[Federal Register Volume 60, Number 107 (Monday, June 5, 1995)]
[Proposed Rules]
[Pages 29533-29535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13643]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 95-61, FCC 95-186]


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

agency: Federal Communications Commission.

action: Notice of inquiry.

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summary: The Commission is required to report annually to Congress on 
the status of competition in the market for the delivery of video 
programming pursuant to Section 628(g) of the Communications Act of 
1934, as amended. On May 4, 1995, the Commission adopted a Notice of 
Inquiry to solicit information from the public for use in preparation 
of the annual assessment of the status of competition in the market for 
the delivery of video programming that is to be submitted to Congress 
by November 15, 1995. The Notice of Inquiry 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.

dates: Comments are due by June 30, 1995, and reply comments are due by 
July 28, 1995.

addresses: Federal Communications Commission, Washington, DC 20554.

for further information contact: Marcia Glauberman, Cable Services 
Bureau (202) 416-1184 or Martin L. Stern, Office of the General Counsel 
(202) 416-0865.

supplementary information: This is a synopsis of the Commission's 
Notice of Inquiry in CS Docket No. 95-61, FCC 95-186, adopted May 4, 
1995, and released May 24, 1995. The complete text of this Notice of 
Inquiry is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room 239), 1919 M Street NW., 
Washington, DC 20554, and may also be purchased from the Commission's 
copy contractor, International Transcription Service (``ITS, Inc.''), 
(202) 857-3800, 2100 M Street NW., Suite 140, Washington, DC 20037.

