[Federal Register Volume 66, Number 129 (Thursday, July 5, 2001)]
[Notices]
[Pages 35431-35435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16792]


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FEDERAL COMMUNICATIONS COMMISSION

[CS Docket No. 01-129, FCC 01-191]


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

AGENCY: Federal Communications Commission.

ACTION: Notice.

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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. This document solicits information from the public for use 
in preparing the competition report that is to be submitted to Congress 
in December 2001. The document 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 on or before August 3, 2001, and reply comments 
are due on or before September 5, 2001.

ADDRESSES: Office of the Secretary, Federal Communications Commission, 
445 12th Street, SW., Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Marcia Glauberman, Cable Services 
Bureau, (202) 418-7200, TTY (202) 418-7172 or via Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Inquiry in CS Docket No. 01-129, FCC 01-191, adopted June 20, 
2001, and released June 25, 2001. The complete text of this Notice 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, DC 20554, and may be purchased from the 
Commission's copy contractor, International Transcription Service, 
(202) 857-3800, 1231 20th Street, NW, Washington, DC 20036, or may be 
viewed via Internet at http://www.fcc.gov/csb/.

[[Page 35432]]

Synopsis of Notice of Inquiry

    1. Section 628(g) of the Communications Act of 1934, as amended, 
directs the Commission to report annually to Congress on the status of 
competition in the market for the delivery of video programming. This 
Notice of Inquiry (``Notice'') solicits data and information on the 
status of competition in the market for the delivery of video 
programming for our eighth annual report (``2001 Report''). The 
Commission will report on the current state of competition and report 
on changes in the competitive environment since our 2000 Report.
    2. We seek information, comment and analyses that will allow us to 
compare video delivery technologies and 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. The accuracy and the usefulness of the 2001 Report are 
directly related to the information we receive from commenters. To the 
extent feasible, we request data as of June 30, 2001, to facilitate our 
analysis of competitive trends over time. Comments submitted in this 
proceeding will be augmented with information from publicly available 
sources.

Competition in the Market for the Delivery of Video Programming

    3. 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.
    4. 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. The Telecommunications Act of 1996 (``1996 Act'') 
extended the pro-competitive provisions of the Cable Television 
Consumer Protection and Competition Act of 1992 (``1992 Act'') and 
established a ``pro-competitive de-regulatory national policy 
framework'' for the telecommunications industry. For this year's 
report, we seek comment and information on the extent to which changes 
in the Communications Act and the 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.
    5. One goal of the 1992 and 1996 Acts is to promote competitive 
choices for consumers. To what extent do consumers have multiple 
options for video programming services? We seek data regarding areas 
where head-to-head competition exists between cable and other video 
programming distributors, or among various types of video programming 
distributors. As in previous Reports, we request information for case 
studies on the effects of competition in local markets where consumers 
have a choice among video programming distributors.
    6. For consumers to have access to competitive alternatives for 
video services, video programming distributors must have access to 
programming and other services as well as the facilities needed to 
distribute these services. We seek information regarding video 
programming distributors' ability to acquire or license programming. We 
also note that the prohibition on exclusive contracts in the program 
access rules ceases to be effective on October 5, 2002, unless the 
Commission finds that the prohibition continues to be necessary. We 
seek suggestions on the methods we should use to evaluate whether this 
provision of the program access rules is still needed.
    7. We also recognize that new service offerings (e.g., data access, 
telephony, video-on-demand, interactive television) and new ways of 
offering service (e.g., personal video recorders, streaming video) are 
being deployed by a number of different video delivery technologies. 
Are there economic, technical or regulatory factors influencing the 
ability of providers to include these services along with more video 
programming? We also request comment on whether the ability to offer 
advanced services (e.g., telephony, data access) affects competition in 
the video marketplace?
    8. Video programming distributors must be able to deliver their 
services to consumers. In this regard, we seek comment and information 
regarding the ability of video programming distributors to have access 
to rights-of-way, pole attachments, conduits, and ducts for the 
delivery of their services to consumers. We also seek to update our 
information on video delivery competition for and within multiple 
dwelling units (``MDUs''), which we consider a separate submarket.
    9. As in previous Reports, we seek factual information and 
statistical data about the current status of each type of video 
programming distributor and any changes that have occurred during the 
past year. For each video programming distribution technology, we seek 
information on: (1) The number of homes passed by wired technologies; 
(2) the number of homes capable of receiving service by wireless 
technologies; (3) the number of video distribution firms in a given 
industry; (4) the number of subscribers and penetration rates; (5) 
channel capacities and the number, type, and identity of video 
programming channels offered; (6) prices charged for the various 
programming packages offered; and (7) industry and firm financial 
information, such as revenues, in the aggregate and by source (e.g., 
programming, advertising), cash flow, and expenditures. 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.
    10. Cable Television. We seek to update and refine our report on 
the performance of the cable television industry. We invite comment and 
request data on cable television's financial performance, capital 
acquisition and disposition, system transactions, rates, channel 
capacity, programming costs, subscribership, viewership, and new 
service offerings.
    11. 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 percent of households within the U.S. and are subscribed to by 70 
percent of those households, the Commission may promulgate any 
additional rules necessary to provide diversity of information sources. 
In the 2000 Report, we found that both benchmarks had not been met. 
Have there been any developments in the last year that would change 
this determination? With respect to channel capacity, we request data 
on the distribution of cable systems and cable subscribers classified 
by channel capacity. We also seek information on the extent to which 
cable operators currently are using all their required set-aside 
channels for the carriage of local broadcast signals, pursuant to 
sections 614 and 615 of the Communications Act. We further note that, 
under 47 CFR 76.921, the exception to the ``buy through prohibition'' 
expires on October 5, 2002. Are there cable systems that will not meet 
the October 2002 deadline for the capability to allow ``buy-through'?
    12. We seek information on mergers, acquisitions, consolidations, 
swaps and

