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

FEDERAL COMMUNICATIONS COMMISSION

[CS Docket No. 97-141, FCC 97-194]

Annual Assessment of the Status of Competition in Markets for the

Delivery of Video Programming

AGENCY: Federal Communications Commission.

ACTION: Notice of inquiry.

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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 pursuant to Section 628(g) of the Communications Act of

1934, as amended. On June 3, 1997, 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

1997. 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 July 23, 1997, and reply comments are due by

August 20, 1997.

ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Marcia Glauberman, Cable Services

Bureau, (202) 418-7200, or Rebecca Dorch, Office of General Counsel,

(202) 418-1880.

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

Notice of Inquiry in CS Docket No. 97-141, FCC 97-194, adopted June 3,

1997, and released June 6, 1997. The complete text of this Notice of

Inquiry is available for inspection and copying during normal business

hours in the FCC Reference Center (Room 239), 1919 M Street, N.W.,

Washington, D.C., 20554, and may also be purchased from the

Commission's copy contractor, International Transcription Service (202)

857-3800, 1900 M Street, N.W., Washington, D.C. 20054.

Synopsis of the Notice of Inquiry

1. Section 628(g) of the Communications Act of 1934, as amended

(``Communications Act''), 47 U.S.C. Sec. 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 solicit comments and

information that the Commission can use to prepare its fourth annual

report (``1997 Competition Report''). Specifically, the NOI invites

commenters to submit data, information and analysis regarding the cable

industry, existing and potential competitors to cable systems, and

prospects for increasing competition in markets for delivery of video

programming. Commenters also are requested to identify and comment on

existing statutory provisions they perceive as restraining competition

or inhibiting development of robust competition in markets for the

delivery of video programming. The Commission expects to use the

information that is submitted by commenters to supplement publicly

available information and relevant comments that have been filed in

other Commission proceedings.

2. 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. We seek information on multichannel video programming

distributors (``MPVDs'') using predominantly wired distribution

technologies, including cable systems, private cable or satellite

master antenna television (``SMATV'') systems, and open video systems

(``OVS''). We also request data for those relying predominantly on

wireless distribution technologies, such as over-the-air broadcast

television, multichannel multipoint distribution service (``MMDS''),

instructional television fixed service (``ITFS''), local multipoint

distribution service (``LMDS''), direct broadcast satellite (``DBS'')

service, and home satellite dish (``HSD'') service, and for other

potential distribution mechanisms, including interactive video and data

services (``IVDS''), the Internet, and public utility companies.

3. The NOI asks a variety of questions concerning each of these

video delivery services. In addition to statistical data on each of

these delivery services, we seek information regarding: (a) industry

transactions, including information on mergers, acquisitions,

consolidations, swaps and trades, and cross-ownership; (b) other

structural developments that affect distributors' delivery of video

programming; (c) regulatory and judicial developments that affect use

of different technologies; and (d) the effects of the

Telecommunications Act of 1996 (``1996 Act'') and its implementation.

4. The 1996 Competition Report described various technological

advances that may affect industry structure and competition in markets

for the delivery of video programming. For this year's report, we seek

updated information on: (a) developments in the deployment, or planned

deployment, of advanced technologies, such as digital compression,

switched digital services, and upgraded architectures; (b) different

transmission facilities used for distribution of multichannel video

programming, such as copper wire, coaxial cable, optical fiber,

broadcast and other terrestrial radio frequency communications,

terrestrial microwave, satellites, and use of the Internet; (c) the

hybridization of different transmission media; and (d) system

configurations and designs that may facilitate competition, such as the

distribution of different types of signals and different types of

services over the same transmission facility. In addition, we request

information about developments in set-top boxes, including updates on

interoperability, portability and market-driven standards. We also seek

information on whether multichannel video distributors are leasing or

selling reception equipment to subscribers, and the competitive impact,

if any, of these marketplace alternatives. We further invite comment on

the use of digital forms of communications and on

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potential problems and new issues relevant to multichannel video

distribution competition in a digital environment.

5. In the 1997 Competition Report, we will provide updated

information on the structure and rivalry of markets for the delivery of

video programming. We seek information on changes in the number and

market share of all MVPDs, and the effects of MVPD horizontal

concentration at the local, regional and national levels. We seek

comment on the definition of the relevant market as revised in the 1996

Competition Report, which posited alternative approaches to measuring

concentration in the average local market, and identified product

differentiation and entry conditions as factors affecting competition.

In local markets where incumbent cable operators face competition from

one or more other video programming distributors, we seek information

on: (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.

6. Mergers, acquisitions, consolidations and corporate

restructuring are important causes of change in industry structure and

in the intensity of market competition. We seek information on such

events over the past year, their effects on industry structure, and

impact on markets for the delivery of video programming. In particular,

we solicit maps that show the ownership patterns that have resulted

from industry restructuring and the effects of these changes on

competition in markets for the delivery of video programming.

7. In the 1997 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. Thus, we seek information and ask a variety of questions

on programming services that are affiliated with cable operators,

affiliated with other non-cable video programming distributors, and

unaffiliated with any MVPD.