Synopsis of the Notice of Inquiry

    1. Section 628(g) of the Communications Act of 1934, as amended 
(``Communications Act''), 47 U.S.C. Sec. 548(g), requires the 
Commission to deliver an annual report to Congress concerning the 
status of competition in the market for the delivery of video 
programming. The Commission submitted its first to Congress in 
September 1994. First Report, CS Docket No. 94-48, summarized in FR 
64657 (December 15, 1994). The Commission expects to submit the 1995 
Competition Report to Congress by November 15, 1995.
    2. When Congress adopted the Cable Television Consumer Protection 
and Competition Act of 1992 (``1992 Cable Act'') and added Section 
628(g) to the Communications Act, it indicated a preference for 
competition over regulation of cable television systems. Congress 
found, however, that sufficient competition to local cable television 
systems did not exist and, as a result, cable operators had undue 
market power compared to that of consumers and video programmers. 
Accordingly, Congress enacted the 1992 Cable Act to promote competition 
and to ensure that consumer interests are protected in the absence of 
effective competition to cable television. A critical element of this 
regulatory framework is to promote the emergence of competition over 
time by fostering the entry of alternative multichannel video 
programming distributors (``MVPDs''). The annual competition report to 
Congress provides an opportunity for the Commission to summarize the 
status of cable television and other video distributors, monitor 
changes in the competitive environment and evaluate the progress that 
is being made in promoting and developing a competitive marketplace for 
the delivery of video programming services.
    3. The Notice of Inquiry (``Notice'') is designed to solicit 
comments and information that the Commission can use to prepare its 
1995 Competition Report. Specifically, the Notice requests information 
concerning the cable industry, existing and potential competitors to 
cable systems, barriers to entry by new competitors, technological 
advances and the prospects for increased competition in the market for 
the delivery of video programming. The Commission expects to use the 
information that is submitted by commenters to supplement publicly 
available information and relevant comments that have been filed in 
other Commission proceedings. The Notice highlights a wide range of 
competitive issues, and offers parties an opportunity to submit 
information on these issues, as well as any other information they 
believe is relevant to an evaluation of competition in market for the 
delivery of video programming.
    4. The Notice begins with an overview of the 1994 Competition 
Report,including a summary of the framework for analyzing competition 
in the market for delivered video programming and the findings 
regarding the status of competition as of September 1994. The 1994 
Competition Report's analytical framework can be summarized as follows: 
(1) Definition of the market; (2) analysis of the status of current and 
potential future participants in the market; (3) examination of the 
conduct of the firms in the market; (4) analysis of market structure 
conditions that may affect competition, with particular emphasis on 
impediments to competition and regulatory efforts to promote 
competition; and (5) evaluation of the overall economic performance of 
the market. In addition, on the basis of its analysis of the status of 
existing and potential competitors to local cable 
[[Page 29534]] systems, the Commission stated that while competitors 
were emerging, alternative video programming distributors were not 
available to a sufficient number of subscribers to create a competitive 
environment in most markets.
    5. The Notice then seeks information and comment on specific issues 
in preparation for the 1995 Competition Report. The Commission first 
addresses the relevant product and geographic markets for delivered 
video programming. In the 1994 Competition Report, the Commission used 
the 1992 Cable Act's definition of ``multichannel video programming 
service'' as a starting point for the relevant product. This definition 
includes cable television, multipoint multichannel distribution service 
(``MMDS'' or ``wireless cable''), direct broadcast satellites (``DBS'') 
and receive-only satellite dishes. The Commission also analyzed the 
status of other MVPDs that were not included in the statutory 
definition, such as satellite master antenna television (``SMATV'') 
systems and video dialtone (``VDT'') service, and other video 
programming distribution media as potential substitutes for cable 
services. With respect to the geographic market, the Commission 
determined that it seemed reasonable to define it, at least 
tentatively, as the local franchising area, although over time this 
definition may be broadened. The Commission seeks comment on whether 
these definitions remain relevant or whether a reassessment of the 
appropriate definitions of product and geographic markets is required.
    6. The Notice then requests data and information about the cable 
television industry, entities using other distribution technologies 
that are already in the market, entities that are potential entrants in 
this market and other technologies that might impact the nature of 
competition in the market for delivery of video programming services. 
Commenters are invited to provide information regarding the cable 
industry, including cable overbuilds, wireless cable systems, SMATV 
systems, direct-to-home satellite services, such as DBS and home 
satellite dishes (``HSDs''), and VDT services. The Notice asks a 
variety of questions concerning each of these video service providers 
and solicits information regarding barriers to entry and the nature of 
the services they provide. The Notice also indicates that the 
Commission intends to examine the effects on competition of broadcast 
television service, video cassette recorders (``VCRs'') and interactive 
video and data services (``IVDS''). In the Notice, the Commission 
states that it expects to explore possible entry of other types of 
firms into the market for the delivery of video programming, such as 
electric utilities, and requests comment on the likelihood of such 
entry and its effect on competition.
    7. The Commission observes that there are technological changes and 
developments that may also affect the structure of the market for the 
delivery of video programming. In this regard, the Notice solicits 
information on digital compression, the hybridization of different 
transmission media used for the distribution of multichannel video 
programming and technologies that will facilitate consumer access to 
various distribution media and services.
    8. In the Notice, the Commission requests comment on the structure 
of the market for the delivery of video programming and the effect of 
this structure on competition. The Commission expects to explore the 
status of horizontal concentration and vertical integration in the 
cable television industry and analyze the market structure conditions 
that may affect competition in markets for the delivery of video 
programming. Information is requested to help the Commission identify 
local markets where cable operators, currently, or may in the near 
future, face competition from other MVPDs. At the national level, the 
1994 Competition Report provided an analysis of multiple system 
operator, or MSO, ownership of cable systems. The Notice seeks data 
regarding the number of subscribers served by individual MSOs, which 
will allow the Commission to continue to monitor industry concentration 
and to assess its effects on the video marketplace. The Commission also 
notes that there has been a trend towards ``clustering,'' or regional 
concentration, of cable system ownership. the Notice invites comment on 
the competitive effects of clustering.
    9. Several provisions of the 1992 Cable Act were intended to ensure 
that vertically integrated cable companies do not impede competition. 
In the Notice, the Commission solicits data to update the information 
presented in the 1994 Competition Report relating to vertically 
integrated and unaffiliated programming services. Thus, the Commission 
seeks information that will allow it to examine affiliation between 
national programming services and cable operators, determine whether 
alternative providers are able to acquire programming services on 
nondiscriminatory terms and assess the degree to which unaffiliated 
programmer are gaining access to cable systems. In particular, the 
Commission ``request[s] comment on whether the program access rules and 
our decisions in response to program access complaints have served 
their intended purpose alleviate [the] problem [that non-cable MVPDs 
faced in acquiring programming services on nondiscriminatory terms].''
    10. The Notice further requests that commenters consider several 
economic market performance indicators that were used in the 1994 
Competition Report to assess the current level of competition. Parties 
are asked to provide appropriate updates wit respect to these 
indicators and to comment on the conclusion drawn in the 1994 
Competition Report regarding these indicators and the appropriate 
methods for assessing market performance. The Commission also seeks 
comment on market structure characteristics that may increase 
competition or pose impediments to competition. Furthermore, comment is 
requested concerning economies of scale and scope in the cable 
industry, regulatory or technological barriers to entry into the market 
for the delivery of video programming and the implications of sunk cost 
investments for competitive entry.
    11. Finally, the Notice seeks recommendations Commission actions, 
if any, to promote further competition in the market for delivered 
video programming. In this regard, parties are asked to explain how 
their proposals would increase competition in the delivery of video 
programming to consumers or enhance the programming distribution 
market.

Administrative Matters

Ex Parte

    12. There are no ex parte or disclosure requirements applicable to 
this proceeding pursuant to 47 CFR 1.1204(a)(4).

Comment Dates

    13. Pursuant to applicable procedures set forth in Sections 1.415 
and 1.419 of the Commission's Rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments on or before June 30, 1995, and reply 
comments on or before July 28, 1995. To file formally in this 
proceeding, participants must file an original and four copies of all 
comments, reply comments and supporting comments. If participants want 
each Commissioner to receive a personal copy of their comments, an 
original plus ten copies must be filed. Comments and reply comments 
should be sent to the Office of the Secretary, Federal Communications 
Commission, Washington, DC 20554. Comments and [[Page 29535]] reply 
comments will be available for public inspection during regular 
business hours in the FCC Reference Center (Room 239) of the Federal 
Communications Commission, 1919 M Street, NW., Washington, DC 20554.

Ordering Clauses

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

List of Subjects in 47 CFR Part 76

    Cable television.

Federal Communications Commission.
LaVera F. Marshall,
Acting Secretary.
[FR Doc. 95-13643 Filed 6-2-95; 8:45 am]
BILLING CODE 6712-01-M