[Federal Register Volume 68, Number 15 (Thursday, January 23, 2003)]
[Notices]
[Pages 3252-3253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1459]


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FEDERAL COMMUNICATIONS COMMISSION

[MB Docket No. 02-145, FCC 02-338]


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: This document is in compliance with the Communications Act of 
1934, as amended, which requires the Commission to report annually to 
Congress on the status of competition in the market for the delivery of 
video programming.
    On December 23, 2002, the Commission adopted its ninth annual 
report (2002 Report). The 2002 Report contains data and information 
that summarize the status of competition in markets for the delivery of 
video programming and updates the Commission's prior reports.

FOR FURTHER INFORMATION CONTACT: Marcia Glauberman or Anne Levine, 
Media Bureau (202) 418-7200, TTY (202) 418-7172.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 2002 
Report in MB Docket No. 02-145, FCC 02-338, adopted December 23, 2002, 
and released December 31, 2002. The complete text of the 2002 Report 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, Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-
2890, or e-mail at [email protected]. In addition, the complete text of 
the 2002 Report is

[[Page 3253]]

available on the Internet at http://www.fcc.gov/mb.

Synopsis of the 2002 Report

    1. The 2002 Report provides updated information on the status of 
competition in the market for the delivery of video programming, 
discusses changes that have occurred in the competitive environment 
over the last year, and describes barriers to competition that continue 
to exist. Overall, although competitive alternatives continue to 
develop, cable television still is the dominant technology for the 
delivery of video programming to consumers in the multichannel video 
program distributor (MVPD) services marketplace. As of June 2002, 76.5 
percent of MVPD subscribers received their video programming from a 
franchised cable operator, compared to 78 percent a year earlier.
    2. The number of cable subscribers reached nearly 68.8 million as 
of June 2002, up about 0.4 percent from the 68.55 million cable 
subscribers in June 2001. Although industry data collected for this 
report period reflect continued growth through June 2002, a number of 
major cable system operators have experienced significant subscriber 
losses and calendar year 2002 may be the first year in which the cable 
industry as a whole experiences a net loss of subscribers.
    3. The total number of non-cable MVPD subscribers grew to 21.1 
million as of June 2002 from 19.3 million as of June 2001, an increase 
of more than nine percent. Direct broadcast satellite (DBS) service has 
grown significantly and now represents 20.3 percent of all MVPD 
subscribers. Between June 2001 and June 2002, the number of DBS 
subscribers grew from almost 16 million households to about 18 million 
households, which is significantly higher than the cable subscriber 
growth rate.
    4. Over the last year, the number of subscribers to multichannel 
multipoint distribution service (MMDS) and large dish satellite service 
(HSD) continue to decline. The participation of incumbent local 
exchange carriers in the distribution of video programming also 
continue to decline. The number of subscribers to open video systems 
(OVS) and private cable has remained relatively stable, although their 
market share remains small.
    5. During the period under review, cable rates continued to rise. 
According to the Bureau of Labor Statistics, between June 2001 and June 
2002, cable prices rose 6.3 percent compared to a 1.1 percent increase 
in the Consumer Price Index, which measures general price changes. 
Concurrently with these rate increases, the number of video and non-
video services offered increased and programming costs increased.
    6. As the Commission reported earlier, the four largest incumbent 
local exchange carriers or telephone companies, have largely exited the 
video business. This remains true today. A few smaller local exchange 
carriers continue to offer, or are preparing to offer, MVPD service 
over existing telephone lines. Alternatively, several cable multiple 
system operators continue to offer telephone services. Cable operators 
are beginning to deploy Internet protocol telephony solutions in 
addition to circuit-switched telephone offerings.
    7. The most significant convergence of service offerings continues 
to be the pairing of Internet service with other service offerings. 
Cable operators continue to build-out the broadband infrastructure that 
permits them to offer high-speed Internet access. Like cable, the DBS 
industry is developing ways to bring advanced services to their 
customers. Many MMDS and private cable operators also offer Internet 
services. In addition, broadband service providers continue to build 
advanced systems specifically to offer a bundle of services, including 
video, voice, and high-speed Internet access.
    8. Non-cable MVPDs continue to report that regulatory and other 
barriers to entry limit their ability to compete with incumbent cable 
operators. Non-cable MVPDs continue to experience some difficulties in 
obtaining programming from vertically-integrated cable programmers and 
from unaffiliated programmers which continue to make exclusive 
agreements with operators. In multiple dwelling units potential entry 
may be discouraged or limited because an incumbent video programming 
distributor has a long term and/or exclusive contract. In addition, 
non-cable MVPDs report problems obtaining franchises from local 
governments and difficulties in gaining access to utility poles needed 
to build out their systems.
    9. In sum, the 2002 Report details the status of competitors in the 
market for the delivery of video programming including: Cable systems, 
DBS and home satellite dishes, wireless cable systems, private cable 
operators, broadcast television, local exchange carrier entry, open 
video systems, broadband service providers, Internet video, home video 
sales and rentals, and electric and gas utilities. The report also 
examines market structure and competition by evaluating horizontal 
concentration in the MVPD marketplace; analyzing vertical integration 
between cable television systems and programming services; and 
discussing technical issues such as cable modems, navigation devices 
and emerging services.

Ordering Clauses

    10. The 2002 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. 154(i), 154(j), 403, and 548(g).
    11. The Commission's Office of Legislative Affairs shall send 
copies of the 2002 Report to the appropriate committees and 
subcommittees of the United States House of Representatives and the 
United States Senate.
    12. The proceeding in MB Docket No. 02-145 is terminated.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-1459 Filed 1-22-03; 8:45 am]
BILLING CODE 6712-01-P