[Federal Register Volume 68, Number 151 (Wednesday, August 6, 2003)]
[Notices]
[Pages 46635-46638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20038]


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FEDERAL COMMUNICATIONS COMMISSION

[MB Docket No. 03-172; FCC 03-185]


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

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 2003. 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 September 11, 2003, and reply 
comments are due on or before September 26, 2003.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION, CONTACT: Andrew Wise, Media Bureau at (202) 
418-7026 or via e-mail at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Inquiry (NOI), MB Docket No. 03-172, adopted July 22, 2003, 
and released July 30, 2003. The full text of this NOI is available for 
inspection and copying during normal business hours in the FCC 
Reference Information Center, Portals II, 445 12th Street, SW., Room 
CY-A257, Washington, DC 20554, and may 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) 863-2898, or via e-mail [email protected] or 
may be viewed via the Internet at http://www.fcc.gov/mb/.

Synopsis of the Notice of Inquiry

    1. Section 628(g) of the Communications Act of 1934, as amended, 
directs the Commission to report to Congress annually on the status of 
competition in the market for the delivery of video programming. This 
Notice of Inquiry (NOI) solicits data and information on the status of 
competition in the market for the delivery of video programming for our 
tenth annual report (``2003 Report''). We request information, 
comments, and analyses that will allow us to evaluate the status of 
competition in the video marketplace, prospects for new entrants to 
that market, and the effect of competition on the industry groups 
involved and on consumers.
    2. In previous years, we have focused only on the current state of 
competition and changes in the competitive environment since the prior 
year's Report. Since the 2003 Report will be the tenth one, we have 
decided to take a broader view of the video marketplace, and to examine 
changes in the industry over the year since the last report, and in the 
period since the first report in 1994. Thus, we invite comments and 
submissions of data on the current state of competition in the video 
programming industry, prospects for future competition, and changes in 
the market since the 2002 Report, over the last five years (i.e., since 
1998), and in the decade since 1994. We also seek comment, data and 
analyses on trends in the market, and comments on the factors that have 
facilitated or impeded changes in the competitive environment over 
these time periods.
    3. The accuracy and usefulness of the 2003 Report is directly 
related to the data and information we receive from commenters that 
respond to this NOI. To facilitate our analysis of competitive trends 
over time, we request data as of June 30, 2003. For our historical 
review, we also request that, whenever possible, commenters submit data 
as of June 30 of the appropriate year. Comments submitted in this 
proceeding will be augmented with information from publicly available 
sources and submissions in other Commission proceedings.

Competition in the Market for the Delivery of Video Programming

    4. 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'') providers, home satellite dish (``HSD'') providers, 
private cable or satellite master antenna television (``SMATV'') 
systems, open video systems (``OVS''), multichannel multipoint 
distribution services (``MMDS''), broadband service providers 
(``BSPs''), and over-the-air broadcast television stations.
    5. We ask commenters to provide information on the most significant 
changes or developments in the past year, last five years and ten 
years. Specifically, we seek information regarding each of the video 
programming distributors, including the number of homes passed, the 
number of subscribers, the services offered, the cost for various 
service options, financial information on each industry, ownership 
information, and data on investments in plant and facility upgrades.
    6. We seek information on industry and market structure and the 
effect of existing Commission regulations and other provisions of the 
law on competition in the video marketplace. We seek comments and data 
on consumer access to more than one video programming distributor, such 
as homes passed, on the number of households subscribing to one or more 
multichannel video programming distributor (``MVPD''), and on the 
number of households relying on over-the-air broadcast television for 
one or more of their television sets. In this context, we seek comment 
on mechanisms for ascertaining or estimating the extent of ``effective 
competition'' beyond the statutory definition of this term. We also 
seek data on relative prices to help us investigate the substitution 
between MVPD technologies, and information on how competition has 
affected prices, service offerings, and quality of service.
    7. We request comment on any factors that are unique to competition 
in the multiple dwelling units (``MDUs'') submarket. We also seek 
information on what barriers to entry exist in the market. 
Specifically, we request comment on the ability of video programming 
distributors to gain access to programming, rights-of-way, pole 
attachments, conduits, and ducts for the delivery of their services to 
consumers.
    8. We ask commenters to provide data on existing and planned 
national and local programming services, and their ownership. We seek 
information on the extent to which programmers are affiliated with 
video programming distributors and to what extent programming 
distributors, both broadcast and non-broadcast programming services, 
are involved in the production of the programming they

