[Federal Register Volume 69, Number 126 (Thursday, July 1, 2004)]
[Notices]
[Pages 39930-39933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14997]


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FEDERAL COMMUNICATIONS COMMISSION

[MB Docket No. 04-227, FCC 04-136]


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 2004. 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 July 23, 2004, and reply comments 
are due on or before August 25, 2004.

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

FOR FURTHER INFORMATION, CONTACT: Anne Levine, Media Bureau, (202) 418-
2330, TTY (202) 418-7172 or by e-mail at anne.levine @fcc.gov.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Inquiry (NOI) in MB Docket No. 04-227, FCC 04-136, adopted 
June 10, 2004, and released June 17, 2004. 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 also be purchased from the 
Commission's copy contractor, Best Company and Printing, Inc., Portals 
II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 
(202) 488-5300 or (800) 378-3160, by e-mail [email protected], or via its 
Web site http://www.bcpiweb.com. Persons with disabilities who need 
assistance in the FCC Reference Information Center may contact Bill 
Cline at (202) 418-2555 TTY, or [email protected]. To request materials in 
accessible formats for people with disabilities (electronic files, 
large print, audio format and Braille), send an e-mail to 
[email protected], or call the Consumer & Governmental Affairs Bureau at 
(202) 418-0531 (voice), 418-7365 (TTY).

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 (NOI) solicits data and information on the status of 
competition in the market for the delivery of video programming for our 
eleventh annual report (2004 Report). We request information, comments, 
and analyses that will allow us to compare video delivery technologies 
and to evaluate the status of competition on the industry groups 
involved and on consumers.
    2. Comments submitted in this proceeding will be augmented with 
information from publicly available sources. We emphasize the 
importance of the information provided by industry participants with 
the best knowledge of the questions and issues raised. If we continue 
to find that we do not get the necessary data from industry 
participants, we may pursue options for a mandatory data collection 
process to ensure that we have appropriate information to fulfill our 
statutory mandate to provide Congress with an annual assessment of the 
status of competition in the video marketplace. The accuracy and the 
usefulness of the 2004 Report are directly related to the information 
we receive from commenters.
    3. The Commission will report on the current state of competition 
and report on changes in the competitive environment since our 2004 
Report. To the extent feasible, we request data as of June 30, 2004, to 
facilitate our analysis of competitive trends over time.

Competition in the Market for the Delivery of Video Programming

    4. Video programming distributors include cable systems, direct 
broadcast satellite (DBS) providers, home satellite dish (HSD) 
providers, broadband service providers (BSPs), private cable or 
satellite master antenna television (PCO) systems, open video systems 
(OVS), multichannel multipoint distribution or wireless cable systems 
(wireless cable), local exchange carrier (LEC) systems, utilities, and 
over-the-air broadcast television stations. Video programming is also 
distributed on videocassettes and DVDs through retail distribution 
outlets and over the Internet.
    5. We seek information and statistical data for each type of video 
programming distributor including: The number of homes capable to 
receiving service via each wired (e.g., an incumbent cable system, BSP, 
OVS provider) or wireless technology (e.g., DBS, wireless cable, PCO); 
the number of subscribers and penetration rates to different levels of 
service for each service (e.g., basic cable service, cable programming 
service tier or ``CPST,'' premium, pay-per-view, video-on-demand); 
channel capacities and the number, type, and identity of video 
programming channels offered, prices charged for various programming 
packages; cost of programming inputs; industry and individual firm 
financial information, such as total revenue and revenue by individual 
company segments or services, cash flow, and expenditures; information 
on how video programming distributors compare in terms of relative size 
and financial

