[Federal Register Volume 62, Number 25 (Thursday, February 6, 1997)]
[Notices]
[Pages 5627-5628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2907]


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FEDERAL COMMUNICATIONS COMMISSION
[CS Docket No. 96-133, FCC 96-496]


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

AGENCY: Federal Communications Commission.

ACTION: Notice; Third annual report to Congress.

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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 2, 1997, the Commission released its 
third such annual report (``1996 Report''). The 1996 Report contains 
data and information that summarize the status of competition in 
markets for the delivery of video programming and updates the 
Commission's two prior reports. The 1996 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 61 FR 34409 (July 2, 1996).


[[Page 5628]]


FOR FURTHER INFORMATION CONTACT: Marcia A. Glauberman, Cable Services 
Bureau (202) 416-1184 or Rebecca Dorch, Office of General Counsel (202) 
418-1868.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 1996 
Report in CS Docket No. 96-133, FCC 96-496, adopted December 26, 1996, 
and released January 2, 1997. The complete text of the 1996 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, 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. In 
addition, the complete text of the 1996 Report is available on the 
Internet at http://www.fcc.gov/Bureaus/Cable/WWW/csb.html or at thttp:/
/www.fcc.gov/ogc/articles.html

Synopsis of the 1996 Report

    1. In the 1996 Report the Commission reviews provisions of the 
Telecommunications Act of 1996 (``1996 Act'') that affect competition 
in markets for the delivery of video programming. The Commission 
reports on information about cable industry performance and the status 
of competitive entry by other multichannel video programming 
distributors (``MVPDs''). The Commission also provides information 
about structural issues affecting competition, such as horizontal 
concentration, vertical integration and technological advances. It 
further examines potential obstacles to the emergence of competition 
and reports on competitive responses by industry players that are 
beginning to face competition from other MVPDs.
    2. In the 1996 Report the Commission notes that the 1996 Act 
embodies Congress' intent to promote a ``pro-competitive national 
policy framework'' and eventual deregulation of markets for the 
delivery of video programming. Several of the 1996 Act's provisions are 
intended to remove barriers to competitive entry in video programming 
markets and establish market conditions that promote the process of 
competitive rivalry. Many provisions of the 1996 Act, and the 
Commission's actions to implement them, have the potential for 
fostering increased competition in markets for the delivery of video 
programming.
    3. At present, however, incumbent franchised cable systems are 
still the primary distributors of multichannel video programming. 
Although other MVPDs continue to increase their share of subscribers in 
many local markets for the delivery of video programming, these markets 
generally remain highly concentrated, and structural conditions are 
still in place that could permit the exercise of market power by 
incumbent cable systems. Nationwide, non-cable MVPDs now serve 11% of 
total MVPD subscribers, with cable operators retaining a share of 89%, 
down from 91% last year. Notwithstanding this decrease in cable 
systems' share of total MVPD subscribers, the actual number of cable 
subscribers continues to increase.
    4. Key Findings:
     Status of competition. It remains difficult to predict the 
extent to which competition from MVPDs using non-cable delivery 
technologies will constrain cable systems' ability to exercise market 
power in the future. In a growing but still very limited number of 
instances, incumbent cable system operators face competition from wired 
MVPDs offering similar services. In addition there has been a 
substantial increase in subscribership to direct broadcast satellite 
(DBS) providers offering differentiated services. However, it remains 
difficult to determine the extent to which markets for the delivery of 
video programming will be characterized by vigorous rivalry among many 
MVPDs offering closely substitutable services, or instead will be 
dominated by a few providers facing less vigorous rivalry from other 
MVPDs offering highly-differentiated or niche programming services.
     Industry growth. The cable industry has continued to grow 
in terms of the number of subscribers, penetration, average system 
channel capacity, the number of programming services available, 
revenues, audience ratings and expenditures on programming since the 
Commission's previous report in 1995.
     Horizontal concentration. Nationally, horizontal 
concentration among the top cable multiple system operators (MSOs) has 
continued to increase, but still remains within the moderately 
concentrated range according to standard measures of industry 
concentration. If all MVPDs are included for consideration, national 
concentration falls just above the threshold of the moderately 
concentrated range. In addition, cable MSOs, through acquisitions and 
trades, continue to increase regional clustering, which now accounts 
for service to approximately 50% of all cable subscribers.
     Promotion of entry and competition. Several of the 1996 
Act's provisions are intended to remove barriers to entry and to 
promote competition in markets for the delivery of video programming. 
The Commission has adopted rules implementing the provision creating 
open video systems and the provision preempting certain local 
restrictions on reception devices, including antennas and dishes for 
reception of over-the-air broadcast, wireless cable and DBS signals.
     Vertical integration. Vertical integration of national 
programming services between cable operators and programmers declined 
from last year's total of 51% to just 44% this year, due largely to the 
sale of Viacom's cable system assets. In addition, of the 16 
programming services that were launched since the Commission's previous 
report, 10 are not vertically integrated. Access to programming remains 
one of the critical factors for successful development of competitive 
MVPDs.
     Technological advances. Technological advances are 
occurring that will permit MVPDs to increase both quantity of service 
(i.e., an increased number of channels using the same amount of 
bandwidth or spectrum space) and types of offerings (e.g., interactive 
services). MVPDs continue to pursue new system architectures, upgraded 
facilities, use of increased bandwidth and deployment of digital 
technology.

Ordering Clauses

    5. This 1996 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. Secs. 154(i), 154(j), 403 and 548(g).
    It is Ordered that the Secretary shall send copies of this 1996 
Report to the appropriate committees and subcommittees of the United 
States House of Representatives and the United States Senate.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-2907 Filed 2-5-97; 8:45 am]
BILLING CODE 6712-01-P