8. As in prior reports, we seek to update our assessment of the

effectiveness of our program access, program carriage, and channel

occupancy rules. In the 1996 Competition Report, we observed a concern

that the program access rules may be too narrowly focused to address

some current issues related to access to programming and noted that the

1996 Act expanded the program access rules to apply to OVS operators

and common carriers in the same manner as they apply to cable

operators. Therefore, we seek information on the effectiveness of the

program access rules during the past year, including the effect of

expansion of these rules to OVS operators and common carriers, and on

any remaining issues of concern to video programming providers or

MVPDs. We also solicit comment on our leased access rules and, in

particular, our recent revision of the formula for calculating the

maximum reasonable rate for the carriage of leased access programming.

9. Moreover, as we did in the 1996 Competition Report, we will

examine the effect of competition in local markets through case studies

of local markets where cable operators faced actual competition from

MVPD entrants. We seek updated information on the effects of actual and

potential competition in these local markets and in others where

consumers have, or soon will have, a choice between MVPDs, including

information on incumbent MVPDs responses, such as decreased rates or

increased service offerings, to anticipated and actual entry by

competing MVPDs. In addition, we request identification of particular

strategic behavior and conduct by other MVPDs that affect competition

in markets characterized by head-to-head competition between or among

MVPDs.

10. We also noted in the 1996 Competition Report that laws,

regulations, and strategic behavior by incumbents can create

impediments to entry and competition in markets for the delivery of

video programming, and endeavored to briefly assess our efforts to

reduce some of those impediments. We request information regarding

existing or potential regulatory impediments that may have the effect

of deterring entry or preventing expansion of competitive opportunities

in video program delivery markets. In addition, we ask commenters to

identify specific statutory provisions that are perceived as advancing

or inhibiting competition or that have differential application and may

distort competition among MVPDs, or that restrain competitive

opportunities within markets for the delivery of multichannel video

programming.

11. A number of the provisions of the 1996 Act were intended to

encourage competition in markets for the delivery of video programming.

In the 1997 Competition Report, we would like to update our assessment

of the effects of the various provisions of the 1996 Act on the status

of competition. In particular, we seek comment on ten specific changes

from the 1996 Act relating to competition in video markets: (a) the

establishment of OVS; (b) preemption of restrictions on over-the-air

reception devices; (c) the change in the definition of cable

television; (d) a new ``effective competition'' definition; (e) changes

in rate regulation provisions; (f) rate competition in multiple

dwelling units; (g) competition in MVPD ``navigation'' equipment

markets; (h) the entry of exempt public utility companies into video

markets; (i) pole attachment regulation; and (j) the elimination of

entrance barriers for entrepreneurs and small businesses.

12. Finally, as provided in our Report submitted to Congress on

July 29, 1996, concerning Video Programming Accessibility,

Implementation of Section 305 of the Telecommunications Act of 1996--

Video Programming Accessibility, 61 FR 4249 (August 14, 1996), we seek

information on methods and schedules for providing greater

accessibility to video programs for persons with visual disabilities.

In the Video Programming Accessibility Report, which was required by

Section 713(f) of the Communications Act, we concluded that the record

before us was insufficient to assess the appropriate methods and

schedules for phasing video description into the marketplace and

indicated that we would collect additional information in the context

of the 1997 Competition Report. Accordingly, in the Notice, we request

data and information including: (a) the availability and cost of

secondary audio programming (``SAP'') channels needed to deploy video

description; (b) the cost and possible funding of video description;

(c) the impact that implementation of digital technologies could have;

(d) specific methods and schedules for ensuring that video programming

includes descriptions; and (e) any other relevant technical, quality,

legal and policy issues. We will use this additional record to better

assess those issues that were not fully addressed in the Video

Accessibility Report.

Administrative Matters

Ex Parte

13. There are no ex parte or disclosure requirements applicable to

this proceeding pursuant to 47 CFR Sec. 1.1204(a)(4).

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Comment Dates

14. Pursuant to applicable procedures set forth in Sections 1.415

and 1.419 of the Commission's Rules, 47 CFR Secs. 1.415 and 1.419,

interested parties may file comments on or before July 23, 1997, and

reply comments on or before August 20, 1997. To file formally in this

proceeding, participants must file an original and four copies of all

comments, reply comments and supporting comments. If participants want

each Commissioner to receive a personal copy of their comments, an

original plus ten copies must be filed. Comments and reply comments

should be sent to the Office of the Secretary, Federal Communications

Commission, Washington, D.C. 20554. Comments and reply comments will be

available for public inspection during regular business hours in the

FCC Reference Center (Room 239) of the Federal Communications

Commission, 1919 M Street, N.W., Washington, D.C. 20554.

Ordering Clauses

15. This Notice of Inquiry is issued pursuant to authority

contained in Sections 4(i), 4(j), 403 and 628(g) of the Communications

Act of 1934, as amended.

List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97-18690 Filed 7-15-97; 8:45 am]

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