[[Page 39931]]

resources; data that measure the audience reach of video programming 
distribution firms as well as relative control over the video 
distribution market; and information on the ability of, and the 
competitive advantages to, video distributor expansion into new markets 
such as local telephony, and high-speed Internet access, and the take 
rates for these services.
    6. We also request information that will allow us to evaluate 
horizontal concentration in the video marketplace, vertical integration 
between programming distributors and programming services, and other 
issues relating to the programming available to consumers. We request 
information on technical issues, including equipment and emerging 
services such as video-on-demand and personal video recorders. We 
further ask for comments regarding developments in foreign markets, as 
they may contribute to our understanding of domestic markets.
    7. We seek comment on competition among multichannel video 
programming distributors (MVPDs). In particular, we are interested in 
data and information on the number of homes capable of choosing among 
MVPD services. We seek data and comment on the number of households 
subscribing to more than one MVPD. We also request information on the 
number of customers switching from one technology to another and the 
factors responsible for switching among MVPDs as well as the percent of 
those customers that drop MVPD service altogether. We further request 
comment on any factors that are unique to competition in multiple 
dwelling units (e.g., apartments).
    8. In addition, we seek comments and information on the 
consequences for consumers of competition in the market for video 
programming. To what extent does competition continue to result in 
lower prices, more programming, better quality of service, or more 
advanced services, both video and non-video? We also request comment on 
whether there are any statutes or regulations that should be modified 
in light of changes in the video industry and competition over the past 
decade.
    9. We seek data on relative prices in order to evaluate 
substitution between MVPD technologies (i.e., what are the prices of 
similar cable, DBS, and BSP services). In addition, we are interested 
in investigating methods for measuring and comparing prices for 
products that vary in quality (e.g., how to compare the price of a 50-
channel package with the price of a 30-channel package).
    10. We seek comment on barriers to entry and the impact of the 
regulatory environment on competition, including the ability of MVPDs 
to gain access to programming networks, rights-of-way, pole 
attachments, conduits, and ducts for the delivery of their services to 
consumers. Although we are primarily concerned with the effect of 
regulation on competition, we also request comment on other barriers to 
entry and competition.
    11. We seek information on existing, planned, and terminated or 
merged programming services to assess the changes in the amount and 
type of video programming available that have occurred in the past 
year, ownership of programming networks, genre of service and 
transmission format (i.e., analog, standard digital (SD), or high 
definition (HD) format), language (e.g., English or foreign language). 
This year, we seek to identify the ownership of non-broadcast networks 
by any media entity, not just cable operators as we have done in the 
past. We further request information on the ability of programming 
networks to sell their services, especially comments on the experiences 
of start-up networks. We also seek information on how video programming 
distributors package and market their programming. To what extent do 
MVPDs offer service to consumers on an ``a la carte'' or ``mini-tier'' 
basis rather than the traditional tiering of programming services? We 
request comment regarding public, educational, and governmental (PEG) 
access and leased access channels, and the programming provided by DBS 
operators in compliance with their public interest obligations. We 
further request information regarding the accessibility of closed 
captioning and video description to persons with disabilities.
    12. We seek information and statistics on the advanced service 
offerings (e.g., high-speed Internet access services, telephony, 
interactive television, electronic programming guides) and new ways of 
offering service (e.g., personal video recorders, video-on-demand, 
streaming video) that are being deployed by video programming 
distributors. We specifically seek comment on the development and 
deployment of electronic programming guides (EPGs), video-on-demand 
(VOD), and interactive television (ITV) services. We request 
information on the impact that the availability of non-video services 
offered by video programming providers has had and continues to have on 
the nature of competition in the video marketplace.
    13. We further seek information and comment regarding issues 
specific to video programming distribution in rural and smaller 
markets. How do MVPD choices for consumers differ in these markets 
compared to larger, more urban markets? What percent of cable systems 
in rural or smaller markets have capacity of less than 750 MHz? We 
request information on the programming offered in rural and smaller 
markets and any differences between these offerings and those available 
in larger markets.
    14. We seek comment on the availability and compatibility of 
customer premises equipment used to provide video programming and other 
services. How does customer premises equipment design, function, and/or 
availability affect consumer choice and competition between firms in 
the video programming market?

