**Before the**

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | MB Docket No. 05-255         |
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| Annual Assessment of the Status  | ) |                              |
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TWELFTH ANNUAL REPORT

**Adopted: February 10, 2006 Released: March 3, 2006**

**Comment Date: April 3, 2006**

**Reply Comment Date: April 18, 2006**

By the Commission: Chairman Martin, Commissioners Copps, Adelstein, and
Tate issuing separate

statements.

Table of Contents

Heading Paragraph \#

I. introduction 1

A. Scope of this Report 2

B. Summary 4

1\. The Current State of Competition: 2005 4

2\. General Findings 6

3\. Specific Findings 8

II\. competitors in the market for the delivery of video programming 27

A. Cable Television Service 27

1\. General Performance 28

2\. Capital Acquisition and Disposition 47

3\. Advanced and Other Services 50

B. Direct-to-Home Satellite Services 70

1\. Direct Broadcast Satellite 70

2\. Home Satellite or Large Dish Service 79

3*.* Satellite-Based Advanced Services 83

C. Broadband Service Providers 87

D. Broadcast Television Service 92

1\. General Performance 92

2\. Digital Television 95

E. Other Wireline Video Services 121

1\. Local Exchange Carriers 121

2\. Electric and Gas Utilities 126

F. Other Wireless Video Services 129

1\. Private Cable Systems 129

2\. Wireless Cable Systems 131

3\. Commercial Mobile Radio Service 133

G. Other Entrants 135

1\. Internet Video 135

2\. Home Video Sales and Rentals 140

III\. Market structure and conditions affecting competition 143

A. Market Structure and Ownership Issues 143

1\. Competitive Issues in the Retail Market for the Distribution of
Video Programming to Consumers 144

2\. Competitive Issues in the Program Supply Market 151

B. Vertical Integration and Other Programming Issues 156

1\. Status of Vertical Integration 156

2\. Other Programming Issues 168

C. Other Competitive Issues 203

1\. Competitive Developments in Small and Rural Markets 203

2\. Competitive Developments in the MDU Market 207

IV\. Technical issues 209

A. Navigation and Reception Devices 210

B. Emerging Technologies 219

V. FOREIGN MARKETS 236

VI\. administrative matters 243

APPENDICES:

Appendix A: List of Commenters

Appendix B: Market Structure Tables

Appendix C: Vertical Integration Tables

# introduction

1.  As required by Section 628(g) of the Communications Act of 1934, as
    amended, this is the Commission's twelfth annual report (*2005
    Report*) to Congress on the status of competition in the market for
    the delivery of video programming.[^1] Congress imposed this annual
    reporting requirement in the Cable Television Consumer Protection
    and Competition Act of 1992 (1992 Cable Act)[^2] as a means of
    obtaining information on the competitive status of the market for
    the delivery of video programming.

## Scope of this Report

2.  Consistent with the statutory purpose, we report on developments in
    the market for the delivery of video programming and on the factors
    that have facilitated or impeded changes in the competitive
    environment over the past year. We present information and analysis
    regarding changes in the market since the *2004 Report*, and we
    describe how those changes affect the current state of the market.
    The information and analysis provided in this *Report* are based on
    information submitted by commenters in response to a *Notice of
    Inquiry* (*Notice*) in this docket,[^3] publicly available data, and
    filings in various Commission proceedings. Although the *Notice*
    asked commenters to provide certain kinds of data and other
    information, we do not require commenters to do so, nor do we audit
    the data that are provided.

3.  The market for the delivery of video programming services is served
    by a number of operators using a wide range of distribution
    technologies. In Section II, we examine each of these delivery
    technologies, and the services provided over them, and we assess
    their ability to provide competitive services in the multichannel
    video market. Specifically, we examine the cable television
    industry, and other established multichannel video programming
    distributors (MVPDs), including direct broadcast satellite (DBS)
    providers, home satellite dishes (HSDs), and broadband service
    providers (BSPs), as well as broadcast television service. We also
    examine other wireline video providers, including local exchange
    carriers (LECs), which have initiated commercial services using
    copper-based, fiber, and hybrid-fiber coaxial cable distribution
    technologies for video programming, and electric and gas utilities.
    In addition, we address wireless video services, including services
    provided by private cable operators (PCOs), wireless cable systems
    using frequencies in the broadband radio and educational broadband
    services (wireless cable), and services offering video programming
    delivered over commercial mobile radio systems (CMRS). We also
    examine Internet-based video services. Finally, we review home video
    sales and rentals. In Section III, we examine market structure and
    competition, evaluating ownership trends in the multichannel video
    marketplace, vertical integration between programming services and
    distribution systems, issues pertaining to access to programming,
    and competitive issues in small and rural markets and multiple
    dwelling units (MDUs). We also address numerous technical issues
    (Section IV) regarding navigation and reception devices and emerging
    services. Finally, we survey developments in foreign markets
    (Section V).

## Summary

### The Current State of Competition: 2005

4.  Americans are voracious consumers of media services, spending close
    to 30 percent of their day engaged in some activity involving media,
    with television viewing the dominant media activity.[^4] For the
    September 2004 -- September 2005 television season, the average
    household tuned into television for 8 hours, 11 minutes a day.[^5]
    This is almost three percent higher than the previous season, over
    12 percent higher than 10 years ago, and the highest level observed
    since television viewing was first measured by Nielsen Media
    Research in the 1950s.[^6] Within the same period, the average
    person watched 4 hours, 32 minutes each day, again a record
    high.[^7]

5.  Competition in the delivery of video programming services has
    provided consumers with increased choice, better picture quality,
    and greater technological innovation. In particular, the effect of
    DBS competition has resulted in the addition of networks to cable
    operators' channel line ups, although it has only lowered cable
    rates slightly.[^8] We find that almost all consumers have the
    choice between over-the-air broadcast television, a cable service,
    and at least two DBS providers. In some areas, consumers also may
    have access to video programming delivered by emerging technologies,
    such as digital broadcast spectrum, fiber to the home, or video over
    the Internet. In addition, through the use of advanced set-top boxes
    and digital video recorders, and the introduction of new mobile
    video services, consumers are now able to maintain more control over
    what, when, and how they receive information. Further, MVPDs of all
    stripes are offering nonvideo services in tandem with their
    traditional video services.

### General Findings

6.  The MVPD market has continued to grow. While the largest MVPD
    remains a cable operator, cable subscribership declined slightly
    since the *2004 Report*. The second and third largest MVPDs now are
    DBS operators. In addition, other delivery technologies continue to
    serve small numbers of subscribers in limited areas. LECs, such as
    SBC[^9] and Verizon, who continue to partner with DBS providers to
    offer video service, have spent the past year preparing to offer
    video in their operating areas and are building out their facilities
    to add video offerings.

7.  Large numbers of consumers continue to subscribe to cable service,
    which commands approximately 69 percent of all MVPD households.
    Cable operators have responded to the growth of DBS and its
    competitive service offerings by, among other things, expanding
    their channel line ups and bundling video service with other service
    offerings, such as cable modem service or telephone service. The
    number of cable subscribers selecting digital tiers and advanced
    services not offered by DBS continues to grow. These competitive
    efforts are matched by DBS operators' offering of local broadcast
    channels, additional sports and international programming, and
    advanced set-top boxes with digital video recorder (DVR)
    capabilities. Similarly, broadband service providers continue to
    offer a triple play of video, voice and Internet access service,
    which is proving to be price competitive with cable. Among our
    findings in rural and small markets are that LECs are upgrading
    their traditional copper facilities to digital subscriber line (DSL)
    and fiber-based platforms to allow them to offer a suite of video,
    telephone, and data services.

### Specific Findings

8.  The number of TV households and the number of MVPD subscribers
    increased in the past year. As of June 2005, there were 109.6
    million TV households, compared to 108.4 million in June 2004. Of
    that number, approximately 94.2 million TV households, or almost 86
    percent of TV households subscribe to an MVPD service, as compared
    to 92.3 million, or 85.1 percent as of June 2004. Cable serves the
    largest percentage of MVPD subscribers, but cable's share of the
    MVPD market continued to decline. As of June 2005, 69.4 percent of
    MVPD subscribers received video programming from a franchised cable
    operator, as compared to 71.6 percent as of June 2004.[^10] DBS
    subscribers comprise the second largest group of MVPD households,
    representing 27.7 percent of total MVPD subscribers as of June 2005,
    compared to 25.1 percent in June 2004, an increase of more than 10
    percent. The competitive presence of MVPDs other than cable or DBS
    declined. The number of MVPD subscribers choosing all other delivery
    technologies decreased, representing 2.9 percent of all subscribers
    in June 2005, as compared to 3.3 percent in June 2004.

9.  In 2005, the four MVPDs with the largest subscribership served 63
    percent of all MVPD subscribers, while in 2004, the top four served
    58 percent of all subscribers. The share of subscribers served by
    the top ten MVPDs also increased from approximately 85 percent in
    2004 to 88 percent in 2005. Relatively few consumers have a second
    wireline alternative, such as an overbuild cable system. BSPs, which
    typically operate overbuild systems, reported no appreciable change
    in subscribership since last year, maintaining total subscribership
    of approximately 1.4 million.

10. ***Cable Service***. The number of basic cable subscribers declined
    slightly, falling from 66.1 million in June 2004 to 65.4 million in
    June 2005. Cable penetration (*i.e.*, subscribers/homes passed)
    declined in 2004, as the number of subscribers decreased and the
    number of homes passed increased.

11. Cable revenue was projected to grow 10.8 percent in 2005 to \$66.5
    billion. Much of the increase in revenue comes from advanced
    services, especially high-speed Internet service and digital cable
    services, and from higher basic cable rates. In addition to
    traditional analog video services, many cable operators offer
    subscribers one or more advanced video services, including digital
    video, video-on-demand, digital video recorders, and high-definition
    television; and nonvideo advanced services, including high-speed
    Internet access and telephony (circuit-switched telephony and/or
    voice over Internet protocol telephony). At year-end 2004, according
    to industry reports, 96 percent of all cable homes passed were
    offered digital video services, 93 percent were offered high-speed
    Internet access services, and telephony service (both VoIP and
    circuit-switched) was available to 38 percent of homes passed by
    cable.

12. Section 612(g) of the Communications Act provides that when cable
    systems with 36 or more activated channels are available to 70
    percent of households within the United States and when 70 percent
    of those households subscribe to them, the Commission may promulgate
    any additional rules necessary to promote diversity of information
    sources. Data submitted in the record this year raises questions as
    to whether the so-called "70/70 test" has been satisfied.
    Accordingly, the Commission is seeking further public comment on the
    best methodologies and data for measuring the 70-percent thresholds
    and, if the thresholds have been met, what action might be warranted
    to achieve the statutory goals.

13. ***Direct-to-Home (DTH) Satellite Service (DBS and Home Satellite
    Dish, or HSD)***. As of June 2005, approximately 26.1 million U.S.
    households subscribed to DBS service. This represents an increase of
    12.8 percent over the approximately 23.2 million DBS subscribers we
    reported last year. DBS accounts for approximately 27.7 percent of
    all U.S. MVPD subscribers. DBS operators continue to add
    local-into-local broadcast television service. In 167 of 210
    television markets (*i.e.*, designated market areas, or DMAs),
    covering 96 percent of all U.S. TV households, at least one DBS
    provider offers the signals of local broadcast stations
    (local-into-local service). As of June 2005, there were 206,358
    households authorized to receive HSD service, a decrease of 38.5
    percent from the 335,766 we reported last year.

14. ***Other Wireline MVPD Services***. For the purposes of this report,
    we consider broadband service providers (BSPs) to be newer firms
    that are building state-of-the-art, facilities-based networks to
    provide video, voice, and data services over a single network. As of
    June 2005, BSPs served approximately 1.4 million subscribers,
    representing 1.5 percent of all MVPD households. Electric and gas
    utilities also provide MVPD and other services. Reports indicate
    that 616 public power entities offer some kind of broadband
    services, serving about 14 percent of total households in the United
    States. Of those, 102 offered video service, 128 offered high-speed
    Internet access, 52 offered local telephone service, and 42 offered
    long distance telephone service. Of the 102 offering video services,
    10 are offering video-on-demand (VOD).

15. Incumbent local exchange carriers (ILECs) have reported plans to
    provide video service via asymmetric digital subscriber line (ADSL),
    very high-speed digital subscriber line (VDSL), or fiber to the home
    (FTTH) or fiber to the node (FTTN).[^11] There are 652 communities
    in 46 states currently served at least in part by FTTH networks,
    with 322,700 "connected homes." The larger LECs have accelerated
    their plans to roll out video services using DSL and fiber-based
    distribution platforms. Verizon is deploying an FTTH network under
    the brand name "FiOS" that will allow delivery of multichannel video
    services in addition to telephony and high-speed Internet access
    service at speeds above those of ADSL technology. Verizon has
    received franchises from local communities in California, Florida,
    Virginia, Texas, Massachusetts, and Maryland. It began offering
    multichannel video service in Keller, Texas, in September 2005, and
    now offers service to more than a dozen Texas communities; in
    Herndon, Virginia, in November 2005; and in Temple Terrace, Florida,
    in December 2005. SBC is planning to deploy an IP-enabled broadband
    network called "Project Lightspeed" using both FTTN and FTTH to
    deliver video and other services to residential customers. SBC
    reports that the network will be available to 18 million homes
    nationwide within three years. Qwest and a number of smaller
    incumbent LECs are offering, or preparing to offer, MVPD service
    over existing telephone lines using VDSL or ADSL technologies.

16. ***Wireless Services***. Wireless cable systems provide video
    competition to incumbent cable operators only on a limited basis.
    The number of wireless cable subscribers has declined steadily from
    a peak of 1.2 million in 1996 to approximately 100,000 as of March
    2005, down from an estimated 200,000 subscribers in April 2004.
    Several major cellular telephone companies are offering video
    services through handheld devices such as mobile telephones.[^12]
    Verizon Wireless rolled out V-Cast, a service that offers video
    programming to cellular telephone users, in February 2005, and
    Sprint Nextel offers news, video clips, and other content in real
    time over their cellular phones. In addition, PCOs, also known as
    satellite master antenna (SMATV) systems, continue to serve a small
    number of MVPD subscribers, either through their own facilities or
    through partnership arrangements with DBS operators. PCO
    subscribership has declined to one million subscribers this year, a
    decrease of 9.1 percent from last year's 1.1 million.

17. ***Broadcast Television Service***. In this year's *Report*, we find
    that there are almost 15.4 million U.S. TV households that do not
    subscribe to an MVPD service and thus rely solely on over-the-air
    broadcast television for their video programming. In addition, we
    note that many households that subscribe to an MVPD also rely on
    over-the-air signals to receive broadcast programming on some of
    their television sets.[^13] They represent 14 percent of all U.S. TV
    households. From June 30, 2004 to June 30, 2005, the number of
    commercial and noncommercial television stations has remained
    unchanged at 1,747. As of October 2005, more than 1,537 stations
    nationwide are on the air with DTV operations, including all 119 of
    the top-four network affiliates in the top 30 television markets.
    The major broadcast networks (ABC, CBS, Fox, and NBC) now provide
    their most popular programming in high-definition. Hundreds of local
    stations are using their digital channels to provide multicast
    programming, including news, weather, sports, religious material,
    music videos and coverage of local musicians and concerts, as well
    as foreign language programming. As of May 2005, cable operators
    were carrying commercial broadcasters' multicast programming in more
    than 50 markets (including at least seven of the top 10
    markets).[^14]

18. ***Internet Video**.* The amount of web-based video provided over
    the Internet continues to increase significantly each year. The
    overall number of homes with access to the Internet continues to
    grow, as does the number of Americans who access the Internet via a
    high-speed broadband connection. As of June 2005, there were
    approximately 33.7 million high-speed residential Internet access
    subscribers, representing approximately 48 percent of the 70.3
    million residential Internet subscription households. As of January
    2005, an average of 14 percent of all Americans had watched some
    form of streaming video in the preceding month, and approximately
    eight percent of Americans had accessed streaming video content in
    the preceding week.

19. ***Home Video Sales and Rentals***. The sale and rental of home
    videos, including videocassettes and DVDs, offer consumers an
    alternative to the premium and pay-per-view offerings of MVPDs.
    Video-on-demand services provided by cable, DBS, and Internet
    providers have emerged, in turn, as competitive alternatives to home
    video. Nine out of 10 TV households have at least one VCR, and an
    estimated 80 million households have DVD capability, representing
    nearly three-quarters of all U.S. households.

20. ***Cable System Ownership***. Between July 2004 and June 2005, a
    total of 22 MVPD transactions were announced.[^15] Together these
    transactions were valued at approximately \$48.7 billion and
    affected approximately 12.7 million subscribers. At the end of 2004,
    there were 118 clusters with approximately 51.5 million subscribers
    compared to 108 clusters and approximately 53.6 million subscribers
    at the end of 2003 (although due to a change in methodology, these
    figures are not directly comparable). In the largest cluster size
    category (over 500,000 subscribers), the number of clusters remained
    constant at 29 between 2003 and 2004.

21. ***Video Programming Services***. In 2005, using additional data
    resources, we identified 531 satellite-delivered national
    programming networks, an increase of 143 networks over the 2004
    total of 388 networks. Of the 531 networks, 116 networks (21.8
    percent) were vertically integrated with at least one cable
    operator. Five of the top seven cable operators (*i.e*., Comcast,
    Time Warner, Cox, Charter, and Cablevision) hold ownership interests
    in satellite-delivered national programming networks. All of the
    vertically integrated networks are owned in whole or in part by one
    or more of these companies. Of the 531 national nonbroadcast
    networks we have identified, 274, or 51.6 percent, that are not
    affiliated with any cable operator or other media entity. There are
    107 national, satellite-delivered nonbroadcast networks that are
    owned by a DBS operator or one or more national broadcast networks
    (*i.e*., Fox, ABC, CBS, NBC Universal, and Univision) and that are
    not also owned by a cable operator. These networks represent 20.2
    percent of the 531 national nonbroadcast networks we have
    identified, and 25.8 percent of the 415 networks that are
    unaffiliated with a cable operator. Twenty-two national nonbroadcast
    networks, not owned by a cable MSO, are vertically integrated with a
    DBS provider. During the 2004-2005 television season, more than half
    of all prime time viewers watched ad-supported nonbroadcast
    networks, the second consecutive year that these networks, combined,
    have topped all national broadcast networks, combined, for an entire
    TV season. Of the 15 top-rated prime time nonbroadcast networks,
    three are vertically integrated with a cable operator. The remaining
    12 networks are owned by other media entities. In addition, six of
    the top 20 nonbroadcast networks (ranked by subscribership) are
    vertically integrated with a cable operator. Of the other 14
    networks, one is C-SPAN, which is funded, but not directly owned or
    controlled, by MVPDs; 12 are affiliated with noncable media
    entities; and one is unaffiliated.

22. In 2005, we identified 96 regional networks, the same number that we
    identified in 2004. Many, but not all, regional networks are
    delivered by satellite. These networks provide programming of local
    or regional interest and are distributed to subscribers of one or
    more MVPDs in an area. A number of regional networks offer local
    news or sports programming, but some provide more general
    programming, such as religious or ethnic programming. Of the 96
    regional networks we identified, 44 networks, or 45.8 percent, were
    vertically integrated with at least one cable multiple system
    operator (MSO). We continue to monitor the availability of sports
    programming. There are 37 regional sports networks, representing
    38.5 percent of all regional networks, devoted to sports
    programming, as compared to the 38 we reported last year. Of the 37
    regional sports networks, 17, or 45.9 percent, are vertically
    integrated with a cable MSO. In addition, News Corp., which holds an
    interest in DBS operator DIRECTV, is affiliated with 16 regional
    sports networks.

23. ***Consumer Equipment and Technical Developments***. The sale of DTV
    consumer electronics continues to accelerate. For 2005, industry
    estimates indicate that 8.2 million HD-ready monitors will be
    shipped to retailers. CEA reports that during the first six months
    of 2005, DTV products sold at a faster rate than during any previous
    comparable period of time, with 3.8 million DTV products sold, a 40
    percent increase in unit sales from the same time period in 2004. In
    2005, the average retail price of a DTV set was expected to drop to
    \$1,189 from \$1,489 in 2004, down from the average price of \$3,147
    in 1998. CEA states that currently several DTV models are available
    for under \$700, and it expects that soon there will be DTV sets
    that sell for as low as \$400.

24. The development and deployment of CableCARDs continued in 2005.
    CableCARDs permit the reception of one-way secured digital cable
    services without the addition of a set-top box. As of November 30,
    2005, there were 375 certified or verified models of CableCARD
    products collectively offered by 22 manufacturers, up from 60 models
    offered by 11 manufacturers the previous year. One-way CableCARDs
    have been deployed to more than 90,000 subscribers by the ten
    largest MSOs.

25. The video industry is evaluating the use of advanced compression
    technologies, such as MPEG-4/H.264 and Microsoft's VC-1, to replace
    the MPEG-2 standard in order to decrease the amount of bandwidth
    required to transmit digital video. For example, DIRECTV is using
    MPEG-4 to provide HD local-into-local in a number of markets. These
    advances are expected to allow existing video delivery services to
    provide more programming and to decrease barriers to entry for new
    entrants to the MVPD market.

26. ***Foreign Markets***. In foreign markets, a number of incumbent
    operators and new entrants are providing Internet protocol
    television (IPTV) over DSL. Services are offered generally through a
    "triple play" service package of video, telephone and broadband
    Internet access. Operators also offer a wide selection of a la carte
    and themed video programming packages.

# competitors in the market for the delivery of video programming

## Cable Television Service

27. This section addresses the performance of cable television system
    operators during the past year.[^16] First, we report on the general
    performance of the industry, including subscriber levels,
    availability of basic services, viewership, and cable rates. Second,
    we discuss the cable industry's financial performance, including its
    revenue, cash flow status, stock valuations, and system
    transactions. Third, we examine the cable industry's acquisition and
    disposition of capital. Lastly, we address the growth of advanced
    video services, including digital and high-definition television,
    video-on-demand, and digital video recorders; and nonvideo advanced
    services, including high-speed Internet access and voice over
    Internet protocol telephony.

### General Performance

28. The number of subscribers to basic cable service[^17] and premium
    cable service[^18] declined in 2004. Basic cable penetration, the
    ratio of the number of basic cable subscribers to the number of
    homes passed,[^19] declined in 2004 and is estimated to have
    declined further in the first half of 2005. By many other measures,
    however, general cable industry performance increased across the
    board. For example, premium service subscriptions[^20] and
    subscriptions to digital video service increased.[^21] Although
    basic cable penetration decreased in 2004, homes passed increased
    during the same period. Channel capacity[^22] and deployment of
    video-on-demand,[^23] digital video recorders,[^24] and
    high-definition service all increased during 2004 and the first half
    of 2005.[^25] Deployment of nonvideo advanced services, such as
    high-speed Internet access service and telephone service, also
    increased during this period.

29. ***Cable's Capacity to Serve Television Households***. A widely used
    industry measurement of cable availability is the percentage of
    homes with a television that are passed by a cable system. The
    calculation of cable availability has been a subject of
    controversy.[^26] The number of homes passed depends on the data
    source used, and the percentage of homes passed varies based on the
    universe used for the comparison.[^27]

30. According to NCTA, at the end of 2004, cable systems passed 108.2
    million occupied homes with a television, and 109.6 million homes
    had a television.[^28] Thus, NCTA estimates that at the end of 2004,
    cable systems passed approximately 99 percent of homes with a
    television.[^29] We continue to use, as we have in the past, data
    derived from Kagan World Media (homes passed by cable systems) and
    Nielsen Media Research (total TV households) for historical
    consistency. We present these data to indicate trends, rather than
    as an absolute measure of cable availability. Kagan estimates that
    at the end of 2004, 109.6 million households had at least one
    television, and cable systems passed 108.6 million occupied homes
    (not all of them with a television).[^30] Using Kagan's numbers, at
    the end of 2004, the percentage of occupied homes with a television
    that were passed by a cable system was approximately 99 percent,
    which is consistent with NCTA's estimate.[^31]

31. 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 percent of households within the United States and are subscribed
    to by 70 percent of those households, the Commission may promulgate
    any additional rules necessary to promote diversity of information
    sources.[^32] As discussed below, data submitted in the record this
    year raises questions as to whether the so-called "70/70 test" has
    been satisfied.[^33] Accordingly, we are seeking additional input to
    help the Commission further consider this issue.

32. Current Census Bureau data indicate that there are 107,850,000
    occupied housing units.[^34] According to Warren Communications News
    (Warren), there are 93,077,522 occupied homes passed by cable
    systems with 36 or more channels.[^35] Thus, based on these data
    sources, cable systems with 36 or more channels are available to
    86.3 percent (93,077,522/107,850,000) of occupied households.[^36]
    No commenter provided any conflicting data relevant to the first
    prong of the test, and so there appears to be no serious
    disagreement that this prong of the analysis has been satisfied.

33. With respect to the second prong of the analysis, however, the
    record is less clear. At least one commenter has submitted a
    statistical analysis that suggests the cable subscription threshold
    has been satisfied, while other measures indicate that current cable
    subscribership falls just short of the statutory mark. SBC believes
    the second prong of the benchmark may have been met. Specifically,
    SBC calculates that 77.2 percent of all households passed by cable
    systems with 36 or more channels subscribe to these cable
    systems.[^37] Using figures estimated by the Commission and NCTA,
    SBC asserts that 65,155,440 households subscribe to cable systems
    with 36 or more channels.[^38] SBC derives this figure from NCTA's
    estimate that 73,219,360 households subscribed to cable as of
    February 2005,[^39] and the Commission's calculation in last year's
    *Report*, using Warren data as of October 2004, that 8,063,920
    households subscribed to cable systems with fewer than 36
    channels.[^40] SBC subtracts the Commission's estimate from NCTA's
    estimate (73,219,360 -- 8,063,920 = 65,155,440).[^41] SBC then
    divides its estimate of households that subscribe to cable systems
    offering 36 or more channels by Warren's October 2004 estimate,
    cited in the *2004* Report, that 84,415,707 households homes were
    passed by cable systems with 36 or more channels.[^42] This
    calculation produces a figure of 77.2 percent (65,155,440/84,415,707
    = 0.772). SBC acknowledges that its data for households passed by
    cable systems and cable subscribers differ from the data used by the
    Commission to determine whether the statutory trigger has been
    met.[^43] To better determine whether the statutory trigger has been
    met, SBC asks the Commission to insist that the cable industry
    provide "the relevant data calculated on a consistent and
    transparent basis."[^44]

34. In contrast several other calculations indicate that the second
    prong of the 70/70 test has not been met. Warren estimates that of
    the occupied U.S. homes passed by cable systems with 36 or more
    channels, 63,145,124 of those households subscribe to cable service
    offered by such systems.[^45] As a percentage measure, then, the
    Warren data indicates that 67.8 percent of homes passed
    (63,145,124/93,077,522) subscribe to these systems. [^46] As
    alternatives, data from the *2005 Price Survey* and the *Annual
    Report of Cable Television Systems* (FCC Form 325) could be used to
    estimate the second prong of the 70/70 benchmark. Neither source,
    however, indicates that the second element of the test has been met.
    From the 2005 Price Survey sample, the Commission staff estimates
    that the subscribers to systems with 36 or more channels as a
    percent of the homes passed by such systems is 56.3 percent,
    compared to 58.8 percent using data from the 2004 Price Survey
    sample.[^47] Based on the Form 325 sample, our staff estimates that
    this figure is 54 percent, compared to 54.7 percent reported last
    year.[^48] NCTA has arrived at still other measures. Using Warren,
    Nielsen, and Kagan data, NCTA submitted estimates of the second
    prong of the 70/70 benchmark ranging from 63.3 percent to 68.9
    percent.[^49]

35. We recognize that the available data sources have some limitations
    because the reported cable penetration rates are not calculated from
    a complete census of cable systems.[^50] Each reported penetration
    rate is an estimate, subject to some variation from the actual
    penetration rate. The limitations of the data sources do not appear
    to affect the determination with respect to the first prong of the
    70/70 test, which is higher than the threshold regardless of the
    data source used for the calculation. The question of whether the
    second prong has been met is less clear since at least one party
    finds that the benchmark has been exceeded and some other estimates,
    while under 70 percent, are very close to that threshold. Given
    these circumstances and the fact that all available data sources are
    imprecise to some extent, it is possible that the second prong of
    the 70/70 benchmark has been met.

36. In light of the significance of this issue and commenters'
    disagreements as to whether the statutory standard has been
    satisfied, the Commission is seeking further public comment on the
    best methodologies and data for measuring the 70-percent thresholds.
    For example, controversy has arisen in other proceedings regarding
    how the Commission should define whether a cable system is available
    to a household.[^51] The question of how to define a household for
    purposes of the 70/70 test has also arisen.[^52] Should we include
    only households that are occupied? Should we include only households
    that contain a television set? How should we determine whether a
    household subscribes to a cable system? Should we include only
    households that subscribe to the basic tier of video services,
    thereby excluding those households that subscribe only to non-video
    services?[^53] We also seek comment on SBC's suggestion that the
    Commission should require the cable industry to provide "the
    relevant data on a consistent and transparent basis."[^54] We also
    invite comment on what, if any, additional action should be
    undertaken to achieve the statutory goals, should we find that the
    thresholds have been met.[^55] As a preliminary matter, we ask
    commenters who advocate that the Commission promulgate additional
    rules to address the scope of our statutory authority under Section
    612(g) to do so. We also ask commenters who advocate the
    promulgation of additional regulations to provide a detailed
    description of the suggested regulations and of their potential
    costs and benefits. Deadlines for public comment on these questions
    are provided in the final section of this Report.

37. ***Subscribership***. The number of basic cable subscribers declined
    slightly from 66 million in 2003 to 65.4 million in 2004, as shown
    in Table 1 below. Kagan estimated that the number of basic cable
    subscribers would remain unchanged at 65.4 million basic subscribers
    at year-end 2005.[^56]

TABLE 1: Cable Television Industry Growth: 1999 - June 2005 (in
millions)[^57]

<table style="width:100%;">
<colgroup>
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 5%" />
<col style="width: 0%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 5%" />
<col style="width: 0%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 5%" />
<col style="width: 0%" />
<col style="width: 13%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="2"></td>
<td colspan="4"><p><strong>TV Households</strong></p>
<p><strong>(TH)</strong> <a href="#fn1" class="footnote-ref" id="fnref1"
role="doc-noteref"><sup>1</sup></a></p></td>
<td colspan="4"><p><strong>Homes Passed</strong></p>
<p><strong>(HP)</strong> <a href="#fn2" class="footnote-ref" id="fnref2"
role="doc-noteref"><sup>2</sup></a></p></td>
<td colspan="4"><strong>Basic Subscribers (Subs)</strong> <a href="#fn3"
class="footnote-ref" id="fnref3"
role="doc-noteref"><sup>3</sup></a></td>
<td colspan="2" rowspan="2"><strong>HH Passed by Cable
(HP/TH)</strong></td>
<td colspan="2" rowspan="2"><strong>HHs Subscribing
(Subs/TH)</strong></td>
<td rowspan="2"><p><strong>U.S. Penetration</strong></p>
<p><strong>(Subs/HP)</strong></p></td>
</tr>
<tr class="even">
<td colspan="2"><strong>Year</strong></td>
<td colspan="2"><strong>Total</strong></td>
<td colspan="2"><strong>% Change Over Prior Yr</strong></td>
<td colspan="2"><strong>Total</strong></td>
<td colspan="2"><p><strong>% Change</strong></p>
<p><strong>Over Prior Yr</strong></p></td>
<td colspan="2"><strong>Total</strong></td>
<td colspan="2"><strong>% Change Over Prior Yr</strong></td>
</tr>
<tr class="odd">
<td><strong>1999</strong></td>
<td colspan="2">100.8</td>
<td colspan="2">1.4%</td>
<td colspan="2">97.6</td>
<td colspan="2">2.1%</td>
<td colspan="2">65.9</td>
<td colspan="2">1.2%</td>
<td colspan="2">96.8%</td>
<td colspan="2">65.4%</td>
<td colspan="2">67.5%</td>
</tr>
<tr class="even">
<td><strong>2000</strong></td>
<td colspan="2">102.2</td>
<td colspan="2">1.4%</td>
<td colspan="2">98.9</td>
<td colspan="2">1.3%</td>
<td colspan="2">66.6</td>
<td colspan="2">1.1%</td>
<td colspan="2">96.8%</td>
<td colspan="2">65.2%</td>
<td colspan="2">67.3%</td>
</tr>
<tr class="odd">
<td><strong>2001</strong></td>
<td colspan="2">104.4</td>
<td colspan="2">2.2%</td>
<td colspan="2">100.6</td>
<td colspan="2">1.7%</td>
<td colspan="2">66.9</td>
<td colspan="2">0.5%</td>
<td colspan="2">96.4%</td>
<td colspan="2">64.1%</td>
<td colspan="2">66.5%</td>
</tr>
<tr class="even">
<td><strong>2002</strong></td>
<td colspan="2">106.7</td>
<td colspan="2">2.2%</td>
<td colspan="2">103.4</td>
<td colspan="2">2.8%</td>
<td colspan="2">66.1</td>
<td colspan="2">-1.2%</td>
<td colspan="2">96.9%</td>
<td colspan="2">61.9%</td>
<td colspan="2">63.9%</td>
</tr>
<tr class="odd">
<td><strong>2003</strong></td>
<td colspan="2">108.4</td>
<td colspan="2">1.6%</td>
<td colspan="2">106.0</td>
<td colspan="2">2.5%</td>
<td colspan="2">66.0</td>
<td colspan="2">-0.2%</td>
<td colspan="2">97.8%</td>
<td colspan="2">60.9%</td>
<td colspan="2">62.3%</td>
</tr>
<tr class="even">
<td><strong>2004</strong></td>
<td colspan="2">109.6</td>
<td colspan="2">1.1%</td>
<td colspan="2">108.6</td>
<td colspan="2">2.5%</td>
<td colspan="2">65.4</td>
<td colspan="2">-0.9%</td>
<td colspan="2">99.1%</td>
<td colspan="2">59.7%</td>
<td colspan="2">60.2%</td>
</tr>
<tr class="odd">
<td><strong>June 2005</strong></td>
<td colspan="2">109.6</td>
<td colspan="2">0.0%<a href="#fn4" class="footnote-ref" id="fnref4"
role="doc-noteref"><sup>4</sup></a></td>
<td colspan="2">109.7</td>
<td colspan="2">1.0%</td>
<td colspan="2">65.4</td>
<td colspan="2">0.0%</td>
<td colspan="2">100.1%</td>
<td colspan="2">59.7%</td>
<td colspan="2">59.6%</td>
</tr>
</tbody>
</table>
<aside id="footnotes" class="footnotes footnotes-end-of-document"
role="doc-endnotes">
<hr />
<ol>
<li id="fn1"><p>The 2004 and estimated June 2005 TV Household numbers
are reported by Kagan Research, LLC as total U.S. TV households. The
numbers are derived from Nielsen Media Research and Kagan estimates.
<em>Id</em>. at 11.<a href="#fnref1" class="footnote-back"
role="doc-backlink">↩︎</a></p></li>
<li id="fn2"><p>Kagan reports the 1999 through 2004 homes passed numbers
as occupied cable homes passed. The June 2005 homes passed estimate is
an average calculated from the actual 2004 and the projected 2005
numbers for occupied cable homes passed. <em>Id</em>. at 9, 11.<a
href="#fnref2" class="footnote-back" role="doc-backlink">↩︎</a></p></li>
<li id="fn3"><p>Kagan reports the 1999 through 2004 basic subscriber
numbers as basic subscribers. The June 2005 basic subscriber estimate is
an average calculated from the actual 2004 and the projected 2005
numbers for total basic cable subscribers. <em>Id</em>.<a href="#fnref3"
class="footnote-back" role="doc-backlink">↩︎</a></p></li>
<li id="fn4"><p>Percentage change columns in this row are from December
2004 to June 2005.<a href="#fnref4" class="footnote-back"
role="doc-backlink">↩︎</a></p></li>
</ol>
</aside>

38. Although the number of basic subscribers was unchanged for the
    second quarter of 2005, as shown in Table 2, cable companies
    continue to experience variations in the number of basic subscribers
    they serve.

