Television broadcasting: Cable television systems— Video programming delivery; market competition status; annual assessment,

[Federal Register: July 2, 1999 (Volume 64, Number 127)]

[Notices]

[Page 36013-36016]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr02jy99-50]

FEDERAL COMMUNICATIONS COMMISSION

[CS Docket No. 99-230, FCC 99-148]

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

AGENCY: Federal Communications Commission.

ACTION: Notice of inquiry.

SUMMARY: The Commission is required to report annually to Congress on the status of competition in markets for the delivery of video programming. On June 18, 1999, 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 1999. 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 August 6, 1999, and reply comments are due by September 1, 1999.

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 or TTY (202) 418-7172.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Notice of Inquiry in CS Docket No. 99-230, FCC 99-148, adopted June 18, 1999, and released June 23, 1999. The complete

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text of this Notice of Inquiry is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, S.W., Washington, D.C., 20554, and may also be purchased from the Commission's copy contractor, International Transcription Service (``ITS, Inc.''), (202) 857-3800, 1231 20th Street, N.W., Washington, D.C. 20036.

Synopsis of the Notice of Inquiry

1. Section 628(g) of the Communications Act of 1934, as amended (``Communications Act''), 47 U.S.C. 548(g), requires the Commission to deliver an annual report to Congress on the status of competition in markets for the delivery of video programming. The Notice of Inquiry (``NOI'' ) is designed to assist the Commission in gathering the information, data, and public comment necessary to prepare its sixth annual report on competition in markets for the delivery of video programming (``1999 Competition Report''). The Commission expects to use the information submitted by commenters to supplement publicly available information and relevant comments that have been filedin other Commission proceedings.

2. For the 1999 Competition Report, we request information and comment regarding the cable industry, existing and potential competitors in markets for the delivery of video programming, and the prospects for increasing competition in these markets. We seek information to update our assessment of the status of competition and on changes in the competitive environment since our 1998 Competition Report was submitted to Congress. For this year's report, to the extent feasible, we ask parties to submit data and information that are current as of June 30, 1999. We also note that the information gathered in this report will present the first comprehensive picture of the state of competition in the video marketplace following the deregulation of rates for cable programming service tiers (``CPSTs'') on March 31, 1999.

3. Markets for the delivery of video programming are served by video distributors using both wired and wireless technologies. Video distributors include multichannel video programming distributors (``MVPDs''), such as cable systems, direct broadcast satellite (``DBS'') service, and home satellite dish (``HSD'') service, private cable or satellite master antenna television (``SMATV'') systems, open video systems (``OVS''), multichannel multipoint distribution service (``MMDS''), and instructional television fixed service (``ITFS''), as well as 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. For the 1999 Competition Report, we seek information and comment that will allow us to evaluate the status of competition in the video marketplace, its effect on the cable television industry, and prospects for increased competition. We are interested in evaluating the extent that consumers have choices among video programming distributors and delivery technologies and in comparing the various video distribution alternatives available to consumers in terms of video programming offerings, prices for programming services and associated equipment, and other services provided (e.g., telephony, data access). We invite comment on the effect of recent statutory and regulatory changes on competition for the delivery of video services. We request information regarding existing or potential regulatory impediments that may deter entry or prevent expansion of competitive opportunities in video program delivery markets, including specific Commission rules, policies, or regulations that ought to be reexamined.

5. In recent Competition Reports, we presented case studies of local markets where cable operators faced actual competition from MVPD entrants. This year, we request information on the effects of actual and potential competition in these and other local markets where consumers have, or soon will have, a choice among MVPDs. In particular, we seek updated information on MVPD services in those areas included in our previous case studies to determine whether the initial effects of competition continue. We also ask commenters to provide specific data regarding other areas where head-to-head competition exists, or is expected to exist in the near future, between cable and other MVPDs, or among various types of MVPDs. We further request information about how competition has affected prices, service offerings, quality of service, and other relevant factors.