[[Page 46636]]

provide, vertically integrated or not. Further, we request data on 
programming services including the scope of service, launch date, 
identification of ownership, and number of subscribers. To what extent 
are video programming distributors able to acquire or license 
unaffiliated programming? What is the extent to which video programming 
distributors are and have been able to acquire or license non-
vertically integrated programming? To what extent are non-cable MVPDs 
producing their own programming or securing exclusive rights to certain 
programming services? Are there certain programming services or types 
of services without which competitive video service providers may find 
themselves unable to compete effectively? We also ask for information 
on how video programming distributors package their programming. In 
addition, we seek comment as to whether non-vertically integrated 
programming channels and independently produced programming are able to 
gain distribution to consumers.
    9. Further, we request comment regarding children's, locally-
originated, local news, community affairs, and non-English programming. 
To what extent do cable operators offer public, educational, and 
governmental (``PEG'') access and leased access channels? Commenters 
are asked to provide information regarding the programming provided by 
DBS operators in compliance with their public interest obligations. We 
request comment on the effectiveness of our program access, program 
carriage, and channel occupancy rules. We seek information regarding 
video programming providers' experiences offering closed captioning and 
video description.
    10. We also ask for information on advanced service offerings 
(e.g., high-speed Internet access services, telephony, video-on-demand, 
high definition television, interactive television) and new ways of 
offering service (e.g., personal video recorders, streaming video) that 
are being deployed by video programming distributors. Specifically, we 
request information regarding the amount and type of programming being 
offered in high-definition television (``HDTV'') format. We seek 
updated statistics such as the cost of such services, the 
subscribership to these services, and the number of homes to which each 
type of service is available. Further, we seek information on the 
impact that the availability of non-video services offered by video 
programming providers has on the nature of competition in the video 
marketplace. In addition, to what extent do MVPDs offer video and non-
video services together? How are the combined services offered and 
priced? We request comment on the number and types of electronic 
program guides (``EPGs'') that video programming distributors offer or 
plan to offer and the technologies used to distribute them. We seek 
comment on the availability and compatibility of customer premises 
equipment used to provide video programming and other services. How 
many households have one or more devices? We seek information on the 
retail availability of navigation devices to consumers.

Cable Television Service

    11. We plan to report on the performance of the cable television 
industry, and request data and comments on the current and historical 
state of competition in this segment of the market. We seek statistical 
information on the cable industry generally and specifically on the 
financial performance of the industry, capital acquisition and 
disposition, rates, channel capacity, programming costs, homes passed, 
subscribership, viewership, new service offerings, and the investments 
that cable operators have made to upgrade their plant and equipment.
    12. We request information on the deployment of various technical 
methods used to increase capacity. For individual multiple system 
operators (``MSOs''), we request data on the number of systems 
upgraded, the analog channel capacity resulting from upgrades, the 
digital channel capacity resulting from upgrades, the number of systems 
with digital tiers, the number of households where digital services are 
available, and the number of subscribers to digital services. What 
types of programming are available on digital tiers?
    13. We seek information on cable system transactions, including the 
names of the buyer and seller, the date of the transaction, type of 
transaction (i.e., sale, swap, or trade), name and location of the 
system, homes passed and number of subscribers, and the price. We seek 
similar information for non-cable video programming providers. We also 
request comment on the practice of clustering, whereby operators 
concentrate their operations in specific geographic areas. We request 
data regarding the effect of clustering by cable operators on 
competition in the video programming distribution market.
    14. We seek comment on whether cable operators are changing the way 
they package programming. We also 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.
    15. We further request information about the advanced services 
provided by cable operators, such as digital video, high-speed Internet 
access services, telephony, video-on-demand, and the amount and type of 
programming being offered in HDTV format. What is the status of the 
cable industry certification process for interoperable cable modems and 
to what extent are consumers now purchasing cable modem equipment 
certified by Cable Television Laboratories, Inc (``CableLabs'') under 
their Certified Cable Modem Project, rather than renting from video 
programming distributors? We also seek the most recent information 
regarding the development of specifications for interoperable set-top 
boxes on CableLabs' OpenCable process. What percentage of existing 
equipment is compatible with the OpenCable standards? What developments 
have taken place in the last year relating to the POD-Host Interface, 
or PHI license, that affect the deployment of navigation devices or 
their availability at retail stores? Finally, we solicit updated 
information on PacketCable, a CableLabs project intended to develop 
interoperable interface specifications for delivering advanced, real-
time multimedia services over two-way cable plant. What is the status 
of the testing and implementation of this standard?
    16. 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 promote diversity of information sources. We request 
comment and supporting data that to determine whether the criteria 
specified under section 612(g) have been met. Under sections 614 and 
615 of the Communications Act, cable operators must set aside up to one 
third of their channel capacity for the carriage of commercial 
television stations and additional channels for noncommercial stations 
depending on the system's channel capacity. We 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.

