[Federal Register Volume 65, Number 158 (Tuesday, August 15, 2000)]
[Notices]
[Pages 49804-49807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20666]


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FEDERAL COMMUNICATIONS COMMISSION

[CS Docket No. 00-132, FCC 00-270 ]


Annual Assessment of the Status of Competition in Markets 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 markets for the delivery of video 
programming. On July 25, 2000, the Commission adopted a Notice of 
Inquiry to solicit information from the public for use in preparing the 
competition report that is to be submitted to Congress in December 
2000. 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 September 8, 2000, and reply comments are 
due by September 29, 2000.

ADDRESSES: Office of the Secretary, Federal Communications Commission, 
445 12th Street, S.W., Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Marcia Glauberman or Donnajean Ward, 
Cable Services Bureau, (202) 418-7200 or TTY (202) 418-7172.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Inquiry in CS Docket No. 00-132, FCC 00-270, adopted July 25, 
2000, and released August 1, 2000. The complete text of this Notice of 
Inquiry 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, D.C. 20554, and may be purchased from 
the Commission's copy contractor, International Transcription Service, 
(202) 857-3800, 1231 20th Street, NW, Washington, D.C. 20036, or may be 
viewed via internet at http://www.fcc.gov/csb/.

Synopsis of Notice of Inquiry

    Section 628(g) of the Communications Act of 1934, as amended, 
directs the Commission to annually report to Congress on the status of 
competition in the market for the delivery of video programming. This 
Notice of Inquiry (``Notice'') is designed to assist the Commission in 
gathering data and information on the status of competition in markets 
for the delivery of video programming for our seventh annual report 
(``2000 Competition Report''). The Commission will report on the 
current state of competition and report on changes in the competitive 
environment since our 1999 Competition Report was submitted to 
Congress.
    We seek information that will allow us 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. We are interested in evaluating the extent to which 
consumers have choices among video programming distributors and 
delivery technologies. We seek to compare video distribution 
alternatives available to consumers. In particular, we seek data that 
will allow us to compare video programming offerings, prices for 
programming services and associated equipment, and any other services 
provided (e.g., telephony, data access). Industry members, interested 
parties, and members of the public should submit information, comments, 
and analyses regarding competition in markets for the delivery of video 
programming.
    In order to facilitate our analysis of competitive trends over 
time, we request data as of June 30, 2000, and ask parties, to the 
extent feasible, to submit data and information that is current as of 
that date. Comments submitted in this proceeding will be augmented with 
information from publicly available sources. In addition, we expect to 
use data collected in recent Commission proceedings and reports such as 
the broadband inquiry pursuant to Section 706, the annual report of 
cable television systems (Form 325), and the annual report on cable 
industry prices.
    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.
    We seek to evaluate video programming distributors in the context 
of an overall video programming marketplace. For this assessment, we 
solicit data and information that will show how broadcast television, 
cable television, telephone, satellite, equipment suppliers and other 
competitors compare in terms of relative size and resources (e.g., 
revenues) and indicate the extent to which participants have the 
ability to enter each others' markets. We request data that measures 
the audience reach of large video programming distribution firms as 
well as their control over the video market and information on the 
ability of video distributors to expand into new markets such as local 
telephony and data services.
    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. Beginning with the 1992 Cable Television Consumer 
Protection and Competition Act of 1992 (``1992 Act''), Congress removed 
several barriers to competition. The Telecommunications Act of 1996 
(``1996 Act'') seeks to extend the pro-competitive provisions of the 
1992 Act and to establish a ``pro-competitive de-regulatory national 
policy framework'' for the telecommunications industry by increasing 
opportunities for firms not traditionally associated with the provision 
of video services to enter into the video marketplace. The 1996 Act 
repealed the prohibition against an entity holding attributable 
interests in a cable system and a local exchange carrier (``LEC'') with 
overlapping service areas as well as removing regulatory barriers to 
the entry of public utility holding companies into telecommunications, 
information services.
    For this year's report, we seek comment and information on the 
extent to which changes in the Communications Act and the