**Table 2: Top MSOs' Basic Cable Subscribers -- 2003 to June 2005**[^58]

+-----------+-----------+--------+---------+---------+--------------+
| **O       | **Year    | **YE   | *       | **June  | **G          |
| perator** | End (YE)  | 2004** | *Gain/( | 2005**  | ain/(Loss)YE |
|           | 2003**    |        | Loss)** |         | 04 to June   |
|           |           |        |         |         | 2005**       |
|           |           |        | **YE    |         |              |
|           |           |        | 03-YE   |         |              |
|           |           |        | 04**    |         |              |
+-----------+-----------+--------+---------+---------+--------------+
| **Comca   | 2         | 21,5   | 8,000   | 2       | (100,000)    |
| st**[^59] | 1,540,000 | 48,000 |         | 1,448,0 |              |
|           |           |        |         | 00[^60] |              |
+-----------+-----------+--------+---------+---------+--------------+
| **Time    | 1         | 10,8   | (       | 1       | 21,000       |
| Warn      | 0,919,000 | 84,000 | 35,000) | 0,905,0 |              |
| er**[^61] |           |        |         | 00[^62] |              |
+-----------+-----------+--------+---------+---------+--------------+
| **C       | 6,285,236 | 6,2    | 2,159   | 6,      | (4,273)      |
| ox**[^63] |           | 87,395 |         | 283,122 |              |
+-----------+-----------+--------+---------+---------+--------------+
| **Chart   | 6,200,500 | 5,9    | (2      | 5,      | (48,400)     |
| er**[^64] |           | 91,500 | 09,000) | 943,100 |              |
+-----------+-----------+--------+---------+---------+--------------+
| **        | 2,944,694 | 2,9    | 18,307  | 3,      | 42,557       |
| Cablevisi |           | 63,001 |         | 005,558 |              |
| on**[^65] |           |        |         |         |              |
+-----------+-----------+--------+---------+---------+--------------+

39. Cable penetration (*i.e.*, subscribers/homes passed) declined in
    2004, as the number of subscribers decreased and the number of homes
    passed increased. Kagan estimated that cable penetration would
    decline further in the first half of 2005. The ratio of cable
    subscribers to television households also declined in 2004, as the
    number of subscribers decreased and the number of television
    households increased.[^66]

40. For the second year in a row, the number of homes subscribing to
    premium cable services declined from 28.3 million in 2003 to 28.1
    million in 2004, as shown in Table 3 below. At the end of 2004,
    approximately 43 percent of cable's 65.4 million subscribers also
    subscribed to premium services.[^67] The number of premium services
    to which homes are subscribing (also known as pay units), however,
    increased from to 83.4 million in 2003 to 90.8 million in 2004.[^68]
    While cable systems sold premium cable services to fewer homes, the
    total revenue received from premium services also increased 6.2
    percent in 2004.[^69] Cable systems sold premium cable services to
    fewer homes, but the average number of subscriptions per premium
    subscriber increased, from an average 2.9 subscriptions per
    subscribing household in 2003 to an average 3.2 subscriptions per
    subscribing household in 2004.[^70]

**TABLE 3: Premium Cable Services: 1999 - 2004 (in millions)**[^71]

+---+-------+---------------+--------+----------------+-----+--------+
| * | **Pr  |               | **P    |                | **A |        |
| * | emium |               | remium |                | ver |        |
| Y | Cable |               | Cable  |                | age |        |
| e | Se    |               | S      |                | Num |        |
| a | rvice |               | ervice |                | ber |        |
| r | S     |               | S      |                | o   |        |
| * | ubscr |               | ubscri |                | f** |        |
| * | ibers |               | ptions |                |     |        |
|   | (Pay  |               | (Pay   |                | **  |        |
|   | HH)** |               | Un     |                | Sub |        |
|   |       |               | its)** |                | scr |        |
|   |       |               |        |                | ipt |        |
|   |       |               |        |                | ion |        |
|   |       |               |        |                | s** |        |
+---+-------+---------------+--------+----------------+-----+--------+
|   | **To  | **% Change**  | **T    | **% Change**   | **  | **%    |
|   | tal** |               | otal** |                | Pay | Ch     |
|   |       | **Over        |        | **Over Prior** | Un  | ange** |
|   |       | Prior**       |        |                | its |        |
|   |       |               |        | **Year**       | /** | **Over |
|   |       | **Year**      |        |                |     | Prior  |
|   |       |               |        |                | **  | Year** |
|   |       |               |        |                | Pay |        |
|   |       |               |        |                | H   |        |
|   |       |               |        |                | H** |        |
+---+-------+---------------+--------+----------------+-----+--------+
| 1 | 28.0  | 0.7%          | 60.2   | 2.7%           | 2.2 | 4.8%   |
| 9 |       |               |        |                |     |        |
| 9 |       |               |        |                |     |        |
| 9 |       |               |        |                |     |        |
+---+-------+---------------+--------+----------------+-----+--------+
| 2 | 28.5  | 1.8%          | 66.8   | 11.0%          | 2.3 | 4.5%   |
| 0 |       |               |        |                |     |        |
| 0 |       |               |        |                |     |        |
| 0 |       |               |        |                |     |        |
+---+-------+---------------+--------+----------------+-----+--------+
| 2 | 29.0  | 1.8%          | 75.6   | 13.2%          | 2.6 | 13.0%  |
| 0 |       |               |        |                |     |        |
| 0 |       |               |        |                |     |        |
| 1 |       |               |        |                |     |        |
+---+-------+---------------+--------+----------------+-----+--------+
| 2 | 29.3  | 1.0%          | 81.1   | 7.3%           | 2.8 | 7.7%   |
| 0 |       |               |        |                |     |        |
| 0 |       |               |        |                |     |        |
| 2 |       |               |        |                |     |        |
+---+-------+---------------+--------+----------------+-----+--------+
| 2 | 28.3  | -3.4%         | 83.4   | 2.8%           | 2.9 | 3.6%   |
| 0 |       |               |        |                |     |        |
| 0 |       |               |        |                |     |        |
| 3 |       |               |        |                |     |        |
+---+-------+---------------+--------+----------------+-----+--------+
| 2 | 28.1  | -0.7%         | 90.8   | 8.9%           | 3.2 | 10.3%  |
| 0 |       |               |        |                |     |        |
| 0 |       |               |        |                |     |        |
| 4 |       |               |        |                |     |        |
+---+-------+---------------+--------+----------------+-----+--------+

41. ***Cable Rates***. Several studies, most notably several released by
    the U.S. Government Accountability Office (GAO), have shown that
    competition constrains cable prices. For example, in 2003, GAO found
    that competition to an incumbent cable operator from a wireline
    provider resulted in cable rates that were "substantially lower (by
    15 percent)" than in markets without this competition.[^72] In this
    study, GAO also concluded that DBS competition had lowered cable
    rates slightly, although the more pronounced competitive effect of
    DBS was the addition of nonbroadcast networks to cable operators'
    channel line-ups.[^73] In 2004, GAO examined six market pairs to
    assess the impact of a BSP overbuilder. In each market pair, one
    market was served by a BSP overbuilder, and the other market was
    not. The market pairs were chosen based on their similarities in
    terms of size and demographics.[^74] GAO found that communities with
    overbuild competition experience lower rates (an average of 23
    percent lower for basic cable) and higher quality service.

42. ***Cable Industry Revenue***. Total revenue grew to \$60.0 billion
    in 2004, as shown in Table 4 below.[^75] This represents a 10.4
    percent increase over the 2003 total revenues of \$54.4 billion.
    Cable revenue is projected to grow 10.8 percent in 2005 to \$66.5
    billion. Much of the increase in revenue comes from advanced
    services, especially high-speed Internet service and digital cable
    services, and from higher basic cable rates, which are regulated by
    local communities.[^76] Average monthly residential revenue per
    subscriber grew from \$66.22 in 2003 to \$72.87 in 2004 and is
    projected to increase to \$80.33 in 2005.[^77] As shown in Table 4,
    all revenue categories increased, except revenue from
    installation/miscellaneous, which decreased 9.6 percent in 2004 but
    is expected to increase by 6.6 percent in 2005.[^78]

43. ***Cable Industry Cash Flow***. Cash flow (generally expressed as
    earnings before interest, taxes, depreciation, and amortization, or
    EBITDA) is often used to assess the financial position of cable
    firms and other companies in capital intensive industries.[^79] Cash
    flow from operations is the net result of cash inflows from
    operations (revenue) and cash outflows from operations (expenses).
    Cash flow from operations indicates a firm\'s ability to meet its
    net financial and investment obligations and thus does not include
    noncash charges to net income such as depreciation and amortization.
    As Table 4 shows, cash flow from operations increased during
    2004.[^80] In addition, cash flow as a percentage of revenue (cash
    flow margin) increased in 2004. That is, cash flow increased at a
    greater rate than revenue, indicating that revenues grew faster than
    operating expenses during 2004.

**Table 4: Cable Industry Revenue and Cash Flow: 2003 -- 2005**[^81]

  --------------------------------- -------------- -------------- ----------- -------------- -----------
                                    **2003**       **2004**       **03-04**   **2005**       **04-05**

                                    **Total**      **Total**      **%         **Est. Total** **%
                                                                  Change**                   Change**

  Basic Subscribers (mil.)          66.0           65.4           -0.9%       65.4           0.0%

  **Revenue Segments (mil.)**                                                                

  Basic Service and CPST Tiers      \$29,000       \$30,080       3.7%        \$31,125       3.5%

  Premium (Pay) Tiers               \$5,891        \$6,255        6.2%        \$6,412        2.5%

  VOD/Pay-Per-View[^82]             \$976          \$1,279        31.0%       \$1,527        19.4%

  Local Advertising                 \$3,143        \$3,527        12.2%       \$3,950        12.0%

  Home Shopping                     \$307          \$329          7.2%        \$358          8.8%

  Total Digital Tier                \$3,396        \$3,966        16.8%       \$4,526        14.1%

  High-speed Internet               \$6,772        \$8,943        32.1%       \$11,172       24.9%

  DVR Service                       \$36           \$150          316.7%      \$405          170.0%

  Circuit Switch and VoIP           \$1,511        \$1,660        9.9%        \$2,240        34.9%

  Installation/Miscellaneous[^83]   \$1,421        \$1,285        -9.6%       \$1,370        6.6%

  Business Services                 \$1,911        \$2,551        33.5%       \$3,411        33.7%

  **Total Revenue (mil.)**          **\$54,364**   **\$60,025**   **10.4%**   **\$66,496**   **10.8%**

  Revenue Per Subscriber            \$823.70       \$917.81       11.4%       \$1016.76      10.8%

  **Operating Cash Flow (mil.)**    **\$20,875**   **\$23,410**   **12.1%**   **\$25,933**   **10.8%**

  Cash Flow per Subscriber          \$316.29       \$357.95       13.2%       \$396.53       10.8%

  **Cash Flow/Total Revenue**       **38.4%**      **39.0%**      **1.6%**    **39.0%**      **0.0%**
  --------------------------------- -------------- -------------- ----------- -------------- -----------

44. ***Programming Costs***. Cable operators' combined program
    expenditures reached \$12.68 billion in 2004 compared to \$11.46
    billion in 2003.[^84] This represents expenditures for existing
    nonbroadcast networks and expenditures for new nonbroadcast
    networks.[^85] In addition to expenditures for national nonbroadcast
    networks, cable companies produced or acquired local and regional
    programming, including cable news and public affairs networks.
    Included in the \$12.68 billion in program expenditures are
    copyright fees of \$132.4 million in 2004 for broadcast signal
    carriage pursuant to Section 111 of the Copyright Act.[^86]

45. ***Cable System Transactions***. The aggregate value of cable
    systems sold in any year depends on the number of transactions, the
    size of the cable systems involved, and the price paid. As shown in
    Table 5 below, there were 21 cable transactions in 2004, covering
    more than 2.7 million basic subscribers and representing an
    aggregate value of \$10.6 billion.[^87] The acquisition of Cox
    Communications by Cox Enterprise Inc. for \$9.0 billion (\$3,846 per
    subscriber) accounted for most of the dollar value.[^88] Most of the
    transactions, however, involved small rural cable systems with an
    average value of \$1,730 per subscriber.[^89] The average value per
    subscriber for the 21 systems sold in 2004 was \$3,906.[^90] In the
    first six months of 2005, there were nine proposed, but not
    necessarily completed, cable system transactions, representing an
    aggregate value of \$38.4 billion. Transactions during the first six
    months of 2005 included the proposed acquisition of Adelphia by
    Comcast and Time Warner for approximately \$17.7 billion (\$3,690
    per subscriber), and the Dolan family group's proposed and recently
    rescinded acquisition of Cablevision for approximately \$13 billion
    (\$4,377 per subscriber).[^91] In another transaction involving the
    privatization of a major cable system, Insight Communications
    recently reached agreement to sell its cable systems to Insight
    Acquisition Corp.[^92]

**TABLE 5: System Transactions: 2002 - June 2005**[^93]

+---------------------------------+-------+-------+---------+----------+
|                                 | **2   | **2   | *       | **       |
|                                 | 002** | 003** | *2004** | Jan-June |
|                                 |       |       |         | 2005**   |
+---------------------------------+-------+-------+---------+----------+
| Number of Systems Sold          | 24    | 34    | 21      | 9        |
+---------------------------------+-------+-------+---------+----------+
| Total Number of Subscribers     | 60    | 65    | 2,      | 10       |
| Sold                            | 7,446 | 0,759 | 701,552 | ,143,967 |
+---------------------------------+-------+-------+---------+----------+
| Average Number of Subscribers   | 2     | 1     | 128,645 | 1        |
|                                 | 5,310 | 9,140 |         | ,127,107 |
| per System Sold                 |       |       |         |          |
+---------------------------------+-------+-------+---------+----------+
| Total Number of Homes Passed    | 1,16  | 1,13  | 4,      | 19       |
| Sold                            | 3,765 | 2,772 | 626,831 | ,156,872 |
+---------------------------------+-------+-------+---------+----------+
| Average Number of Homes Passed  | 4     | 3     | 220,325 | 2        |
| per System Sold                 | 8,490 | 3,317 |         | ,128,541 |
+---------------------------------+-------+-------+---------+----------+
| Total Dollar Value (mil.)       | \$    | \$    | \       | \$38,398 |
|                                 | 1,381 | 1,495 | $10,554 |          |
+---------------------------------+-------+-------+---------+----------+
| Average Value (mil.) of System  | \     | \     | \$502.6 | \$4,266  |
| Sold                            | $57.5 | $44.0 |         |          |
+---------------------------------+-------+-------+---------+----------+
| National Average Dollar Value   | \$    | \$    | \$3,906 | \$3,785  |
| Per Subscriber                  | 2,273 | 2,297 |         |          |
+---------------------------------+-------+-------+---------+----------+
| Dollar Value Per Home Passed    | \$    | \$    | \$2,281 | \$2,004  |
|                                 | 1,186 | 1,319 |         |          |
+---------------------------------+-------+-------+---------+----------+
| Cash Flow Multiple              | 11.2  | 9.5   | 9.4     | 11.0     |
+---------------------------------+-------+-------+---------+----------+

46. ***Stock Prices***. Cable stock prices, as measured by the Kagan
    Cable MSO Average,[^94] gained 28.8 percent from June 2004 to June
    2005, while the S&P 500 gained 5.8 percent, and the NASDAQ gained
    1.7 percent.[^95] At the end of June 2005, cable stocks were trading
    at 8.5 times cash flow, which was unchanged from the historic low of
    8.5 times cash flow reported at the end of June 2004.[^96] One
    analyst reported that cable stocks have not risen because cable
    investors are concerned about the entry of telephone companies into
    the video delivery market and price reductions by telephone
    companies for their high-speed Internet service.[^97]

### Capital Acquisition and Disposition

47. ***Industry Financing***. Table 6 shows the amount of financing
    raised per year by source. In past years, much of the money raised
    by cable operators was for upgrading and rebuilding cable systems.
    With the upgrading and rebuilding nearing completion, the majority
    of money raised in 2004 was for refinancing.[^98] Kagan reports that
    only small rural cable companies are still borrowing for upgrading
    and rebuilding their systems.[^99] In 2004, cable companies reduced
    public debt by \$4.9 billion. Some companies began repurchasing
    stock.[^100] As a result, Kagan reports that net equity raised by
    the cable industry was negative for the first time since it began
    tracking cable financings in 1982.[^101]

**TABLE 6: Acquisition of Capital: 1999 - June 2005 (\$ in
millions)**[^102]

<table>
<colgroup>
<col style="width: 13%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td colspan="2"><strong>Private Debt</strong></td>
<td colspan="2"><p><strong>Net New</strong></p>
<p><strong>Public Debt</strong></p></td>
<td colspan="2"><p><strong>Private Equity</strong></p>
<p><strong>(Pvt. Placement/VC)</strong></p></td>
<td colspan="2"><p><strong>Public Equity</strong></p>
<p><strong>(Common/Preferred)</strong></p></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Year</strong></td>
<td><p><strong>Amount</strong></p>
<p><strong>Raised</strong></p></td>
<td><strong>% of Total Raised in Year</strong></td>
<td><strong>Amount Raised</strong></td>
<td><strong>% of Total Raised in Year</strong></td>
<td><strong>Amount Raised</strong></td>
<td><p><strong>% of Total Raised</strong></p>
<p><strong>in Year</strong></p></td>
<td><strong>Amount Raised</strong></td>
<td><p><strong>% of Total Raised</strong></p>
<p><strong>In Year</strong></p></td>
<td><p><strong>Total Capital</strong></p>
<p><strong>Raised</strong></p>
<p><strong>In Year</strong></p></td>
</tr>
<tr class="odd">
<td><strong>1999</strong></td>
<td>$34,358</td>
<td>51.9%</td>
<td>$18,610</td>
<td>28.1%</td>
<td>$5,385</td>
<td>8.1%</td>
<td>$7,799</td>
<td>11.8%</td>
<td>$66,152</td>
</tr>
<tr class="even">
<td><strong>2000</strong></td>
<td>$7,255</td>
<td>60.3%</td>
<td>$4,288</td>
<td>35.7%</td>
<td>$101</td>
<td>0.8%</td>
<td>$380</td>
<td>3.2%</td>
<td>$12,024</td>
</tr>
<tr class="odd">
<td><strong>2001</strong></td>
<td>$6,668</td>
<td>31.4%</td>
<td>$10,678</td>
<td>50.2%</td>
<td>$623</td>
<td>2.9%</td>
<td>$3,282</td>
<td>15.4%</td>
<td>$21,251</td>
</tr>
<tr class="even">
<td><strong>2002</strong></td>
<td>$2,544</td>
<td>25.2%</td>
<td>$3,942</td>
<td>39.0%</td>
<td>$15</td>
<td>0.1%</td>
<td>$3,608</td>
<td>35.7%</td>
<td>$10,109</td>
</tr>
<tr class="odd">
<td><strong>2003</strong></td>
<td>$1,791</td>
<td>66.5%</td>
<td>$734</td>
<td>27.2%</td>
<td>$116</td>
<td>4.3%</td>
<td>$54</td>
<td>2.0%</td>
<td>$2,695</td>
</tr>
<tr class="even">
<td><strong>2004</strong></td>
<td>$12,674</td>
<td>159.7%</td>
<td>-$4,863</td>
<td>-61.3%</td>
<td>$125</td>
<td>1.6%</td>
<td>$0</td>
<td>0%</td>
<td>$7,936</td>
</tr>
<tr class="odd">
<td><strong>Jan-June 2005</strong></td>
<td>$270</td>
<td>28.7%</td>
<td>$663</td>
<td>70.4%</td>
<td>$9</td>
<td>0.9%</td>
<td>$0</td>
<td>0%</td>
<td>$942</td>
</tr>
</tbody>
</table>

48. ***Capital Expenditures/Capital Investment***. Over the last decade,
    cable companies have invested heavily to rebuild and upgrade cable
    systems.[^103] NCTA states that cable operators have invested almost
    \$100 billion since 1996 to replace coaxial cable with fiber optic
    technology and install new digital equipment in homes and system
    headends.[^104] These investments have enabled cable operators to
    offer more channels of basic and digital cable services, premium
    movie services, pay-per-view service, high-definition service,
    high-speed Internet access services, CD-quality music, cable
    telephony, and more personalized programming options. According to
    NCTA, the cable industry's investment in broadband two-way networks
    makes available a number of advanced services on virtually every
    cable system today.[^105] Kagan reports that at year-end 2004, 96
    percent of all cable homes passed were offered digital video
    services and 93 percent were offered high-speed Internet access
    services.[^106] Total capital expenditures were \$10.1 billion in
    2004, and Kagan projects that they will increase to \$10.3 billion
    in 2005.[^107]

49. With the rebuilding and upgrading of cable systems nearing
    completion, cable operators are reducing capital expenditures on
    system upgrades. At the same time, however, as shown in Table 7,
    they are increasing capital expenditures on customer premises
    equipment upgrades.

**Table 7: Capital Expenditures by Major MSOs (millions)**

+----------+------+--------+---------+---------+---------+-----------+
| **Op     | **   |        |         | ***     |         |           |
| erator** | *200 |        |         | 2005*** |         |           |
|          | 4*** |        |         |         |         |           |
+----------+------+--------+---------+---------+---------+-----------+
|          | *    | **     | ***C    | **      | *       | **        |
|          | *Tot | *Plant | ustomer | Total** | **Plant | *Customer |
|          | al** | Upgra  | P       |         | Upgr    | Premises  |
|          |      | des*** | remises | *       | ades*** | Equ       |
|          |      |        | Equip   | *Jan. - |         | ipment*** |
|          |      |        | ment*** | June**  |         |           |
+----------+------+--------+---------+---------+---------+-----------+
| *        | \$3  | \$902  | \$1,500 | \$1,800 | \$167   | \$932     |
| *Comcast | ,600 |        |         |         |         |           |
| **[^108] |      |        |         |         |         |           |
+----------+------+--------+---------+---------+---------+-----------+
| **Time   | \$1  | \$139  | \$719   | \$899   | \$69    | \$431     |
| Warner   | ,700 |        |         |         |         |           |
| **[^109] |      |        |         |         |         |           |
+----------+------+--------+---------+---------+---------+-----------+
| **Cox    | \$1  | \$87   | \$528   | \$661   | **NA**  | **NA**    |
| **[^110] | ,400 |        |         |         |         |           |
+----------+------+--------+---------+---------+---------+-----------+
| *        | \    | \$49   | \$451   | \$542   | \$22    | \$228     |
| *Charter | $924 |        |         |         |         |           |
| **[^111] |      |        |         |         |         |           |
+----------+------+--------+---------+---------+---------+-----------+
| **Cab    | \    | \$12   | \$429   | \$316   | \$3     | \$227     |
| levision | $574 |        |         |         |         |           |
| **[^112] |      |        |         |         |         |           |
+----------+------+--------+---------+---------+---------+-----------+

### Advanced and Other Services

50. In addition to traditional analog video services, most cable
    operators offer subscribers advanced video services, including
    digital video, video-on-demand, digital video recorders, and
    high-definition television; and nonvideo advanced services,
    including high-speed Internet access and telephony (circuit-switched
    telephony and/or voice over Internet protocol telephony).[^113]
    Mid-sized and smaller cable operators also are deploying advanced
    services. Our review of six mid-sized and smaller cable operators
    shows that all offer digital cable service and high-speed Internet
    service and many offer video-on-demand, digital video recorders,
    high-definition television, and telephone service.

51. ***Digital Video Services***. Most cable operators offer digitally
    compressed video channels to cable subscribers. Digital cable
    subscribers typically rent a digital set-top box from the cable
    company and receive some free digital video service. Digital cable
    subscribers obtain video programming by purchasing one or more
    digital service tiers. Digital tiers provide a variety of
    programming similar to basic tiers or theme tiers, such as a movie
    tier, a sports tier, and a non-English-language tier. Digital cable
    subscribers may also purchase one or more premium digital tiers,
    such as HBO, Showtime, Cinemax, The Movie Channel, Starz!, and
    international programming.[^114] A high-definition service tier also
    is available to many digital cable subscribers.[^115] In addition,
    cable operators are offering interactive digital services to digital
    cable subscribers, such as digital video recorders and
    video-on-demand.[^116] All of these digital services are available
    to subscribers with analog televisions that use a digital set-top
    box that converts digital signals to analog.[^117] Data from the
    Form 325 for 2004 indicates that nearly 94 percent of homes passed
    have access to digital video and 84 percent of systems have digital
    video capability.[^118] Approximately 96 percent of all cable homes
    passed had access to digital video services at the end of 2004
    according to Kagan.[^119] There were 25.4 million digital cable
    subscribers at the end of 2004, compared to 22.5 million at the end
    of 2003, a 12.9 percent increase.[^120] At the end of June 2005, the
    number of digital cable subscribers rose to 26.3 million and the
    number was projected to increase to 28.2 million by the end of
    2005.[^121]

52. As shown in Table 8 below, as of June 2005, the top cable operators'
    digital subscriber counts equal 41% to 58% of their total basic
    cable subscribers.

**Table 8**: Digital Cable Subscribers for Top MSOs (in millions)

+-----------+-------------+--------------+-------------+--------------+
| **O       | **2004**    |              | **2005**    |              |
| perator** |             |              |             |              |
+-----------+-------------+--------------+-------------+--------------+
|           | **Digital   | **% Basic**  | **Digital   | **% Basic**  |
|           | Su          |              | Su          |              |
|           | bscribers** | **Cable      | bscribers** | **Cable      |
|           |             | Subs**       |             | Subs**       |
+-----------+-------------+--------------+-------------+--------------+
| **Comcas  | 8.6         | 40%          | 9.1         | 43%          |
| t**[^122] |             |              |             |              |
+-----------+-------------+--------------+-------------+--------------+
| **Time    | 4.8         | 44%          | 5.1         | 46%          |
| Warne     |             |              |             |              |
| r**[^123] |             |              |             |              |
+-----------+-------------+--------------+-------------+--------------+
| **C       | 1.5         | 50%          | 1.7         | 58%          |
| ablevisio |             |              |             |              |
| n**[^124] |             |              |             |              |
+-----------+-------------+--------------+-------------+--------------+
| **Co      | 2.4         | 38%          | 2.6         | 41%          |
| x**[^125] |             |              |             |              |
+-----------+-------------+--------------+-------------+--------------+
| **Charte  | 2.7         | 45%          | 2.7         | 45%          |
| r**[^126] |             |              |             |              |
+-----------+-------------+--------------+-------------+--------------+

53. NCTA reports that, in January 2005, cable operators were carrying
    the digital broadcast signals -- including high-definition and
    multicast signals -- of 504 unique broadcast television
    stations.[^127] In January 2005, NCTA reached an agreement with the
    Association of Public Television Stations to ensure that the digital
    service -- including multicast channels -- offered by local public
    television stations would be available to most cable
    subscribers.[^128] Comcast has agreements to carry local multicast
    digital signals with over 200 commercial broadcast stations in 72
    DMAs.[^129] In addition, Comcast has agreed to carry the multicast
    digital signals of noncommercial broadcasters and expected to be
    carrying the digital signals of 58 noncommercial broadcast stations
    in 62 markets in the fall of 2005.[^130]

54. In 2003, the Commission adopted rules based on an agreement between
    consumer electronics companies and cable operators that enable
    television sets to be built with "plug-and-play" functionality for
    one-way digital cable services, which include typical cable video
    services and premium channels such as HBO and Showtime.[^131] For
    these services, consumers are able to plug their cable directly into
    their digital television set without the need for a set-top box.
    Consumers, however, must obtain a security card (often called a
    CableCARD), from their local cable operator, to be inserted into the
    television set. Approximately 90,000 one-way CableCARDs have been
    deployed.[^132]

55. Consumers still need a set-top box to receive two-way services
    (*e.g.*, video-on-demand), and the cable and consumer electronics
    industries continue to work on an agreement for two-way
    "plug-and-play" functionality.[^133] Samsung Electronics recently
    achieved CableLabs Certified status for an OpenCable Application
    Platform (OCAP) enabled interactive digital television set that can
    connect directly to the cable system, and receive current advanced
    and premium cable services.[^134] The television set is currently in
    trials with Time Warner in North Carolina.[^135] Consumer
    electronics manufacturers are selling digital cable-ready television
    sets with over-the-air integrated DTV tuners as well as cable
    tuners.[^136] Industry sources indicate that two-way digital devices
    will soon be available in retail stores.[^137]

56. ***Video-on-Demand (VOD)***. VOD allows subscribers to order video
    programs from a central server at any time of day, and to
    fast-forward, rewind, and pause the programs.[^138] In most cases,
    subscribers receive unlimited viewing of a VOD program for 24 hours.
    Some cable operators also offer subscription video-on-demand (SVOD)
    where subscribers pay a monthly fee for unlimited access to a
    library of pre-selected programs. Other cable operators offer near
    video-on-demand (NVOD) which typically features a schedule of
    popular movies and events offered on a staggered-start basis
    (*e.g.*, every 15 to 30 minutes). Cable companies view VOD as a
    competitive service to DVD/VHS rentals and a means to help reduce
    subscriber churn. At year-end 2004, VOD service was available to 73
    percent of homes passed by cable systems.[^139] At year-end 2004,
    there were 19.5 million VOD-enabled digital capable households and
    this is projected to grow to 23.9 million by the end of 2005.[^140]

57. Comcast's VOD service, which is available to 87 percent of Comcast
    subscribers, allows digital cable subscribers to choose from a menu
    of more than 3,500 programs, at any given time, with most of these
    programs available free.[^141] Comcast says its VOD service is
    growing rapidly, and it expected subscribers to order 1.5 billion
    VOD programs in 2005.[^142] Comcast's VOD content includes the
    recently launched PBS Kids Sprout on Demand, independent films,
    multicultural programs, movies, and newscasts from local broadcast
    stations.[^143] Comcast's "Select on Demand" service provides 15 VOD
    channels, each a collection of original programming organized by
    particular themes.[^144] By the end of March 2005, Cox's VOD service
    had been deployed in eight markets and was available to about half
    of Cox's digital subscribers.[^145] Cox's VOD service provides
    access to 600 hours of content, including 100 hours of free
    programming.[^146] Time Warner's VOD service is available in all of
    its 31 cable operating divisions.[^147] With Time Warner's Premiums
    on Demand VOD service, digital cable subscribers who also subscribe
    to a premium channel (*i.e.*, HBO, Showtime, Cinemax, or the Movie
    Channel) receive unlimited access to movies offered on the premium
    movie channels for a monthly fee.[^148] With Time Warner's Movies on
    Demand VOD service, digital cable subscribers may access hundreds of
    movies for a rental fee.[^149] Cablevision's VOD service provides
    over 200 hours of free programming and subscriptions to HBO on
    Demand, Cinemax on Demand, Anime Network on Demand, Showtime on
    Demand, Disney Channel on Demand, Playboy TV on Demand, and IFC
    Uncensored on Demand, which offers independent films and original
    series.[^150] Charter's VOD service offers thousands of movies
    including those available through premium channels like HBO On
    Demand and Showtime on Demand.[^151]

58. ***Digital Video Recorders (DVRs)***. DVR service allows subscribers
    to record programs onto a hard drive located in a set-top box, which
    can then be played back at any time. DVR features include
    fast-forward, rewind, and the ability to pause live television.
    While early units were marketed independently, cable and satellite
    operators are integrating DVR functionality into their digital
    set-top boxes.[^152] At the end of 2004, DVR service was available
    to 79 percent of the homes passed by cable systems and there were
    1.8 million subscribers equipped with integrated DVRs.[^153] Many
    cable and satellite operators use dual-tuner DVRs which enable
    subscribers to record one or more programs while watching another
    program.