Direct-to-Home Satellite Services

    17. We seek current and historical information about direct-to-home 
(``DTH'') satellite services, which

[[Page 46637]]

includes direct broadcast satellite (``DBS'') and home satellite dish 
(``HSD'' or ``C-Band'') services. Are there identifiable differences 
between consumers who choose to subscribe to DBS rather than cable or 
another video programming distributor? How many or what percentage of 
households cannot receive DBS service because they are not within the 
line-of-sight of the satellite signal? We seek comment on the 
geographic locations of DBS and HSD subscribers, by state and type of 
area (i.e., urban, suburban, rural). To what extent do DBS subscribers 
reside in areas not passed by cable systems?
    18. We request information on the number of markets where local-
into-local television service is offered, or will be offered in the 
near future, pursuant to Satellite Home Viewer Improvement Act of 1999 
(``SHVIA''), including the number and affiliation of the stations 
carried. What percentage of DBS subscribers are opting for local 
programming packages where available? In cases in which additional 
equipment is needed to receive a full complement of local signals, what 
percentage of subscribers is obtaining this additional equipment? We 
also request information on the impact on DBS subscribership and 
penetration as well as its effect on the video programming market 
generally. What percentage of DBS subscribers continues to subscribe to 
cable in order to receive local broadcast signals?
    19. We request current and historical data that will allow us to 
compare DBS and cable rates for programming packages and equipment. 
What is the typical cost of DBS equipment and installation? We request 
information regarding DBS operator equipment leasing program options, 
including the monthly rates charged for leasing equipment. To what 
extent do satellite operators subsidize equipment costs in order to 
attract subscribers? Have DBS rates for some programming packages 
increased over the last year? What factors affect changes in DBS 
prices?
    20. We seek information on the status of Internet access services 
offered by the DBS industry. We seek information regarding other 
advanced services offered or co-marketed by DBS operators. To what 
extent are DBS operators offering programming in HDTV format? What 
marketing arrangements have non-DBS video programming distributors 
entered into to provide DBS service to their customers?

Broadcast Television Service

    21. We seek information on the role of broadcast television in the 
market for the delivery of video programming. We request information on 
the number and percentage of MVPD subscribers who rely on off-air 
reception for local broadcast service on one or more television sets, 
by type of MVPD service. In addition, what percentage of households has 
only over-the-air broadcast television reception on all television 
sets?
    22. We request information regarding the amount and type of 
programming (e.g., network, local, syndicated) being broadcast on 
digital channels, including the extent to which DTV channels are being 
used for HDTV, the extent to which they are being used for multichannel 
program offerings (``multicasting''), and the extent to which they are 
being planned as ancillary and supplementary services such as 
subscription services. We also seek information on DTV carriage 
agreements between broadcasters and cable operators and the status of 
any such negotiations. In addition, we request information on the sales 
of DTV consumer equipment and the factors affecting consumer adoption 
of DTV equipment.

Wireless Cable Systems

    23. We seek information regarding the previously identified trend 
towards declining subscribership for wireless cable, also revered to as 
MMDS-provided video. What factors affect the health and viability of 
the MMDS industry? We seek information about the availability of 
advanced services, such as digital video, high-speed Internet access 
services, and telephony. Where are consumers able to access these 
services via MMDS and how does the availability of these services 
affect competition?

