and broadcast television stations increasingly negotiate directly with content creators for non-linear forms of content distribution, including video on demand and online video distribution, we plan to look more closely at content creators in our 14th Report. Creators of video programming include major studios that are subsidiaries of entertainment conglomerates and independent companies. We request data, information, and comment that will help us analyze the number and size of content creators and the evolving relationship between content creators and the firms that distribute video content. Are there barriers for independent production entities to access the audiences of all delivery systems (including broadcast and online)—not just MVPDs? In addition, we are interested in information regarding entities, local and national, that create news, public interest programming and/or sports and the relationships between the content creators and those that deliver video programming.

53. We seek data, information, and comment on the business strategies of content creators regarding the selling and licensing of video content and the effect on video distribution. How have changes in the creation of content affected the distribution of video programming? Have changes in content creation increased investment in the distribution of video programming? Have changes in the business strategies of content creators regarding the type of video content created, the timing of release of specific video content through the various delivery systems (i.e., the order of delivery technologies used to distribute the programming, a process also called windowing), and the prices charged for content in each window affected competition between distributors of video programming? Have there been significant changes in the bargaining power between content creators and distributors of video programming? How do the windowing strategies of video content creators affect the distribution of video programming through VOD and over the Internet? Have business strategies changed for creators of news programming, especially local news programming? Are there specific strategies that affect the delivery of sports programming that differ from those of creators of other types of video content? We seek data, information, and comment to analyze each of these issues.

54. Video Content Aggregators. We plan to continue to look at traditional video programming and seek data, information, and comment regarding the impact of changes in the aggregation of content on the delivery of video programming. Video content aggregators are entities that combine video content into packages of video programming for distribution. Have changes in the business models of content aggregators affected competition among distributors of video programming? Have there been significant changes in the bargaining power between content aggregators and distributors of video programming? Has entry by new video content aggregators or increased programming channels offered by existing content aggregators lead to an expanded number of channels offered by MVPDs or additional programming offered by broadcast television stations on their multiple digital streams? Have changes in the business models of content aggregators affected the growth of OVDs? Are existing video content aggregators creating additional programming networks and packages, or are new aggregators creating video programming packages? What factors do video content aggregators, including broadcast networks, cable networks, and broadcast stations, consider when deciding the terms of distributing their content?

55. Consumer Premises Equipment. In the 14th Report, we plan to discuss the devices—current and forthcoming—that facilitate the delivery of video programming and examine how these inputs affect competition in the delivery of video programming. We request information on developments relating to consumer premises equipment and services that provide options to consumers for viewing video programming. Further, we seek information on the retail market for set-top boxes, including set-top boxes that do not use CableCARDs such as those sold at retail for use with DBS services. What are the challenges that manufacturers face in investing and innovating in consumer equipment? Can consumers easily compare prices to lease smart video devices from their MVPDs and/or purchase them in retail outlets? Therefore, we request information regarding the different types of consumer premises equipment—both MVPD supplied and non-MVPD supplied—used to access video content and the capabilities thereof. We also seek information and comment on how competition among video programming distributors is affected by developments related to consumer premises equipment, such as electronic programming guides, two-way functionality, and CableCARDs that permit the reception of secured programming services without a leased set-top box, and developments in the regulatory environment for consumer premises equipment. We also request information regarding digital rights management technology and issues that affect the availability of video programming to consumers. We seek information to analyze the relationships between MVPDs that deliver video programming and manufacturers of consumer premises equipment, especially cable and DBS set-top boxes and devices that enable consumers to move video delivered over the Internet to televisions.

Consumer Behavior

56. We seek information about how trends in consumer behavior affect the products and services of providers of delivered video programming. We seek data on trends that compare consumer viewing of regularly scheduled video programming with viewing of time-shifted programming using DVRs, VOD content, and OVD content. Are consumers who are not “cutting” the MVPD cord “shaving” their subscriptions by, for example, substituting Netflix for premium channels or VOD services? Do consumers view OVD service in conjunction with over-the-air broadcast television service as a potential substitute for MVPD service?

57. We seek data, information, and comment on the development of consumer information sources for delivered video programming services and equipment. Do consumers have sufficient information to compare the prices, services, and equipment that video distributors offer? What do consumers consider most important when choosing a provider? What do consumers say are the main reasons for switching providers (e.g., price, quantity, quality)?

Procedural Matters

58. Ex Parte Rules. There are no ex parte or disclosure requirements applicable to this proceeding pursuant to 47 CFR 1.204(b)(1).

59. Comment Information. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/​ecfs2/​ or the Federal eRulemaking Portal: http://www.regulations.gov.
• For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. 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, filers should send an e-mail to [e-mail], and include the following words in the body of the message “get form.” A Sample form and directions will be sent in response.
• Paper Filers: 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, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington DC 20554.
• People with Disabilities: Contact the FCC to request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to [e-mail] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

Federal Communications Commission.

Marlene H. Dortch,

Secretary.