59. Comcast's dual-tuner DVR service is available in all Comcast's
    markets and can be purchased by digital cable subscribers for an
    additional \$9.95 per month.[^154] More than 575,000 households
    subscribe to Comcast's DVR service.[^155] In March 2005, Comcast and
    TiVo announced a partnership to offer TiVo-based DVR service to
    Comcast subscribers.[^156] DIRECTV, however, recently began to
    transition from TiVo's DVR hardware toward an in-house DVR
    product.[^157] Cox's DVR service is available in Cox's upgraded
    service areas and costs \$9.99 per month.[^158] In Northern
    Virginia, Cox is testing and planning to offer multi-room DVR
    service in 2006 that delivers DVR service to several televisions in
    a household with a single DVR set-top box.[^159] At the end of June
    2005, the number of subscribers to Time Warner's DVR service had
    grown to 1.1 million from 862,000 at the end of 2004, representing
    22 percent of the company's digital cable subscribers.[^160] Time
    Warner's DVR service is available to digital cable subscribers for
    \$9.95 per month. Cablevision's DVR service is also available to
    digital cable subscribers for \$9.95 per month. Charter dual-tuner
    DVR service is available in limited Charter service areas for \$9.99
    per month.[^161]

60. ***High-Definition Television (HDTV*)**. HDTV features dramatically
    improved, highly detailed picture quality, improved audio quality,
    and a wide-screen display.[^162] For subscribers to receive the
    high-definition service tier, most cable companies require
    subscription to the digital service and use of a high-definition
    set-top box.[^163] To obtain the full visual effect of HDTV, a cable
    subscriber also needs an HDTV set. HDTV service from networks that
    have standard-definition or analog counterparts, including ABC, NBC,
    CBS, FOX, PBS, WB, UPN, and TNT, is often offered at no additional
    charge to HDTV subscribers. HDTV service from premium channels,
    including HBO and Showtime, is usually offered at no additional
    charge over the cost of subscriptions to those networks. Other
    programming, including programming offered only in HDTV, may be
    offered at an additional monthly fee. At the end of 2004, HDTV
    service was available to 87 percent of homes passed by cable service
    (approximately 92 million households).[^164] Approximately 2.3
    million cable subscribers were equipped with HDTV set-top
    boxes.[^165] A total of 184 (out of 210) DMAs, including all of the
    top 100 DMAs, were served by at least one cable system offering HDTV
    service.[^166] Twenty-three nonbroadcast networks offer HDTV
    service.[^167]

61. Comcast's HDTV service is available in 72 markets, representing 94
    percent of the homes passed by Comcast's cable systems.[^168]
    Subscribers with a digital set-top box can upgrade to an HDTV
    set-top box for an additional \$5 monthly fee.[^169] Comcast offers
    its HDTV subscribers high-definition local broadcast signals,
    including the signals of affiliates of ABC, NBC, CBS, and PBS, and
    cable networks ESPN HD, INHD and INHD2.[^170] At no additional cost,
    Comcast's premium network subscribers can watch HBO HD, Showtime HD,
    Starz HD and Cinemax HD.[^171] Cox's digital cable subscribers can
    upgrade to an HDTV set-top box for an additional \$6.50 per
    month.[^172] At no additional charge, Cox HDTV service offers
    high-definition local broadcast signals, including the signals of
    affiliates of ABC, NBC, CBS, FOX, and PBS, as well as Discovery HD
    Theater, ESPN HD, INHD1, INHD2, and NBC Universal HDTV.[^173] HBO
    HDTV and Showtime HDTV are included at no additional charge to those
    with HBO and Showtime subscriptions.[^174] Time Warner's digital
    cable subscribers can upgrade to an HDTV set-top box for no
    additional charge.[^175] Time Warner offers HDTV subscribers
    high-definition local broadcast signals, including the signals of
    affiliates of ABC, CBS, NBC, and PBS.[^176] Time Warner also offers
    HDTV service from HBO and Showtime at no extra charge to subscribers
    of these premium networks.[^177] Cablevision's digital cable
    subscribers may upgrade to an HDTV set-top box at no additional cost
    over the standard set-top box rental fee.[^178] Cablevision's
    subscribers with HDTV set-top boxes have access to 18 HDTV networks
    at no additional charge over the standard-definition version of the
    networks.[^179] The networks include local affiliates of ABC, CBS,
    NBC, PBS, WB, and FOX.[^180] Other networks include MSG Network, FSN
    New York, YES Network, ESPN, Universal HD, HBO, Showtime, Cinemax,
    Starz, The Movie Channel, and INHD.[^181] Charter offers HDTV
    service in more than 33 markets.[^182] Charter's HDTV set-top box
    costs \$3 more a month than its standard digital set-top box.[^183]
    At no additional charge, Charter offers the HDTV service from local
    affiliates of ABC, CBS, and NBC.[^184] Charter also offers HDTV
    service from Discovery HD, ESPN HD, HDNet, HDNet Movies, HBO HD to
    HBO subscribers, and Showtime HD to Showtime subscribers.[^185]

62. ***High-Speed Internet Access Service***. FCC Form 325 data from
    2004 indicates that more than 93 percent of homes passed have access
    to high-speed Internet service. Approximately 80 percent of systems
    offer high-speed Internet service.[^186] By the end of June 2005,
    the number of subscribers to high-speed Internet service offered by
    cable operators had grown to 23 million households.[^187]
    Residential high-speed Internet access service is a principal driver
    of cable industry revenue growth, generating \$8.9 billion in
    2004.[^188] It is projected to generate \$11.2 billion in
    2005.[^189] Cable, DSL, wireline, and wireless technologies provided
    high-speed Internet access service to 35.3 million residential and
    small business subscribers at the end of 2004.[^190] By January
    2005, the U.S. had 11.4 broadband connections for every 100
    inhabitants.[^191] Coaxial cable technology provided 60.3 percent of
    that total, DSL technology provided 37.2 percent, and other wireline
    and wireless technologies provided the remaining 2.5 percent.[^192]
    Cable's share has declined from 63.2 percent at the end of 2003
    while DSL's share has increased from 34.3 percent at the end of
    2003.[^193] High-speed data services using cable modems now enable
    the delivery of emerging video services, such as Internet video and
    video-on-demand.[^194]

63. Most cable operators provide high-speed Internet service with one
    proprietary Internet Service Provider (ISP) specifically created and
    owned by the cable operator.[^195] For example, Cablevision offers
    high-speed Internet service under the brand Optimum Online; Comcast
    offers the service under the "Comcast High-Speed Internet" brand
    name; Charter offers the service under the "Charter High-Speed"
    brand name; and Cox offers the service under the "Cox High Speed
    Internet" brand name. Some cable operators, however, offer their
    high-speed Internet service subscribers the ability to use
    unaffiliated ISPs. For example, Time Warner Cable offers its
    subscribers multiple ISPs, including its own Road Runner Internet
    access service with AOL for \$49.95, Earthlink for \$44.95, and
    Stic.Net for \$44.95.[^196]

64. As of June 30, 2005, Comcast's high-speed Internet access service
    was available to 40.8 million homes, or 98.9 percent of homes passed
    by Comcast's systems.[^197] On June 30, 2005, Comcast had 7.7
    million subscribers to its high-speed Internet access service,
    representing a penetration rate[^198] of 18.9 percent, up from the 7
    million high-speed Internet subscribers Comcast reported at the end
    of 2004.[^199] At the end of June 2005, Cox's high-speed Internet
    service had grown to 2.8 million subscribers, representing a 26.9
    percent penetration rate, compared to the 2.6 million high-speed
    Internet access subscribers Cox reported for year end 2004.[^200]
    Time Warner reported that it had 4.3 million high-speed Internet
    subscribers the end of June 2005, representing a penetration rate of
    22 percent, compared to 3.9 million high-speed Internet subscribers
    at year-end 2004.[^201] As of June 30, 2005, Cablevision had 1.5
    million high-speed Internet subscribers and a penetration rate of 34
    percent, up from the 1.4 million high-speed Internet subscribers
    reported for December 31, 2004.[^202] Charter's high-speed Internet
    service had grown to more than 2 million subscribers at the end of
    June 2005, a penetration rate of 18 percent, compared to the 1.9
    million high-speed Internet subscribers reported at the end of
    2004.[^203]

65. Over the past year, many cable operators have increased the speed of
    their high-speed Internet services as well as experimented with
    lower-priced tiers of service, some as low as \$25 per month.[^204]
    Most cable operators are now offering 4 to 6 Mbps downstream and
    additional high-speed Internet tiers with even faster speeds.[^205]
    NCTA says that the cable industry has developed technical
    specifications that will enable operators to continue increasing
    Internet service speeds to 160 Mbps downstream and 60 Mbps
    upstream.[^206] Cable operators also offer a variety of features
    with their high-speed Internet services, including increased storage
    capacity; multiple e-mail accounts; integrated security suites with
    anti-virus, anti-spyware, and firewall protection; pop-up blocking
    and spam filtering; video e-mail; specialized content; and home
    networking for multiple devices.[^207] Comcast offers 6 Mbps
    downstream and 384 Kbps upstream for \$42.95 per month and 8 Mbps
    downstream and 768 Kbps upstream for premium service
    subscribers.[^208] For no additional charge, Comcast also provides
    broadband security services.[^209] Cox offers security software,
    pop-up blocker, antivirus protection and speeds of 5 Mbps downstream
    and 2 Mbps upstream for \$39.95 per month; it offers speeds of 15
    Mbps downstream and 2 Mbps upstream for \$54.95 per month.[^210]
    Time Warner's high-speed Internet service provides 5 Mbps downstream
    for \$39.95 per month.[^211] Cablevision's high-speed Internet
    service provides up to 10 Mbps downstream for \$44.95 per
    month.[^212] Cablevision is marketing 50 Mbps, expandable to 100
    Mbps, for commercial subscribers. Cablevision's high-speed Internet
    service also provides software that scans for computer
    viruses.[^213] Charter's high-speed Internet subscribers receive 3
    Mbps downstream and 256 Kbps upstream, antivirus protection and
    firewall software for approximately \$40 per month.[^214]

66. ***Telephony Offered by Cable Operators***. Although some cable
    companies have been providing traditional circuit-switched telephony
    for years, the cable industry is now using digital technology to
    provide voice-over-Internet protocol (VoIP) services.[^215] At the
    end of 2004, cable telephony service, both VoIP and
    circuit-switched, was available to 38 percent of the homes passed by
    cable.[^216] At the end of 2004, there were 3.6 million subscribers
    to cable telephone service, with 3 million subscribers being served
    by circuit-switched service and 600,000 subscribers being served by
    VoIP service.[^217] At the end of June 2005, there were 1.2 million
    subscribers to cable's VoIP service.[^218] Most cable operators
    offer discounts for VoIP when it is bundled with other cable
    services.[^219] For example, Cox charges \$49.95 for stand-alone
    VoIP service, \$44.95 when subscribers take a two-product bundle
    from Cox, and \$39.95 when subscribers take a three-product bundle
    from Cox.[^220]

67. Comcast is a facilities-based provider of cable telephone services
    that serves approximately 1.2 million subscribers in 18 markets with
    circuit-switched phone service.[^221] In early 2005, Comcast began
    offering VoIP service to subscribers in Boston, Massachusetts;
    Chicago, Illinois; Hartford, Connecticut; Philadelphia,
    Pennsylvania; and Portland, Oregon, and it plans to deploy VoIP in
    additional markets in 2006.[^222] Comcast's VoIP service is a
    primary service that offers E911 capability and provides battery
    backup power for up to eight hours.[^223] As the largest cable
    telephone service provider in the nation, Cox has more than 1.4
    million residential telephone subscribers using both
    circuit-switched and VoIP technologies.[^224] Cox offers VoIP
    service in five markets and by the end of 2005, Cox planned to
    extend its VoIP service to Las Vegas, Nevada; Macon, Georgia;
    Central Florida (includes Gainesville and Ocala, Florida); Gulf
    Coast Florida (includes Fort Walton Beach and Pensacola, Florida);
    and Topeka, Kansas.[^225] Cox provides what it calls a "lifeline
    service" that includes E911 service as a standard feature in all of
    its telephone markets and back-up power so that its digital phone
    service continues to work during a power outage.[^226] Time Warner
    has deployed VoIP service to all 31 of its divisions and, as of
    September 30, 2005, had 854,000 VoIP subscribers.[^227] Time
    Warner's VoIP service includes E911 service but does not include
    back-up power and will not function during a power outage.[^228]
    Cablevision's VoIP service is available to 4.4 million homes and at
    the end of June 2005 the service had 478,000 subscribers, up from
    the 272,688 subscribers reported at the end of 2004.[^229]
    Cablevision's VoIP service provides E911 service. It uses household
    electrical power and will not operate if the power in the home goes
    out.[^230] Cablevision offers VoIP subscribers a battery back-up
    option that allows several hours of continued operation in the event
    of a power outage.[^231] The network remains powered for several
    hours during a loss of electrical current, so with the battery
    back-up option VoIP subscribers continue to have service during an
    electrical interruption as long as they are not using electric
    telephones.[^232] Charter offers telephone service to 45,400
    subscribers using VoIP in most markets.[^233] Charter's VoIP service
    provides E911 service, and Charter's network has a built-in
    emergency battery backup that provides telephone service for most
    customers for eight to ten hours.[^234] In addition, between January
    10, 2005, and October 11, 2005, Adelphia engaged in a limited trial
    of VoIP services in the Colorado Springs, Colorado, area. Adelphia
    reports that it has no plans to conduct further trials or provide
    VoIP service during the pendency of its proposed sale to Comcast and
    Time Warner.[^235]

68. ***Mid-sized and Smaller Cable Operators***. The FCC Form 325
    samples cable systems with between 5,000 and 20,000 subscribers and
    also surveys a sample of systems with fewer than 5,000 subscribers.
    Findings from data collected for 2004 show that in these smaller
    systems high-speed data service, digital cable service, and
    telephony are being offered. In particular, for systems with 5,000
    or fewer subscribers, 33 percent offer high-speed Internet service,
    45 percent offer digital cable service, 3 percent offer telephony
    services and 16 percent have cable plants with capacities of 750 MHz
    or greater. For systems with between 5,000 and 20,000 subscribers,
    94 percent offer high-speed Internet service, 94 percent offer
    digital cable service, 6 percent offer telephony services and 68
    percent have capacities of 750 MHz or greater.[^236]

69. This year we examined six mid-sized and smaller cable operators to
    identify the advanced services they provide.[^237] All provide
    high-speed Internet service. All provide digital video service but
    not all offer VOD, HDTV, and DVR service. Most provide telephone
    service and some use VoIP technology.[^238] Bresnan Communications
    serves over 300,000 subscribers in Colorado, Montana, Wyoming, and
    Utah, offering a full range of advanced services that include
    digital video service, VOD, HDTV, DVR, high-speed Internet service,
    and digital telephone service to residential and business
    subscribers over an upgraded fiber-optic coaxial network.[^239]
    Service Electric Cable TV & Communications serves approximately
    280,000 subscribers in Pennsylvania and New Jersey.[^240] Service
    Electric offers digital video service, HDTV, DVR, high-speed
    Internet service, and digital telephone service to residential and
    business subscribers.[^241] Service Electric does not offer VOD
    service. Susquehanna Communications serves approximately 233,000
    subscribers in Pennsylvania, New York, Illinois, Indiana, Maine, and
    Mississippi.[^242] An advanced hybrid fiber optic and coaxial
    network is in place or under construction in nearly 93 percent of
    Susquehanna Communications' service area and is expected to be fully
    deployed in the next two years.[^243] Susquehanna Communications
    offers digital video service, HDTV, DVR, high-speed Internet
    service, and digital telephone service to residential and business
    subscribers.[^244] Susquehanna Communications does not offer VOD
    service. Buckeye CableSystem serves approximately 149,000
    subscribers in Ohio, Michigan, and New York.[^245] Buckeye
    CableSystem offers digital video service, VOD, HDTV, DVR, high-speed
    Internet service, and residential telephone service.[^246] US Cable
    Group serves over 140,000 subscribers in Minnesota, Wisconsin, South
    Carolina, Georgia, Florida, Missouri, Texas, New Mexico, Colorado,
    and New Jersey.[^247] US Cable Group offers digital video service to
    over 90 percent of homes passed.[^248] US Cable Group also offers
    high-speed Internet service.[^249] US Cable Group does not offer
    VOD, HDTV, DVR, or residential telephone service. Sunflower
    Broadband operates cable systems in Kansas and offers digital video
    service, VOD, HDTV, DVR, high-speed Internet service, and digital
    telephone service to residential and business subscribers.[^250] In
    May 2005, Sunflower Broadband became one of the first cable
    companies in the country to offer an all digital channel
    line-up.[^251] Digital cable subscribers can now see all channels
    with digital quality picture and sound.[^252]

## Direct-to-Home Satellite Services

### Direct Broadcast Satellite

70. DBS service is provided via satellite to small parabolic "dish"
    antennas located at the individual residences of consumers or at
    business or educational organizations.[^253] Three operators provide
    DBS service: DIRECTV, EchoStar (marketed as the DISH Network), and
    Dominion Video Satellite, Inc. (marketed as Sky Angel).[^254]

71. Last year we reported on the Cablevision subsidiary Rainbow DBS,
    which began providing MVPD services under the VOOM brand name in
    October 2003. In December 2004, the Cablevision Board of Directors
    decided to pursue "strategic alternatives" for the Rainbow DBS
    assets. In January 2005, Cablevision reached an agreement with
    EchoStar to sell its Rainbow 1 satellite, located at the 61.5° W.L.
    orbital position; Commission licenses to construct, launch and
    operate DBS services over 11 channels at the 61.5° W.L. orbital
    position; and contents of Rainbow DBS' ground facility in Black
    Hawk, South Dakota. Cablevision continued to explore uses for VOOM's
    programming.[^255] Subsequently, Rainbow DBS ended its VOOM service,
    which had attained a total subscribership of approximately 26,000
    homes, and announced that it was launching a new HD programming
    service with 21 channels, 10 of which EchoStar agreed to carry
    initially, with all 21 being available to EchoStar subscribers by
    2006.

72. ***Subscribership.*** As of June 2005, approximately 26.12 million
    U.S. households subscribed to DBS service. This represents an
    increase of 12.8 percent over the 23.16 million DBS subscribers we
    reported last year.[^256] DBS accounts for approximately 27.7
    percent of all U.S. MVPD subscribers.[^257] Analysts attribute DBS'
    continued growth to the increase in local-into-local broadcast
    stations; service enhancements, including multiple room viewing
    solutions and HDTV; and the ability to co-market DSL service.[^258]
    In terms of subscriber penetration, DBS penetration initially
    occurred primarily in rural and small markets, but as a recent GAO
    study found, since 2001, DBS penetration has grown rapidly and
    increased in suburban and urban areas.[^259] According to GAO, the
    DBS penetration rate was over 36 percent in areas where cable
    operators did not provide advanced services, such as digital cable,
    cable modem service and telephone service, compared with
    approximately 16 percent in areas where cable operators provided one
    or more such services, but not all, and only 14 percent in areas
    where cable operators provided all three advanced services.[^260]
    GAO also reported that the DBS penetration rate is 12 percent higher
    in areas where DBS customers can receive local-into-local service
    than where local-into-local is not available.[^261]

73. DIRECTV is the largest DBS provider and second largest MVPD. DIRECTV
    served 14.67 million subscribers as of June 2005, an increase of
    1.63 million, or 12.5 percent, from the 13.04 million subscribers as
    of June 2004.[^262] EchoStar is the second largest DBS provider and
    third largest MVPD, with approximately 11.45 million subscribers as
    of June 30, 2005, an increase of 13.1 percent over the 10.12 million
    subscribers a year earlier.[^263] Dominion Video Satellite's Sky
    Angel service serves fewer than one million subscribers and provides
    20 family and religion-oriented channels.[^264]

74. ***Service and Equipment Pricing***. DIRECTV and EchoStar offer
    numerous programming packages. DIRECTV offers three English language
    programming packages and four Spanish language programming
    packages.[^265] EchoStar offers five English language and three
    Spanish language program packages.[^266] EchoStar and DIRECTV also
    offer packages to subscribers in Hawaii and Alaska.[^267] Sky Angel
    service is not available in Hawaii or Alaska. In February 2005,
    EchoStar raised the prices on its English language program packages
    by an average of 6.5 percent, citing an increase of seven percent in
    programming costs.[^268] EchoStar did not raise the price of its
    three Spanish language packages.[^269]

75. Subscribers to DBS service need a satellite dish and a set-top box.
    EchoStar and DIRECTV continue to rely on discounted set-top box
    equipment, free satellite dishes, and free installation to attract
    new customers.[^270] With respect to equipment, DIRECTV and EchoStar
    offer a wide range of set-top box receivers. EchoStar's Digital Home
    Advantage plan offers discounts on programming packages based on the
    number of receivers the subscriber leases.[^271] DIRECTV states that
    it does not lease equipment,[^272] but it is reported to be
    considering introducing a leasing model for its equipment in early
    2006.[^273]

76. ***Availability of Local Broadcast Stations.*** Local broadcast
    television station availability is approaching 100 percent for both
    EchoStar and DIRECTV. In 167 of 210 television markets (*i.e.*,
    designated market areas, or DMAs), which represent 96 percent of all
    U.S. television households, at least one DBS provider offers the
    signals of local broadcast stations (local-into-local
    service).[^274] EchoStar offers local-into-local service in 162 DMAs
    and Puerto Rico, representing approximately 95 percent of U.S.
    television households.[^275] DIRECTV offers local-into-local service
    in 134 markets, representing 93 percent of U.S. television
    households.[^276] EchoStar charges an additional \$5.99 where the
    major four broadcasting networks are available, whereas DIRECTV's
    program packages automatically include local broadcast signals where
    it offers local-into-local service.[^277]

77. ***Regulatory Issues***. On December 8, 2004, the Satellite Home
    Viewer Extension and Reauthorization Act of 2004 (SHVERA) was
    enacted.[^278] The Commission continues to implement the provisions
    of SHVERA related to the carriage of broadcast signals by DBS
    operators. In June 2005, pursuant to SHVERA, the Commission extended
    reciprocal good-faith bargaining obligations for retransmission
    consent negotiations to cable and satellite operators.[^279] In
    August 2005, in accordance with SHVERA, the Commission ordered that
    DBS operators provide analog signals to Alaska and Hawaii, and
    specified that carriage elections for analog and digital signals
    must be made by October 1, 2005, and April 1, 2007, respectively, in
    order to meet the statutory requirement that satellite carriers
    provide these signals to substantially all of their subscribers in
    each station's local market by December 8, 2005 for analog signals
    and by June 8, 2007 for digital signals.[^280] In September 2005,
    pursuant to SHVERA, the Commission submitted a report to Congress on
    the impact on competition in the MVPD market of the current
    retransmission consent provisions and the network nonduplication,
    syndicated exclusivity, and sports blackout rules, including the
    effect of those rules on the ability of rural cable operators to
    compete with the DBS industry in the provision of digital broadcast
    television signals to consumers.[^281] The Commission did not
    recommend any changes to the statutory provisions relating to those
    Commission rules.[^282] In November 2005, pursuant to SHVERA, the
    Commission established rules and regulations by which satellite
    carriers may offer Commission-determined "significantly viewed"
    signals of out-of-market (or "distant") broadcast stations to
    subscribers.[^283] In December 2005, pursuant to Section 204(b) of
    SHVERA, the Commission submitted a Report to Congress concerning the
    digital signal strength standard and the signal testing procedures
    used to identify whether a household is "unserved" for purposes of
    the satellite statutory copyright license for distant digital
    signals.[^284] The Commission is currently undertaking a number of
    other rulemaking proceedings to implement SHVERA.[^285]

78. ***Satellite Fleet Developments and Video Capacity.*** DIRECTV
    launched new satellites this year. In October 2005, DIRECTV took
    on-orbit delivery of SPACEWAY F1, which was launched in April 2005
    and which is the first of four Ka-band satellites that DIRECTV will
    use to distribute local HD broadcast signals into several large
    markets.[^286] In November 2005, DIRECTV also launched SPACEWAY
    F2.[^287] Together, SPACEWAY F1 and SPACEWAY F2 are expected to
    provide local digital and HD signals to approximately 24 markets,
    representing 45 percent of U.S. television households.[^288] DIRECTV
    states that the combined capacity of the four satellites will enable
    DIRECTV to retransmit more than 150 national channels in
    high-definition and the digital signals of approximately 1,500 local
    broadcast stations.[^289] In order for DIRECTV subscribers to access
    programming transmitted by the new satellites, they will have to
    upgrade to a new satellite dish and HD compatible set-top box.[^290]
    In May 2005, DIRECTV launched DIRECTV 8, a Ku/Ka-band hybrid
    satellite that will supplement DIRECTV's existing satellite fleet
    and will replace an older DIRECTV satellite, which will function as
    a back-up satellite, at the 101° W.L. orbital location.[^291] In
    early 2006, EchoStar is expected to launch its Echo X satellite at
    the 129° W.L. orbital location, which will be used to eliminate the
    need for some of its subscribers to use multiple dishes to receive
    programming.[^292]

### Home Satellite or Large Dish Service

79. The home satellite dish (HSD), or large dish, segment of the
    satellite industry is the original satellite-to-home service offered
    to consumers. It involves the home reception of analog signals
    transmitted by satellites operating in the C- and Ku-band
    frequencies, generally referred to here as C-band. Satellites in the
    C-band frequency are used primarily to transmit programming to cable
    operators via C-band receiving dishes at the cable operator's
    central technical facility or "headend." To be authorized to receive
    one or more scrambled channels, an HSD owner must purchase an
    integrated receiver-decoder from an equipment dealer and then pay a
    monthly or annual subscription fee to a program packager.[^293]

80. As of June 2005, there were 206,358 households authorized to receive
    HSD service, a decrease of 38.5 percent from the 335,766 we reported
    last year.[^294] By one estimate, an additional 100,000 households
    watch unscrambled channels.[^295] In addition, two C-band program
    packagers have reported the number of subscribers they serve:
    National Programming Service, LLC (NPS) states that it provides
    service to approximately 100,000 customers, and Superstar/Netlink
    reports that it serves approximately 170,000 subscribers.[^296] We
    observe that, combined, these subscriber counts exceed what has been
    reported by Motorola's Access Control Center and thus raise a
    question about the actual number of C-band subscribers.

81. Motorola introduced a digital home satellite dish solution called
    4DTV, which enables C-band customers to receive digital only
    satellite channels in addition to available analog
    programming.[^297] 4DTV allows customers to receive four types of
    programming: (1) free, unscrambled analog channels and so-called
    "wild feeds;" (2) VideoCipher II Plus subscription services; (3)
    free DigiCipher II services; and (4) subscription-based DigiCipher
    II channels. The price of 4DTV digital receivers has decreased,
    retailing for approximately \$550.00 today, compared with \$800.00
    last year.[^298]

82. In March 2005, the Commission issued a notice of proposed rulemaking
    concerning technical changes to its earth station rules, including a
    proposal to prohibit analog video transmission in the C-band, with a
    one-year transition period.[^299] This proceeding is pending.

### Satellite-Based Advanced Services

83. ***Broadband Satellite Services.*** WildBlue, a new satellite-based
    two-way broadband Internet service provider, initiated service on
    the Telesat Anik F2 Ka-band "spot beam" satellite, which was
    launched in July 2004.[^300] In June 2005, WildBlue acquired its
    first subscriber.[^301] WildBlue offers three service packages for
    residential subscribers ranging in price from \$49.95 to \$79.95,
    with download speeds from 512 Kbps to 1.5 Mbps and upload speeds
    from 128 Kbps to 256 Kbps.[^302] WildBlue's equipment retails for
    \$299.00 plus required professional installation cost of
    \$179.95.[^303] Hughes Network Systems' continues to offer
    DIRECWAY's satellite-based, two-way, high-speed Internet access to
    consumers.[^304] As of June 30, 2005, DIRECWAY had approximately
    253,000 residential and business customers.[^305] In September 2005,
    DIRECWAY introduced new modems, which DIRECWAY claims will deliver
    faster download and upload rates, and new pricing plans for
    residential and business subscribers.[^306] Existing DIRECTV
    subscribers cannot use their DIRECTV dish to receive DIRECWAY
    service, but DIRECWAY satellite dishes can be upgraded to receive
    DIRECTV DBS service. EchoStar does not offer a satellite-based
    broadband Internet service at this time.[^307]

84. EchoStar and DIRECTV continue to maintain co-marketing relationships
    with local exchange carriers to offer DSL broadband services.
    DIRECTV has relationships with Verizon, BellSouth, Qwest and
    Internet service provider Earthlink. EchoStar has existing
    relationships with SBC, Sprint, CenturyTel, and Earthlink.[^308] In
    October 2005, EchoStar and ALLTEL signed a co-marketing agreement
    under which ALLTEL will offer EchoStar's DISH service in 15 states
    of its 36-state service territory.[^309] EchoStar entered into a
    similar agreement with Frontier Communications, a subsidiary of
    Citizens Communications Company.[^310] With respect to SBC, EchoStar
    renegotiated its co-marketing relationship with SBC.[^311] In areas
    where SBC will not be immediately deploying its Project Lightspeed,
    EchoStar and SBC plan to introduce a single receiver manufactured by
    2Wire, Inc. to integrate both satellite and DSL in one set-top
    box.[^312]

85. ***Other Advanced Services***. DBS providers continue to offer HD
    service but remain constrained in what they can offer by the
    capacity limitations of their satellite fleets. EchoStar's primary
    HD programming package remains essentially unchanged from last year
    and includes ESPNHD, Discovery HD, TNT in HD, HDNet and HDNet
    Movies. Earlier this year, it expanded its HD programming by
    offering VOOM HD Networks, which includes ten genre-based channels,
    such as Monsters HD (horror and science fiction programming) and
    Rush HD (extreme action sports programming). It also offers HBO
    HDTV, Showtime HDTV, CBS HDTV, and DISH Network Pay-Per-View in
    HD.[^313] EchoStar offers two HD receivers,[^314] and has packaged
    flat panel LCD televisions with its HD set-top boxes to offer an
    all-in-one equipment and service package.[^315] In February 2006,
    EchoStar began delivering HD local broadcast stations in the New
    York and Los Angeles markets.[^316] DIRECTV's HD Package includes
    ESPN HD, ESPN2 HD, Discovery HD Theater, HDNet, HDNet Movies and
    Universal HD for \$10.99 per month.[^317] DIRECTV delivers the
    national HD broadcast feed of ABC, CBS, Fox, NBC, and WB in select
    markets.[^318] DIRECTV is planning to use its Spaceway - F1
    satellite to deliver HD local broadcast stations in select
    markets.[^319] Beginning in October 2005, DIRECTV launched HD local
    broadcast stations in several markets.[^320]

86. EchoStar and DIRECTV also continue to develop their DVR services.
    Presently, neither EchoStar nor DIRECTV offers real-time on-demand
    programming because they lack the capacity on their satellites to
    store programming and provide feeds to individual subscribers.
    DIRECTV states that it has experienced higher subscription rates for
    its DVR-enabled equipment and services following more attractive
    pricing for the service.[^321] DIRECTV has been packaging TiVo's DVR
    platform into some of its receivers, but has announced that it will
    transition to its own DIRECTV Plus DVR, which is manufactured by
    News Corp. subsidiary NDS.[^322] In addition to providing DVR
    functionality, the new set-top box is designed to support DIRECTV's
    new interactive features, VOD functionality, and pay-per-view movies
    with VOD functionality.[^323] DIRECTV charges \$5.99 per month for
    its DVR service.[^324] EchoStar introduced "DISH on demand" which is
    based on the model 625 set-top box that offers a hard drive that can
    record up to 100 hours of programming and reserves enough space for
    EchoStar to download movies and other content via satellite for the
    subscriber to view "on demand."[^325] DIRECTV reported that it had
    two million subscribers with DVRs as of June 2005.[^326] EchoStar
    has not reported its DVR subscribership since it reported that it
    reached one million DVR subscribers in September 2003.[^327]

## Broadband Service Providers

87. For purposes of this report, we define broadband service providers
    (BSPs) as newer firms that are building state-of-the-art,
    facilities-based networks to provide video, voice and data services
    over a single network.[^328] Most BSPs are overbuilders.[^329] As we
    have noted previously, BSPs continue to face considerable challenges
    as discussed below, and competition to cable from BSPs is limited to
    very few markets. As discussed in the Local Exchange Carrier
    section, below, a renewed interest from large LECs in entering the
    video distribution market may change this fact over the next few
    years.

88. ***OVS***. In 1996, Congress established the open video system (OVS)
    framework, one of four statutorily recognized options for the
    provision of video programming services by LECs.[^330] BSPs are the
    only significant holders of OVS certifications or local OVS
    franchises.[^331] BSPA reports that new OVS activity has been
    limited, but that some of its members have converted cable
    franchises into OVS franchises, which has enabled some BSPs to
    eliminate build-out requirements.[^332] BSPA maintains that build
    out requirements limit wireline video competition by increasing the
    costs of entry.[^333] BSPA argues that most incumbent cable
    operators have had decades to build out to current service
    boundaries with limited or no competition, and did not have to rely
    on capital markets for funding as current entrants do.[^334]

89. ***BSP Overbuilders***. RCN Corporation is the nation's largest
    overbuilder, supplying voice, video, and high-speed Internet access
    services to residential subscribers over its own network in the
    Boston, New York, Chicago, San Francisco, Los Angeles, Washington,
    D.C, Philadelphia, and Lehigh Valley, Pennsylvania, metropolitan
    markets.[^335] As of June 2005, RCN was the 14th largest MVPD with
    371,000 subscribers.[^336] WideOpenWest (WOW) is the second largest
    overbuilder. WOW was the 16th largest MVPD and, as of June 2005,
    served 292,500 subscribers.[^337] The third largest overbuilder is
    Knoxville, Tennessee-based Knology, which operates mainly in the
    Southeast. As of June 2005, Knology was the 23rd largest MVPD, and
    had 179,800 video subscribers.[^338] Grande, which operates systems
    in several cities in Texas, reported that video connections
    increased from 78,000 to 85,440, and high-speed data increased from
    47,000 to 63,241, between June 2004 and June 2005.[^339]

90. Last year we reported that many overbuilders were continuing to
    experience financial difficulties. Since then, RCN emerged from
    Chapter 11 bankruptcy. RCN reports that it enjoys "a new management
    team, a new Board of Directors, and \[an\] improved balance
    sheet."[^340] BSPA reports that BSPs are consolidating ownership of
    their system holdings, which may help BSPs gain economies of scale
    and become more financially stable.[^341]

91. ***Nature of MVPD Competition***. BSPA highlights a 2005 U.S.
    Government Accountability Office (GAO) study that examined overbuild
    video systems.[^342] The report states that DBS penetration varies
    depending on the type of community (*i.e.*, urban, rural, or
    suburban) and the technical sophistication of the cable competitor
    and/or the presence of an overbuilder. BSPA maintains that DBS is
    not as direct a substitute for cable as are BSPs, and that the
    variation of DBS penetration across communities argues that the
    Commission should not accede to cable industry arguments that cable
    is no longer dominant in the MVPD market.[^343] We note that the
    *2004 GAO Report* studied six market pairs for which one market of
    each pair was served by a BSP overbuilder, and the other was not.
    GAO found that communities with overbuild competition experienced
    lower rates (an average of 23 percent lower for basic cable) and
    higher-quality service. GAO also found that BSPs were facing
    difficulties competing, such as access to programming and Multiple
    Dwelling Units (MDUs), and franchise requirements imposed by
    localities.[^344] BSPA calls upon the Commission to monitor and
    analyze DBS competition as GAO did in the *GAO 2005 Report*, and to
    reject the notion that markets are not competitive until such time
    as competitors achieve a market share of 25-30 percent.[^345]
    Comcast strongly disputes the allegation that DBS competition is not
    meaningful, referring to the "dramatic effects" that DBS competition
    has had on the multichannel video marketplace.[^346]

## Broadcast Television Service

### General Performance

92. Broadcast networks and local stations supply video programming
    directly over the air to consumers. Consumers who do not subscribe
    to an MVPD service rely solely on over-the-air transmission of local
    broadcast television signals. Other households receive broadcast
    television programming over the air on those television receivers
    that they have chosen not to connect to an MVPD service. In
    addition, many consumers receive broadcast signals via their cable,
    DBS, or other MVPD service.