Cable Television Service

    15. We seek to update and refine our Report on the performance of 
the cable television industry and request comment on the current state 
of competition in this segment of the market. Specifically, we request 
information regarding the investments that cable operators have made to 
upgrade their plant and equipment to increase channel capacity, create 
digital services, or offer advanced services, and the various technical 
methods being used to increase capacity. How is bandwidth allocated 
among analog and digital video tiers and what factors influence that 
decision? To what extent is new capacity used for non-video services? 
Further, we request information on cable operator plans to convert 
their systems to all-digital transmission.
    16. We also seek comment on the level of large-scale consolidation 
in the MVPD industry. We 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.
    17. We seek comment on whether cable operators are changing the way 
they package programming. Are cable operators restructuring their tiers 
by shifting programming from one tier to another? We seek comment on 
relevant trends in pricing of cable tiers.
    18. Commenters are asked to provide information specific to the 
advanced service offerings by cable operators and particularly video-
on-demand, traditional circuit-switched telephone service and Internet 
Protocol (IP) telephony, and high-speed data access services.
    19. We also seek updated information regarding the development of 
specifications for interoperable set-top boxes (i.e., set-top boxes 
that can be

[[Page 39932]]

moved from one cable franchise area to another and function with any 
given cable provider's local system). We also 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. Furthermore, we 
request information on how many products are currently available with 
plug-and-play functionality, or are soon to be available.
    20. 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 would be useful for an accurate 
determination of whether the criteria have been met, and, if so, 
whether the Commission should promulgate additional rules to promote 
diversity of information sources.
    21. We request comment on the ``tier buy-through'' option mandated 
by section 623(b)(8) of the Communications Act? What portion of 
subscribers is taking advantage of this option that permits consumers 
to purchase programming on a per-channel or per-program basis without 
subscriptions to any tier of service other than the basic tier?
    22. 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 and the percentage of broadcast stations 
carried on cable pursuant to retransmission consent agreements.

Direct-to-Home Satellite Services

    23. For direct-to-home (DTH) satellite services (i.e., DBS and 
large dish or HSD), we request data on the geographic locations of DBS 
and HSD subscribers, by state and type of area (i.e., urban, suburban, 
rural). How have the demographics changed since DBS began operation? 
What percentage of new DBS subscribers are former cable subscribers or 
former HSD households? We request information regarding the investments 
that DBS operators have made or plan to make to upgrade their plant and 
equipment to increase channel capacity or offer advanced services.
    24. We request information on the number of markets where local-
into-local television service is, 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. 
We also request data that will allow us to compare DBS and cable rates 
for programming packages and equipment. Furthermore, we ask commenters 
to provide information on the number of channels and the monthly prices 
of various DBS programming packages and programming available for HSD 
subscribers.
    25. We seek information on the status of current and future plans 
of both satellite-delivered high-speed Internet access with a telephone 
return path as well as two-way satellite delivered high-speed Internet 
access services offered by the overall satellite industry, including 
fixed satellite systems (FSS), DTH and DBS providers. To what extent do 
DBS operators co-market advances services, such as DSL or voice 
services, with local exchange carriers (LECs)?

Broadband Service Providers, Open Video System Operators, and 
Overbuilders

    26. We request information regarding the provision of video, voice, 
and data services by broadband service providers (BSPs), open video 
system (OVS) operators, and overbuilders. Further, we seek comment on 
the current and potential effect of BSPs, OVS, or overbuilders on the 
status of video competition, and the characteristics that exemplify BSP 
competitiveness (e.g., number of subscribers, homes passed, 
geographical reach, business model). Are there market characteristics 
that make certain areas more conducive to such competition than others? 
What are the technical and economic factors that determine whether 
overbuild systems are successful? Are there still significant barriers 
to entry?

Broadcast Television Service

    27. We seek data and comment on the role of broadcast television in 
the market for the delivery of video programming, including information 
on audience shares, advertising revenues, and compensation broadcasters 
receive for retransmission consent. We seek to update our information 
on the practice of repurposing and ``time shifted'' programming, and 
ask commenters to provide examples of repurposing programming or ``time 
shifted'' scheduling during the current television season.
    28. We seek comment and data on a broad range of issues relating to 
the digital television (DTV) transition to examine the ways in which 
broadcast television stations' deployment of digital television service 
and the DTV programming provided by MVPDs impact competition in the 
video programming distribution market. We invite comment on programming 
content available in DTV formats, spectrum usage, over-the-air 
availability of DTV service and carriage of DTV programming by MVPDs, 
the production of DTV programming by stations and MVPDs, the equipment 
used to receive DTV programming, current and projected levels of 
consumer access to and use of DTV and related equipment, and consumer 
education efforts. We request information on the development of DTV, 
including historical, current and projected data. We ask specifically 
how many noncommercial educational broadcast stations are being 
carried, and under what terms.

