Competition in the Market for the Delivery of Video Programming

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 94-48; FCC 94-119]

Competition in the Market for the Delivery of Video Programming

AGENCY: Federal Communications Commission.

ACTION: Notice of inquiry.

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SUMMARY: This Notice of Inquity (Inquiry) in CS Docket No. 94-48

results from a directive to the Commission included in the Cable

Television Consumer Protection and Competition Act of 1992 (``1992

Cable Act''), to prepare snd submit a report on the status of

competition in the market for the delivery of video programming to

Congress, 18 months after promulgation of the program access

regulations, or, October 1, 1994, and annually, thereafter. In this

Inquiry, the Commission intends to gather information to prepare a

preliminary analysis on the current state of competition to cable

television provided by alternative distribution technologies, to

collect data and information on the practices of video programming

vendors and distributors, to identify the information required to write

subsequent comprehensive annual reports to Congress, and to identify

the appropriate means for collecting such information in the future.

DATES: Comments may be filed on or before June 29, 1994; reply comments

may be filed on or before July 29, 1994.

ADDRESSES: Federal Communications Commission, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:Diane L. Hofbauer at (202) 416-0856, or

Nina M. Sandman at (202) 416-0856, Cable Services Bureau, Competition

Division.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Notice of Inquiry (Inquiry) in CS Docket No. 94-48, adopted May 19,

1994, and released May 19, 1994. The full text of this Inquiry is

available for inspection and copying during normal business hours in

the FCC Reference Center (Room 239), 1919 M Street, NW., Washington,

DC, and may also be purchased from the Commission's copy contractor,

International Transcription Services, (202) 857-3800, 2100 M Street

NW., suite 140, Washington, DC 20037.

Synopsis of Notice of Inquiry

1. The Inquiry stesses that a primary goal of the 1992 Cable Act

was to promote increased competition in the delivery of cable

television services. Section 19(g) of the 1992 Cable Act directed the

Commission to annually report to Congress on the status of competition

in the market for the delivery of video programming. The first report

must be submitted to Congress no later than October 1, 1994. The

Commission believes that it must engage in an ongoing process of

evaluating the status of competition to cable television in order to

meet this annual reporting requirement.

2. The goals of this Inquiry are threefold: (1) To gather

information sufficient to prepare a preliminary analysis for Congress

of the current state of competition to cable provided by alternative

distribution technologies; (2) to collect information on whether and

the extent to which the conduct and practices of multichannel video

programming vendors and distributors have changed; and (3) to identify

the information required to enable the Commission to prepare more

comprehensive analyses in our future reports and the appropriate means

of obtaining it.

3. The Inquiry asks questions about the suitable means of analyzing

the relevant programming and distribution markets. To assist the

Commission in conducting its analysis, the Inquiry seeks comment on

relevant economic methodologies, including structure-conduct-

performance analyses and their complementary antitrust concepts,

contestable market theory, and transaction cost economics.

4. The Inquiry also seeks to establish a reference point for future

comparisons of the status of the multichannel video programming

marketplace by updating the information contained in Appendix G of the

Commission's 1990 Cable Report to Congress (``1990 Report'') with

respect to horizontal ownership levels and vertical integration. 55 FR

32631 (8/10/90).

5. For this first annual report to Congress, the Commission will

undertake a preliminary assessment of the status of competition at the

local level in the video programming marketplace. The Inquiry notes

that competition to cable television is currently provided to a limited

extent by ``wireless cable'' systems, high-power and medium-power

direct broadcast satellite (``DBS'') services, direct-to-home satellite

services, satellite master antenna television (``SMATV'') systems,

telephone technologies (such as video dialtone), cable overbuilds, and

over-the-air television broadcasting.

6. The Inquiry notes that there have been various significant

technological changes since the 1990 Report. For example, since local

telephone exchange carriers are now seen as providing competition to

cable, the Inquiry seeks comment on how the Commission should approach

and address video dialtone in the context of its report. Also, the

Inquiry addresses digital compression, as well as entry into the video

programming distribution market by other providers such as electric or

other utility companies, and the implications of their entry.

7. With respect to analysis of horizontal ownership and vertical

integration in the cable industry, the Inquiry notes that substantial

reliance was placed on the 1990 Report when establishing the subscriber

and channel occupancy limits. The Inquiry seeks to gather data to

create a baseline that may be used to provide a comprehensive report,

and that will also aid the Commission in its periodic review of the

appropriateness of those limits.

8. In addition, the Inquiry proposes to gather information on the

existence and extent of affiliations, including, but not limited to,

investments, joint ventures, and partnerships between multichannel

video programming distributors and other communications companies.

Comment is sought on how these and other types of business

relationships will affect the cost, quality, and variety of video

programming. The Inquiry acknowledges that some information that could

be requested might include proprietary or otherwise confidential

information or data. Comment is requested on how the Commission should

gather, examine, protect or release such information and data, and on

possible methods for protecting individual confidentiality.

9. The Inquiry seeks comments on the effect that the 1992 Cable Act

and the Commission's implementing rules, and the effect of the changes

in the multichannel video marketplace resulting from the 1992 Act and

rules, have had on the entry and development of competitors in the

marketplace, e.g., negotiations, sales, marketing, and carriage

practices.

10. The Inquiry also seeks to determine whether anticompetitive

practices in the multichannel video programming and distribution

markets have diminished, and whether new and potentially

anticompetitive conduct has developed. To the extent commenters express

continued concerns about the existence of undue market power by cable

operators, other multichannel video programming distributors, or

vertically integrated programming vendors engaging in conduct that is

not encompassed within the Commission's rules, they are requested to

suggest regulatory responses that will address them.

11. Since the Inquiry acknowledges that it may be desirable in the

future to establish more systematic reporting procedures, it seeks

comments on specific studies, survey methodologies, etc. that the

Commission might undertake to gather the information that will enable

it to prepare accurate and comprehensive reports. The Inquiry seeks

comment on whether the Commission should adopt annual reporting

requirements on various licensees providing multichannel video

programming distribution services and on vertically integrated

programming vendors, and what such reporting requirements should

entail.

12. The Inquiry emphasizes that the Commission wishes to gather and

compile all of this information without unduly burdening the

information providers. Thus, the Inquiry seeks comment on the least

intrusive means for gathering the necessary information and data.

Administrative Matters

Ex Parte. This is a non-restricted proceeding subject to 47 CFR

Sec. 1.1206(b)(2).

Comments. Interested parties may file comments on or before June

29, 1994, and reply comments on or before July 29, 1994.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 94-13146 Filed 5-26-94; 8:45 am]

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