[[Page 49805]]

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. For example, the prohibition on cable 
exclusivity in the program access rules ceases to be effective on 
October 5, 2002, unless the Commission finds that the prohibition 
continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming. The Commission is 
required to begin a proceeding to review these rules in 2001, 
therefore, we seek comment on the standards that should be employed in 
this review and on the process for undertaking it.
    In addition, 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% of households within the United States and are 
subscribed to by 70% of those households, the Commission may promulgate 
any additional rules necessary to provide diversity of information 
sources. We seek, through data gathered in this proceeding, to 
determine if the cable industry has reached the benchmarks specified in 
this provision and seek comment on how the requirements of this 
provision should be met.
    As in previous reports, we seek factual information and statistical 
data about the current status of incumbent video programming 
distributors and any changes that have occurred during the past year. 
We also seek the following financial information for each video 
distribution firm.
    In addition, we seek information and analysis on the degree to 
which viewers or consumers consider the different types of video 
programming distributors to be substitutes. We request any information 
available on the extent to which customers have switched from one 
provider or technology to another one. We request that commenters 
provide information on those factors responsible for the switch, such 
as relative prices, service offerings, availability or lack of 
``favorite'' programming, technical problems, ease of use, or special 
features available with a specific technology. 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.

Cable Television

    Last year, we reported that franchised cable operators had 
approximately 67 million subscribers and an 82% share of the 
multichannel video programming distribution market. We also reported 
increases in cable subscribership, channel capacity, and viewership. 
Have these increases recurred this year? We seek to update and refine 
our report on the performance of the cable television industry and 
request data and comments on the current state of competition in this 
segment of the video programming distribution market. We invite comment 
and request data on cable television's financial performance, capital 
acquisition and disposition, system transactions, rates, programming 
costs, subscribership, viewership, and new service offerings.
    We further seek comment on how cable operators package programming 
for consumers. Are cable operators restructuring their programming 
tiers now that cable programming service tier (''CPST'') rate 
regulation has ended? If so, to what extent are operators shifting 
programming from the basic service tier (''BST'') to the CPST and 
creating smaller basic tiers (i.e., ``lifeline'' tiers)? To what extent 
are operators shifting services to create uniform program offerings 
across their regional or clustered systems? We are interested in 
information on whether, and if so how, cable operators are 
restructuring their programming packages and tiers of service as a 
result of actual or potential competition. We also seek comment on 
whether, and to what extent, these efforts are intended to 
differentiate cable service from that of competing video services.

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? How do 
DBS rates for a package of programming and equipment compare to 
equivalent packages offered by cable?
    On November 29, 1999, the Satellite Home Viewer Improvement Act of 
1999 (``SHVIA'') became law. One of the key elements of the SHVIA is 
that it permits satellite carriers to offer their subscribers local TV 
broadcast signals in their local markets, through an option referred to 
as ``local-into-local.'' We seek data and information on the number of 
markets where local-into-local service is offered, or will be offered 
in the near future, including the number and affiliation of the 
stations carried.

Broadcast Television

    In this Notice, we seek information on the role of broadcast 
television in market for distributing video programming. We request 
information regarding the extent to which broadcast television competes 
as a distribution medium with multichannel video programmers for 
audiences or for advertising revenue.
    Broadcasters are in the process of rolling out digital television 
(``DTV''). Currently, there are close to one hundred television 
stations broadcasting over-the-air in digital format. While the 
Commission undertakes a review of the digital television rollout every 
two years, its focus is on the technical buildout of systems rather 
than the role of DTV in markets for the delivery of video programming 
that is our focus.

Wireless Cable

    In the 1999 Competition Report, we reported an almost 18% decline 
in MMDS video subscribers. The decline in subscribership is a trend 
that has continued from previous years. However, the industry is in the 
process of expanding service offerings to include two-way 
communications services, such as Internet. What effect will this have 
on MMDS subscribership trend and what effect does the decline of MMDS 
subscribership have on the status of video competition and consumer 
choice? We request fact-based projections and forecasts on the future 
of video programming distribution via MMDS technology.