93. As we reported last year, broadcast television stations' audience
    shares have continued to fall as cable and DBS penetration, the
    number of cable channels, and the number of nonbroadcast networks
    continue to grow. For the 2004-2005 television season, broadcast
    television stations accounted for a combined average 47 share of
    prime time viewing among all television households, compared to a 48
    share in the previous season.[^347] Broadcast stations achieved a 41
    share of all-day (24-hour) viewing during the 2004-2005 season, down
    from a 44 share the previous season. In contrast, nonbroadcast
    channels' collective audience share continues to grow. In the
    2004-2005 television season, nonbroadcast channels[^348] accounted
    for a combined average 53 share of prime time viewing among all
    television households, up from the 52 share in the previous
    season.[^349] Nonbroadcast channels accounted for a 59 share of
    all-day viewing, up from a 56 share in the previous season.[^350]

94. Since the 2004 Report, the number of commercial and noncommercial
    television stations has remained unchanged at 1,747 from June 30,
    2004 to June 30, 2005.[^351] Total television broadcast advertising
    revenues grew 11 percent from \$42.5 billion in 2003, to \$47.2
    billion in 2004.[^352] Advertising revenue for the seven most widely
    distributed broadcast networks (ABC, CBS, Fox, NBC, PAX, UPN, and
    WB) was estimated at \$24.9 billion in 2004, a 9.5 percent increase
    over the \$22.7 billion earned in 2003.[^353] Cable programming
    networks fared somewhat better, experiencing a 17.7 percent increase
    in advertising revenue in 2004; they earned \$16.4 billion in
    advertising revenue compared to \$14 billion in 2002.[^354]

### Digital Television

95. DTV allows broadcasters to use a single 6 MHz channel to transmit a
    high-definition television (HDTV) signal, several
    standard-definition television (SDTV) signals (multicasting), or
    ancillary services in addition to video programming.[^355] As of
    October 2005, more than 1,537 stations nationwide are on the air
    with DTV operations, including all 119 stations affiliated with the
    top-four network affiliates in the top thirty television
    markets.[^356]

#### Over-the-Air Households

96. On March 1, 2005, the Media Bureau released a staff report
    concerning over-the-air broadcast viewers (*OTA Report*).[^357] The
    report presented information submitted in response to a *Public
    Notice* (*OTA Public Notice*) that posed several questions about
    U.S. TV households that receive broadcast television only in analog
    format and over the air via an indoor or outdoor antenna.[^358] The
    *OTA Public Notice* asked how many analog over-the-air households
    there are, where they are located, what their demographic
    characteristics are, and why they do not subscribe to an MVPD
    service. The *OTA Public Notice* also requested comment on how best
    to provide for analog over-the-air households when analog broadcast
    television service is terminated at the end of the DTV transition.
    The *OTA Report* notes that the Commission's estimate of
    over-the-air only households is derived from figures reported in the
    *2004* *Report*. At the time the *OTA Report* was released, the
    Commission estimated that about 14.86 percent of television
    households rely on over-the-air television broadcasts to receive
    video programming.[^359] In this report, the *2005* *Report*, we
    find that there are 15.36 million U.S. TV households that do not
    subscribe to an MVPD service and thus rely on over-the-air broadcast
    television for their video programming, representing 14 percent of
    all U.S. TV households.[^360] In addition, we note that many
    households that subscribe to an MVPD also rely on over-the-air
    signals to receive broadcast programming on some of their television
    sets. [^361] The *OTA Report* also notes that commenters in that
    proceeding estimate that the percentage of TV households that
    receive video programming over-the-air only ranges from 13 percent
    to 19 percent.[^362]

97. Nielsen estimates that, as of July 2005, 15.43 million households,
    or 14 percent of the 109.6 total U.S. television households, rely
    exclusively on over-the-air television for video programming.[^363]
    Commenters in this proceeding provide estimates of the number of
    television households relying solely on over-the-air television
    reception within the range of 12 percent to 18 percent of U.S.
    television households. NAB, for example, estimates that there are as
    many as 20.5 million households containing 45 million television
    sets that do not subscribe to an MVPD and that there are an
    additional 18.3 million MVPD households with 28 million television
    sets that are not connected to MVPD service.[^364] CEA estimates
    that approximately 12 percent of all television households receive
    their broadcast television signals over-the-air.[^365] NCTA notes
    that approximately 15 percent of television households do not
    subscribe to an MVPD, and that a significant percentage of MVPD
    households include televisions that are not connected to an MVPD
    service.[^366]

#### Programming

98. ***Programming Available Over the Air.*** NAB indicates that
    currently the major broadcast networks (ABC, CBS, Fox, and NBC) now
    provide their most popular programming in high-definition.[^367]
    Special events, such as the Academy Awards and numerous major
    sporting events, also were broadcast in HD format over the past
    year.[^368] In addition, 1,537 local stations are broadcasting
    digital signals, including digital multicast, with some broadcasting
    their local news in HD format.[^369] The Association of Public
    Television Stations (APTS) states that, in 2005, PBS member stations
    will be distributing 125 hours of high-definition content and also
    will be distributing 290 hours of widescreen-formatted digital
    programming.[^370] In addition, American Public Television (APT)
    will be supplying 91 hours of HD programming each month to public
    television stations. Public television stations also are
    broadcasting multiple program streams to bring new services to the
    public that could not be made available using a single analog
    stream.[^371]

99. ***Programming Available Through MVPDs.*** NCTA reports that, as of
    January 2005, local cable systems were carrying the digital signals
    of 504 unique broadcast stations, and cable operators offer as many
    as 23 nonbroadcast networks that transmit much of their programming
    in HD format.[^372] In April 2005, public television and cable
    operators serving over 80 percent of cable subscribers in markets
    comprising over 80 percent of U.S. TV households entered into an
    agreement providing for the carriage of public television stations'
    digital programming (including multicast channels) by cable
    operators.[^373]

100. ***Multicasting.*** Multicasting is the process by which multiple
     streams of digital television programming are transmitted at the
     same time over a single broadcast channel. In the *Notice*, we
     requested information on the content provided using broadcasters'
     DTV spectrum, including the use of multicasting, and whether cable
     operators and other MVPDs are carrying multicast DTV
     programming.[^374] As Comcast notes, the broadcast industry, like
     the cable industry, recently has undergone a technological
     evolution, and broadcasters that transmit in digital now are able
     to distribute multiple channels to any consumers who have also
     converted their home equipment to digital.[^375] Comcast notes that
     broadcasters are now able to transmit multiple standard-definition
     over-the-air signals. This multicasting capability will allow
     stations to offer consumers more services and content, thereby
     increasing broadcasters' competitive impact in the multichannel
     video marketplace.[^376]

101. NAB indicates that, in addition to providing HD format programming,
     hundreds of local stations, even local stations in medium and small
     markets, are using their digital channels for multicast
     services.[^377] According to a study by Decisionmark Corp., the 11
     largest broadcast networks and their affiliates broadcast more than
     937,000 hours of multicast programming during the month of October
     2005.[^378] This multicast programming includes news, weather,
     sports, religious material, music videos and coverage of local
     musicians and concerts, as well as foreign language programming
     (especially, but not limited to, Spanish programming).[^379]
     According to a July 2005 survey of full-power commercial television
     stations conducted by NAB, 50 percent of the responding stations
     are currently multicasting, and of the remaining 50 percent, 79
     percent are considering multicasting in the future. Of those
     stations currently planning to multicast, 79 percent expect such
     programming to be locally produced or locally focused.[^380] NAB
     also found that 79 percent of respondents said if multicast is not
     carried by cable operators, they will not provide these
     services.[^381]

102. APTS states that more than 95 percent of all public television
     stations have committed to broadcast at least one multicast channel
     dedicated to formal educational programming.[^382] In addition,
     public television stations plan to multicast public affairs and
     local issue coverage such as coverage of state legislatures, local
     town meetings and debates, and instructional television, as well as
     foreign language programming, children's programming and
     programming dedicated to the senior community.[^383] PBS stations
     are also using digital transmission capability to offer educational
     data services discussed in the next section.

103. NCTA states that, as of May 2005, cable operators were carrying
     commercial broadcasters' multicast programming in over 50 markets
     (including at least seven of the top ten markets).[^384] Comcast,
     for example, offers PBS multicast channel PBS Kids Sprout and has
     entered into agreements with over 200 commercial broadcasters in 72
     markets to carry their local multicast digital signals.[^385]
     Several cable operators agreed to carry CBS stations' extra
     coverage of the NCAA men's college basketball tournament on
     multicast channels.[^386] In addition, Verizon's video service FiOS
     and the Tribune Company, owner of 26 broadcast television stations
     nationwide, have tentatively entered into an agreement in which
     FiOS will carry any multicast programming Tribune decides to
     offer.[^387]

104. APTS requests that the Commission require DBS providers to carry
     all free, over-the-air digital signals where local television
     stations are being carried pursuant to the Satellite Home Viewer
     Improvement Act of 1999 (SHVIA),[^388] and argues that such
     carriage should include both high-definition programming and all
     multicast digital programming.[^389] APTS argues that digital
     carriage on satellite will speed the digital transition, given that
     satellite subscribers account for over 20 percent of all TV
     households on average.[^390] APTS also argues that the Commission
     should impose multicast carriage requirements on new LEC video
     providers, arguing that new entrants' broadband networks have more
     than enough capacity to accommodate such programming.[^391]

105. ***Datacasting and Subscriptions Services.*** DTV also allows
     broadcasters to use part of their digital bandwidth for
     subscription multichannel video programming services and
     datacasting.[^392] These services can be provided simultaneously
     with HD or SD DTV programs, and can provide delivery of virtually
     any type of data, audio or video, including text, graphics,
     software, web pages, video-on-demand,[^393] and niche
     programming.[^394]

106. Last year, we reported on the activities of U.S. Digital
     Television, Inc. (USDTV), which combined broadcast spectrum
     licensed to a number of broadcasters to create subscription video
     distribution via DTV streams.[^395] USDTV continues to offer a
     multichannel video programming service including broadcast and
     nonbroadcast programming using local over-the-air DTV
     spectrum.[^396] USDTV provides service in Salt Lake City, Las
     Vegas, Albuquerque, and Dallas, and has announced plans to begin
     service in the Norfolk/Hampton Roads area in Spring 2006.[^397] Its
     service costs \$20 per month for 30 channels of programming,
     including 12 nonbroadcast networks, and it serves between 4,500 and
     5,000 subscribers.[^398] In September 2005, News Corp's station
     group, Hearst-Argyle Television Inc., McGraw-Hill Broadcasting, LIN
     TV Corp., Morgan-Murphy Stations and Telcom DTV LLC jointly
     invested \$25.8 million in USDTV in return for an interest in the
     company. This additional funding is expected to allow USDTV to
     expand its service to other markets and to add technological
     upgrades to provide on-demand content and DVR services.[^399]

107. APTS indicates that some public television stations are employing
     datacasting for supplemental programming and public safety
     purposes.[^400] For example, New Jersey Network's 21^st^ Century
     Digital Classroom program and WHYY, Philadelphia, Pennsylvania, are
     using datacasting to deliver media-rich video content over the air
     to students, teachers, and adults in classrooms and libraries. Such
     content includes video, text, audio, graphs and maps.[^401] The New
     Jersey Network also datacasts workforce training programs to
     several sites around the state. Some public television stations are
     using datacasting to allow public safety and emergency management
     agencies to transmit securely critical, time-sensitive information
     to personal computers equipped with DTV tuner cards and a small
     antenna.[^402] Public television stations using this service
     include Kentucky Educational Television, WNET in New York, New
     Jersey Network, Nashville Public Television, and New Hampshire
     Public Television.[^403] APTS believes public television stations
     will play an important role in supporting a national and local
     digital broadcast emergency alert system through the digital
     interconnection infrastructure public broadcasting is
     developing.[^404]

108. In addition, digital spectrum can be used for services provided on
     various types of electronic devices. As reported last year, iBlast
     and dotcast use the digital broadcast spectrum of local TV stations
     to distribute digital media content directly to home computers,
     set-top boxes, DVRs, vehicle entertainment systems, game consoles,
     PDAs and MP3 players.[^405]

#### DTV Equipment

109. The sale of DTV consumer electronics continues to accelerate.[^406]
     Kagan Media Research estimates that between 1998, when digital
     television sets were first offered for retail sale, and year-end
     2004, approximately 15.8 million HD-ready and enhanced-definition
     (ED)-ready monitors had been shipped to retailers, with 13.65
     million of those being HD-ready monitors.[^407] Of those shipped,
     Kagan estimates that a total of 14.7 million have been purchased by
     consumers, of which 12.4 million were HD-ready.[^408] For 2005,
     Kagan also estimates that 9.9 million HD-ready and ED-ready
     monitors will be shipped to retailers, with 8.2 million of those
     HD-ready. Of those shipped, Kagan estimates that more than 8.9
     million monitors will be purchased by consumers, with 7.8 million
     of those being HD-ready.[^409] CEA research indicates that 85
     percent of DTV displays sold in 2004 were capable of displaying a
     picture in HDTV resolution, while the remaining 15 percent were
     capable of EDTV resolution.[^410] HD-ready and ED-ready monitors do
     not necessarily contain DTV tuners. The remaining households must
     purchase a DTV tuner to receive digital television over the air or
     must subscribe to an MVPD that retransmits digital signals. CEA
     forecasts that 15.3 million integrated DTVs will be sold in 2005,
     24.3 million in 2006, 32.1 million in 2007 and 36.3 million in
     2008.[^411]

110. CEA estimates that, since 1998, more than 17 million DTV sets in
     total have been sold to consumers, and Americans have spent over
     \$30 billion to purchase DTV sets.[^412] CEA reports that during
     the first six months of 2005, DTV products sold at a faster rate
     than during any previous comparable period of time, with 3.8
     million DTV products sold, accounting for \$4.6 billion in sales, a
     40 percent increase in unit sales from the same time period in
     2004.[^413] CEA estimates that, by 2009, Americans will purchase
     more than 152.3 million DTV tuners and over-the-air tuners will be
     found in 86 percent of American homes.[^414]

111. CEA comments that DTV set prices are 75 percent lower than they
     were five years ago and are still declining by approximately 15 to
     20 percent each year.[^415] In 2005, the average retail price of a
     DTV set is expected to drop to \$1,189 from \$1,489 in 2004, down
     from the average price of \$3,147 in 1998.[^416] CEA states that
     currently several DTV models are available for under \$700, and it
     expects that soon there will be DTV sets that sell for as low as
     \$400.[^417] CEA adds that over the next two years manufacturers
     plan to introduce one or more \$60 digital-to-analog converters
     that will allow digital TV broadcasts to be converted to analog for
     viewing on analog TV sets.[^418]

112. On June 15, 2005, NAB and the Association for Maximum Service
     Television, Inc., announced a project in which they would pursue
     the development of a high-quality, low-cost digital-to-analog
     converter box for terrestrial DTV reception.[^419] CEA, however,
     states that the digital-to-analog converter box for which NAB and
     MSTV requested proposals includes features that consumers do not
     want or need.[^420] CEA maintains that these features will add
     significant costs to the low-cost box originally envisioned,
     undermining Congress's ultimate goal that an affordable option be
     made available to consumers.[^421] In October 2005, NAB chose LG
     Electronics, Inc., and Thomson, SA, to each develop a prototype
     high quality, low cost terrestrial digital converter box to receive
     digital signals on conventional analog televisions.[^422]

#### DTV Transition

113. In our *2004 Report*, we described several rulemaking decisions
     that the Commission adopted during 2004 intended to accelerate or
     promote the transition to DTV.[^423] This year, we report on the
     Commission's continuing efforts to foster the DTV transition.[^424]

114. ***DTV Signal Carriage Proceeding.*** In February 2005, the
     Commission considered petitions for reconsideration of the *Digital
     Must Carry First Report and Order* and the various comments
     submitted in response to the *Digital Must Carry FNPRM*.[^425] The
     Commission affirmed its tentative conclusion not to require cable
     operators to carry both a broadcaster's analog and digital signals
     (*i.e.*, dual carriage) during the transition. In addition, as
     noted above, the Commission also denied petitions for
     reconsideration of its statutory interpretation of "primary video."
     In the interest of providing certainty on these significant issues,
     the Commission deferred the resolution of certain other issues to a
     future order. These include petitions requesting reconsideration or
     clarification with respect to the Commission's decisions on Program
     System and Information Protocol (PSIP) carriage and channel
     numbering, carriage of program-related material, material
     degradation, and down-conversion of digital-only stations.[^426]

115. ***Low-Power Television and Television Translators.*** Last year,
     we reported that the Commission established rules in September 2004
     to allow for the digital conversion of low-power television and
     television translator stations (*LPTV Report and Order*).[^427] In
     the *LPTV Report and Order* the Commission found that LPTV and
     translator stations could either file for an on-channel digital
     conversion of their existing stations or file for a digital
     "companion channel" to operate in analog and digital
     simultaneously.[^428] On October 4, 2005, a *Public Notice* was
     issued announcing that the Commission has commenced accepting
     applications for digital on-channel conversions.[^429] The
     Commission has not yet commenced accepting applications for digital
     companion channels for LPTV and translator stations.

116. ***Channel Election and Designation.*** In the *Second Periodic
     Review*, the Commission adopted a multi-step channel election
     process through which commercial and noncommercial broadcast
     licensees and permittees (licensees) will select their ultimate
     "in-core" (*i.e.*, channels 2-51) DTV channel.[^430] In the first
     round of the election process, licensees currently holding in-core
     channels filed election forms by February 10, 2005. In June 2005,
     the Media Bureau approved a number of negotiated channel
     arrangements among licensees[^431] and announced the tentative DTV
     channel designations for 1,554 licensees participating in the first
     round.[^432] In addition, the Media Bureau notified approximately
     160 licensees that had elected to keep their allotted NTSC (*i.e.,*
     analog) channel as their post-transition DTV channel that their
     proposed operations would result in impermissible interference to
     one or more stations, and gave these licensees 60 days to re-file
     indicating how they would resolve the interference conflict. After
     analyzing these submissions, the Media Bureau announced a total of
     1,713 tentative DTV channel designations based upon the first round
     of channel elections.[^433] The remaining licensees, which could
     not or did not elect in the first-round, filed second-round channel
     election forms by October 31, 2005.[^434]

117.  In early 2006, the Media Bureau expects to announce tentative DTV
     channel designations and interference conflicts for licensees
     participating in the second-round. The conflicted licensees will
     have 60 days from notification to re-file, indicating how they will
     resolve the conflict. The Media Bureau expects a third-round of
     elections, to cover any stations that were not tentatively assigned
     a channel in the prior two rounds.[^435]

#### Educational Efforts

118. In the *2004 Report,* we provided information on efforts to educate
     consumers about the DTV transition. We reported on the Commission's
     web portal, http://www.dtv.gov, that was intended to serve as a
     one-stop source of information regarding the transition, and
     efforts by CEA, the Consumer Electronics Retail Coalition (CERC)
     and its member companies, NAB, NCTA, and individual MVPD
     operators.[^436]

119. These educational efforts continue. For example, several
     organizations continue to operate websites, host conventions, and
     produce videos and publications designed to provide consumers with
     information about the transition. A consumer and retailer website,
     http://www.checkhd.com, operated by Decisionmark, continues to
     provide information about the availability of local digital and HD
     channels, information on how to purchase a digital set, and answers
     to basic DTV questions.[^437] CEA operates several websites
     designed for both retail sales associates and consumers,[^438] and
     continues to host conventions aimed at providing HDTV information
     updates to local retailers, broadcasters, manufacturer
     representatives, and cable and satellite providers.[^439] CEA also
     produces "HDTV Update E-News," which is a video that is updated
     several times per year and sent to retailers, manufacturers, and
     the press. In addition, NAB has developed an educational video
     series that it makes available to its television station members
     and that is designed to educate consumers on basic DTV
     concepts.[^440]

120. In addition, CERC has issued a retail consumer guide that focuses
     on the choices that consumers will have when analog broadcasting
     ends.[^441] CEA continues to distribute a consumer and retailer tip
     sheet, "*Buying a Digital Television,*" that it produced in
     partnership with the Commission and CERC.

## Other Wireline Video Services

### Local Exchange Carriers

121. The 1996 Act amended Section 651 of the Communications Act to
     permit common carriers to provide video services in their telephone
     service areas. The statute permitted common carriers to: (1)
     provide video programming to subscribers through radio
     communications under Title III of the Communications Act;[^442] (2)
     provide transmission of video programming on a common carrier basis
     under Title II of the Communications Act;[^443] (3) provide video
     programming as a cable system under Title VI of the Communications
     Act;[^444] or (4) provide video programming by means of an open
     video system (OVS).[^445]

122. As we reported last year, there are new signs of LEC interest in
     providing video services. We previously reported on joint marketing
     agreements between BellSouth, Qwest, SBC, and Verizon and DBS
     service providers,[^446] and noted that several LECs have reported
     plans to provide video service via asymmetric digital subscriber
     line (ADSL), very high-speed digital subscriber line (VDSL), or
     fiber to the home (FTTH) using IP technology.[^447] The
     Fiber-to-the-Home Council reports that there are 652 communities in
     46 states served at least in part by FTTH networks, with 322,700
     "connected homes."[^448] Over the past year, the larger LECs have
     continued and accelerated their plans to roll out video services,
     with Verizon actually signing cable franchises and beginning
     service in one community.[^449]

123. As has been true for the past several years, BellSouth holds 20
     cable franchises with the potential to pass 1.4 million homes and
     provides cable service to approximately 40,000 customers in 14 of
     its franchise areas.[^450] BellSouth reports that it is studying
     the use of Internet Protocol Video, or IPTV, for further
     distribution of multichannel video services, and that a
     full-service market trial could begin next year.[^451] Qwest
     provides video services via traditional Hybrid Fiber-Coaxial (HFC)
     architecture in the western suburbs of Omaha, Nebraska, and is
     deploying an FTTH network in Lone Tree, Colorado.[^452] SBC is
     deploying an IP-enabled broadband network called "Project
     Lightspeed," using both Fiber to the Node (FTTN) and FTTH to
     deliver video and other services to residential customers.[^453]
     SBC reports that the network will be available to 18 million homes
     nationwide.[^454] SBC separately reports that they will begin
     commercial service to limited subscribers in neighborhoods in San
     Antonio, Texas in late 2005 or early 2006, scale to full service in
     San Antonio in mid-2006, and reach the full 18 million households
     by the first half of 2008.[^455]

124. The efforts of Verizon are noteworthy this year because it has
     begun commercial service in several communities and committed to
     beginning service in many additional communities in the near
     future. Verizon is deploying an FTTH network under the brand name
     "FiOS" that will allow delivery of multichannel video services in
     addition to telephony and high-speed Internet access service at
     speeds above those of ADSL technology. Verizon has received
     franchises from local communities in California, Florida, Virginia,
     Texas,[^456] Maryland, and Massachusetts.[^457] Verizon began
     offering multichannel video service in Keller, Texas, a city 30
     miles from Dallas, on September 21, 2005, and now offers service to
     more than a dozen Texas communities;[^458] in Herndon, Virginia, a
     suburb of Washington, D.C., on November 21, 2005;[^459] and in
     Temple Terrace, Florida, a city northeast of Tampa, on December 6,
     2005.[^460] Verizon commented that it would pass over three million
     homes and businesses by the end of 2005, and planned to pass an
     additional three million homes and businesses by the end of
     2006.[^461]

125. Qwest and a number of smaller incumbent LECs are offering, or
     preparing to offer, MVPD service over existing telephone lines
     using VDSL or ADSL technologies.[^462] Qwest offers video,
     high-speed Internet access, and telephone service over existing
     copper telephone lines using VDSL in the Phoenix, Arizona,
     metropolitan area and in Denver and Boulder, Colorado.[^463]
     Cincinnati Bell reports that it is upgrading its existing DSL
     architecture to provide IPTV services through an FTTN configuration
     similar to that being deployed by SBC.[^464] CenturyTel is
     operating a trial IPTV service over DSL in La Crosse, Wisconsin,
     and planned commercial launch of the service in the fourth quarter
     of 2005.[^465] Cincinnati Bell and CenturyTel both intend to store
     all available channels at the network node and deliver only the
     content requested by the subscriber, either by channel selection or
     program selection, rather than delivering all channels to all homes
     all the time.[^466]

### Electric and Gas Utilities

126. Electric and gas utilities possess certain assets that have
     positioned them well for entry into the MVPD market, including
     access to public rights-of-way, ownership and operation of various
     infrastructures amenable to the provision of network services, and
     well-established relationships with customers.[^467] Some utilities
     continue to move forward with ventures involving multichannel video
     programming distribution, though such services are still not
     widespread.

127. As previously reported, some municipal, county, and public
     utilities provide voice, video, and high-speed Internet access
     services in competition with incumbent cable systems, generally
     using fiber optic networks.[^468] Some utilities have built systems
     on their own, but many utilities involved in the video distribution
     market are engaged in joint ventures with other companies.[^469] It
     is reported that utility systems are being deployed in urban and
     rural areas and serve both low-income and affluent
     communities.[^470] To some extent these systems are bringing video,
     voice, and high-speed Internet access to previously unserved
     communities.

128. The American Public Power Association (APPA), created by and for
     the nation's more than 2,000 not-for-profit, community and
     state-owned electric utilities, surveyed its members at the end of
     2004, and found that 616 public power entities offer some kind of
     broadband services, serving about 14 percent of total households in
     the United States.[^471] Of those, 102 offered video service, 128
     offered high-speed Internet access, 52 offered local telephone
     service, and 42 offered long distance telephone service. Of the 102
     offering video services, 10 are offering video on demand
     (VOD).[^472]

## Other Wireless Video Services

### Private Cable Systems

129. Private cable operator (PCO) systems, also known as satellite
     master antenna (SMATV) systems, are video distribution facilities
     that use closed transmission paths without using any public
     rights-of-way.[^473] PCOs acquire video programming and distribute
     it via terrestrial wiring in urban and suburban multiple dwelling
     units (MDUs), such as apartments and condominiums, as well as
     commercial multiple tenant units (MTUs), including hotels and
     office buildings. Traditionally, PCOs receive nonbroadcast
     programming from resellers called aggregators using satellite
     master antenna systems atop the buildings they serve. PCOs usually
     combine this nonbroadcast video programming with local broadcast
     television signals that they receive using master antennas. Thus,
     the packages PCOs provide their subscribers are comparable to those
     of cable systems, and they directly compete with franchised cable
     operators.

130. PCOs continue to serve a small number of MVPD subscribers, either
     through their own facilities or through partnership arrangements
     with DBS operators, DIRECTV and EchoStar.[^474] PCO subscribership
     has declined to one million subscribers this year, a decrease of
     9.1 percent from last year's 1.1 million.[^475] The Independent
     Multi-Family Communications Council (IMCC), the trade association
     that represents PCOs and the MDUs they serve, indicates that it
     currently has more than 150 members that are PCOs.[^476] PCOs have
     received millions of dollars for the purpose of starting new PCOs
     in the last two years, and there has been some industry
     consolidation, creating larger and more stable PCOs. PCOs range in
     size from large operators serving customers throughout the entire
     United States, to small operators that serve MDUs in as few as
     three communities.[^477]

### Wireless Cable Systems

131. Wireless cable systems use Broadband Radio Service (BRS) and
     Educational Broadband Service (EBS) in the 2 GHz band to transmit
     video programming and provide broadband services to residential
     subscribers.[^478] These services were originally designed for the
     delivery of multichannel video programming, similar to that of
     traditional cable systems, but over the past several years
     licensees have focused their operations instead on providing
     two-way high-speed Internet access services.[^479] The number of
     wireless cable subscribers has declined steadily from a peak of 1.2
     million in 1996 to approximately 100,000 as of March 2005, down
     from an estimated 200,000 subscribers in April 2004.[^480] Thus,
     wireless cable systems provide video competition to incumbent cable
     operators only on a limited basis.

132. Last year we reported that BellSouth provides video programming in
     the areas where it holds MMDS/BRS and ITFS/EBS licenses.[^481]
     BellSouth continues to provide video programming to limited areas
     in the Atlanta, New Orleans, and Louisville television markets and
     in parts of Florida.[^482] W.A.T.C.H. TV, an operator of one of the
     few digital wireless cable systems in the U.S., claims that a
     wireless cable system can compete successfully against other cable
     systems and DBS if it digitizes its facilities, which allows it to
     offer hundreds of channels of programming to its subscribers.[^483]
     W.A.T.C.H. TV reports that it has transformed its 11-channel analog
     video-only service to a state-of-the-art network, offering its
     12,000 subscribers in the Lima, Ohio, market 200 channels of
     digital video and audio programming and offering high-speed
     Internet access to 4,800 subscribers, at a lower price than that
     charged by competing cable and DBS operators.[^484] It further
     states that it is the only operator in its market to provide
     competition to incumbent cable operators because DBS does not offer
     either local-into-local broadcast service or a broadband service
     for consumers.[^485]

### Commercial Mobile Radio Service

133. In our *2004 Report*, we noted that several cellular telephone
     companies were beginning to offer video services on their mobile
     telephones.[^486] Wireless companies are now spending billions of
     dollars to build third-generation, or 3G, networks which enable the
     transmission of live video to cellphones, and cellphone makers are
     selling video-ready telephones for as little as \$99 when bought
     with a subscription to a video service.[^487] For services
     currently available, unlimited viewing costs \$15 to \$20 a
     month.[^488] Mobile telephone providers are increasingly offering
     video that includes content from traditional cable networks, as
     well as pre-recorded content from a host of other producers.
     Examples include live and recorded programming from the Discovery
     Channel, ESPN, Weather Channel, Fox News and Nickelodeon.[^489]

134. Several major cellular telephone companies are offering video
     services. Verizon Wireless rolled out V-Cast, a service that offers
     video programming to cellular telephone users, in February 2005.
     V-Cast provides news updates, sports highlights, celebrity news,
     stock market quotes, and information, weather and games for \$15 a
     month. Its television-like video, at high bit rates, allows
     customers to download music videos and other high-quality
     content.[^490] Sprint Corporation began broadcasting live video
     over its wireless telephones in August 2004. Sprint PCS customers
     can now view news, video clips and other content in real time over
     their cellular telephones.[^491] MobiTV, a video service available
     from Sprint PCS, Cingular, and several regional carriers, also
     sends video programming to cellphones and currently has 300,000
     subscribers.[^492] Qualcomm recently introduced its TV-to-cellphone
     technology, called MediaFLO.[^493] HBO and Cingular Wireless are
     reportedly considering a wireless content distribution
     arrangement.[^494]

## Other Entrants

### Internet Video 

135. The amount of web-based video provided over the Internet continues
     to increase significantly each year. As we have reported in the
     past, many traditional broadcast and nonbroadcast programmers are
     currently providing streaming and downloadable video content on
     their Internet web pages, as do many independent content producers.
     Several companies are also using the Internet, coupled with a
     television set-top box that allows an on-screen guide, to provide
     video directly to a television set. In addition, several companies
     are using Internet Protocol technology to provide facilities-based
     IP video, as are many independent content producers.

136. ***Streaming Video***. Video streamed over the Internet through the
     web (sent from the content provider to the subscriber in real-time)
     is still most viable when delivered over broadband networks. Even
     with the most advanced compression technology available, broadcast
     quality video is not possible over a 56 kbps dialup
     connection.[^495] Broadcast quality video is possible, however, at
     768 kbps with advanced compression/decompression technology
     (codecs[^496]) and at 1.5 Mbps or higher broadcast quality
     standard-definition MPEG-2 is possible.[^497] Some industry
     observers continue to believe, however, that widespread adoption of
     streaming video will only be possible if connection speeds
     significantly increase over those currently achieved over cable and
     DSL broadband.[^498] As we reported last year, the Internet2
     network continues to facilitate high-quality streaming video using
     its highly reliable 10 Gbps backbone.[^499] The Internet2 network,
     however, continues to primarily serve the research and academic
     communities.