Private Cable Operators

    24. We request current and historical information on the types of 
services offered by private cable operators, also known as SMATV 
systems. We request data for private cable systems, including 
subscribership levels, service areas, and the identities of the largest 
operators. How do the programming packages offered and the price of 
SMATV service compare to those of incumbent cable operators? Are there 
services that private cable operators provide their subscribers that 
cable, DBS, and other technologies do not?

Local Exchange Carriers and Utilities

    25. We seek information, both current and historical, regarding 
local exchange carriers (``LECs''), long distance telephone companies, 
and utility companies that provide video services. We request 
information on franchised cable systems operated by LECs, both within 
their telephone service areas and outside those regions. To what extent 
are LEC video programming services being bundled with telephone, 
Internet, or other utility services?

Broadband Service Providers, Open Video System Operators, and 
Overbuilders

    26. We seek current and historical information regarding the 
provision of video, voice, and data services by broadband service 
providers (``BSPs''), open video system (``OVS'') operators, and 
overbuilders. We ask commenters to provide information regarding the 
video service packages that are offered and the rates charged for the 
various packages. Are video services offered in combination with 
telephone and high speed Internet access? We further seek comment on 
the current, historical, and potential effect of BSPs, OVS operators, 
and overbuilders on the status of video competition. What are the 
technical and economic obstacles to the successful operation of systems 
of this type?

Home Video Sales and Rentals

    27. We seek information regarding the home video sales and rental 
market. We request data on the number or percentage of households with 
videocassette recorders, laser disc players, DVD players, and personal 
video recorders (``PVRs''). We request information on the amount of 
programming available in VCR, DVD, and laser disc formats for sale and 
rental, the cost of rentals, and how this compares to the cost of pay-
per-view, video-on-demand, or near video-on demand movies. We seek 
information on the development of the Internet as a means through which 
some video retailers are selling their videos. Further, we seek 
information on the development of companies offering PVR services in 
conjunction with video programming distributors, equipment 
manufacturers, advertisers, and programmers.

Internet Video

    28. We seek information on the types of video services currently 
being offered over the Internet and fact-based projections of 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.

[[Page 46638]]

Foreign Markets

    29. Finally, we seek information regarding the status of 
competition in the market for the delivery of video programming in 
markets outside of the United States that would provide insights 
regarding the nature of competition in the U.S. market. We seek 
information from these experiences that would be instructive as to the 
efficiency of market structures and regulations within the United 
States.

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 Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments on or 
before September 11, 2003, and reply comments on or before September 
26, 2003. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
    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, U.S. 
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 .'' 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. Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). The Commission's contractor, 
Vistronix, Inc., will receive hand-delivered or messenger-delivered 
paper filings for the Commission's Secretary at 236 Massachusetts 
Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this 
location are 8 a.m. to 7 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes must be disposed of 
before entering the building. Commercial overnight mail (other than 
U.S. Postal Service Express Mail and Priority Mail) must be sent to 
9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service 
first-class mail, Express Mail, and Priority Mail should be addressed 
to 445 12th Street, SW., Washington, DC 20554. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission. The Media Bureau contact for this 
proceeding is Andrew Wise at (202) 418-7026, or at [email protected].
    33. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street, SW., CY-A257, Washington, 
DC 20554. Persons with disabilities who need assistance in the FCC 
Reference Center may contact Bill Cline at (202) 418-0267 (voice), 
(202) 418-7365 (TTY), or [email protected]. These documents also will be 
available electronically from the Commission's Electronic Comment 
Filing System. Documents are available electronically in ASCII text, 
Word 97, and Adobe Acrobat. Copies of filings in this proceeding may be 
obtained from Qualex International, Portals II, 445 12th Street, SW., 
Room, CY-B402, Washington, DC 20554, telephone (202) 863-2893, 
facsimile (202) 863-2898, or via e-mail at [email protected]. To 
request materials in accessible formats for people with disabilities 
(Braille, large print, electronic files, audio format), send an e-mail 
to [email protected] or call the Consumer and Governmental Affairs Bureau 
at 202-418-0531 (voice), 202-418-7365 (TTY).

Ordering Clause

    34. This NOI 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.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-20038 Filed 8-5-03; 8:45 am]
BILLING CODE 6712-01-P