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 multiple dwelling units (``MDUs'') such as 
apartment buildings. The 1999 Competition Report noted growth in SMATV 
subscribership based on the comments of the National Cable Television 
Association. As was reported, the increase in SMATV subscribers may be 
attributable to the inexact method used for estimating SMATV 
subscribers. In order to provide the most accurate and reliable 
estimate of SMATV subscribership, we request data for SMATV markets, 
including subscribership levels, service areas, and

[[Page 49806]]

the identities of the largest operators. We also request information on 
the types of services offered by SMATV providers and the price charged 
for those services. How do the programming packages offered and the 
price of SMATV service compare to those of incumbent cable operators?

Open Video Systems

    We request information on the operation of open video systems, 
including the number of homes passed, the number of subscribers, and 
the types of services being offered on OVS. To what extent are open 
video systems joint ventures between video service providers and other 
entities (e.g., utility companies, Internet service providers) and what 
are the arrangements among the participants in such ventures? An OVS 
operator must make channel capacity available for use by unaffiliated 
programmers. Are unaffiliated programmers seeking carriage on open 
video systems? How many programmers and what type of programming is 
being offered on this basis?

Local Exchange Carriers and Utilities

    For the 2000 Competition Report, we request information regarding 
LECs, long distance telephone companies, and utility companies that 
provide video services. What delivery technologies are being used? Is 
the entity providing video services as part of a joint venture? With 
respect to LECs, we request information about the current status of 
their activities and any changes that have occurred since the 1999 
Competition Report. In addition, we request updated information on 
franchised cable systems operated by LECs, both within their telephone 
services areas and outside those regions.

Home Video

    In 1990, the Commission concluded that home video provides 
competition to cable television, at least with respect to the premium 
and pay-per-view programming services. Subsequently, we have reported 
on developments in the home video marketplace in our annual reports. We 
seek comment on whether these technologies should continue to be 
considered competitors with broadcasting and multichannel video 
programming distributors given the changes in the marketplace. We also 
seek information and updated statistics regarding home video sales and 
rental market.

Internet Video

    We also seek comment and fact-based projections as to when and if 
Internet video will become a viable competitor in the market for the 
delivery of video programming. We request information on the 
technological, legal, and competitive factors that may promote or 
impede the provision of video over the Internet. What technical 
parameters must be established and what technical, economic, or 
regulatory barriers exist to prevent Internet or DSL delivered video 
becoming an effective competitor to the more established distribution 
systems?

Programming Issues

    In past years, we have relied heavily on publicly available 
information and data from a variety of sources to compile our profile 
of video programming practices and ownership. For this year's report, 
in order to get the most accurate picture of MSO ownership in national 
video programming services, we ask video distributors to supply us 
directly with programming information.
    We request information on recently launched programming and planned 
programming launches. We seek ownership information for each new and 
planned programming service. We also ask commenters to provide the 
actual launch date for new services and the currently scheduled launch 
date for planned services? To what extent does the success of a new 
programming service depend on the tier of service on which it is 
placed? To what extent does the success of a new programming service 
depend on its being associated with one of the largest cable system 
operators? To what extent does the success of a new programming service 
depend on its being associated with the brand name of an existing 
channel?
    As in previous reports, 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.

Technical Advances

    Cable operators and other video programming distributors continue 
to develop and deploy advanced technologies that allow them to deliver 
additional video programming and options, high speed data access, 
telephony service and other services to consumers. In this section, we 
request information on the various aspects of these technical advances 
and how they affect competition in the markets for video programming.

System Upgrades

    Cable operators have made substantial investments to upgrade their 
plant and equipment to increase channel capacity, create digital 
services, or offer advanced services such as high-speed, switched, 
broadband telecommunications capability. We seek information on whether 
these investments are continuing at the same pace as in previous years 
and what role, if any, the ability to provide advanced broadband 
services plays in attracting and retaining subscribers to cable firms.