137. Regardless of the fact that there is relatively minimal
     availability of high-quality video from such high-speed networks as
     the Internet2, many households continue to access streaming video
     using dial-up and residential high-speed Internet access
     connections. The overall number of homes with access to the
     Internet continues to grow, as does the number of Americans who
     access the Internet via a high-speed broadband connection.
     According to one report, as of June 2005, there were approximately
     33.7 million residential high-speed Internet access subscribers,
     representing approximately 48 percent of the 70.3 million
     residential Internet subscription households.[^500] As of January
     2005, an average of 14 percent of all Americans had watched some
     form of streaming video in the past month, and approximately eight
     percent of Americans had accessed streaming video content in the
     past week.[^501]

138. Many traditional programmers continue to offer streaming video on
     their websites to increase access to and supplement their regular
     television programming content. For example, CBS News, CNN, Comedy
     Central, and Nickelodeon offer 24-hour web access to some regularly
     featured television programming; ESPN.com has partnered with Major
     League Baseball to provide access to baseball games and baseball
     highlights; College Sports TV provides access to live video feeds
     of some college football games; MTV offers access to regularly
     featured programming and supplemental content; and In2TV, a
     partnership between AOL and Warner Bros., allows consumers to
     stream full-length episodes of popular television series from a
     library of thousands of television programs.[^502] In addition,
     some traditional content producers are also offering new and unique
     content over the Internet via the web. For example, Scripps
     Networks has announced that it will launch ten web-based video
     channels by the end of 2006; AOL continues to offer such exclusive
     and specialized video content as the Live8 concert and music
     videos; and Yahoo and Google are both exploring original content
     for distribution via the web.[^503] Clear Channel Communications
     plans to add original streaming video programming to some 200 local
     radio stations' web sites.[^504] Maxim Magazine plans to offer free
     streaming video programming on-demand to Internet users via MSN's
     video streaming service.[^505] MTV plans to launch a free hybrid
     linear video and video-on-demand channel called MTV
     Overdrive.[^506] "The Knot TV" is a 24-hour streaming video channel
     featuring wedding-related shows.[^507]

139. ***Downloadable Video***. As we reported last year, we expect that
     a large amount of video available through the web will be
     downloadable video. Downloadable video is available on the websites
     of both traditional programmers and independent producers of video
     content. There are numerous online services that allow users to
     download content to a computer hard drive for viewing on a personal
     computer, television, or mobile video device. In October 2005,
     Disney's ABC and Apple's iTunes entered into a deal to offer
     current and past season episodes of ABC and Disney Channel
     television shows for download from Apple's iTunes Music Store for
     viewing on a PC or iPod video player.[^508] More established
     efforts to provide downloadable video include offerings from
     Movielink, Starz! Ticket on Real Movies, ClickStar and CinemaNow.
     For example, Movielink, a joint venture of Metro-Goldwyn-Mayer
     Studios, Paramount Pictures, Sony Pictures Entertainment, Universal
     Studios, and Warner Bros. Studios, offers movies, television shows,
     and other popular videos for download on a rental or purchase
     basis.[^509] Some companies are offering or are planning to offer
     content distribution via the web for independent content producers.
     DaveTV, Brightcove, and Wi-FiTV provide an Internet-based
     distribution interface for content producers of all sizes.[^510]
     Some content producers are offering their services directly to
     Internet users via websites such as Strandvenice.com, which is an
     online reality channel that offers a 50-minute series pilot episode
     for free and charges 99 cents for future 30-minute episodes.[^511]
     Akimbo has partnered with producers and distributors of movies and
     videos to deliver video programming directly to a subscriber's
     television using the consumer's existing broadband
     connection.[^512] Akimbo provides the subscriber a set-top box that
     generates an on-screen guide that enables the subscriber to choose
     programming from a library of video selections. Akimbo then uses IP
     technology to deliver the video from a central office, over the
     Internet, to the subscriber's television.[^513]

### Home Video Sales and Rentals

140. The sale and rental of home video, including videocassettes and
     DVDs, are considered part of the video marketplace because they
     provide services similar to the premium and pay-per-view offerings
     of MVPDs.[^514] As such, they offer some level of competition to
     broadcast television, cable television and DBS for the consumer's
     time and money. Video-on-demand services provided by cable, DBS,
     and Internet providers have emerged as competitive alternatives to
     home video.[^515]

141. Nine out of ten TV households have at least one VCR.[^516] DVDs
     also have made a significant impact on the home video market. An
     estimated 80 million households have DVD capability, representing
     nearly three-quarters of all U.S. households. Consumers purchased
     37 million DVD players in 2004, an eight percent increase over
     2003, and in the first six months of 2005 nearly 14 million DVD
     players were sold. Household penetration is expected to reach 80
     percent by year-end 2005.[^517] There are approximately 47,000 DVD
     titles available for purchase or rental today compared to 30,000 a
     year ago.[^518] Consumers spent \$24.5 billion renting or
     purchasing DVDs or VHS videocassettes last year, compared to \$9.4
     billion in U.S. movie ticket revenues.[^519] Overall, consumers
     spent \$15.5 billion on DVD sales alone in 2004, a 33 percent
     increase over 2003, while DVD rentals increased 26 percent over
     2003, as consumers spent more than \$5.7 billion.[^520]

142. Sales and rentals of DVDs have accounted for 60 percent of
     entertainment companies' profits over the past eight years.[^521]
     Consumers can purchase DVDs and videocassettes from video chains,
     such as Blockbuster or Hollywood Video; from mass merchandise
     stores, such as Target and Wal-Mart; or from online companies, such
     as Amazon. Consumers rented more than one billion DVDs during the
     first half of 2005, [^522] either at retail outlets or via online
     services, such as Netflix.[^523] Netflix currently has about 3.2
     million subscribers. It is projected that Netflix will have four
     million subscribers by the end of 2005, and five million by the end
     of 2006.[^524] Earlier this year, Wal-Mart and Netflix entered a
     partnership whereby Netflix will promote Wal-Mart DVD sales and
     Wal-Mart will offer its online customers the opportunity to sign up
     with Netflix at Wal-Mart's current online movie rental service
     price for the year.[^525] Netflix also has announced that it plans
     to offer downloadable movies by the end of 2005.[^526] In addition
     to its video stores, Blockbuster offers an online DVD rental
     service and is reported to have a million subscribers, a number
     that is expected to double by the first quarter of 2006.[^527]

# Market structure and conditions affecting competition

## Market Structure and Ownership Issues

143. The video programming market is comprised of a retail market for
     the distribution of multichannel video programming to households,
     and a program supply market for the purchase of video programming
     by MVPDs. In this section, we first review changes in the market
     for the distribution of video programming, including changes in the
     level of competition in that market between June 2004 and
     June 2005. We then review the market for the purchase of video
     programming by MVPDs, examining the effects that changes in
     concentration among MVPDs at the national and regional levels have
     had on this market in the last year.

### Competitive Issues in the Retail Market for the Distribution of Video Programming to Consumers

144. In the past year, incumbent cable operators' share of all MVPD
     subscribers continued to decline. As of June 30, 2005, cable
     operators served 69.4 percent of the 94.2 million MVPD subscribers,
     compared to 71.6 percent of the 92.3 million MVPD subscribers a
     year earlier.[^528] DBS, the major wireless MVPD technology that is
     available to subscribers nationwide, saw its share of MVPD
     subscribers increase between June 2004 and June 2005, from 25.1
     percent of the market to 27.7 percent. Relatively few consumers,
     however, have a second wireline alternative, such as an overbuild
     cable system, as indicated by the small number of subscribers to
     BSPs and the limited entry by LEC thus far.[^529] Several other
     MVPD technologies, such as private cable systems and wireless cable
     systems, offer consumers alternatives to incumbent cable services,
     but only in limited areas, and their overall share of the MVPD
     market has declined from 3.29 percent to 2.88 percent over the last
     year.

145. The Commission recently opened a proceeding to investigate whether
     the current local franchising process inhibits competitive entry in
     the retail market for the distribution of video programming.[^530]
     The *Franchising NPRM* seeks comment on issues relating to the
     implementation of Section 621(a)(1) of the Communications Act.
     Specifically, the Commission asks how it can ensure that local
     franchising authorities (LFAs) do not unreasonably refuse to award
     cable franchises to competitive entrants. The *Franchising NPRM*
     tentatively concludes that the mandate of Section 621(a)(1) should
     be interpreted to prohibit not just the ultimate refusal to award a
     franchise, but also a broader range of behaviors, including the
     establishment of procedures and other requirements that
     unreasonably interfere with the ability of would-be new entrants to
     introduce their competitive offerings quickly.

146. In the *Notice*, we asked about the impact of the local franchising
     process on new entrants into local markets.[^531] In their comments
     in response to the *Notice of Inquiry* in this docket, a number of
     parties addressed this issue. LECs described the local franchising
     process as an impediment to entry into the market.[^532] SBC
     maintains that cable franchise requirements are unnecessary given
     existing local authority to manage telephone company rights of
     way.[^533] Verizon and others note that franchise negotiation gives
     notice of entry to the incumbent, delays entry, and allows LFAs to
     demand unrelated concessions from the entrant.[^534] Verizon
     alleges that a "level playing field" approach to regulation is
     harmful to competition, and urges congressional action and
     Commission action pursuant to Section 621(a) of the Communications
     Act to alleviate these concerns.[^535] Broadband service provider
     RCN reports that local franchise requirements have not prevented
     competitors like RCN from entering the market, but argues that RCN
     should receive equivalent relief if other competitors are relieved
     from franchise obligations.[^536]

147. BSPA indicates that franchise build-out requirements are
     anachronistic and a barrier to entry and it supports a national
     policy to eliminate them.[^537] BSPA argues that most incumbent
     cable operators have had decades to build out to current service
     boundaries with limited or no competition, and did not have to rely
     on capital markets for funding as current entrants do.[^538]
     Verizon also objects to build-out requirements.[^539] NCTA argues
     that existing franchise regulations and build-out requirements are
     appropriate for all providers in the multichannel video industry,
     and that they should not pose a "significant barrier" to
     competitive entry.[^540]

148. In addition to franchising requirements, commenters assert that
     there are other factors that also may inhibit entry and
     competition. For example, Verizon raises the issue of open and
     competitively neutral technical standards.[^541] BSPA states that
     discrimination in access to, and pricing of, video programming and
     other digital content constitutes a threat to BSP entry and
     competition.[^542] SBC also stresses the importance of access to
     programming, particularly programming affiliated with incumbent
     cable operators and terrestrially delivered regional sports
     networks.[^543]

149. BSPA also identifies exclusive long-term MDU access contracts as a
     barrier to entry and notes that difficulties remain for BSPs and
     other wireline MVPDs gaining access to utility poles at reasonable
     rates.[^544] Verizon also raises the issues of access to residents
     of MDUs.[^545]

150. NTCA and BSPA allege that incumbent cable operators faced with
     competitive entry have engaged in "targeted" or "predatory" pricing
     practices.[^546] BSPA recommends that the Commission require cable
     operators to disclose all rates and promotions offered to any
     customer in a local franchise area, and to consider whether, even
     in areas in which a finding of effective competition has been
     granted, the Commission may continue to require uniform pricing;
     BSPA adds that, if necessary, the Commission should recommend that
     Congress amend the Communications Act to allow the Commission to
     require uniform pricing under the circumstances BSPA
     describes.[^547] Comcast disagrees, stating that cable pricing
     practices are lawful and are indicative of a competitive
     marketplace.[^548]

### Competitive Issues in the Program Supply Market 

151. Buyers in the market for the purchase of video programming are
     MVPDs, including cable operators and other video programming
     providers. The sellers are primarily nonbroadcast programming
     networks. This market tends to be regional or national because
     programmers seek to reach a much broader audience than could be
     provided by a local franchise area. For example, some programming
     services are intended for nationwide audiences (*e.g.*, CNN, USA),
     while others seek a regional audience (*e.g*., New England Sports
     Network).

152. Cable and DBS operators are the primary purchasers of multichannel
     video programming targeted to a national audience.[^549] As shown
     in Table 9, in 2005, the four MVPDs with the largest subscribership
     served 63 percent of all MVPD subscribers,[^550] while in 2004, the
     top four served 58 percent of all subscribers.[^551] The share of
     subscribers served by the top ten MVPDs also increased from
     approximately 85 percent in 2004 to 88 percent in 2005.[^552]

**TABLE 9: MVPD Competition and Concentration**

  ----------------------- ----------------------- -----------------------
  **Percentage of MVPD                            
  Subscribers Served by                           
  Technology**                                    

                          **2004**                **2005**

  **Cable**               71.6                    69.4

  **DBS**                 25.1                    27.7

  **Other**               3.3                     2.9

  **Percentage of MVPD                            
  Subscribers Served by                           
  Largest Providers**                             

                          **2004**                **2005**

  **Top 4**               58                      63

  **Top 10**              85                      88

  **Top 25**              90                      94
  ----------------------- ----------------------- -----------------------

153. To compare market concentration for the purchase of programming
     over a period of time, we have traditionally used the
     Herfindahl-Hirschman Index (HHI) to measure horizontal
     concentration.[^553] We recognize that the HHI is not an indicator
     of "competition" in the market for the purchase of video
     programming, and that it is not being used in the same way that it
     would be for purposes of antitrust analysis. For purposes of this
     report, however, the HHI is a useful tool to follow trends in the
     concentration of MVPD size from year to year. We use the reported
     MVPD subscriber shares to calculate HHI figures. In June 2005, the
     HHI for the national market for the purchase of programming
     was 1201. This represents a marked increase from the March 2004
     MVPD HHI of 1097.[^554] This increasing HHI reflects the fact that
     the DBS providers grew very quickly, while virtually every cable
     operator, most especially smaller ones, shrank, thereby increasing
     the share of the industry served by the largest providers.

154. ***Consolidation Among Cable Operators***. Cable operators continue
     to pursue a regional strategy of "clustering" their systems. The
     effect of clustering has drawn significant comment in the license
     transfer proceeding relating to the sale of Adelphia's systems to
     Comcast and Time Warner, in which the transfer of systems will
     enlarge or consolidate various clusters owned by Comcast and Time
     Warner. The applicants assert that these transactions will enable
     Comcast and Time Warner to compete on more equal terms with DBS
     providers and ILECs.[^555] BellSouth argues that consolidation and
     clustering in the cable industry increases the ability of cable
     operators to gain exclusive contracts with unaffiliated cable
     networks.[^556]

155. Between July 2004 and June 2005, a total of 22 transactions were
     announced. Together these transactions were valued at approximately
     \$48.7 billion and affected 12,719,387 subscribers.[^557] At the
     end of 2004, there were 118 clusters with approximately 51.5
     million subscribers compared to 108 clusters and approximately 53.6
     million subscribers at the end of 2003 (although due to a change in
     methodology, these figures are not directly comparable).[^558] In
     the largest cluster size category (over 500,000 subscribers), the
     number of clusters remained constant at 29 between 2003 and
     2004.[^559]

## Vertical Integration and Other Programming Issues

### Status of Vertical Integration

156. In 1992, Congress enacted various provisions related to vertical
     integration between cable operators and programming networks
     (*e.g.*, program access, channel occupancy limit) to foster
     competition and diversity.[^560] Our examination of vertical
     integration in the MVPD industry, therefore, focuses on ownership
     affiliations between video programming distributors and video
     programming suppliers. Vertical relationships may have beneficial
     effects,[^561] or they may deter competitive entry in the video
     marketplace and/or limit the diversity of programming.[^562]

157. ***Nationally Distributed Programming Networks***. In 2005, we
     identified 531 satellite-delivered national programming networks,
     an increase of 143 networks over the 2004 total of 388
     networks.[^563] Of the 531, 116 networks (21.8 percent) were
     vertically integrated with at least one cable operator in
     2005.[^564] Last year we identified 388 satellite-delivered
     national networks, 89 of which (22.9 percent) were vertically
     integrated with a cable operator.[^565] In addition, 22 national
     nonbroadcast networks, not also owned by a cable MSO, are
     vertically integrated with a DBS provider.

158. This year we report a significant increase in the number of
     satellite-delivered national networks. We attribute this increase
     to several factors. First, we have updated our prior estimates
     based on additional data sources.[^566] Also, we have investigated
     comments that noted errors or omissions regarding last year's
     data.[^567] Finally, we have identified many new networks since the
     last report, most notably new, non-English and multicultural
     programming services.[^568] Despite the substantial revisions to
     our list, the proportion of national nonbroadcast networks that are
     vertically integrated with a cable operator has remained relatively
     stable over the last year.

159. Five of the top seven cable operators (*i.e.*, Comcast, Time
     Warner, Cox, Cablevision, and Advance/Newhouse) hold ownership
     interests in satellite-delivered national programming networks. If
     we count iN DEMAND as one network, 57 satellite-delivered national
     programming networks are vertically integrated with one or more of
     these cable operators.[^569] Time Warner has an ownership interest
     in 31 national networks; Cox has an ownership interest in 17
     national networks; Advance/Newhouse, owner of cable operator Bright
     House Networks, has interests in 14 national networks; Comcast has
     an ownership interest in 11 national programming networks; and
     Cablevision, through its programming affiliate Rainbow Media, has
     an ownership interest in four national networks.[^570]

160. In the *Notice*, we sought information regarding the ownership of
     national satellite-delivered programming networks by MVPDs other
     than cable operators and by "other" media entities, such as
     broadcast television networks and broadcast television station
     owners. [^571] We have identified 141 programming networks that are
     owned by one or more of these media entities and that are not owned
     in any part by a cable operator.[^572] These 141 networks represent
     26.6 percent of the 531 total networks identified, and 34 percent
     of the 415 networks that are not affiliated with a cable operator.
     Thus, of the 531 national nonbroadcast networks we have identified,
     116 networks are affiliated with a cable operator, 141 of the
     remaining networks not affiliated with a cable operator are
     affiliated with a media entity, and the remaining 274 networks, or
     51.6 percent, are not affiliated with any cable operator or other
     media entity.[^573]

161. As shown in Table 10 below, there are 107 national,
     satellite-delivered nonbroadcast networks that are owned by a DBS
     operator (DIRECTV, EchoStar, and Dominion), or one or more national
     broadcast television networks (*i.e*., ABC, CBS, Fox,
     NBC-Universal, and Univision) and that are not also owned by a
     cable operator.[^574] These 107 networks represent 20.2 percent of
     the 531 national nonbroadcast networks we have identified, and 25.8
     percent of the 415 networks that are unaffiliated with a cable
     operator. For example, News Corporation, which holds a 34 percent
     interest in both DBS operator DIRECTV and an 82 percent interest in
     broadcast network Fox, has ownership interests in 19 national
     nonbroadcast networks not also owned by a cable MSO.[^575] Dominion
     Video Satellite, provider of DBS service Sky Angel, has interests
     in three networks. Viacom, the parent company of the CBS and UPN
     broadcast networks, has ownership interests in 40 national
     nonbroadcast networks not also owned by a cable MSO, including one
     network jointly owned with NBC-Universal. Broadcast network ABC,
     through its parent company Disney, has ownership interests in 22
     national networks not also owned by a cable MSO.[^576]
     NBC-Universal, through its parent company General Electric, has
     ownership interests in 21 nonbroadcast networks not also owned by a
     cable MSO, including six networks owned jointly with Disney and
     Hearst, one with Paxson Communications, and one with Viacom.
     Univision, a Spanish language network and station licensee, has
     ownership interests in nine networks not also owned by a cable MSO.
     In addition, Liberty Media, which has an ownership interest in News
     Corp. (and indirectly has ownership interests in networks owned by
     News Corp.), has direct ownership interests in 34 national
     programming networks, including 15 networks it owns jointly with
     one or more cable operators (*i.e*., the Discovery-branded
     networks, which it co-owns with Cox and Advance/Newhouse, and Court
     TV, which it co-owns with Time Warner).[^577]

162. We also have identified programming networks affiliated with
     broadcast television station licensees not also owned by a cable
     operator, also shown on Table 10. Hearst, in joint ventures with
     Disney and NBC-Universal, has ownership interests in a total of 17
     national nonbroadcast programming networks not also owned by a
     cable MSO. Of these, 11 are owned jointly with Disney, and six are
     owned jointly with Disney and NBC-Universal. E.W. Scripps holds
     ownership interests in six national programming networks. The
     Trinity Broadcasting Network owns four programming networks.
     Landmark Communications owns two networks. The New York Times has
     ownership interest in one network not also owned by a cable MSO.
     Tribune and Daystar Television Network each have ownership
     interests in one programming network not also owned by a cable MSO,
     and Paxson Communications has an interest in one network with
     NBC-Universal.[^578]

     **Table 10: National Networks Affiliated with a** DBS Operator,
     National Broadcast Television Network, or Broadcast Television
     Licensee

+--------------+-------------------------------------------------------+
| **Network**  | **Networks Wholly Owned or Owned in Part**            |
|              |                                                       |
| **Owner**    |                                                       |
+--------------+-------------------------------------------------------+
| Dominion     | Angel One, Angel Two, KTV- Kids and Teens Television  |
| Video        |                                                       |
|              |                                                       |
| Satellite    |                                                       |
+--------------+-------------------------------------------------------+
| News Corp.   | Fox Movie Channel, Fox News Channel, Fox Reality, Fox |
|              | Sports Net, Fox Soccer Channel, FX, Fuel, National    |
|              | Geographic Channel, Speed Channel, TV Games Network,  |
|              | TV Guide Channel, TV Guide Interactive, Fox Sports en |
|              | Español, Phoenix Info News, Phoenix North American    |
|              | Chinese Channel, Star Plus, Star One, Star News,      |
|              | Vijay                                                 |
+--------------+-------------------------------------------------------+
| Viacom       | BET, BET Gospel , BET Hip Hop, BET on Jazz, Country   |
|              | Music Television                                      |
|              |                                                       |
|              | (CMT), Comedy Central, College Sports Television,     |
|              | Flix, Logo, MTV, MTV                                  |
|              |                                                       |
|              | Hits, MTV Jams, MTV2, Nickelodeon/Nick at Nite, Nick  |
|              | 2 , Nick GAS,                                         |
|              |                                                       |
|              | Nicktoons, TV Land, Noggin, Showtime, Showtime HD,    |
|              | Showtime Beyond,                                      |
|              |                                                       |
|              | Showtime PPV, Showtime Extreme, Showtime Family,      |
|              | Showtime Next, Showtime Showcase, Showtime Too,       |
|              | Showtime Women, Spike TV, The Movie Channel (TMC),    |
|              | TMC HD, TMC XTRA, VH1, VH1 Classic, VH1 Soul, VH1     |
|              | Country, MTV Español, VH Uno                          |
+--------------+-------------------------------------------------------+
| Viacom,      | Sundance Channel                                      |
|              |                                                       |
| N            |                                                       |
| BC-Universal |                                                       |
+--------------+-------------------------------------------------------+
| NB           | i- Independent Television (formerly PaxTV)            |
| C-Universal, |                                                       |
|              |                                                       |
| Paxson       |                                                       |
+--------------+-------------------------------------------------------+
| N            | Bravo, CNBC, CNBC World, MSNBC, Sci-Fi Channel, Shop  |
| BC-Universal | NBC, TR!O,                                            |
|              |                                                       |
|              | Universal HD, USA Network, Weather Plus, Telemundo,   |
|              | Telemundo Puerto Rico, Mun2                           |
+--------------+-------------------------------------------------------+
| NB           | A&E, Biography Channel, History Channel, History      |
| C-Universal, | International,                                        |
|              |                                                       |
| Disney,      | Military History Channel, History Channel en Español  |
| Hearst       |                                                       |
+--------------+-------------------------------------------------------+
| Disney       | ABC Family, Disney Channel, SoapNet, Toon Disney,     |
|              | Toon Disney en Español.                               |
+--------------+-------------------------------------------------------+
| Disney,      | ESPN, ESPN Classic, ESPN2, ESPN HD, ESPNews, ESPN2    |
| Hearst       | HD, ESPNU, ESPN Deportes, Lifetime Television,        |
|              | Lifetime Real Women, Lifetime Movie Network           |
+--------------+-------------------------------------------------------+
| Univision    | Bandamax, De Pelicula, De Pelicula Clasico, Ritmoson  |
|              | Latino, Telefe Internacional, Telefutura, Telehit,    |
|              | Galavision, Univision                                 |
+--------------+-------------------------------------------------------+
| Liberty      | Encore, Encore HD, Encore Action, Encore Drama,       |
| Media        | Encore Love, Encore Mystery, Encore WAM!, Encore      |
|              | Westerns, Game Show Network, Hallmark Channel,        |
|              | Movieplex, QVC, Starz!, Starz! Cinema, Starz!Kids &   |
|              | Family, Starz!HD, Starz! Comedy, Starz! Edge, Starz!  |
|              | InBlack                                               |
+--------------+-------------------------------------------------------+
| EW Scripps   | DIY (Do-it-Yourself Network), Fine Living, Food       |
|              | Network, Great American Country, HGTV, Shop-at-Home   |
+--------------+-------------------------------------------------------+
| Trinity      | Church Channel, JCTV, Trinity Broadcasting, TBN       |
| Broadcasting | Enlace USA                                            |
+--------------+-------------------------------------------------------+
| Daystar      | Daystar Television Network                            |
+--------------+-------------------------------------------------------+
| Landmark     | Weather Channel, Weatherscan Local                    |
| Co           |                                                       |
| mmunications |                                                       |
+--------------+-------------------------------------------------------+
| Tribune      | WGN Superstation                                      |
| Company      |                                                       |
+--------------+-------------------------------------------------------+
| New York     | Ovation: The Arts Network                             |
| Times        |                                                       |
+--------------+-------------------------------------------------------+

163. ***Top 20 National Programming Networks (by subscribership)***.
     Currently, six of the top 20 nonbroadcast video programming
     networks (ranked by subscribership) are vertically integrated with
     a cable operator.[^579] Of the remaining 14 networks, one is
     C-SPAN, which is funded, but not directly owned or controlled, by
     MVPDs, 12 are affiliated with noncable media entities, and one is
     unaffiliated. This figure represents a slight decrease from 2004,
     when seven of the top 20 networks were vertically integrated.[^580]
     Additionally, it appears that there is some diverse ownership of
     the most popular networks. Eleven different entities own all or
     part of one or more of the top 20 programming networks in terms of
     subscribership.[^581]

164. ***National Nonbroadcast Programming Networks by Viewership.*** Of
     the 15 top-rated prime time nonbroadcast programming networks,
     three are vertically integrated with a cable operator (Time Warner
     owns 100 percent of TNT and TBS, and Cox and Advance/Newhouse each
     own 25 percent of The Discovery Channel).[^582] The remaining 12
     networks are owned by other media entities. News Corp. has
     ownership interests in Fox News Channel, and Disney has ownership
     interests in The Disney Channel, Lifetime, Toon Disney, History
     Channel, and ESPN. Hearst has ownership interests in Lifetime, The
     History Channel, and ESPN. NBC has ownership interests in USA
     Network, The History Channel, and the Sci Fi Channel. Viacom has
     ownership interests in Nickelodeon, Nick at Nite, SpikeTV, and MTV.

165. During the 2004-2005 television season, the combined audience
     share[^583] of all nonbroadcast networks[^584] was higher than the
     combined audience share of all broadcast television stations[^585]
     for both all day viewing and prime time viewing.[^586] For all day
     viewing, the combined audience share of all nonbroadcast networks
     was 59, and the combined audience share of all broadcast television
     stations was 41. For prime time viewing, the combined audience
     share of all nonbroadcast networks was 53, and the combined
     audience share of all broadcast television stations was 47. More
     than half of all prime time viewers watched ad-supported cable
     networks during the past TV season, the second consecutive year
     that nonbroadcast networks have topped all national broadcast
     networks combined for an entire TV season.[^587]

166. ***Regional Programming Networks***. In 2005, we identified 96
     regional networks, the same number of networks as last year,
     despite the exit and entry of several networks.[^588] Many, but not
     all, regional networks are satellite-delivered. These networks
     provide programming of local or regional interest and are
     distributed to subscribers of one or more MVPDs in an area. A
     significant number of regional networks offer local news or sports
     programming, but some provide more general programming, such as
     religious or ethnic programming. Of the 96 regional networks we
     identified, 44 networks, or 45.8 percent, were vertically
     integrated with at least one MSO. Comcast has ownership interests
     in 14, or 14.6 percent, of all regional networks. Cablevision has
     ownership interests in 13, or 13.6 percent, of the regional
     networks. Time Warner has ownership interests in 10, or 10.4
     percent, of the regional networks. Cox has ownership interests in
     six, or 6.2 percent, of the 96 regional networks, and Charter has
     an ownership interest in one regional network. Although not a cable
     MSO, News Corp., which holds an interest in DBS operator DIRECTV
     has ownership interests in 16, or 16.7 percent, of the 96 regional
     networks.[^589]

167. ***Planned Services***. This year, we identified 79 programming
     services that have been planned but are not yet operational.[^590]
     The planned-services count includes some overlap from previous
     years because it can often take several years from the announcement
     of a new programming network to its initiation of service.[^591]

### Other Programming Issues

168. In this section, we discuss comments we received about the
     effectiveness of our program access, program carriage, and channel
     occupancy rules and issues relating to the carriage of local
     broadcast stations pursuant to must carry and retransmission
     consent. We also address other matters related to programming
     channels including sports programming; news programming; public,
     educational and governmental (PEG) channels; DBS public interest
     programming; non-English programming; locally originated and
     community-oriented programming; children's programming; access to
     programming by persons with disabilities; and packaging of
     programming services.

#### Regulatory Issues

169. ***Program Access and Program Carriage Rules***. The Commission's
     rules concerning competitive access to cable programming were
     initially adopted to implement the 1992 Cable Act. These rules seek
     to promote competition and diversity in the multichannel video
     programming market by preventing vertically integrated programming
     suppliers from favoring affiliated video distributors over
     unaffiliated MVPDs in the sale of satellite-delivered programming
     and making it more difficult for competing MVPDs to attract
     subscribers.[^592] Also, these rules are intended to allow program
     suppliers that are unaffiliated with cable operators to secure
     carriage on cable systems that are affiliated with programmers. The
     program access rules apply to cable operators and to programming
     vendors that are affiliated with cable operators and deliver video
     programming via satellite to MVPDs. The rules prohibit any cable
     operator that has an attributable interest in a satellite cable
     programming vendor from improperly influencing the decisions of the
     vendor with respect to the sale or delivery, including prices,
     terms, and conditions of sale or delivery, of satellite-delivered
     programming to any competing MVPD. The rules also prohibit
     vertically integrated satellite programming distributors from
     discriminating in the prices or terms and conditions of sale of
     satellite-delivered programming to cable operators and competing
     MVPDs. In addition, cable operators generally are prohibited from
     entering into exclusive distribution arrangements with vertically
     integrated programming vendors. The Commission has concluded that
     the language of Section 628(c) expressly applies to "satellite
     cable programming and satellite broadcast programming," and that
     terrestrially delivered programming is "outside the direct coverage
     of Section 628(c)."[^593]

170. As in previous years, a number of commenters address the statutory
     exemption for terrestrially delivered programming in the existing
     program access rules. Several commenters, citing past problems
     accessing terrestrially delivered, Comcast-affiliated programming
     in Philadelphia and Boston, repeat their concerns regarding
     incumbent cable operators' ability to restrict competing MVPDs'
     access to terrestrially delivered programming.[^594] RCN and USTA
     express concern that terrestrial distribution of video signals will
     become increasingly common as a result of cable operators' regional
     clustering of systems.[^595] SBC, USTA, EchoStar, BellSouth,
     CenturyTel, BSPA, Verizon, RCN, and other commenters urge the
     Commission to ensure that all competitors have access to so-called
     "must have" programming and that the Commission eliminate the
     terrestrial exemption or recommend that Congress do so.[^596]
     Comcast counters that these concerns are unfounded, stating that
     commenters provide no examples of programming networks that were
     migrated to terrestrial delivery other than Comcast SportsNet
     Philadelphia, and that terrestrial delivery of that network was
     premised on legitimate business considerations. [^597] Comcast adds
     that its newest sports networks are delivered by satellite.[^598]
     We are not aware of any comprehensive source for determining the
     delivery mode for each of the national and regional networks. We
     will seek such information for our next report on the status of
     competition in the market for delivery of video programming.

171. Commenters raise various other concerns relating to access to
     programming. EchoStar and Qwest ask the Commission to recommend
     that Congress eliminate the sunset of the exclusivity provisions in
     the program access rules.[^599] Verizon suggests that the
     Commission ensure that cable companies are not able to foreclose
     access to programming by new MVPD entrants through arrangements
     that give an incumbent an exclusive right to carry particular
     programming.[^600] CenturyTel proposes that new entrants be granted
     the right to opt into the terms of the programming agreements
     entered into by the incumbent cable operator in the market.[^601]
     NCTA urges the Commission to reject these proposals stating that
     today's video marketplace is competitive and that most of the
     popular and widely viewed nonbroadcast programming networks are
     available from cable's MVPD competitors.[^602] Comcast states that
     differentiation of program offerings is a normal and expected
     behavior in a competitive marketplace.[^603]

172. Various commenters discuss programming cost differentials. BSPA is
     concerned about discounts cable incumbents receive when purchasing
     programming, which it asserts are discriminatory.[^604] EchoStar
     asserts that vertically integrated programmers offer lower prices
     to incumbent cable operators and discriminate against EchoStar in
     other terms and conditions as well.[^605] ACA estimates that the
     dominant media conglomerates charge smaller MVPDs programming rates
     that are between 30 percent and 55 percent higher than rates paid
     by larger MVPDs.[^606] ACA states that when a smaller MVPD acquires
     a cable system from a major MSO, programming costs increase solely
     due to price discrimination against smaller providers. RCN states
     that vertically integrated programmers should be subject to
     affiliate transaction restrictions that would require sales between
     affiliated companies to be recorded at arm's-length market prices
     (*i.e.*, that prices be disclosed) and that the price of cable
     services reflect the market price.[^607] Cincinnati Bell and
     OPASTCO state that the cost of such programming may serve as a
     barrier to entry into the video market by small and rural IPTV
     providers. OPASTCO states that it is virtually impossible for rural
     video providers to know the true market rates for programming
     because of nondisclosure agreements between programming providers
     and large cable companies.[^608] Comcast claims that these
     commenters want the Commission to mandate terms of carriage on
     their behalf so that they need not negotiate with programmers in
     the marketplace. Comcast adds that government interference in the
     video marketplace would be inconsistent with Congressional intent
     to leave negotiations between MVPDs and program suppliers to the
     marketplace.[^609]

173. Commenters also discuss programmers' ability to secure
     distribution. DIRECTV contends that clustering has enabled MSOs to
     concentrate their subscribers and achieve market share levels
     throughout many of the largest DMAs that they previously enjoyed
     only in their individual franchise areas, thus becoming
     indispensable to local and regional programmers seeking
     distribution.[^610] The America Channel argues that carriage by
     both Comcast and Time Warner is essential for survival of
     advertiser-supported networks and that denial of carriage by either
     of these MSOs impacts a network's ability to procure funding and
     the minimal carriage necessary for market entry. The America
     Channel also states that new networks that are affiliated with
     cable operators or broadcasters are more likely to be carried than
     independent programming networks.[^611] It maintains that
     programming networks developed by cable operators and other media
     companies are launched as linear networks (*i.e.*, basic
     nonbroadcast networks), while unaffiliated programming networks are
     able to gain carriage only through VOD distribution. The America
     Channel also claims that networks affiliated with MVPDs charge
     higher rates than those of independent networks.[^612] The America
     Channel submits that unfair discrimination, not bandwidth
     constraints, underlie independent networks' inability to gain
     carriage. The America Channel requests that the Commission require
     MVPDs to disclose sufficient information regarding capacity and
     constraints so it can determine: (1) the digital bandwidth
     capabilities of the largest MVPDs on a per-system basis; (2) how
     many digital channels each can carry today; and (3) MVPDs' plans
     with respect to digital capacity in the future and how they will
     affect access for independent networks.[^613]

174. Comcast states that cable operators and other MVPDs choose
     programming networks that they believe consumers will demand. It
     states that MVPDs consider many factors in making carriage
     decisions, including the content of the network, the necessity or
     desirability of its presentation as a linear network, the financing
     of the network, the experience and proven capability of the
     network's management team, the distribution arrangement the network
     has already secured, and the fees and terms of carriage. Comcast
     denies that carriage by Comcast or Time Warner is necessary for a
     programming network to be carried by other MVPDs. Comcast and Time
     Warner note that The Sportsman Channel launched successfully
     without any carriage agreements, secured its first carriage
     agreement with NCTC, and then signed agreements with 18 other cable
     operators before signing with Comcast.[^614] Time Warner states
     that The America Channel's claim that affiliated networks charge
     higher license fees than independent networks is directly
     contradicted by a GAO report to Congress that found that ownership
     affiliations with broadcasters or cable operators had no influence
     on cable networks' license fees.[^615]

175. ***Must Carry and Retransmission Consent.*** In 1992, Congress
     enacted statutory provisions concerning the carriage of local
     broadcast television stations by cable operators and subsequently
     extended similar provisions to DBS providers in 1999. Among the
     reasons for enacting broadcast signal provisions, Congress found
     that broadcasters and consumers benefit from the carriage of local
     television stations and that cable operators derive benefits from
     offering this popular programming. It also concluded that cable
     carriage of broadcast television signals without consent or
     copyright liability resulted in broadcasters subsidizing cable
     operators, creating a competitive imbalance between these two
     industries that compete for audience, advertising, and
     programming.[^616]

176. 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.[^617] Pursuant to the SHVIA, DBS operators may
     provide local-into-local broadcast television service.[^618] Unlike
     cable operators, which are required to carry local television
     stations in every market they serve, a DBS operator must carry all
     stations in any market where it chooses to carry any local
     television station ("carry one, carry all").[^619] In both the
     cable and DBS contexts, commercial broadcasters may elect to be
     carried pursuant to must carry status or retransmission
     consent.[^620] Where a station elects must carry, it is generally
     guaranteed carriage, but it is prohibited from receiving
     compensation for this carriage.[^621] Under retransmission consent,
     the broadcaster and cable or DBS operator negotiate an agreement
     that may involve compensation in return for permission to
     retransmit the broadcast signal. The current rules apply to the
     carriage of analog television stations only.