[[Page 35433]]

trades, cross-ownership, and other structural development that affect 
the delivery of video programming. For the past several years, cable 
operators have engaged in a strategy of buying and/or swapping cable 
systems to create regional clusters cable systems. We request comment 
on the practice of clustering and its effect on competition in the 
video programming distribution market. We also are interested in 
learning whether noncable video programming distributors (e.g., MMDS, 
SMATV) cluster their systems.
    13. We further seek comment on whether cable operators are changing 
the way they package programming. To what extent are cable operators 
offering smaller basic tiers (i.e., ``lifeline'' tiers) or shifting 
programming from the basic service tier (``BST'') to cable programming 
service tier (``CPST'') or from these tiers to digital tiers? To what 
extent are operators shifting services to create uniform program 
offerings across their regional or clustered systems?
    14. 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? We request data that will allow us to compare 
DBS and cable rates for programming packages and equipment.
    15. Some of the increase in DBS's share of multichannel video 
programming distributor (``MVPD'') subscribers has been attributed to 
the carriage of local broadcast stations (``local-into-local service'') 
by DBS operators, pursuant to the Satellite Home Viewer Improvement Act 
of 1999 (``SHVIA''). We request updated information on the number of 
markets where local-into-local service is offered and the percent of 
DBS subscribers opting for such packages.
    16. Broadcast Television. We seek information on the role of 
broadcast television in market for the delivery of video programming. 
We request information regarding the extent to which broadcast 
television competes as a distribution medium with multichannel video 
programmers for audiences and for advertising revenue. We seek 
information on the number and percentage of households that rely on 
over-the-air broadcast television reception for some or all the 
television sets in their homes.
    17. Broadcasters are in the process of rolling out digital 
television (``DTV''). We request comment on the role of DTV in the 
market for the delivery of video programming. We request information 
regarding the amount and type of DTV programming currently being 
offered. We also seek information on the sales of DTV consumer 
equipment and factors affecting consumer adoption of DTV equipment. 
Further, in conjunction with the on-going consideration of issues 
relating to the carriage of DTV stations by cable operators, we seek 
information and comment on DTV carriage agreements between broadcasters 
and cable operators.
    18. Wireless Cable. In the 2000 Report, we reported an almost 15 
percent decline in MMDS video subscribers, a trend that has continued 
from previous years. We observed that the MMDS industry provides 
competition to the cable industry for MVPD service only in limited 
areas and that the industry is transitioning from offering video 
programming to offering data service. What effect will this transition 
have on the status of MMDS as a competitor in the market for the 
delivery of video programming and consumer choice?
    19. 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 MDUs, 
such as apartment buildings. The 2000 Report noted that SMATV 
subscribership has remained relatively unchanged in recent years, but 
we recognized that our estimate of SMATV subscribership may be inexact 
since the SMATV industry consists of hundreds of small and medium size 
firms. To provide the most accurate and reliable estimate of SMATV 
subscribership, we request data for SMATV markets, including 
subscribership levels, service areas, the identities of the largest 
operators, types of services offered, and the price charged for those 
services.
    20. Open Video Systems. We request data on the status of open video 
systems, including the number of homes passed, the number of 
subscribers, the types of services offered, the packaging of services, 
and the cost of services. To what extent are open video systems joint 
ventures between video service providers and other entities (e.g., 
utility companies, Internet service providers)? An OVS operator must 
make channel capacity available for use by unaffiliated programmers. We 
solicit information on unaffiliated programmers seeking carriage on 
open video systems and the number and types of such programming. Under 
the City of Dallas, Texas v. FCC decision, local governments have the 
ability to impose franchise requirements on OVS operators. What effect 
has this decision had on the growth of OVS?
    21. Local Exchange Carriers and Utilities. For the 2001 Report, we 
request information regarding LECs, long distance telephone companies, 
and utility companies that provide video services. In the 2000 Report, 
we found that the rate of entry by LECs appeared to be slowing even by 
the most aggressive telephone companies, and several LECs have reduced 
or eliminated their MVPD efforts. With respect to LECs, we request 
information about the current status of their activities and any 
changes that have occurred since the 2000 Report.
    22. Broadband Providers. In previous Reports, in the context of 
overbuilding, we mentioned several broadband providers, which are newer 
firms that are building state-of-the-art facilities-based networks to 
provide video, voice and data services over a single network. We note 
that some broadband providers offer video services as franchised cable 
operators and some have obtained OVS certification. We seek information 
regarding broadband providers, including data on the geographic 
locations of such systems, and whether they operate as franchised cable 
systems or some other model. We also ask for information regarding the 
number of homes passed, the number of subscribers, video service 
packages offered, non-video service offerings in combination with video 
services, and the rates charged for the various packages. What are the 
technical, economic and regulatory obstacles to the successful 
operation of systems of this type?
    23. Home Video Sales and Rentals. The Commission has considered 
home video sales and rentals as part of the video marketplace because 
they offer services similar to premium and pay-per-view programming 
services. The home video marketplace includes videocassettes, DVDs, 
laser discs, and personal video recorders (``PVRs''). For the 2001 
Report, we seek information and updated statistics regarding the home 
video sales and rental market.