Convergence

    In the 1999 Competition Report, we observed that the most 
significant convergence of service offerings has been the pairing of 
Internet service with video services. One method of implementing this 
convergence is through the widespread deployment of modems by cable 
operators. Cable firms have begun finalizing the technical standards 
(Data Over Cable Service Interface Specification or ``DOCSIS'') 
intended to provide manufacturers with a set of standards that will 
enable the production of interoperable cable modems. We seek comment on 
the current and future effect of video programming distributors 
providing Internet and other data services to their subscribers.

Consumer Equipment

    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.
    Along with cable modems, cable operators are also deploying set-top 
boxes, integrated receiver/decoders, and navigation devices or 
receivers that facilitate or differentiate video distributors' service 
offerings. Thus, we seek comment on the compatibility and availability 
of customer premises equipment used to provide video programming 
services. Specifically, we ask commenters to provide information 
regarding the development of specifications for interoperable set-top 
boxes, including updated information on the progress of Cable 
Television Laboratories, Inc.'s OpenCable process. We also seek 
information on the retail availability of navigation devices to 
consumers. What types of devices are available at retail and what are 
their capabilities? Is existing equipment compatible with the 
OpenCable? Finally, to what extent are consumers now purchasing 
equipment, including DOCSIS compliant cable modems rather than renting 
from video programming distributors?

[[Page 49807]]

Electronic Programming Guides

    An electronic programming guide (``EPG'') is a software-based 
service or device offered by cable operators and other video 
programming distributors to consumers to navigate, organize, and 
differentiate video program offerings. For this year's report, we 
request updated information on the extent to which video programming 
distributors offer or plan to offer EPGs to their subscribers. We ask 
commenters to provide data on the number and different types of 
available electronic programming guides. We are interested in whether 
each EPG is nationally or locally produced and whether nationally 
distributed EPGs can be customized for local program offerings. We seek 
information regarding the ownership of nationally distributed EPGs, 
particularly with respect to their affiliation with video programming 
distributors.

Case Studies

    In recent Competition Reports, we presented several case studies of 
local markets where cable operators faced actual competition from new 
entrants. This year, we request information on the effects of actual 
and potential competition in local markets where consumers have a 
choice among video programming distributors. In particular, we seek 
updated information on video programming services in those areas 
included in our previous case studies to determine whether the initial 
effects of competition continue. We also seek data regarding other 
areas where head-to-head competition exists, or is expected to exist in 
the near future, between cable and other video programming 
distributors, or among various types of video programming distributors. 
How has such competition affected prices, service offerings, quality of 
service, and other relevant factors? What regulatory changes have 
facilitated head-to-head competition in local markets between or among 
video programming distributors? What barriers still exist which inhibit 
further competition?

Ex Parte

    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

    Pursuant to applicable procedures set forth in 47 CFR 1.415 and 
1.419, interested parties may file comments on or before September 8, 
2000 and reply comments on or before September 29, 2000. Comments may 
be filed using the Commission's Electronic Comment Filing System (ECFS) 
or by filing paper copies.
    Comments filed through the ECFS can be sent as an electronic file 
via the Internet to http://www.fcc.gov/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 [email protected], 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.
    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 is Marcia Glauberman at (202) 
418-7200, TTY (202) 418-7172, or at [email protected].
    Parties who choose to file by paper should also submit their 
comments on diskette. These diskettes should be submitted to Marcia 
Glauberman, 445 12th Street, S.W., Room 3-A738, Washington, D.C. 20554. 
Such a submission should be on 3.5 inch diskette formatted in an IBM 
compatible format using Microsoft Word for Windows 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 labelled with the commenter's name, proceeding (including the 
lead docket number in this case [CS Docket No. 00-132]), type of 
pleading (comment or reply comment), 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, preferable in a single electronic 
file. In addition commenters must send diskette copies to the 
Commission's copy contractor, International Transcription Service, 
Inc., 1231 20th Street, NW., Washington, DC 20036.

Ordering Clause

    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.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 00-20666 Filed 8-14-00; 8:45 am]
BILLING CODE 6712-01-P