177. As we observed in last year's report, through the retransmission
     consent process, broadcasters can receive cash or consideration
     comparable to cash in exchange for granting MVPDs the right to
     retransmit their signals.[^622] In this year's *Notice*, we asked
     for information on the extent to which cable television and DBS
     retransmission consent negotiations are providing broadcasters with
     an additional revenue source, either through direct compensation or
     through indirect benefits such as, for example, contracts for the
     carriage of affiliated programming. We asked what forms of
     compensation broadcasters are receiving for retransmission consent,
     and how they account for indirect compensation.[^623]

178. Joint Cable Commenters state that retransmission consent has been a
     key driver of cable rate increases because it has been used to
     launch and broaden the carriage of broadcaster-owned nonbroadcast
     networks.[^624] ACA and OPASTCO claim that when dealing with small-
     and medium-size cable companies, networks and major affiliate
     groups are demanding monthly fees of \$0.50 to \$1.00 per
     subscriber or more for each network-affiliated station, adding
     \$2.50-\$5.00 or more per month to basic cable rates in smaller
     markets.[^625] ACA contends that this could cost smaller cable
     companies and their customers an additional \$1 billion over the
     next three years.[^626] BSPA also expresses concern about the
     ability of broadcasters to leverage retransmission consent to
     demand exorbitant compensation for programming and asks the
     Commission to monitor this situation and be prepared to take
     corrective action.[^627] Qwest states that Section 548 of the
     Communications Act -- which prohibits unfair practices, undue
     influence and price discrimination -- does not go far enough to
     protect new MVPDs from television stations that may adopt a "pay
     cash or else" stance in the upcoming retransmission consent
     negotiations. It adds that the Commission should address this
     problem or, if necessary, make specific recommendations to Congress
     to correct the problem.[^628] NRTC members are concerned about
     their ability to secure retransmission rights to local off-air
     signals on fair and reasonable terms, and urge the Commission to
     continue to monitor retransmission consent issues and to view those
     issues from the perspective of the small telco IPTV operator.[^629]

179. NAB states that cable companies rarely pay cash for retransmission
     consent and that even if broadcasters could obtain cash payments in
     return for carriage of their signals, the \$1 billion figure cited
     by ACA is "fanciful at best."[^630] According to the Affiliates
     Associations, some broadcasters negotiated for and received
     consideration of other kinds, such as agreements by cable operators
     to purchase advertising on the stations; agreements by cable
     operators to allow a broadcast station to sell local advertising
     time in cable programming; and/or agreements by cable operators to
     carry local news programs or other programming owned by the
     broadcast company.[^631] Some broadcasters do, however, receive
     cash payments that can be substantial. For example, Hearst Argyle
     Television Inc. reported a \$2.3 million increase in retransmission
     revenues for the period ending September 30, 2005.[^632]

180. Disney states that there is no justification for any changes in the
     retransmission consent statute or regulations. It states that
     broadcasters, just like any other business, should be compensated
     for their product if it is distributed and resold by another
     entity. Disney adds that broadcasters invest billions of dollars
     annually to create valuable programming and are entitled to
     compensation.[^633] Network Affiliates contend that the current
     retransmission consent process furthers the interest of competition
     in the programming marketplace. It asserts that past retransmission
     consent election cycles, as well as individual negotiations, show
     no evidence of a break-down in the process or in the marketplace,
     and it states that additional government intrusion into these
     private contractual negotiations is not needed.[^634] NAB concurs
     with Disney and the Affiliates Associations regarding compensation
     for cable operators' carriage of broadcast signals, especially
     given cable operators' increasing competition with broadcasters for
     local advertising revenue. NAB adds that ACA's comments regarding
     retransmission consent do not accurately depict competitive
     realities in medium and small television markets, and that
     television broadcasters in these markets are facing severe
     financial pressures.[^635]

181. Several commenters address the issue of retransmission consent
     agreements that require MVPDs to carry certain nonbroadcast
     networks in return for the right to carry local broadcast signals.
     EchoStar states that the use of such terms is widespread, and it
     claims that the broadcast networks leverage their ability to
     withhold must have broadcast programming to obtain carriage of
     affiliated programming. EchoStar maintains that such practices
     often violate antitrust law, although violations are difficult to
     prove because the Commission generally does not allow discovery in
     retransmission consent proceedings. It urges the Commission to
     provide for discovery in such proceedings.[^636] OPASTCO states
     that the tying of retransmission consent for carriage of local
     broadcast networks to carriage of unwanted cable networks prevents
     rural carriers from crafting tiers that reflect the demands of
     their local markets.[^637] Joint Cable Commenters believe that
     broadcasters' use of retransmission consent to launch and broaden
     the carriage of nonbroadcast programming networks has been a major
     factor in shaping the price and composition of the expanded basic
     package.[^638]

182. Disney states that it negotiates retransmission consent only for
     its 10 owned-and-operated ABC affiliates. It indicates that it
     offers cable and satellite operators a stand-alone cash
     retransmission consent deal with no requirement to carry affiliated
     networks, but that it also offers alternatives that involve the
     carriage of nonbroadcast programming networks. According to Disney,
     it works with the MVPD to meet each operator's needs.[^639] We will
     continue to monitor the issues raised by commenters and will seek
     further information and comment on them for our next report on the
     status of competition in the market for delivery of video
     programming.

#### **Sports Programming**

183. We continue to monitor the availability of sports programming which
     many MVPDs consider must have programming in order to compete
     effectively in the video market.[^640] There are 37 regional
     networks devoted to sports programming, a decrease from the 38 we
     identified last year.[^641] Regional sports networks now represent
     approximately 38.5 percent of the 96 regional networks.[^642] Of
     the 37 regional sports networks, 17, or 45.9 percent are vertically
     integrated with a cable MSO. Fox continues to be the leader in the
     distribution of regional sports networks, owning or holding an
     ownership interest in 16, or 43.2 percent, of all regional sports
     networks.[^643]

184. While we report no new regional sports networks this year, in March
     2005, ESPN launched an additional national sports channel, ESPNU,
     which carries regular season collegiate athletic events and the
     NCAA championships.[^644] News Corp. and Cablevision restructured
     their ownership of several jointly owned regional sports channels.
     News Corp. owns 100 percent of Fox Sports Net and FSN Ohio, FSN
     Florida, and National Advertising Partners. Cablevision controls
     100 percent of MSG and its properties, the New York Knicks,
     Rangers, and Liberty. Cablevision and News Corp. continue to own 20
     percent and 40 percent, respectively, of FSN Bay Area, with
     Cablevision managing the network.[^645] On March 7, 2005, the
     Empire Sports Network, which was owned by Adelphia and featured
     Buffalo Sabres NHL games, terminated its service.[^646] C-SET, a
     regional sports network that carried sports programming in the
     Carolinas, terminated its service on June 30, 2005.[^647] In
     addition, in 2005, the Baltimore Orioles and Major League Baseball
     formed a new network, the Mid Atlantic Sports Network (MASN). The
     network initially was formed to carry the Washington Nationals
     baseball games during the 2005 season, with plans to become a
     full-time network in 2006, and to carry the Baltimore Orioles
     baseball games once the Orioles' current agreement with Comcast
     Sports Net expires following the 2006 baseball season.[^648]

     Due to a dispute between Comcast and MASN, which is being addressed
     in a separate proceeding,[^649] MASN has been available only to RCN
     and DIRECTV subscribers in the Washington, D.C., area.[^650]

#### News Programming

185. We requested comment on the extent to which MVPDs provide local
     news and community affairs programming because such programming
     allows MVPDs to provide a unique service that meets the interests
     and needs of their communities.[^651] This year, of the 96 regional
     programming networks identified, 45, or 46.9 percent, are regional
     news networks.[^652] A news channel may concentrate on a single
     metropolitan area, as do NY1, the News 12 networks, Bay News 9, and
     News 8 Austin. They may originate their own content, or repurpose
     news content from co-owned broadcast channels. NewsChannel 5+ in
     Nashville, NewsWatch 15 in New Orleans, NewsChannel5 in San Diego,
     and News on One in Omaha are examples of this model. In several
     markets, cable operators offer local news through VOD services. In
     Los Angeles, Time Warner is offering VOD newscasts from KNBC;
     Buckeye Cable offers its Toledo subscribers VOD news from NBC
     affiliate WNWO; Comcast Cable provides VOD news to its subscribers
     in Philadelphia, Baltimore, Minneapolis, Boston, San Francisco,
     Denver and Salt Lake City.[^653] Cablevision launched two new News
     12 networks, News 12 Brooklyn and News 12 Hudson Valley, this
     year.[^654]

#### **Other Programming**

186. In the Notice we requested comment on a variety of other types of
     programming, including PEG programming, DBS public interest
     programming, non-English programming, locally originated and
     community-oriented programming, children's programming, and access
     to programming by persons with disabilities. MVPDs use these types
     of programming to compete more effectively and to serve specific
     groups in their local communities.[^655]

187. ***PEG Programming.*** Many cable operators set aside one or more
     channels on a cable system for public, educational, and
     governmental programming. Generally, these channels provide
     programming produced by community groups and individuals.[^656]
     Local franchising authorities may request, as part of the
     franchising process, that operators devote a certain amount of
     channel capacity and equipment for this purpose.[^657] According to
     the Consumer's Union, these channels are heavily used in some
     communities, but other communities have not sought PEG
     channels.[^658] In Vermont, which regulates cable television at the
     state level, each cable system is required to set aside channels
     for PEG programming.[^659]

188. ***DBS Public Interest Programming***: DBS operators are required
     to reserve 4 percent of their channel capacity for "noncommercial
     programming of an educational or informational nature."[^660] To
     qualify for carriage on this reserved capacity, programmers must be
     organized for a noncommercial, nonprofit purpose; they must be a
     national educational programming supplier; and they must be
     responsible for 50 percent of the direct costs incurred by the DBS
     operator in making the programming available. Furthermore, the
     programming offered by such programmers must contain no
     advertisements, must be of an educational or informative nature,
     and must be available on a regular schedule.[^661] EchoStar reports
     that it provides 13 channels of public interest programming.[^662]
     DIRECTV provides 12 channels of public interest programming.[^663]

189. ***Non-English Programming.*** Cable and DBS operators continue to
     add non-English language programming either as part of their
     general packages or as themed tiers. EchoStar states that it is
     offering the Hispanic Information & Telecommunications Network as a
     Spanish educational, instructional, and cultural programming
     channel in its public interest line-up. It also states that it
     offers the broadcast signals of Univision, Telefutura, Telemundo,
     and TV Azteca affiliates, as well as the signals of 88 local
     independent broadcast stations, which include ethnic, religious,
     Spanish, and shopping programming. In addition, it also offers
     three Latino packages consisting of 30, 120, or 160 nonbroadcast
     channels, as well as international programming packages in various
     languages, including African, Arabic, Armenian, Chinese, Farsi,
     French, German, Greek, Hebrew, Italian, Japanese, Korean, Polish,
     Portuguese, Russian, South Asian, Tagalog, and Urdu.[^664] DIRECTV
     offers Univision, Galavision, ONCE Mexico, CCTV-9 (Chinese), and
     DIRECTV Para Todos, a 99-channel package of Spanish language
     programming.[^665] Comcast reports that it offers a broad selection
     of Hispanic programming networks, including Discovery en Español,
     CNN en Español, and Toon Disney Español. It also states that in the
     past year it has launched several services catering to
     multicultural audiences and that, in total, Comcast carries over 50
     multicultural channels and plans to add several more in English or
     other languages.[^666]

190. ***Locally Originated and Community-Oriented Programming:*** APTS
     states that the nation's 356 local public television stations
     provide programming of interest to their communities. According to
     APTS, these stations are owned and operated by local community
     foundations, colleges, universities and school districts, as well
     as locally responsive state commissions. While these stations are
     15 percent funded by the Federal government, the remaining 85
     percent is donated by local residents, businesses, state and local
     governments, local colleges and universities, and
     foundations.[^667] Comcast states that its CN8, which provides news
     and sports programming with local appeal to subscribers in the
     Mid-Atlantic states and New England, has expanded its service area
     to include Pittsburgh.[^668] Comcast's VOD service provides local
     content, including local public affairs programming and newscasts
     from local broadcast stations that it makes available for as many
     as three days after the broadcast has occurred.[^669] NAB states
     that broadcast stations remain the leading source of vital public
     safety information and are a significant source of local, diverse
     programming. It also states that the broadcast stations carried on
     cable systems continue to provide a guaranteed minimum of local and
     diverse voices for subscribers.[^670]

191. ***Children's Programming.*** Nonbroadcast networks continue to
     attract a growing audience among children and families. Total day
     viewing of expanded basic networks by children (ages 2-11)
     increased from a 28.3 share in 1993/1994 to a 56.4 share during the
     2004/2005 television season.[^671] PBS Kids Sprout, a joint venture
     of Comcast, Sesame Workshop, HITS Entertainment, and PBS Kids,
     launched on VOD in early 2005.[^672] Comcast began distributing the
     network in September 2005 as a full-time network on some of its
     systems.[^673] According to RCN, PBS Kids Sprout is a must have
     network for the children's demographic. Before Comcast acquired an
     interest in the network, RCN received PBS Kids Sprout through
     programming supplier TVN as part of its children's VOD package,
     Kids Unlimited. RCN claims that since Comcast acquired an interest
     in the network, RCN has experienced difficulties obtaining access
     to the programming. In spring 2005, RCN lost access to it,
     resulting in an 83 percent drop in its customers' usage of its Kids
     Unlimited VOD service.[^674]

192. ***Access to Programming by Persons with Disabilities.*** We
     invited comment and information regarding the accessibility of
     closed captioning and video description to persons with
     disabilities.[^675] In particular we sought comment regarding the
     quality, accuracy, placement, technology, and instances of delayed
     or missing captioning. Currently, video programming distributors
     are required to provide at least 1,350 hours of captioned "new"
     nonexempt programming on each channel during each calendar
     quarter.[^676] As of January 1, 2006, the transition period for new
     programming ends and video programming distributors then will be
     required to provide captioning for 100 percent of all new nonexempt
     programming.[^677] In addition, a video programming distributor
     must include captioning in 30 percent of its "pre-rule" nonexempt
     programming on each channel during each calendar quarter.[^678] The
     rules exempt several specific classes of programming from the
     closed captioning requirements.[^679] Video programming providers
     may also petition the Commission for an exemption from the closed
     captioning rules if the requirements would impose an undue
     burden.[^680] The closed captioning rules are enforced through a
     complaint process, with the complaint initially directed to the
     video programming distributor responsible for compliance with the
     rules.[^681]

193. Only one commenter provided information on closed captioning.
     DIRECTV states that it passes along all NTSC closed captioning
     information in line 21, fields 1 and 2 of the Vertical Blanking
     Interval (VBI). It adds that programmers are able to use the
     Secondary Audio Programming (SAP) channels for video description if
     they do not currently use them for other purposes. DIRECTV
     currently carries a SAP channel on 39 nonbroadcast channels and
     over 200 broadcast channels, but it leaves the decision on how to
     use the SAP channel to programmers. DIRECTV does not monitor the
     SAP channels on a regular basis. It is unaware of any current HD
     programming that is being authored with native CEA-708B closed
     captioning, but it has tested its own receivers, which all
     functioned properly during testing.[^682]

194. On July 21, 2005, the Commission released a *Notice of Proposed
     Rulemaking* seeking comment about: (1) the current status of the
     Commission's closed captioning rules in ensuring that video
     programming is accessible to deaf and hard of hearing Americans and
     whether any revisions should be made to enhance the effectiveness
     of those rules; and (2) several compliance and quality issues
     relating to closed captioning that were raised in a *Petition for
     Rulemaking* filed by Telecommunications for the Deaf, Inc., the
     National Association of the Deaf, Self Help for Hard of Hearing
     People, Inc., the Association for Late Deafened Adults, and the
     Deaf and Hard of Hearing Consumer Advocacy Network.[^683] This
     proceeding is pending.

#### **Packaging of Programming Services**

195. In the *Notice,* we sought information on how video programming
     distributors package and market their programming. We also sought
     comment concerning the extent that MVPDs offer or plan to offer
     consumers more choice in channel selection rather than traditional
     tiering of programming services.[^684] The commenters indicate that
     MVPDs generally continue to offer packages or tiers of service that
     include a large number of programming networks, including a variety
     of family-friendly services. Generally, however, parents cannot
     subscribe to those channels alone.[^685] Instead, they must buy the
     channels they do not want their families to view in order to
     receive the family-friendly channels they desire. Commenters note
     that by offering programming on a theme tier or smaller package
     basis, MVPDs can address consumers' concerns regarding their
     inability to prevent objectionable content from coming into their
     homes, can differentiate their service offerings, and can allow
     subscribers to pay only for those programming services they
     regularly watch.[^686]

196. Recently, a number of cable operators have announced plans to offer
     family-friendly programming tiers.[^687] For example, on December
     15, 2005. Time Warner announced that it would launch a family tier
     in the first quarter of 2006.[^688] Consisting of 15 channels, the
     tier will be priced at an additional \$12.99 a month above the
     monthly cost of the basic service tier, which averages about \$12
     across Time Warner's systems, and generally will require a digital
     set-top box for every television in the home that will receive the
     family tier.[^689] On December 22, 2005, Comcast announced that it
     will launch a family tier with an average of 35-40 channels
     beginning in early 2006.[^690] In addition to the 20-25 channels
     that customers receive on their basic service tier, Comcast's
     family tier will include 16 family-friendly networks of primarily
     G-rated content.[^691] According to Comcast, the Family Tier
     package will cost an average of \$31.20 per month, which will
     reflect its national average for basic service of \$12, the
     16-channel Family Tier for \$14.95, and a digital cable set-top box
     at a national average price of \$4.25 per month. In January 10,
     2006, Cox announced it would launch a Family Tier in early 2006,
     which will consist of an average of 40 channels of programming,
     including local broadcast stations and broad-based general
     entertainment, news, and sports programming.[^692] Cox's Family
     Tier will be offered at a national average price of \$32 per month
     for the programming package, set-top box with
     electronic/interactive program guild capability and parental
     controls for specific programs and channels. On January 17, 2006,
     Insight announced that it would offer a Family Tier as a digital
     package that will include 15 channels of programming for \$13 per
     month. This new tier will be available as an add-on to the
     21-channel basic service tier.[^693] Other cable operators, such as
     Midcontinent and Charter, have stated they are committed to
     developing family-friendly offerings, but have not yet announced
     specific plans.[^694] In addition, DIRECTV plans to offer a Family
     Tier with more than 40 channels that will include local broadcast
     stations and nonbroadcast networks at a price of \$34.99 per
     month.[^695] On February 1, 2006, EchoStar began offering a family
     tier with approximately 40 channels at a price of \$19.99 per month
     for nonbroadcast channels, and \$24.99 per month with local
     channels.[^696]

197. Alternatively, a number of groups have raised issue with the
     voluntary industry proposals to offer family tiers. For example,
     the Parents Television Council contends that "family tiers are not
     the same as providing consumers with cable choice, the ability to
     take and pay for only what they want."[^697] In a joint letter to
     Congress, Consumers Union, the Consumer Federation of America, and
     Free Press state that the recently announced family tiers are a
     good first step and demonstrate that cable operators can offer
     smaller, specialized bundles of service.[^698] It, however, is
     concerned that cable operators, along with broadcasters, have
     decided which channels will be included and the tiers offer
     consumers very little choice. In addition, The Concerned Women for
     America (CWA) assert that parents, rather than the cable industry,
     should be the ones to decide what is appropriate for their children
     to watch and that control is taken out of parents' hands when the
     cable operators determine which channel to include in their family
     tiers.[^699] Because the announcement and availability of family
     tiers is a recent development, we are unable to evaluate the
     effectiveness of these programming packages in this Report.

198. In response to the request for comment on the packaging of
     programming in the *Notice*, ACA states that many small- and
     medium-sized cable operators would like to offer themed tiers at a
     lower cost, and a more family-friendly expanded basic tier, but
     that major programming providers prevent it by imposing various
     types of distribution restrictions and requirements. ACA reports
     that if its members were permitted to move sports services to a
     separate tier, they would do so because their subscribers would
     prefer a lower cost expanded basic package and less sports
     programming. ACA also states that some of its members would like to
     be able to respond to customers who find the content on certain
     entertainment networks that carry mature programming to be
     objectionable and would like to move these networks to a
     "Contemporary Adult" tier. It adds that these networks carry
     partial nudity, sexually explicit content, and profanity. According
     to ACA, this would reduce wholesale costs for the expanded basic
     tier, ease retail rate pressure, and address subscribers'
     concerns.[^700]

199. BSPA recognizes that the issue of tiering flexibility, and a la
     carte service raise many questions which need to be addressed in
     the marketplace, rather than on paper at the Commission before any
     decision can be made regarding the final costs and benefits of such
     offerings (whether to consumers, programmers, or distributors).
     Accordingly, BSPA proposes that several of its members, with those
     program suppliers and other cable providers who agree to
     participate, initiate focused, multi-year market tests in selected
     local markets, involving a la carte-type offerings. BSPA asserts
     that its proposed market tests would shed light on a number of
     questions, including (1) how many subscribers would choose the
     current structure over a voluntary a la carte option; (2) what
     level of a la carte would balance the needs of consumers,
     distributors, and content producers; (3) how many new customers
     would subscribe to MVPD service if they had a greater choice of
     offerings; (4) how advertising rates and structures are
     affected; (5) which networks or types of content would fail to
     garner significant numbers of subscribers; and (6) the potential
     financial impact on content producers and distributors. BSPA adds
     that a market test would improve the Commission's understanding of
     the key issues and would better inform the legislative debate in
     Congress regarding consumer choice, pricing, and indecency issues.
     BSPA asks the Commission to endorse and support the industry's
     pursuit of limited market tests of a la carte offerings.[^701]

200. OPASTCO states that practices that require rural carriers to carry
     channels that most of their customers do not demand, or that compel
     them to place less popular channels in certain tiers, prevent these
     carriers from creating tiers that match the demands of their
     individual markets.[^702] Cincinnati Bell states that although it
     would like to offer differentiated programming packages, pricing
     options, and bundled services that compete with packages offered by
     incumbent cable or satellite providers, it will not be able to do
     so unless it can obtain reasonably priced programming, as well as
     carriage and tiering flexibility.[^703]

201. Consumers for Cable Choice complain that cable's spectrum
     limitations keep valuable programming from special interest and
     minority markets. It claims that only those willing to pay a
     substantial premium can access additional channels and services of
     interest, if they are available at all. It adds that
     broadband-based networks offer the promise of substantially more
     programming options for these important markets. Consumers for
     Cable Choice point to the Latino market as an example, stating that
     many cable providers make available only one or two
     Spanish-speaking networks, and often no English-speaking Latino
     networks. It claims that IPTV technology could expand the amount of
     programming available to minority groups and special
     interests.[^704]

202. Disney claims that MVPD subscribers enjoy many program packaging
     options that typically include retransmission of local broadcast
     signals, PEG channels, and selected other programming
     services.[^705] DIRECTV provides examples of its programming
     packages, which include various packages targeted to specific
     audiences. Its Total Choice package includes sports, movies, family
     entertainment, music and local channels. It also offers premium
     channel packages, such as HBO, Starz, Showtime, and Cinemax, as
     well as several sports and international packages.[^706] Dominion
     Video Satellite, Inc., through its Sky Angel DBS service, provides
     faith-based programming, as well as news and family-oriented
     entertainment networks. It states that it serves the needs of an
     audience that desires a multichannel service that offers a wide
     variety of both faith-based and family-friendly channels without
     being required to receive and subsidize programming that is overtly
     in conflict with their values.[^707]

## Other Competitive Issues

### Competitive Developments in Small and Rural Markets

203. In the *Notice*, we requested information and comment regarding
     issues specific to video programming distribution in rural and
     smaller markets.[^708] Small cable operators and telephone
     companies have video subscribership ranging from 50 subscribers up
     to 100,000 subscribers. These relatively small numbers belie the
     fact that in the aggregate small cable operators and telephone
     companies serve a significant percentage of the MVPD market. The
     American Cable Association reports that its 1,100 members serve
     approximately eight million subscribers, or 12 percent of total
     U.S. cable subscribers.[^709] Their principal competitors are DBS
     operators DIRECTV and EchoStar, which have higher penetration rates
     in rural markets than in urban or suburban markets.[^710] Many
     small and rural MVPDs are rolling out advanced services, including
     Internet access, VoIP, DVR and VOD.[^711] OPASTCO states that its
     members experience increased subscription rates when they bundle
     broadband services with video services.[^712]

204. Generally, small and rural cable operators and telephone companies
     serve very small numbers of subscribers in communities that
     experience little or no population growth. These demographics can
     limit their ability to raise capital for plant and equipment
     upgrades that will allow these small operators to compete with
     MVPDs having larger regional or national distribution platforms,
     such as cable MSOs and DBS, respectively. Thus, small and rural
     cable operators and telephone companies argue that a major factor
     limiting their ability to compete is the lack of a cost-effective
     means to receive and distribute video services.[^713] NRTC, which
     represents approximately 1,200 rural utilities and affiliates in 47
     states, states that many of its members distribute DIRECTV's
     service, but many also are pursuing a multi-platform approach,
     including satellite, wireless technologies, fiber platforms, and
     broadband-over-power line technologies, in order to compete for
     video subscribers.[^714] OPASTCO reports that its rural LEC members
     are becoming MVPDs by exploiting newer technologies.[^715] NRTC
     states that it is focused on providing its members with
     cost-effective access to television programming by using a
     low-cost, end-to-end IPTV delivery system, with commercial
     deployment expected in early 2006.[^716] NRTC reports that it has
     entered into an agreement with satellite operator SES-AMERICOM to
     support and market to its members a service called "IP-Prime," a
     centralized, satellite-delivered IPTV/MPEG-4 video distribution
     platform, which will enable small and rural operators to use
     standard headends to receive signals that can be bundled with
     standard-definition and HD programming, high-speed Internet, and
     telephony services.[^717] NRTC reports that a commercial rollout of
     the IP Prime system is expected in the second quarter of
     2006.[^718]

205. Access to must have programming, including major national cable
     networks and regional sports networks, on a timely basis and at
     competitive rates is a key competitive issue for all MVPDs. Small
     and rural cable operators and LECs planning to offer video
     programming complain that securing access to programming is
     cumbersome and expensive.[^719] NTCA, a trade association
     representing more than 560 rural telecommunications providers,
     reports that small providers lack leverage in their negotiations
     with video content providers. It states that its members who
     provide video service spend approximately 50 percent of their
     operating expenses for programming, adding that it expects that
     percentage to increase in the future. NTCA adds that rural
     subscribers are penalized because its member companies serve fewer
     subscribers than medium- and large-sized MSOs.[^720] In addition,
     NTCA states that some of its members that have analog cable systems
     are being required to upgrade their facilities to digital in order
     to gain rights to carry certain programming.[^721] NRTC believes
     that programming providers are hesitant to enter into programming
     agreements with small and rural LECs that plan to use an IPTV
     platform due to concerns about digital content copyright
     infringement.[^722] ACA, which represents small cable operators,
     states that more than half of its members serve fewer than 1,000
     subscribers. ACA states that many of its members lack leverage in
     dealing with large programmers, and that retransmission consent
     fees will add approximately \$1 billion to the cost of basic cable
     service in the small cable sector.[^723] ACA asserts that "lighter
     regulatory burdens and costs" of DBS have ensured its success in
     competing against cable operators in small and rural markets.[^724]

206. Many small cable operators purchase video programming through
     buying cooperatives, such as the National Cable Television
     Cooperative (NCTC), which represents approximately 1,000
     independent cable operators serving approximately 14 million
     subscribers nationwide.[^725] NCTC negotiates master agreements
     with cable programming networks, cable hardware and equipment
     manufacturers, and other service providers on behalf of its
     membership. Through NCTC, small cable operators earn volume
     discounts to which they would not be entitled on their own. Disney
     states that it provides volume discounts to NCTC on behalf of rural
     cable operators for each of its national programming services, and
     adds that 99 percent of NCTC's members opted into ESPN's most
     recent carriage agreement negotiated with NCTC.[^726]

### Competitive Developments in the MDU Market

207. Multiple dwelling units (MDUs) comprise a separate segment of the
     MVPD market because alternative video providers may have difficulty
     offering service in MDUs in competition with an incumbent
     provider.[^727] To some extent, competitive choices for MDU
     residents have been limited, especially from DBS, since many MDU
     residents do not have the line-of-sight necessary to receive DBS
     service.[^728] DIRECTV reports, however, that it has simplified the
     delivery of its satellite TV to customers living in apartment
     buildings.[^729] It announced a "single wire" distribution system
     that makes it possible for DIRECTV to combine all signals from its
     satellites on a single wire running to multiple set-top boxes in a
     building.

208. Exclusive contracts are those that specify that video service in an
     MDU will be provided only by a particular MVPD. Perpetual contracts
     are those which grant an MVPD the right to provide service for an
     indefinite or very long period of time, or which have automatic
     renewal provisions (sometimes referred to as "evergreen" clauses).
     Competitive entrants into the MVPD market have raised concerns with
     these kinds of contracts for the past several years. As it did the
     last two years, BSPA identifies exclusive, long-term MDU access
     contracts as a barrier to entry.[^730] Verizon also raises this
     issue.[^731]

# Technical issues

209. Technology changes have important consequences for the state of
     video competition. Accordingly, we report on a number of
     developments in this area that affect the manner and state of
     competition. We examine both regulatory developments and market
     developments that may affect competition in the video market in the
     coming years.

## Navigation and Reception Devices

210. ***Tuner Mandate.*** The DTV reception requirement initially was
     implemented in phases based on classes of screen size, mandating a
     date by which 50 percent of manufactured sets of a certain size
     must include the capability to receive digital television signals
     and a later date by which 100 percent of sets of a certain size
     must contain the necessary circuitry. For television sets 36" and
     larger, July 1, 2005 was the effective date on which all
     televisions with an analog tuner were required to include a DTV
     tuner.[^732] On June 9, 2005, the Commission modified the schedule
     by which new televisions and other receiving devices, such as VCRs
     and digital video recorders, are required to include the capability
     to receive over-the-air digital broadcast signals.[^733]
     Specifically, the Commission advanced the date on which 100 percent
     of TV receivers with screen sizes 25"-36" must include DTV tuners
     to March 1, 2006.[^734] On November 8, 2005, the Commission amended
     its rules to advance to March 1, 2007 the date on which new
     television receivers with screen sizes 13"-24" and certain other
     receiving devices, such as VCRs and digital video recorders, must
     include the capability to receive digital television signals.[^735]
     The Commission also amended its rules to apply the DTV reception
     requirement to new receivers with screen sizes smaller than 13" on
     the same schedule.[^736] The Commission made these changes to
     ensure greater commercial availability and better match the
     consumer electronics manufacturers' normal product introduction
     cycle.