6. In addition to analyzing case studies, in the 1999 Competition Report, we want to present a broader picture of the current state of competition on a local, regional, and national basis. We ask commenters to assist us in this assessment of competitive alternatives available to consumers by providing detailed information on the types of competitive alternatives available, comparisons of the video and nonvideo services offered, and the prices charged for these service and associated equipment. We seek data on the number of television households that can choose between two, three, four, or more video programming distribution services and other information including: (a) The identity of the competitors; (b) the distribution technology used by each competitor; (c) the date that each competitor entered the market; (d) the location of the market, including whether it is predominantly urban or rural; (e) an estimate of the subscribership and market share for the services of each competitor; (f) a description of the service offerings of each competitor; (g) differentiation strategies each competitor is pursuing; and (h) the prices charged for the service offerings.

7. In the 1997 and 1998 Competition Reports, we considered multiple dwelling units (``MDUs'') a separate submarket. For the 1999 Competition Report, we would like to update our information on video delivery competition for and within MDUs. We request information regarding the choices that consumers have among MVPD services within a particular MDU, comparisons of the program offerings and prices charged by competing MVPDs serving an MDU, and comparisons of the program offerings and prices charged by MVPDs serving MDUs and competing MVPDs serving the same geographic area.

8. As in previous reports, we seek factual information and statistical data regarding the status of video programming distributors using different technologies, and changes that have occurred in the past year. In addition to statistical data on each of these delivery services, we seek information regarding: (a) The number of homes passed (for wired technologies) and the number of homes capable of receiving service (for wireless technologies); (b) the number of operators; (c) the identities of the ten largest operators (national market only); (d) the number of subscribers and penetration rates; (e) channel capacities and the number and types of channels offered; and (f) the number and types of services offered. In addition, we request financial information for each technology, including firm and industry revenues, in the aggregate and by sources (e.g., subscriber revenues, advertising revenues, programming revenues); cash flow; changes in stock prices; investments; capital acquisition; and capital expenditures.

9. For each video programming distribution technology, we also request information describing: (a) Technological advances (e.g.,

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   deployment of digital services) that make or may make the technology competitive; (b) the effort (including steps, costs and time) needed to increase the number of homes passed or capable of receiving service; (c) the effort (including steps, costs and time) needed to increase the number of channels and types of services offered; and (d) regulatory and judicial developments that affect the use of different technologies. In addition, in evaluating the extent of competition among various MVPDs' services or technologies, we seek information and analysis on the degree to which viewers or consumers consider the different types of MVPDs to be substitutes and on the extent to which customers have switched from one provider or technology to another one.

10. As in prior reports, we will provide updated information in the 1999 Competition Report on the structure of, and rivalry in, markets for the delivery of video programming. We intend to evaluate MVPD market concentration as we have done previously and, thus, seek data regarding current national subscribership levels of all MVPDs, whether these levels have changed since the 1998 Competition Report, and, if so, how significantly. To the extent national concentration has increased or decreased for specific MVPDs, we ask commenters to discuss the reasons for such changes, including whether such changes are the results of merger and acquisition activity, marketing strategies, or other factors. We request data that will allow us to report on cable industry transactions, including information on mergers, acquisitions, consolidations, swaps and trades, cross-ownership, and other structural developments that affect distributors' delivery of video programming. We further request information regarding transactions involving noncable MVPDs that might affect competition in the video marketplace.

11. With respect to regional concentration (i.e., ``clustering''), for cable and other MVPDs, we seek information on the geographic areas served by particular companies and comment regarding the effects industry consolidation and clustering have had on competition. We also ask commenters to discuss whether clustering has facilitated MVPDs' ability to provide increased or improved services, such as additional video and nonvideo services, lower prices, or better customer service.

12. In the 1999 Competition Report, we will update information on existing and planned programming services, with particular focus on those programming services that are affiliated with video programming distributors. We seek information and ask a variety of questions on programming services that are affiliated with cable operators, affiliated with non-cable video programming distributors and unaffiliated with any MVPD.