Wireless Cable Systems

    29. We seek information regarding the previously identified trend 
towards declining availability of and subscribership to MMDS-provided 
video, also known as wireless cable. What factors have affected the 
health and viability of the wireless cable industry? We seek 
information about the availability of advanced services, including two-
way services, such as digital video, high-speed Internet access 
services, and telephony.

Private Cable Operators

    30. We request information on the types of services offered by 
private cable operators, also known as satellite master antenna 
television (``SMATV'') operators, and the price charged for those 
services. What factors affect the health and viability of the private 
cable industry? Are there competitive or legal hurdles that prevent 
private cable operators from working with DBS operators in MDUs?

Local Exchange Carriers and Utilities

    31. We seek information regarding LECs and utility companies that 
provide video services. Specifically, we request information on 
franchised cable systems operated by LECs and DSL-based video 
offerings.

Home Video Sales and Rentals

    32. We seek information regarding the home video sales and rental 
market, such as data on the number or percentage of households with

[[Page 39933]]

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 with the cost of 
pay-per-view, video-on-demand, or near video-on-demand programming 
offered by MVPDs.

Internet Video

    33. We seek information on the types of video services currently 
being offered over the Internet both in real-time and downloadable 
format. We also seek projections of whether and, if so, when Internet 
video will become a viable competitor in the market for the delivery of 
video programming. What criteria should determine whether Internet 
video is to be considered ``broadcast quality'' (e.g., frames-per-
second delivered, the size of the viewing area, the relative ease of 
use by the consumer, consumer habit, the type of programming offered, 
relative availability of programming)? How does currently available 
real-time Internet video compare to traditional MVPD and broadcast 
programming? We also solicit information on the technological, legal, 
regulatory, and competitive factors that may promote or impede the 
provision of video over the Internet.

Foreign Markets

    34. Finally, we seek information regarding the status of 
competition in foreign markets for the delivery of video programming 
that would provide insights regarding the nature of competition in the 
United States market. Specifically, we seek information on ongoing 
efforts in foreign markets to provide DSL-based video, interactive 
video services, ``a la carte'' channel options, high-speed Internet 
access service, and the transition to DTV. We seek information 
regarding any differences between the United States and other markets 
with respect to video programming distribution and advanced services 
provision that would be instructive as to the efficiency of market 
structures and regulations within the United States. How do 
regulations, or lack thereof, in foreign markets compare with 
regulations in the United States and how might these differences yield 
different competitive results?

Procedural Matters

Ex Parte

    35. 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

    36. Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415 and 1.419, interested parties may file comments on 
or before July 23, 2004, and reply comments on or before August 25, 
2004. 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, May 1, 1998.
    37. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/cgb/ecfs/. 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.
    38. 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).
    39. The Commission's contractor, Natek, 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.
    40. Parties also must serve either one copy of each filing via e-
mail or two paper copies to Best Copy and Printing, Inc., Portals II, 
445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 
(800) 378-3160, or via its Web site at http://www.bcpiweb.com. In 
addition, parties should serve one copy of each filing via email or one 
paper copy to Anne Levine, Media Bureau, 445 12th Street, SW., 2-C410, 
Washington, DC 20554. Parties should serve one copy of each filing via 
email or five paper copies to Linda Senecal, 445 12th Street, SW., 2-
C438, Washington, DC 20554.

Authority

    41. 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, 47 U.S.C. 154(i), 154(j), 403, and 548(g).

Federal Communications Commission.
William F Caton,
Deputy Secretary.
[FR Doc. 04-14997 Filed 6-30-04; 8:45 am]
BILLING CODE 6712-01-P