211. ***CableCARDs and Navigation Devices.*** The development and
     deployment of CableCARDs continued in 2005. As of November 30,
     2005, there were 375 certified or verified models of CableCARD
     products from 22 manufacturers,[^737] up from 60 models from 11
     manufacturers the previous year.[^738] CableCARDs permit the
     reception of secured digital cable services without the addition of
     a set-top box. CableCARDs have been deployed to more than 90,000
     subscribers by the 10 largest MSOs.[^739] While consumers currently
     need a set-top box to receive two-way services (*e.g.* VOD,
     PPV),[^740] efforts to develop multi-stream and two-way CableCARDs
     have continued. Multi-stream unidirectional CableCARDs will permit
     the development of multi-tuner DVRs without requiring the use of
     multiple CableCARDs to access each stream. Two-way digital
     television finally will permit full-featured interactivity without
     a set-top box. In August 2005, Samsung became the first
     manufacturer to gain CableLabs certification for a two-way digital
     television.[^741] Additional manufacturers, including Panasonic,
     LG, Diego, Video Without Boundaries, and Thomson, signed the
     two-way Cable Host Interface License Agreement (CHILA) in late
     2005, enabling them to develop two-way products.[^742]

212. In March 2005, the Commission issued a *Second Report and Order*
     maintaining the ban on cable operator deployment of integrated
     set-top boxes, but deferring the effective date of the ban by 12
     months from July 2006 to July 2007.[^743] In doing so, the
     Commission allowed time for the development of software-based
     downloadable conditional access and established a December 1, 2005,
     deadline for the cable industry to report to the Commission on the
     feasibility of deploying such a conditional access solution.[^744]
     Downloadable conditional access relies upon development of a common
     hardware platform capable of securely downloading software from any
     cable operator that will then mimic the cable operator's existing
     hardware-based conditional access. If a subscriber removes the
     set-top box and uses it with a different cable operator, the new
     cable operator downloads a new security system compatible with its
     conditional access system and erases the previous software-based
     conditional access code. In July 2005, Comcast, in conjunction with
     Motorola, Scientific-Atlanta, and Nagravision, demonstrated early
     development units capable of downloadable conditional access.[^745]
     In November 2005, Comcast hosted a second demonstration in which
     Motorola, Scientific-Atlanta, and Samsung demonstrated new
     prototypes capable of more advanced downloadable conditional access
     functions.[^746] On November 30, 2005, NCTA submitted to the
     Commission the required downloadable security report, which
     contained a detailed timeline for the development and deployment of
     downloadable conditional access.[^747] NCTA stated that it expected
     cable operators nationwide to deploy downloadable conditional
     access by July 1, 2008.[^748]

213. Verizon urges the Commission to adopt technology-neutral standards
     to ensure that FTTP and other modes of video delivery can emerge
     and compete with traditional cable technology. Verizon contends
     that CableLabs serves the needs of the cable industry, and it
     cannot be relied upon to make impartial determinations on
     technologies that affect competitors to traditional cable
     operators. Verizon indicates that the International Electrical and
     Electronic Engineers (IEEE), the Alliance for Telecommunications
     Industry Solutions (ATIS), the Multimedia over Coax Alliance
     (MOCA), and other neutral, standards-setting bodies are developing
     open, competitively neutral standards to govern a variety of other
     technical issues, such as the transport of digital content over
     home networks and IPTV.

214. Specifically, Verizon states that the Commission should consider
     technology-neutral standards in proceedings such as the so-called
     Plug and Play docket.[^749] It argues that the Commission should
     not adopt DOCSIS 2.0 or any other standard centered on technology
     only used by traditional cable operators when it considers
     standards for two-way digital television receivers. Verizon
     observes that the DOCSIS 2.0 specifications do not address the
     needs of competing technologies, such as FTTP and digital broadcast
     satellite.[^750] Verizon contends that acceptance of CableLabs'
     standards, such as DOCSIS 2.0, would lead to the development of
     equipment (*e.g.,* connectors, set-top boxes, and interfaces built
     into the television sets) that would impose additional costs on
     competitors that need to connect to FTTP or digital broadcast
     satellite infrastructures. Verizon recommends that the Commission
     adopt the IEEE 802.3i framework, or an alternative that will work
     with all competing technologies, as the two-way standard.

215. ***OCAP and Interactive Television.*** The development and
     deployment of CableLabs' Open Cable Application Platform (OCAP)
     middleware solution continued in 2005,[^751] with 28 firms
     demonstrating hardware platforms, middleware implementations,
     interactive TV applications, and network equipment that is OCAP
     compatible in August 2005.[^752] Once a manufacturer adapts OCAP to
     a specific device, no further customization is required of the
     application developers. Operators have access to a simplified
     development, testing, and support environment by limiting the
     number of versions of each piece of software deployed to customers.
     Further, manufacturers can develop products that will support all
     services (including bi-directional services) delivered by cable
     operators as well as future Interactive Television (ITV)
     applications and services.

216. As reported earlier, ITV is a service that supports
     subscriber-initiated choices or actions that are related to one or
     more video programming streams (*e.g.,* t-commerce, data
     enhancements, and interactive gaming).[^753] Cable operators, DBS
     operators, application developers, and consumer electronics
     manufacturers continue to explore a variety of ITV services in
     order to increase revenue and subscribership. ITV services may also
     reduce subscriber churn (*i.e.,* subscriber loss). The development
     and deployment of ITV services will advance as OCAP is implemented
     and developers create programs capable of running on OCAP platforms
     and reaching different types of audiences. In their October 14,
     2005 update, CEA and NCTA agreed to incorporate support for OCAP in
     interactive Digital Cable Ready (iDCR) devices, although the two
     organizations continue to negotiate technical details.[^754]

217. In January 2005, Samsung entered into an agreement with three major
     MSOs, Time Warner, Bright House Cable, and Charter Cable, to
     implement bi-directional OCAP software in cable set-top
     boxes.[^755] Bi-directional OCAP is a necessary component to allow
     third parties to produce two-way capable third party set-top boxes.
     In January 2006, several MSOs announced they would begin trials of
     OCAP in select markets: Comcast in Philadelphia, Denver, Boston,
     and Union, New Jersey; Time Warner in New York, Milwaukee, Green
     Bay, Lincoln and Waco; Advance/Newhouse in Indianapolis. Cox,
     Cablevision, and Charter made similar announcements, but did not
     specify the markets where the trials would occur.[^756] Samsung
     also recently achieved certification status and began testing an
     OCAP-enabled interactive digital television set, thereby becoming
     the first consumer electronics manufacturer to build a two-way
     integrated digital television capable of handling interactive
     digital cable content and services, including VOD.[^757] Panasonic
     and LG also have joined Samsung in entering into agreements with
     CableLabs, allowing them to implement OCAP middleware on
     cable-ready digital TVs, set-top boxes, and other products to
     support two-way, interactive cable services.[^758] Panasonic has
     announced it will become the first major manufacturer to supply
     OCAP based set-top boxes in an agreement with Comcast.[^759]

218. In addition, the Advanced Television Systems Committee (ATSC)
     recently approved the Advanced Common Application Platform (ACAP),
     which synchronizes the ATSC DTV Application Software Environment
     (DASE) Standard with OCAP. The new standard provides consumers with
     advanced interactive services, while providing content creators,
     broadcasters, cable operators and consumer electronics
     manufacturers with the technical details necessary for the
     development of services and products interoperable with both cable
     and broadcast.[^760] The cost and complexity of design,
     implementation, and support decrease by having a common application
     platform on which to develop services.

## Emerging Technologies

219. ***Fiber Optic Delivery of Video.*** Fiber to the Premises (FTTP)
     and Fiber to the Node (FTTN) are emerging as competitive methods
     for the delivery of voice, video, and data. Both Verizon and SBC
     are deploying Broadband Passive Optical Networks (BPON). In
     September 2005, Verizon launched FiOS TV, which was expected to
     offer video programming to an anticipated three million homes
     passed by their FTTP plant by the end of 2005.[^761] Verizon
     delivers video programming from two national super-headends to
     regional video hub offices via its Sonet network. Verizon inserts
     local broadcast signals and public, educational, and government
     channels at the hub offices, and then transmits the signals to the
     central offices (COs) for distribution to customer premises. All
     VOD content and the interactive program guide are sent using the
     Internet Protocol (IP).[^762] Video entering as an IP stream will
     be sent to the set-tops using Multimedia over Coax (MoCA)
     technology.[^763] Verizon is expected to use MoCA for set-top
     upstream capabilities. Currently, Verizon plans deployment of its
     high-speed data, voice, and video networks in 15 states.[^764] SBC
     projects it will pass nearly 18 million households in 13 states by
     the end of 2007 with its FTTN Project Lightspeed.[^765] Both
     Verizon FiOS and SBC Project Lightspeed will offer data speeds in
     excess of current average broadband speeds and will provide video
     services competitive with existing offerings from the major
     MSOs.[^766]

220. Other FTTP deployments also are occurring. Developers of active
     FTTP architectures are entering into agreements primarily with
     smaller telephone companies, municipalities, and utilities. Active
     networks use active electronic devices (*e.g.*, amplifiers,
     splitters), and the platform enables sending only the channel the
     subscriber is watching, providing more efficient use of spectrum
     and preventing signal theft through compromised or unauthorized
     set-top boxes. For example, the Utah Telecommunications Open
     Infrastructure Agency (UTOPIA) and iProvo are using active FTTP
     architecture. UTOPIA connects 140,000 homes and businesses in Salt
     Lake City.[^767] iProvo is building out a network that reaches
     27,000 homes and 4,100 businesses and has recently completed Phase
     5 of its deployment.[^768]

221. ***Distributed Transmission of Digital Television (DTS/DTx).*** A
     DTV distributed transmission system employs multiple synchronized
     transmitters spread around a television station's service area.
     Each transmitter broadcasts the station's DTV signal on the same
     channel, relying on the performance of "adaptive equalizer"
     circuitry in DTV receivers to cancel or combine the multiple
     signals plus any reflected signals to produce a single signal. Such
     distributed transmitters are considered to be similar to analog TV
     booster stations, a secondary, low-power service used to "fill in"
     gaps in the parent station's coverage area, but DTV technology has
     the potential to enable this type of operation more efficiently
     than its analog predecessor.[^769]

222. In the *Second DTV Periodic Report and Order*, the Commission
     approved, in principle, the use of distributed transmission system
     (DTS) technologies but deferred to a separate proceeding the
     development of rules for DTS operation and the examination of
     several policy issues related to its use.[^770] In November 2005,
     the Commission issued a *Notice of Proposed Rulemaking* to examine
     the issues related to the use of DTS and proposed rules for future
     DTS operation.[^771] The proposed rules would permit an existing
     authorized broadcast station to use DTS after the new,
     post-transition DTV Table of Allotments is established and the
     current freeze on the filing of most applications is lifted. This
     would afford stations the opportunity to apply to maximize their
     service areas. In addition, the Commission issued a *Clarification
     Order* with respect to the interim rules established in the *Second
     DTV Periodic Report and Order*.[^772] Those rules continue to be
     available for stations that wish to apply to use DTS technology
     during the pendency of the rulemaking proceeding.

223. ***Enhanced-VSB (E-VSB).*** Enhanced-VSB or E-VSB is an amendment
     to the ATSC A/53C standard for DTV. E-VSB provides an option to
     broadcasters to trade off data-rate for a lower carrier-to-noise
     threshold for a portion of their data stream. This portion can be
     more resistant to interference and low signal strength conditions.
     One potential application is for a "fallback audio" stream that
     could be heard even if the video picture is unavailable. Another
     could be a small video stream for mobile handheld devices or data
     transfer to mobile devices. The ATSC has published a number of
     related Candidate Standards that support the E-VSB System.
     CS/T3-608 and CS/T3-609 provide transport specifications, and
     CS/T3-606 provides enhancements to the ATSC PSIP Standard (A/65).
     Enhancements to AC-3 audio (E-AC-3) are contained in documents
     CS/T3-613 and CS/T3-614.[^773]

224. ***Home Networking and Wi-Fi.*** Home networking allows consumers
     to connect multiple devices in the home (*e.g.*, set-top boxes,
     television sets, personal computers) with each other. Currently,
     the most common application for home networking is to connect
     multiple PCs to cable modems. Within the context of video
     competition, home networks may also be used to transmit video such
     as downloaded VOD movies. MoCA, the Multimedia over Coax Alliance,
     was formed to develop specifications for networking over existing
     in-home coaxial cables.[^774] By allowing devices connected to the
     same set of coax cables to network at high speeds (over 100 Mbps),
     programming recorded by one PVR in the house can be accessed by any
     other set-top device in the house.[^775] The Digital Living Network
     Alliance (DLNA), a consortium including Fujitsu, IBM, Intel,
     Microsoft, and other consumer electronics manufacturers,[^776] also
     is seeking to standardize the interaction of various networked
     devices in the home to enable the seamless transfer and management
     of content among enabled devices.[^777] In addition, Comcast, Time
     Warner, and Cox offer home networking using a wireless system based
     on CableLabs' CableHome.[^778] Another example of home networking
     is TiVo Corporation's TiVo ToGo service, which permits consumers to
     view programming recorded on one TiVo device in the home on other
     TiVo devices, on home computers, and on portable media
     players.[^779]

225. Cable operators also are forming alliances with wireless
     hotspot[^780] providers to offer subscribers high-speed data access
     via Wi-Fi hotspots.[^781] For example, Comcast offers its
     high-speed Internet subscribers owning Wi-Fi enabled laptops the
     T-Mobile subscription "HotSpot" service.[^782] Cox has joined
     Qwest, Intel, and Arizona State officials to offer a Wi-Fi hotspot
     service known as Public Online Wireless Electronic Resource
     (POWER), which provides free wireless broadband service to members
     of the public in Arizona. Time Warner is deploying its own wireless
     network in large, heavily trafficked commercial establishments, and
     Charter is using a Wi-Fi wholesaler to deliver roaming coverage to
     its cable modem subscribers.[^783] Cable operators believe the
     hotspot coverage will enable additional services and increase
     revenue streams.

226. ***WiMAX and Municipal Wi-Fi.*** WiMAX continues to develop as a
     wireless standard that is expected to become a last mile solution
     for cable operators, broadband providers, and others.[^784] The
     technology, embodied in IEEE Standard 802.16, has the potential to
     reach rural customers outside the range of today's infrastructure
     and also can be used to provide entire metropolitan areas with
     high-speed data access. With speeds up to 75 Mbps and ranges up to
     30 miles, WiMAX technology is a step in the transition to IP
     communication entirely without wires.[^785] Among the potential
     applications for WiMAX is the delivery of high-quality video to
     handheld or portable devices. Development of WiMAX has continued,
     with the creation of a certification program in April 2005[^786]
     and the opening of an official testing laboratory in July
     2005.[^787] While the primary proponent of WiMAX has been the Intel
     Corporation, Nokia also has begun significant investment in the
     technology.[^788] Some analysts do not expect widespread
     availability of WiMAX before 2010.[^789]

227. Closer on the horizon than WiMAX deployment is the provision of
     wireless broadband by various municipalities, often offered for
     free.[^790] At least six major cities, including Philadelphia, San
     Francisco, Chicago, Denver, Miami Beach, and Portland, Oregon, have
     begun developing or announced plans to deploy municipal Wi-Fi
     networks, either free or at low cost to local residents. [^791] In
     general, municipalities deploy Wi-Fi as a mesh network covering an
     entire, large area with wireless data access based on IEEE Standard
     802.11.[^792] Traditional public wireless access has followed the
     hotspot model already deployed.[^793] Some municipalities,
     including Philadelphia, have partnered with an existing service
     provider, such as Earthlink, to offer this new network at wholesale
     rates to competitive ISPs.[^794] In some cases incumbent providers
     and other competitors have sought and continue to seek local and
     national government prohibitions on publicly funded data
     networks.[^795]

228. ***Next Generation Network Architecture***. NGNA is an undertaking
     by Comcast, Cox, and Time Warner to advance cable operators'
     transition to all-digital networks without expensive rebuilds.
     While encompassing many aspects of cable service, including
     advanced video and audio compression technologies (codecs), such as
     MPEG-4 and Windows Media 9, a primary goal of NGNA has been the
     development in 2005 of an alternative software-based conditional
     access system which continues to support cable operators' existing
     security. Comcast and Motorola have begun development of a solution
     based on Motorola's MediaCipher technology.[^796] The companies
     demonstrated this technology to the Commission at a Comcast-hosted
     event in July 2005.[^797]

229. ***Advanced Compression.*** The use of advanced codecs in place of
     MPEG-2 can significantly decrease the amount of bandwidth required
     to transmit digital video. Although advanced compression
     technologies require significant investment in new hardware, MVPDs
     have embraced the reduction in bandwidth that advanced compression
     allows. Existing video delivery services are able to provide more
     programming and new entrants face decreased barriers to entry into
     the competitive video marketplace.[^798] MVPDs have focused on two
     codecs -- MPEG-4/H.264 (also known as AVC) and Microsoft's VC-1
     (formerly Windows Media 9/VC-9). Both AVC and VC-1 are included in
     the HD-DVD and Blu-ray BD-ROM high-definition disc specifications
     along with MPEG-2, which provides at least one new pipe into the
     home for HD programming.[^799] The ATSC has several candidate
     standards under consideration that could include AVC and VC-1 for
     limited use in terrestrial digital broadcasting.[^800] In January
     2005, DIRECTV announced that it has begun to transition its
     operation to AVC, with the intent to provide local HD channels
     nationwide by 2007.[^801]

230. ***Mobile Video.*** Several technologies have emerged to offer
     broadcast television to mobile telephones. Digital Video
     Broadcast-Handheld (DVB-H) and QUALCOMM's proprietary MediaFLO
     technology are the two most prominent mobile video platforms. Tower
     operator Crown Castle has deployed a single-frequency DVB-H test
     site in Pittsburgh, Pennsylvania, using spectrum in the 1440-1790
     MHz band.[^802] The service will provide video at 24-30 frames per
     second. Crown Castle plans to launch commercially in select major
     markets, including New York, in 2006 and to deploy nationwide to
     the top 30 markets throughout 2007.[^803] Verizon Wireless plans to
     use Crown Castle\'s network to send live television to its phones
     in the first quarter of 2006.[^804] MediaFLO transmissions are
     expected to use 700 MHz TV channels.[^805] On September 27, 2005,
     QUALCOMM announced the first live, over-the-air demonstration of
     the FLO (Forward Link Only) Technology delivered to a wireless
     handset.[^806]

231. Mobile phone companies also are beginning to deliver video
     programming to cellular telephones and other portable devices via
     3G data services. Verizon
     [Wireless](http://www.betanews.com/article/print/Verizon_Wireless_VCAST_Goes_Live/1107259065#%23)
     launched a 3G multimedia service called VCAST in February 2005.
     Transmitting at a maximum speed of 300 to 500 kbps, VCAST offers
     on-demand content, as well as 3D games to phones compatible with
     the next-generation network.[^807] Sprint began streaming live Fox
     News on wireless phones in April 2005 through its Sprint TV
     service.[^808] Satellite radio providers are also testing mobile
     video. In January 2005, On2 Networks announced that XM Satellite
     Radio will use On2 Networks' VP6.2 codec for streaming video to
     mobile receivers in vehicles.[^809]

232. MobiTV launched live broadcast television service beginning in
     November 2003, although the initial service deployment frame rate
     was only one frame per second.[^810] The first MobiTV service
     allowed consumers to access some 13 channels in real time.[^811]
     MobiTV today is providing about 36 channels to 500,000
     subscribers.[^812] The service is available to customers of Sprint
     PCS, Cingular, and several regional carriers.[^813] Other startups,
     such as GoTV, PacketVideo, and SmartVideo, are delivering video
     content to phones. Chip manufacturers continue to improve the speed
     and quality of mobile video.

233. Consumer electronics manufacturers are beginning to offer portable
     video players. Computer manufacturer Apple recently unveiled a new
     version of the iPod capable of carrying 75-150 hours of downloaded
     video.[^814] Disney offers programming through the iTunes store
     that consumers can view on the iPod, including Pixar short films
     and hit television shows for \$1.99 per download.[^815] In March
     2005, Sony released the Playstation Portable, a combination
     portable gaming device and media player that can display
     full-length movies from a Sony proprietary Universal Media Disc
     (UMD).[^816] CinemaNow offers movie downloads that consumers can
     view on PCs and on several portable video players from a variety of
     manufacturers.[^817] The Commission will monitor these nascent
     technologies as their services develop.

234. ***DOCSIS 3.0.*** CableLab's Data Over Cable Service Interface
     Specification or DOCSIS continues to be the dominant standard used
     to provide high-speed Internet service for cable operators. As the
     throughput to operators increases, their ability to deliver
     additional and more complex services, including video over IP,
     increases.[^818] As noted in our *2004 Report*,[^819] CableLabs
     will not pursue a new DOCSIS 2.x specification[^820] and will
     instead use routine "Engineering Change Requests"[^821] to add many
     of the planned features to the existing DOCSIS 2.0 specification,
     saving other changes for a future DOCSIS 3.0 specification.[^822]
     DOCSIS 3.0 will enable advanced services, such as Internet video,
     by supporting delivery of hundreds of Mbps to a single DOCSIS
     device.[^823] [CableLabs](http://www.cablelabs.com/) has selected
     \"packet bonding\" over "MPEG bonding"[^824] for wideband[^825]
     capabilities in the emerging DOCSIS 3.0 specification.[^826] This
     is partly based on the fact that packet bonding gives operators a
     faster time to market because the technique can be deployed with
     existing technologies. Legacy cable modem termination systems
     (CMTSs), for example, can support packet bonding with a software
     revision. DOCSIS 3.0 enables channel bonding, a technique that will
     allow cable operators to offer speeds of 100 Mbps and greater,
     allowing them to better compete against new fiber-to-the-home
     (FTTH) technologies.[^827] The next-generation of CMTSs under the
     emerging DOCSIS 3.0 specification may also set the technical
     groundwork for more IP video in the future.[^828]

235. ***PacketCable.*** PacketCable, another CableLabs project, is the
     specification standard developed for delivering advanced real-time
     multimedia services over two-way cable plant.[^829] PacketCable
     uses IP technology to enable a wide range of services, including IP
     telephony, multimedia conferencing, interactive gaming, and general
     multimedia applications.[^830] As of September 2005, 35
     PacketCable-embedded multimedia terminal adapter devices were
     certified by CableLabs.[^831] In addition, 31 DOCSIS certified
     modems also contain PacketCable capabilities. PacketCable
     Multimedia is an evolution of PacketCable that expands the realm of
     applications supported. It provides opportunities for better
     bandwidth management and the deployment of a variety of IP-based
     services by enabling dynamic bandwidth requests, managing shared
     edge network resources and integrating noncable specific
     applications in the DOCSIS environment. PacketCable Multimedia also
     provides a general, all-purpose quality-of-service (QoS) framework
     for multimedia applications.[^832] PacketCable Multimedia allows
     MSOs to use its quality-of-service feature to provide better, more
     consistent VoIP service, which is a critical part of the triple
     play (*i.e.,* video, voice, data) business model for cable
     operators, as competing VoIP services, such as Vonage, gain
     ground.[^833]

# FOREIGN MARKETS

236. In the *Notice*, the Commission invited comment on 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 and the relative efficiency of
     market structures and regulations within the United States. In last
     year's report, we reviewed several countries' experiences with the
     digital television transition; broadcast, cable and satellite
     competition; and developments in video over broadband, now more
     commonly referred to internationally as IPTV.[^834] This year we
     focus on developments in IPTV.

237. The advent of IPTV is a response by both incumbent operators and
     new entrants to the growth of competition in the provision of
     broadband services.[^835] Although the rates of growth vary
     worldwide, a number of countries have seen stagnant growth in the
     fixed line market, due in part to saturation, such as in Western
     Europe, and due in part to the ubiquity and density of mobile
     telephone service in Asia and Europe generally, which has led to
     substitution of mobile telephone service for fixed line
     service.[^836] Incumbents have responded by upgrading their
     facilities to deliver more advanced services, such as broadband
     Internet. Similarly, competitive providers have taken advantage of
     regulatory initiatives in some markets that open up incumbent
     operators' facilities to competition and, in the European Union,
     allow cross border competition.[^837] Overall, this has led to
     lower prices, more competition, and increased use of broadband
     infrastructure to deliver a bundle of services that include voice,
     data, and video.[^838]

238. In Europe, recent developments suggest a measured rollout of IPTV
     over DSL[^839] by incumbents and new entrants.[^840] In the United
     Kingdom, the unbundling of local telephone loop connections
     prompted several companies to introduce IPTV, in conjunction with
     telecommunications and Internet access services. As we reported
     last year, Homechoice has been providing service primarily to
     residential areas of London, and now passes 2.4 million
     homes.[^841] It recently announced that, beginning in 2006, it will
     expand its network to 10 million homes passed.[^842] Within its
     present footprint, Homechoice, which reports approximately 34,000
     subscribers, is adding new pay-TV customers at a faster rate than
     either cable or satellite operators.[^843] Approximately 55 percent
     of Homechoice's customers subscribe to all three of its services --
     video, telephony and Internet access service. The leading
     telecommunications carrier in the United Kingdom, BT, announced
     that it would enter the IPTV market in late summer 2006.[^844] BT's
     service will be delivered at a minimum connection speed of 1.5 Mb,
     and will include a set-top box with an integrated digital
     over-the-air broadcast receiver and wireline broadband receiver, as
     well as a DVR capable of storing up to 80 hours of programming and
     capable of displaying HD content.[^845] BT's service also will
     include VOD services characterized as "catch-up TV," in which
     programs from the previous seven days' broadcast schedule will be
     available on demand without the need to record; 30 digital
     over-the-air TV channels; communications services, including
     instant messaging, chat, and video telephony on TV; and interactive
     services.[^846]

239. Italy's FastWeb, one of Europe's first IPTV providers, which
     launched in 2001, reported that it has approximately 644,000
     subscribers as of September 2005.[^847] FastWeb's network covers 85
     cities and population centers in Italy, passing a total of 7.5
     million homes.[^848] FastWeb plans to extend its network to 30
     million homes passed by the end of 2006. FastWeb is the only
     Italian operator offering a triple play service package of video,
     voice, and data service. For approximately \$30 a month, FastWeb's
     basic package offers metered broadband service of 300 minutes of
     voice and Internet access, including Internet access of 10 Mbps
     download for subscribers with a fiber optic connection and 6 Mbps
     download for subscribers with a DSL connection; and a package of
     television programming that includes four national Italian
     broadcast channels, a collection of thematic and international
     channels (*e.g.*, CNN, Cartoon Network, Disney Channel); VOD; and a
     network-based DVR.[^849] Beyond the included video programming,
     FastWeb offers a range of thematic programming tiers, such as
     Sports and Movies, and also offers programming on an a la carte
     basis.[^850] Approximately 40 percent of FastWeb's subscribers
     choose to subscribe to a la carte channels and subscription
     packages.[^851] In addition, FastWeb resells on an a la carte basis
     some of the programming of its principal video programming
     competitor, Sky Italia. In July 2005, Telecom Italia launched free
     trials of its IPTV over ADSL service in Rome, Milan, Bologna, and
     Palermo and was expected to introduce the service in 21 Italian
     cities by the end of 2005. The service will feature live TV,
     including exclusive Italian football matches, top Italian
     basketball, and VOD. Telecom Italia is using Microsoft TV IPTV
     Edition software.[^852]

240. France has three national operators providing IPTV service. France
     Telecom's MaLigne TV, a DSL-based service, passes approximately 8.5
     million homes and has approximately 142,000 subscribers as of
     September 2005.[^853] France Telecom will extend this service to
     the carriers it owns in the United Kingdom, the Netherlands and
     Poland by mid-2006.[^854] In addition, France Telecom is planning
     to introduce a set-top box, called "LiveBox," which will be capable
     of supporting a range of service offerings in addition to home
     networking.[^855] Neuf Telecom launched its IPTV over DSL service
     in late 2004 and offers a triple play service for approximately
     \$35 per month, featuring 46 channels and more than 150 additional
     channels that can be purchased a la carte or in bundles.[^856] The
     third provider, Iliad, markets its triple-play service through its
     "Free" broadband service provider. At a cost of approximately \$35
     per month, in addition to Internet access and telephone service,
     Free provides 80 free television channels and offers approximately
     170 subscription video channels on an a la carte basis or in
     thematic packages, such as sports and music.[^857] As of June 2005,
     Free had approximately 1.18 million subscribers to its triple-play
     package, 130,000 of whom choose to subscribe to a la carte video
     programming.[^858]

241. Elsewhere in Europe, in June 2005, Finland's Alcom, the primary DSL
     provider for the Aland Islands, launched that country's first
     commercial IPTV over DSL service and now serves approximately 1,000
     subscribers.[^859] Alcom offers 26 channels for approximately \$11
     per month.[^860] Broadband and telephone service are separate
     subscriptions and range in price from approximately \$35-\$64 per
     month, depending on the speed of service.[^861] In May 2005,
     Russian company Sistema Multimedia launched its IPTV service Stream
     TV, which offers Internet access, VOD, and 80 Russian and
     international television channels, with a basic service package
     costing approximately \$9.95 per month. The service, which is
     available to approximately 3.3 million Moscow homes, allows
     subscribers to add new video channels or packages on an a la carte
     basis.[^862]

242. In Asia, a number of countries have seen the introduction of IPTV
     services by both incumbent operators and new entrants. One analyst
     argues that Asia is "fertile ground" for IPTV services given
     incumbent operators' extensive existing wireline networks, high
     population density of urban areas, leadership of Asian countries in
     broadband penetration growth, widespread deployment throughout Asia
     of ADSL networks supporting at least 6 Mbps to residential areas,
     and government policies encouraging aggressive broadband
     implementation through a combination of regulatory flexibility and
     financial incentives.[^863] PCCW of Hong Kong launched its IPTV
     service Now Broadband TV (NOW) in 2003 and had over 441,000
     subscribers as of June 2005.[^864] The service is offered on a
     stand-alone basis or in combination with PCCW's Netvigator
     broadband Internet access service. NOW offers customers 15 free
     video channels and 57 subscription video channels, 22 of which are
     exclusive to the provider.[^865] NOW allows its customers to
     subscribe to individual channels on a month-to-month, six-month, or
     12-month basis, in addition to annually based subscriptions to
     packages of programming offered by other providers. At present the
     service does not support any DVR functionality, nor can any content
     be recorded by any other means.[^866] In China, despite aggressive
     deployment of broadband infrastructure, the rollout of IPTV has
     been very slow and is limited to trials at the present time, as
     China's major telecommunications operators await the issuance of
     IPTV licenses by the State Administration of Film, Radio, and
     Television.[^867] Four companies in Japan provide IPTV service, and
     a new service was expected to launch in South Korea before the end
     of 2005.[^868]

# administrative matters

243. This *2005 Report* 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).

244. It is ORDERED that the Office of Legislative Affairs shall send
     copies of the *2005 Report* to the appropriate committees and
     subcommittees of the United States House of Representatives and the
     United States Senate.

245. *Accessible Formats*. To request materials in accessible formats
     for people with disabilities (Braille, large print, electronic
     files, audio format), send an e-mail to
     [fcc504@fcc.gov]{.underline} or call the Consumer & Governmental
     Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY). *Ex
     Parte Rules*. There are no *ex parte* or disclosure requirements
     applicable to this proceeding pursuant to 47 C.F.R. § 1.1204(b)(1).

246. Pursuant to Sections 1.415 and 1.419 of the Commission's rules, 47
     C.F.R. §§ 1.415, 1.419, interested parties may file comments on
     paragraphs 31-36 in MB Docket No. 05-255 on or before April 3,
     2006, and reply comments on or before April 18, 2006. Comments may
     be filed using: (1) the Commission's Electronic Comment Filing
     System (ECFS), (2) the Federal Government's eRulemaking Portal,
     or (3) by filing paper copies. *See* Electronic Filing of Documents
     in Rulemaking Proceedings, 63 FR 24121 (1998).

-   *Electronic Filers*: Comments may be filed electronically using the
    Internet by accessing the ECFS: <http://www.fcc.gov/cgb/ecfs/> or
    the Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Filers
    should follow the instructions provided on the website for
    submitting comments.

    -   For ECFS filers, if multiple docket or rulemaking numbers appear
        in the caption of this proceeding, filers must transmit one
        electronic copy of the comments for each docket or rulemaking
        number referenced in the caption. In completing the transmittal
        screen, filers 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, filers should send
        an e-mail to <ecfs@fcc.gov>, and include the following words in
        the body of the message, "get form." A sample form and
        directions will be sent in response.

-   *Paper Filers*: 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, filers
    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). All filings must be addressed to the
> Commission's Secretary, Office of the Secretary, Federal
> Communications Commission.

-   The Commission's contractor 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 8:00 a.m. to 7:00 p.m. All hand
    deliveries must be held together with rubber bands or fasteners. Any
    envelopes must be disposed of [before]{.underline} 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, Express, and Priority mail should
    be addressed to 445 12^th^ Street, SW, Washington DC 20554.

```{=html}
<!-- -->
```
-   In addition, parties must serve the following with either an
    electronic copy via e-mail or a paper copy of each pleading: (1) the
    Commission's duplicating contractor, Best Copy and Printing, Inc.,
    Portals II, 445 12^th^ Street, S.W., Room CY-B402, Washington, D.C.
    20554, telephone 1-800-378-3160, or via e-mail at
    www.bcpiweb.com; (2) Marcia Glauberman, Media Bureau, 445 12^th^
    Street, S.W., Room 2-C264, Marcia.Glauberman@fcc.gov; (3) Anne
    Levine, Media Bureau, 445 12^th^ Street, S.W., Room 2-A864,
    Anne.Levine@fcc.gov; and (4) Timothy May, Media Bureau, 445 12^th^
    Street, S.W., Room 2-C315, Timothy.May@fcc.gov.

247. *People with Disabilities*: Contact the FCC to request materials in
     accessible formats (Braille, large print, electronic files, audio
     format, etc.) by e-mail at [fcc504@fcc.gov](mailto:FCC504@fcc.gov)
     or call the Consumer & Governmental Affairs Bureau at 202-418-0530
     (voice), 202-418-0432 (TTY).

248. The Media Bureau contacts for this proceeding are Anne Levine
     at (202) 418-7027, Anne.Levine@fcc.gov, and Timothy May at (202)
     418-1463, or Timothy.May@fcc.gov.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch Secretary

**APPENDIX A**

**[LIST OF COMMENTERS]{.underline}**

**[Initial Comments]{.underline}**

Alcatel

American Cable Association (ACA)

The America Channel (TAC)

Association of Public Television Stations (APTS)

BellSouth Corporation and BellSouth Entertainment, LLC (BellSouth)

Broadband Service Providers Association (BSPA)

CenturyTel, Inc.

Cincinnati Bell Inc.

City of Ontario, California

Comcast Corporation (Comcast)

Community Broadcasters Association (CBA)

Consumer Electronics Association (CEA)

Consumers for Cable Choice

DIRECTV, Inc.

EchoStar Satellite L.L.C. (EchoStar)

Media General, Inc.

National Association of Broadcasters (NAB)

National Cable & Telecommunications Association (NCTA)

National Rural Telecommunications Cooperative (NRTC)

National Telecommunications Cooperative Association (NTCA)

Network Domain, LLC

Qwest Communications International Inc. (Qwest)

RCN Telecom Services, Inc. (RCN)

SBC Communications, Inc. (SBC)

Telecommunications Industry Association (TIA)

United States Telecom Association (USTA)

Verizon Communications Inc. (Verizon)

The Walt Disney Company (Disney)

W.A.T.C.H. TV Company (W.A.T.C.H. TV)

**[Reply Comments]{.underline}**

ABC, CBS and NBC Television Affiliate Associations (Affiliates
Associations)

BellSouth Corporation and BellSouth Entertainment, LLC (BellSouth)

Comcast Corporation (Comcast)

Consumer Electronics Association (CEA)

DIRECTV, Inc.

EchoStar Satellite L.L.C. (EchoStar)

iN DEMAND L.L.C.