13. We also request information on the various program options offered by each MVPD technology, including exclusive program offerings, the number of channels available, and the comparability of the program options and packages available with each technology. We request data on the extent to which there are programming networks affiliated with noncable MVPDs and whether such programming networks are available to competing MVPDs. We ask whether there are certain programming services or specific classes of service that an MVPD needs to provide to subscribers in order to be successful. Further, we solicit information regarding increases in programming cost over the last year.

14. We are interested in how MVPDs package their programming, particularly the extent to which they offer discrete programming choices (i.e., service on an ``a la carte'' or individual channel basis) rather than programming service packages (i.e., tiers of programming services). We ask whether MVPDs offer ``mini-tiers,'' ``lifeline'' basic tiers, or digital tiers and what are the technical, economic, legal, or other considerations related to offering customized programming packages. In addition, we ask whether MVPDs are offering video and nonvideo services together (i.e., bundled services) and how such combined services are offered and priced. We further solicit a variety of information regarding: (a) Local and regional channels; (b) public, educational, and governmental (``PEG'') access channels; (c) leased access channels; (d) DBS channels used for ``noncommercial programming of an educational or informational nature;'' and (e) electronic programming guides (``EPGs'') offered by cable operators and other MVPDs.

15. 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. We request comment on each of these rules, especially whether the coverage of the program access rules is appropriate and on any other issues of concern to video programming providers or MVPDs relating to the availability and distribution of programming.

16. In the 1998 Competition Report, we addressed the deployment of digital technology and discussed recent activities to promote the commercial availability of the equipment used to access video programming and other services pursuant to the requirements of the Telecommunications Act of 1996. For this year's report, we seek updated information on system upgrades, particularly with respect to digital technology. We request information regarding multiple system operators (``MSOs'') that have created digital tiers and the types of programming offered on these tiers. We seek similar information on upgrades and the deployment of advanced technologies to provide digital programming and other advanced services by MVPDs other than cable operators. We also request information on the feasibility and use of combined distribution technologies (e.g., DBS and SMATV). Moreover, we are interested in what role, if any, the ability to provide advanced services plays in attracting subscribers to video programming services and contributing to the competitiveness of an MVPD.

17. Another important aspect of technological development is the deployment of set-top boxes, integrated receiver/decoders, or receivers that facilitate or differentiate MVPD service offering. In this year's report, we plan to update the information provided in the 1998 Competition Report regarding the certification of set-top boxes, including updated information on the progress of Cable Television Laboratories, Inc.'s OpenCable'' process, and the availability of set- top boxes through retail outlets.

18. In last year's report, we also observed that the cable industry had begun the widespread deployment of cable modems and that CableLabs was in the process of finalizing its Data Over Cable Service Interface Specification (``DOCSIS'') intended to provide manufacturers with a set of standards that will enable the production of interoperable cable modems. We seek information regarding the availability DOCSIS compliant modems and the extent to which consumers are buying rather than leasing modems.

    Administrative Matters

    Ex Parte

19. There are no ex parte or disclosure requirements applicable to this proceeding pursuant to 47 CFR 1.1204(b)(1). Comment Dates

20. Pursuant to applicable procedures set forth in 47 CFR 1.415 and 1.419,

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    interested parties may file comments on or before August 6, 1999, and reply comments on or before September 1, 1999. 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 24,121 (1998).

21. Comments filedthrough 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 files. 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 ecfs@fcc.gov, 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.

22. Parties who choose to file by paper must file an original and four copies of each filing. If participants want each Commissioner to receive a personal copy of their comments, an original plus nine copies must be filed. If more than one docket or rulemaking number appear 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, Washington DC 20554. The Cable Services Bureau contact for this proceeding is Marcia Glauberman at (202) 418-7200, TTY (202) 418-7172, or at mglauber@fcc.gov.

23. 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, SW, Room 3-A738, Washington, DC 20554. Such a submission should be on 3.5 inch diskette formatted in an IBM compatible format using WordPerfect 5.1 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. 99-230]), 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

24. 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. 99-16832Filed7-1-99; 8:45 am]

    BILLING CODE 6712-01-P