Convergence of Services and Technologies

    24. Convergence of Service Offerings. The 1996 Act removed barriers 
to LEC

[[Page 35434]]

entry into the video marketplace in order to facilitate competition 
between incumbent cable operators and telephone companies. In the 2000 
Report, as in previous years, we found that the expected technological 
convergence between telephone and cable companies had not yet occurred. 
However, we observed that the most significant convergence of service 
offerings has been the pairing of Internet service with video services 
by a wide range of companies throughout the communications industries. 
We request information on the current state of high-speed data 
offerings by each delivery technology and comparable statistics on the 
availability of such service, the cost of such service, the number of 
homes to which the service is available, and the number of subscribers 
of these services. What effect, if any, does the provision of these 
ancillary services have on competition in the video marketplace?
    25. Convergence of Television and the Internet. A number of recent 
developments point to the convergence of television and the Internet. 
In recent Reports, we addressed Internet video, i.e., real-time and 
downloadable video accessible over the Internet. We seek comment as to 
if, and when, Internet video will become a viable competitor in the 
market for the delivery of video programming. We also solicit 
information on the technological, legal, and competitive factors that 
may promote or impede the provision of video over the Internet.
    26. In the 2000 Report, we observed that interactive television 
(``ITV'') services were beginning to be offered through cable, 
satellite, and terrestrial technologies. ITV combines television with 
many of the functions of the personal computer (``PC''). We seek 
comment on the development and deployment of these services, 
specifically the types of services being offered and the technologies 
used to provide them to consumers. We also seek information on 
electronic program guides (``EPGs''), which are sometimes considered an 
ITV service.

Programming Issues

    27. For the 2001 Report, we seek information that will allow us to 
update our information on existing and planned national and local/
regional programming services and to assess the extent to which video 
programming services are affiliated with cable multiple system 
operators (``MSOs''). We also request data on the extent to which there 
are programming networks affiliated with noncable video programming 
distributors and whether such programming networks are available to 
competitors, including cable operators. We request comment on whether 
there are certain programming services (i.e., ``marquee'' program 
services) or types of services (e.g., movie, sports, or news channels) 
without which competitive video service providers may find themselves 
unable to effectively compete. We further seek information and comment 
regarding public, educational, and governmental (``PEG'') access and 
leased access channels.
    28. In the 2001 Report, 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. In particular, we seek information on cases 
of video programming distributors being denied programming when a 
satellite-delivered service becomes terrestrially-delivered, or being 
denied programming by non-vertically integrated programmers?

Technical Advances

    29. Cable operators and other video programming distributors 
continue to develop and deploy advanced technologies, especially 
digital compression techniques, to increase their capacities and to 
enhance the capabilities of their transmission systems. We request 
information on the various aspects of these technical advances, 
including information on investments in facilities and equipment 
upgrades by cable and other MVPDs. 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. We solicit updated information on the developments 
regarding consumer equipment.

Procedural Matters

Ex Parte

    30. 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

    31. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's Rules, interested parties may file comments 
on or before August 3, 2001, and reply comments on or before September 
5, 2001. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies.
    32. 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.
    33. 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 Marcia Glauberman at 
(202) 418-7046, TTY (202) 418-7172, or at [email protected].
    34. Parties who choose to file by paper should also submit their 
comments on diskette. Parties should submit diskettes to Marcia 
Glauberman, Cable Services Bureau, 445 12th Street SW., Room 3-A738, 
Washington, DC 20554. Such a submission should be on a 3.5-inch 
diskette formatted in an IBM compatible form using MS DOS 5.0 and 
Microsoft Word, 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 labeled with the party's name, 
proceeding (including the lead docket number in this case [CS Docket 
No. 00-129]), type of pleading (comments or reply comments), 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, 
referable in a single electronic file. In addition, commenters must 
send diskette copies to the

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Commission's copy contractor, International Transcription Service, 1231 
20th Street, NW., Washington, DC 20036.

Ordering Clause

    35. 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.
Magalie Roman Salas,
Secretary.
[FR Doc. 01-16792 Filed 7-3-01; 8:45 am]
BILLING CODE 6712-01-U