Joint Cable Commenters (Advance/Newhouse Communications, Cox
Communications, Inc.,

and Insight Communications)

National Association of Broadcasters (NAB)

National Cable &Telecommunications Association (NCTA)

Organization for the Promotion and Advancement of Small
Telecommunications Companies (OPASCO)

Paxson Communications Corporation (Paxson)

Qwest Communications International Inc. (Qwest)

SBC Communications, Inc. (SBC)

Time Warner Cable Inc. (Time Warner)

The United States Telecom Association (USTA)

Verizon Communications Inc. (Verizon)

**APPENDIX B**

TABLE B-1

**Assessment of Competing Technologies**

+-------------------+----------+--------+--------+---------+---------+
| **Technology      | **June   | **June | **June | **June  | **June  |
| Used**            | 01**     | 02**   | 03**   | 04**    | 05**    |
+-------------------+----------+--------+--------+---------+---------+
| (1) TV Households | 102      | 105,4  | 106,6  | 108,    | 109,    |
|                   | ,184,810 | 44,330 | 41,910 | 410,160 | 590,170 |
| > Percent Change  |          |        |        |         |         |
|                   | 1.37%    | 3.19%  | 1.14%  | 1.66%   | 1.09%   |
+-------------------+----------+--------+--------+---------+---------+
| (2) MVPD          | 86       | 87,5   | 88,3   | 92,     | 94,     |
|                   | ,062,074 | 62,641 | 12,191 | 295,766 | 226,357 |
|   Households^(i)^ |          |        |        |         |         |
|                   | 3.72%    | 1.74%  | 0.86%  | 4.51%   | 2.09%   |
| > Percent Change  |          |        |        |         |         |
|                   | 84.22%   | 83.04% | 84.18% | 85.14%  | 85.98%  |
| Percent of TV     |          |        |        |         |         |
| Households        |          |        |        |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (3) Cable         | 66       | 66,4   | 66,0   | 66,     | 65,     |
|     Subscribers   | ,732,000 | 72,000 | 50,000 | 100,000 | 400,000 |
|                   |          |        |        |         |         |
| > Percent Change  | 0.73%    | -0.39% | -0.63% | 0.08%   | -1.06%  |
|                   |          |        |        |         |         |
| Percent of MVPD   | 77.54%   | 75.91% | 73.58% | 71.62%  | 69.41%  |
| Total             |          |        |        |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (4) MMDS          | 700,000  | 4      | 2      | 200,000 | 100,000 |
|     Subscribers   |          | 90,000 | 00,000 |         |         |
|                   | 0.0%     |        |        | 0.00%   | -50.00% |
| > Percent Change  |          | -      | -      |         |         |
|                   | 0.81%    | 30.00% | 59.18% | 0.22%   | 0.11%   |
| Percent of MVPD   |          |        |        |         |         |
| Total             |          | 0.56%  | 0.22%  |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (5) PCO           | 1        | 1,6    | 1,2    | 1,      | 1,      |
|     Subscribers   | ,500,000 | 00,000 | 00,000 | 100,000 | 000,000 |
|                   |          |        |        |         |         |
| > Percent Change  | 0.0%     | 6.67%  | -      | -8.33%  | -9.09%  |
|                   |          |        | 25.00% |         |         |
| Percent of MVPD   | 1.74%    | 1.83%  |        | 1.19%   | 1.06%   |
| Total             |          |        | 1.34%  |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (6) HSD           | 1        | 7      | 5      | 335,766 | 206,358 |
|     Subscribers   | ,000,074 | 00,641 | 02,191 |         |         |
|                   |          |        |        | -33.14% | -38.54% |
| > Percent Change  | -32.28%  | -      | -      |         |         |
|                   |          | 29.94% | 28.32% | 0.36%   | 0.22%   |
| Percent of MVPD   | 1.16%    |        |        |         |         |
| Total             |          | 0.80%  | 0.56%  |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (7) DBS           | 16       | 18,2   | 20,3   | 23,     | 26,     |
|     Subscribers   | ,070,000 | 40,000 | 60,000 | 160,000 | 120,000 |
|                   |          |        |        |         |         |
| > Percent Change  | 23.74%   | 13.50% | 11.62% | 13.75%  | 12.78%  |
|                   |          |        |        |         |         |
| Percent of MVPD   | 18.67%   | 20.83% | 22.68% | 25.09%  | 27.72%  |
| Total             |          |        |        |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (8) OVS           | 60,000   | 60,000 |        |         |         |
|                   |          |        |        |         |         |
| Subscribers^(ii)^ | 0.00%    | 0.00%  |        |         |         |
|                   |          |        |        |         |         |
| > Percent Change  | 0.07%    | 0.07%  |        |         |         |
|                   |          |        |        |         |         |
| Percent of MVPD   |          |        |        |         |         |
| Total             |          |        |        |         |         |
+-------------------+----------+--------+--------+---------+---------+
| (9) BSP           |          |        | 1,4    | 1,      | 1,      |
|     S             |          |        | 60,000 | 400,000 | 400,000 |
| ubscribers^(iii)^ |          |        |        |         |         |
|                   |          |        | N/A    | -4.11%  | 0.00%   |
| Percent Change    |          |        |        |         |         |
|                   |          |        | 1.63%  | 1.52%   | 1.49%   |
| Percent of MVPD   |          |        |        |         |         |
| Total             |          |        |        |         |         |
+-------------------+----------+--------+--------+---------+---------+

**Notes:**

(i) The total number of MVPD households given on this table is the sum
    of the subscribers to each of the MVPD services listed. The actual
    total number of MVPD households is likely to be somewhat less than
    the given figure since some households subscribe to the services of
    more than one MVPD. *See* *1994 Report,* 9 FCC Rcd at 7480. However,
    the number of households subscribing to more than one MVPD is
    expected to be low. Hence, the total can be seen as a reasonable
    estimate of the number of MVPD households.

(ii) Beginning in 2003, we combined OVS subscribers with BSP
     subscribers. We are no longer, therefore, reporting a separate
     number for OVS subscribers.

(iii) This number includes some, if not all, OVS subscribers, and may
      double count some cable subscribers from newer cable overbuild
      systems. We started reporting this number two years ago and thus
      we do not have subscribers for years prior to 2003.

**Sources:\
**

(1) Television households: All years, *Nielsen Media Research.*

(2) Total MVPD households: The sum of the total number of subscribers
    listed under each of the categories of the various technologies. See
    note (i) above.

(3) Cable subscribers: All years, Kagan Research, LLC, *Kagan's 10-Pay
    TV Subscriber History,* Broadband Cable Financial Databook 2005,
    July 2005, at 11.

(4) MMDS subscribers: 2001 from NCTA Comments for the *2001 Report* at
    7; 2002 from NCTA Comments for the *2002 Report* at 12; 2003 from
    NCTA Comments for the *2003 Report* at 8; 2004 from NCTA Comments at
    7, n.12; 2005 from NCTA, *Analysis of MVPDs: March 2005*, Cable
    Developments 2005 at 15.

(5) PCO (SMATV) subscribers: 2001 subscribers from NCTA Comments for the
    *2001 Report* at 9; 2002 subscribers from NCTA Comments for the
    *2002 Report* at 12; 2003 subscribers from NCTA Comments for the
    *2003 Report* at 8; 2004 subscribers from NCTA Comments at 7, n.12;
    2005 from Kagan Media Research, Media Trends 2005, at 69.

(6) HSD subscribers: 2001 from SBCA Comments for the *2001 Report,*
    Table 1 at 4; 2002 from SkyReport.com at
    http://www.skyreport.com/dth_us.htm; 2003 from SBCA Comments for the
    *2003 Report* at 4; 2004 from *2004 Report*, 20 FCC Rcd at 2798 ¶
    64; 2005 from *C-Band Decline Continues*, Satellite Business News
    FAXUpdate, July 6, 2005.

(7) DBS subscribers: 2001 from SBCA Comments for the *2001 Report,*
    Table 1 at 4; 2002 from SkyReport.com at
    http://www.skyreport.com/dth_us.htm; 2003 from SBCA Comments for the
    *2003 Report* at 4; 2004 from *2004 Report*, 20 FCC Rcd at 2792 ¶
    54; 2005 from The DIRECTV Group, Inc., *SEC Quarterly Report Form
    10-Q Pursuant to Section 13 or 15(d) of the Securities Act of 1934
    for the Quarterly Period Ended June 30, 2005*, at 40, and EchoStar
    Communications Corp., *SEC Quarterly Report Form 10-Q Pursuant to
    Section 13 or 15(d) of the Securities Act of 1934 for the Quarterly
    Period Ended June 30, 2005*, at 25.

(8) BSP subscribers: 2003 subscribers from NCTA Comments for the *2003
    Report* at 8; 2004 subscribers from BSPA Comments at 6 for the *2004
    Report* and Commission estimates; 2005 subscribers from Commission
    estimates.

    **TABLE B-2**

Number and Subscriber Size of Major Cable System Clusters

**(Cumulative Figures)**

+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| *      | 2   |        | **  |       | **  |       | **  |       |
| *Range | 001 |        | 200 |       | 200 |       | 200 |       |
| of     |     |        | 2** |       | 3** |       | 4** |       |
| Clu    |     |        |     |       |     |       |     |       |
| stered |     |        |     |       |     |       |     |       |
| Subsc  |     |        |     |       |     |       |     |       |
| ribers |     |        |     |       |     |       |     |       |
| (      |     |        |     |       |     |       |     |       |
| thousa |     |        |     |       |     |       |     |       |
| nds)** |     |        |     |       |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
|        | Cl  | Subsc  | Cl  | S     | Cl  | Su    | Cl  | Su    |
|        | ust | ribers | ust | ubscr | ust | bscri | ust | bscri |
|        | ers |        | ers | ibers | ers | bers( | ers | bers( |
|        |     | (mil   |     |       |     | (mill |     | (mill |
|        |     | lions) |     | (mill |     | ions) |     | ions) |
|        |     |        |     | ions) |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| 1      | 30  | 4.3    | 31  | 4.5   | 34  | 4.9   | 46  | 5.4   |
| 00-199 |     |        |     |       |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| 2      | 17  | 4.2    | 18  | 4.4   | 18  | 4.4   | 18  | 6.3   |
| 00-299 |     |        |     |       |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| 3      | 18  | 6.1    | 21  | 7.1   | 17  | 5.7   | 17  | 6.6   |
| 00-399 |     |        |     |       |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| 4      | 10  | 4.4    | 10  | 4.4   | 10  | 4.4   | 8   | 3.5   |
| 00-499 |     |        |     |       |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| \>500  | 32  | 33.3   | 29  | 31.0  | 29  | 34.3  | 29  | 29.7  |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+
| **T    | 107 | 52.3   | 109 | 51.3  | 108 | 53.6  | 118 | 51.5  |
| otal** |     |        |     |       |     |       |     |       |
+--------+-----+--------+-----+-------+-----+-------+-----+-------+

**Sources:**

2001 from Kagan World Media, *Major Cable TV Systems/Clusters*,
Broadband Cable Financial Databook 2002 at 38; 2002 from Kagan World
Media, *Major Cable TV Systems/Clusters*, Broadband Cable Financial
Databook 2003, at 39; 2003 from Kagan Research, LLC, *Major Cable TV
Systems/Clusters*, Broadband Cable Financial Databook 2004, at 39-40;
and 2004 from Kagan Research, LLC, *Major Cable TV Systems/Clusters*,
Broadband Cable Financial Databook 2005, at 39-40. Since last year,
Kagan World Media's methodology for counting clusters has changed,
leading to difficulties in directly comparing the numbers for 2004 with
those for previous years, which causes year-to-year comparisons to be
uninformative. In previous years, all of Comcast's subscribers in the
Northeast and Mid-Atlantic were counted as part of one "supercluster."
Beginning this year, those subscribers were broken out into separate
clusters. This is probably a more accurate approach, but causes direct
year-to-year comparisons to be uninformative.

**TABLE B-3**

**2005 Concentration in the National Market for Purchase of Video
Programming^(1)^**

  ----------------------- ----------------------- -----------------------
  Rank                    Company                 **Percent of
                                                  Subscribers^(2)^**

  1                       Comcast                 22.99

  2                       DirecTV                 15.72

  3                       EchoStar                12.27

  4                       Time Warner             11.69

  Top 4                                           62.67

  5                       Cox                     6.73

  6                       Charter                 6.37

  7                       Adelphia                5.50

  8                       Cablevision             3.22

  Top 8                                           84.50

  9                       Bright House            2.34

  10                      Mediacom                1.55

  Top 10                                          88.39

  **Top 25**                                      94.00

  **Top 50**                                      95.73

                          HHI                     1201^(3)^
  ----------------------- ----------------------- -----------------------

**Notes:**

(1) MSO subscriber totals as of June 2005, and reported in Top Cable
    System Operators as of March 2004, Kagan World Media, *Cable TV
    Investor,* July 29, 2004, at 16-17. There is no double counting of
    subscribers. If a cable operator is partially owned by more than one
    MSO, its subscribers are assigned to the largest MSO. Subscribers
    for DIRECTV and EchoStar are based on the company's SEC 10-Q
    filings.

(2) The total number of MVPD subscribers used to calculate the HHI is
    94,226,357 from Table B-1.

(3) The HHI is calculated on the basis of market shares for the top 65
    companies. Because all of the remaining MVPDs have very small shares
    of the market, an HHI calculation that included all cable system
    operators could only be slightly higher (no more than 2-3 points)
    than the given HHI.

    **TABLE B-4**

    **Concentration in the National Market for the Purchase of Video
    Programming**

**2002-2005**

  -------------- --------------- -------------- -------------- --------------
  **Market       **Percent of                                  
  Share**        MVPD                                          
                 Subscribers**                                 

                 2002            2003           2004           2005

  Top Share      14.75           22.69          23.37          22.99

  Top 2          29.04           35.01          35.47          38.71

  Top 3          41.03           46.63          47.34          50.99

  Top 4          50.48           55.98          57.97          62.67

  Top 10         84.44           81.95          84.72          88.39

  Top 25         90.26           87.45          90.41          94.00

  Top 50         92.05           89.29          92.32          95.73

  HHI            884             1031           1097           1201
  -------------- --------------- -------------- -------------- --------------

**Sources:**

Data for 2002 through 2004 were taken from *Reports, 2002-2004*. Data
for 2005 are from Table B-3. Reported statistics for 2004 were based on
March data since June data comparable to that used in previous years
were unavailable. For 2005, June data were available, and were used.

**APPENDIX C**

TABLE C-1

National Video Programming Services

Affiliated with One or More Cable MSO

+----------------------+------+-----------------------+---------------+
| Programming Service  | La   | MSO Ownership (%)     | Ownership by  |
|                      | unch |                       |               |
|                      | Date |                       | Other Media   |
|                      |      |                       | Entity (1)    |
+----------------------+------+-----------------------+---------------+
| **Rainbow Media      |      |                       |               |
| Group**              |      |                       |               |
+----------------------+------+-----------------------+---------------+
| American Movie       | Oct. | Cablevision (60)      |               |
| Classics (AMC)       | 84   |                       |               |
+----------------------+------+-----------------------+---------------+
| Fuse                 | Jul. | Cablevision (60)      |               |
|                      | 94   |                       |               |
+----------------------+------+-----------------------+---------------+
| Independent Film     | Sep. | Cablevision (60)      |               |
| Channel              | 94   |                       |               |
+----------------------+------+-----------------------+---------------+
| WE: Women's          | Jan. | Cablevision (60)      |               |
| Entertainment        | 97   |                       |               |
+----------------------+------+-----------------------+---------------+
| **Turner             |      |                       |               |
| Broadcasting System  |      |                       |               |
| Group**              |      |                       |               |
+----------------------+------+-----------------------+---------------+
| Boomerang            | Apr. | Time Warner (100)     |               |
|                      | 00   |                       |               |
+----------------------+------+-----------------------+---------------+
| Cartoon Network      | Oct. | Time Warner (100)     |               |
|                      | 92   |                       |               |
+----------------------+------+-----------------------+---------------+
| CNN                  | Jun. | Time Warner (100)     |               |
|                      | 80   |                       |               |
+----------------------+------+-----------------------+---------------+
| CNN En Español       | Mar. | Time Warner (100)     |               |
|                      | 97   |                       |               |
+----------------------+------+-----------------------+---------------+
| CNN Headline News    | Jan. | Time Warner (100)     |               |
|                      | 82   |                       |               |
+----------------------+------+-----------------------+---------------+
| CNN International    | Jan. | Time Warner (100)     |               |
|                      | 95   |                       |               |
+----------------------+------+-----------------------+---------------+
| TBS (Turner          | Dec. | Time Warner (100)     |               |
| Broadcasting System) | 76   |                       |               |
+----------------------+------+-----------------------+---------------+
| Turner Classic       | Apr. | Time Warner (100)     |               |
| Movies (TCM)         | 94   |                       |               |
+----------------------+------+-----------------------+---------------+
| Turner Network       | Oct. | Time Warner (100)     |               |
| Television (TNT)     | 88   |                       |               |
+----------------------+------+-----------------------+---------------+
| TNT HD               |      | Time Warner (100)     |               |
+----------------------+------+-----------------------+---------------+
| Court TV             | Jul. | Time Warner (50)      | Liberty Media |
|                      | 91   |                       |               |
+----------------------+------+-----------------------+---------------+
| **HBO Group**        |      |                       |               |
+----------------------+------+-----------------------+---------------+
| Home Box Office      | Nov. | Time Warner (100)     |               |
| (HBO)                | 72   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO 2                | Oct. | Time Warner (100)     |               |
|                      | 98   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO Comedy           | May  | Time Warner (100)     |               |
|                      | 99   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO Family           | Oct. | Time Warner (100)     |               |
|                      | 98   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO Latino           | Nov. | Time Warner (100)     |               |
|                      | 00   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO Signature        | Oct. | Time Warner (100)     |               |
|                      | 98   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO Zone             | May  | Time Warner (100)     |               |
|                      | 99   |                       |               |
+----------------------+------+-----------------------+---------------+
| HBO HD               |      | Time Warner (100)     |               |
+----------------------+------+-----------------------+---------------+
| Programming Service  | La   | MSO Ownership (%)     | Ownership by  |
|                      | unch |                       |               |
|                      | Date |                       | Other Media   |
|                      |      |                       | Entity        |
+----------------------+------+-----------------------+---------------+
| Cinemax              | Jun. | Time Warner (100)     |               |
|                      | 98   |                       |               |
+----------------------+------+-----------------------+---------------+
| Cinemax HD           |      | Time Warner (100)     |               |
+----------------------+------+-----------------------+---------------+
| Action Max           | Aug. | Time Warner (100)     |               |
|                      | 80   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| \@Max                | May  | Time Warner (100)     |               |
|                      | 01   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| 5StarMax             | May  | Time Warner (100)     |               |
|                      | 02   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| MoreMAX              | Jun. | Time Warner (100)     |               |
|                      | 98   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| OuterMax             | May  | Time Warner (100)     |               |
|                      | 01   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| Thriller Max         | Jun. | Time Warner (100)     |               |
|                      | 98   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| WMAX                 | May  | Time Warner (100)     |               |
|                      | 01   |                       |               |
| (Cinemax multiplex)  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| **Comcast Corp.      |      |                       |               |
| Networks**           |      |                       |               |
+----------------------+------+-----------------------+---------------+
| E! Entertainment     | Jun. | Comcast (60.5)        | Disney        |
|                      | 90   |                       |               |
+----------------------+------+-----------------------+---------------+
| G4 VideogameTV       | Jun. | Comcast (83.5)        | EchoStar      |
|                      | 02   |                       |               |
| (formerly G4 tech    |      |                       |               |
| TV)                  |      |                       |               |
+----------------------+------+-----------------------+---------------+
| Golf Channel         | Jan. | Comcast (99.85)       |               |
|                      | 95   |                       |               |
+----------------------+------+-----------------------+---------------+
| Outdoor Life Network | Jul. | Comcast (100)         |               |
| (OLN)                | 95   |                       |               |
+----------------------+------+-----------------------+---------------+
| Style                | Oct. | Comcast (60.5)        | Disney        |
|                      | 98   |                       |               |
+----------------------+------+-----------------------+---------------+
| TV One               | Jan. | Comcast (32.8)        | News Corp.    |
|                      | 04   |                       |               |
+----------------------+------+-----------------------+---------------+
| AZN Television       | Jul. | Comcast (100)         |               |
|                      | 90   |                       |               |
+----------------------+------+-----------------------+---------------+
| PBS Kids Sprout      | Oct. | Comcast (40)          | PBS           |
|                      | 05   |                       |               |
+----------------------+------+-----------------------+---------------+
| **Discovery          |      |                       |               |
| Communications,      |      |                       |               |
| Inc.**               |      |                       |               |
+----------------------+------+-----------------------+---------------+
| Discovery Channel    | Jun. | Cox (25), Advance     | Liberty Media |
|                      | 85   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Discovery En Español | Oct. | Cox (25), Advance     | Liberty Media |
|                      | 98   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Discovery Health     | Jul. | Cox (25), Advance     | Liberty Media |
|                      | 98   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Discovery HD Theatre | Jun. | Cox (25), Advance     | Liberty Media |
|                      | 02   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Discovery Home       | Oct. | Cox (25), Advance     | Liberty Media |
|                      | 96   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Discovery Kids       | Oct. | Cox (25), Advance     | Liberty Media |
|                      | 96   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Discovery Times      | Oct. | Cox (12.5), Advance   | Liberty Media |
|                      | 96   | Newhouse (12.5)       |               |
|                      |      |                       | New York      |
|                      |      |                       | Times         |
+----------------------+------+-----------------------+---------------+
| Animal Planet        | Oct. | Cox (25), Advance     | Liberty Media |
|                      | 96   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| BBC America          | Mar. | Cox (25), Advance     | Liberty Media |
|                      | 98   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| FiT TV               | Jan. | Cox (25), Advance     | Liberty Media |
|                      | 04   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Programming Service  | La   | MSO Ownership (%)     | Ownership by  |
|                      | unch |                       |               |
|                      | Date |                       | Other Media   |
|                      |      |                       | Entity        |
+----------------------+------+-----------------------+---------------+
| Military Channel     | Jul. | Cox (25), Advance     | Liberty Media |
|                      | 98   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| The Learning Channel | Nov. | Cox (25), Advance     | Liberty Media |
| (TLC)                | 80   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Travel Channel       | Feb. | Cox (25), Advance     | Liberty Media |
|                      | 87   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| Science Channel      | Oct. | Cox (25), Advance     | Liberty Media |
|                      | 96   | Newhouse (25)         |               |
+----------------------+------+-----------------------+---------------+
| **Joint Ventures and |      |                       |               |
| Other Vertically     |      |                       |               |
| Integrated           |      |                       |               |
| Networks**           |      |                       |               |
+----------------------+------+-----------------------+---------------+
| iN DEMAND            | Nov. | Comcast (54.1), Time  |               |
|                      | 85   | Warner (30.3), Cox    |               |
| (60 multiplexed      |      | (15.6)                |               |
| channels)            |      |                       |               |
+----------------------+------+-----------------------+---------------+
| iN DEMAND HD1        | Sep. | Comcast (54.1), Time  |               |
|                      | 03   | Warner (30.3), Cox    |               |
| (also called iNHD)   |      | (15.6)                |               |
+----------------------+------+-----------------------+---------------+
| iN DEMAND HD2        | Sep. | Comcast (54.1), Time  |               |
|                      | 03   | Warner (30.3), Cox    |               |
| (also called iNHD2)  |      | (15.6)                |               |
+----------------------+------+-----------------------+---------------+

\(1\) "Other" media entity is defined as a DBS operator, broadcast
network, or broadcast television station licensee. Liberty Media's
programming interests are listed because of Liberty's ownership interest
in News Corp.

**Sources:**

*2004 Report,* 20 FCC Rcd at 1723-1742.

Cablevision Systems Corp., *Corporate Information, Programming, Rainbow
Media*, at http://www.cablevision.com /index.jhtml?pageType=rainbow
(visited Oct. 21, 2005).

Time Warner, Inc., *Businesses, Turner Broadcasting System*, at
http://www/timewarner.com/corp/ businesses/detail/
turner_broadcasting/index.html (visited Oct. 21, 2005).

Time Warner, Inc., *Businesses, HBO. Home Box Office*, at
http://www.timewarner.com/corp/businesses/detail/hbo/ index.html
(visited Oct. 21, 2005).

Discovery Communications, Inc, *Corporate Homepage*, at
http://corporate.discovery.com (visited Oct. 21, 2005).

Discovery Holding Company, *Investor Relations Home*, at
http://ir.discoveryholding.com/phoenix.zhtml?c=191960 &p=irol=irhome
(visited Nov. 3, 2005).

Discovery Communications Inc., *Discovery Communications Forms Global
New Media Group* (press release), Oct. 24, 2005).

Discovery Communications Inc., *Shareholders*, at
http://corporate.discovery.com/finance/shareholders.html (visited Nov.
1, 2005).

Liberty Media Corporation, *Investor Relations -- Investments*, at
http://www.libertymedia.com/ir/asset_list.htm (visited Nov. 3, 2005).

Comcast Corp., *Comcast Press Room -- Comcast Companies*, at
http://www.cmcsk.com/phoenix.zhtml?c=147565& p=irol-companies (visited
Oct. 20, 2005).

Comcast Corp., *SEC Filing 10-K for the Year-Ended Dec. 31, 2004*, at 8.

Comcast Corp., *SEC Filing 10-Q for the Quarter-Ended Feb. 23, 2005*, at
8.

MLSnet.com, *Order the MLS Direct Kick Package Available on DIRECTV,
Dish Network, Digital Cable via iN DEMAND*, at
http://www.mlsnet.com/MLS/schedule/tv.jsp (visited Oct. 20, 2005).

Ovation -- The Arts Network, *Ovation Info, Mission Statement*, at
http://www.ovationtv.com/about/missionst.asp (visited Oct. 21, 2005).

TVOne, *TV One Launches in Key Markets in Summer 2005* (press release),
July 25, 2005.

*Applications for Consent to the Assignment and/or Transfer of Control
of Licenses, Adelphia Communications Corporation, Assignors, to Time
Warner Cable Inc., Assignees; Adelphia Communications Corporation,
Assignors and Transferors, to Comcast Corporation, Assignees and
Transferees; Comcast Corporation, Transferor, to Time Warner Inc.,
Transferee; Time Warner Inc., Transferor, to Comcast Corporation,
Transferee*, Applications and Public Interest Statement, MB Docket No.
05-192 (filed May 18, 2005), at 9-11, 12, 15-18.

Letter from Arthur H. Harding, counsel for Time Warner Inc., to Marlene
H. Dortch, Secretary, FCC, MB Docket No. 05-192 (Oct. 21, 2005), at 1-5.

**TABLE C-2**

National Video Programming Services

Not Affiliated with a Cable MSO

(By Affiliation)

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  | (1)                     |
+------------------------------------+-------+-------------------------+
| A&E (Arts & Entertainment)         | Feb.  | Disney, NBC-Universal,  |
|                                    | 84    | Hearst                  |
+------------------------------------+-------+-------------------------+
| ABC Family                         | Apr.  | Disney                  |
|                                    | 77    |                         |
+------------------------------------+-------+-------------------------+
| America\'s Store                   | Sep.  |                         |
|                                    | 86    |                         |
+------------------------------------+-------+-------------------------+
| American Life (formerly Goodlife   | Feb.  |                         |
| Television Network)                | 85    |                         |
+------------------------------------+-------+-------------------------+
| Angel One                          |       | Dominion Video          |
|                                    |       | Satellite               |
+------------------------------------+-------+-------------------------+
| Angel Two                          |       | Dominion Video          |
|                                    |       | Satellite               |
+------------------------------------+-------+-------------------------+
| Anime Network                      | Dec.  |                         |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| Auction Network                    |       |                         |
+------------------------------------+-------+-------------------------+
| Black Entertainment Television     | Jan.  | Viacom                  |
| (BET)                              | 80    |                         |
+------------------------------------+-------+-------------------------+
| BET Gospel                         | Jul.  | Viacom                  |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| BET Hip Hop                        | Jul.  | Viacom                  |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| BET on Jazz                        | Jan.  | Viacom                  |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Beauty & Fashion                   |       |                         |
+------------------------------------+-------+-------------------------+
| Biography Channel                  | Nov.  | Disney, NBC-Universal,  |
|                                    | 98    | Hearst                  |
+------------------------------------+-------+-------------------------+
| Black Family Channel               | Nov.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Bloomberg Television               | Jan.  |                         |
|                                    | 95    |                         |
+------------------------------------+-------+-------------------------+
| B Mania                            | Nov.  |                         |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| Bravo                              | Dec.  | NBC-Universal           |
|                                    | 80    |                         |
+------------------------------------+-------+-------------------------+
| Bridges TV                         | Nov.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Buzztime Entertainment             | 1994  |                         |
+------------------------------------+-------+-------------------------+
| BYUTV                              | Jan.  |                         |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| Catalog TV                         |       |                         |
+------------------------------------+-------+-------------------------+
| Celtic Vision                      | 1995  |                         |
+------------------------------------+-------+-------------------------+
| Church Channel                     | Jan.  | Trinity Broadcasting    |
|                                    | 02    | Network                 |
+------------------------------------+-------+-------------------------+
| Classic Arts Showcase              | May   |                         |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Country Music Television (CMT)     | Mar.  | Viacom                  |
|                                    | 83    |                         |
+------------------------------------+-------+-------------------------+
| CNBC                               | Jul.  | NBC-Universal           |
|                                    | 89    |                         |
+------------------------------------+-------+-------------------------+
| CNBC World                         | Apr.  | NBC-Universal           |
|                                    | 89    |                         |
+------------------------------------+-------+-------------------------+
| Comedy Central                     | Apr.  | Viacom                  |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| C-SPAN                             | Mar.  | \(2\)                   |
|                                    | 79    |                         |
+------------------------------------+-------+-------------------------+

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| C-SPAN2                            | Jun.  | \(2\)                   |
|                                    | 86    |                         |
+------------------------------------+-------+-------------------------+
| C-SPAN3                            | Sep.  | \(2\)                   |
|                                    | 97    |                         |
+------------------------------------+-------+-------------------------+
| CSTV (College Sports Television)   | Apr.  | Viacom                  |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Colours TV                         | Dec.  |                         |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Cornerstone Television             | Apr.  |                         |
|                                    | 79    |                         |
+------------------------------------+-------+-------------------------+
| Current TV                         | Aug.  |                         |
|                                    | 05    |                         |
+------------------------------------+-------+-------------------------+
| Daystar Television Network         | Dec.  | Daystar Television      |
|                                    | 98    | Network                 |
+------------------------------------+-------+-------------------------+
| Deep Dish TV                       | Jan.  |                         |
|                                    | 86    |                         |
+------------------------------------+-------+-------------------------+
| Disney Channel                     | Apr.  | Disney                  |
|                                    | 83    |                         |
+------------------------------------+-------+-------------------------+
| DIY (Do-It-Yourself Network)       | Dec.  | EW Scripps              |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Encore                             | Apr.  | Liberty Media           |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| Encore HD                          | Mar.  | Liberty Media           |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Encore Action                      | Sep.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Encore Drama                       | 1994  | Liberty Media           |
+------------------------------------+-------+-------------------------+
| Encore Love                        | Jul.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Encore Mystery                     | Jul.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Encore WAM!                        | Sep.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Encore Westerns                    | Jul.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Epic Sports                        | 2005  |                         |
+------------------------------------+-------+-------------------------+
| ESPN                               | Sep.  | Disney, Hearst          |
|                                    | 79    |                         |
+------------------------------------+-------+-------------------------+
| ESPN Classic                       | May   | Disney, Hearst          |
|                                    | 95    |                         |
+------------------------------------+-------+-------------------------+
| ESPN2                              | Oct.  | Disney, Hearst          |
|                                    | 93    |                         |
+------------------------------------+-------+-------------------------+
| ESPN HD                            | Mar.  | Disney, Hearst          |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| ESPNews                            | Nov.  | Disney, Hearst          |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| ESPN2 HD                           |       | Disney, Hearst          |
+------------------------------------+-------+-------------------------+
| ESPNU                              | Mar.  | Disney, Hearst          |
|                                    | 05    |                         |
+------------------------------------+-------+-------------------------+
| Eternal Word Television Network    | Aug.  |                         |
| (EWTN)                             | 81    |                         |
+------------------------------------+-------+-------------------------+
| Faith Television Network           | Jul.  |                         |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| Familyland Television Network      | Nov.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Family Net                         | May   |                         |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| Fine Living                        | Mar.  | EW Scripps              |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| Flix (a Showtime Network)          | Aug.  | Viacom                  |
|                                    | 92    |                         |
+------------------------------------+-------+-------------------------+
| Food Network                       | Nov.  | EW Scripps              |
|                                    | 93    |                         |
+------------------------------------+-------+-------------------------+
| Fox Movie Channel                  | Nov.  | News Corp.              |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Fox News Channel                   | Oct.  | News Corp.              |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Fox Reality                        | May   | News Corp.              |
|                                    | 05    |                         |
+------------------------------------+-------+-------------------------+
| Fox Sports Net                     | Nov.  | News Corp.              |
|                                    | 97    |                         |
+------------------------------------+-------+-------------------------+
| Fox Soccer Channel (formerly Fox   | Nov.  | News Corp.              |
| Sports World)                      | 97    |                         |
+------------------------------------+-------+-------------------------+
| FX                                 | Jun.  | News Corp.              |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Fuel                               | Jul.  | News Corp.              |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Free Speech TV (FSTV)              | Jun.  |                         |
|                                    | 95    |                         |
+------------------------------------+-------+-------------------------+
| Game Show Network (GSN)            | Dec.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Golden Eagle Broadcasting          | Nov.  |                         |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| Great American Country             | Dec.  | EW Scripps              |
|                                    | 95    |                         |
+------------------------------------+-------+-------------------------+
| Good Samaritan Network             | 2000  |                         |
+------------------------------------+-------+-------------------------+
| Guardian Television Network        | 1976  |                         |
+------------------------------------+-------+-------------------------+
| Hallmark Channel                   | Sep.  | Liberty Media           |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| Hallmark Movie Channel             | Jan.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| HDNET                              | Sep.  |                         |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| HDNET Movies                       | Jan.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Healthy Living Channel             | Jan.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Here! TV                           | Oct.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| History Channel                    | Jan.  | Disney, NBC-Universal,  |
|                                    | 95    | Hearst                  |
+------------------------------------+-------+-------------------------+
| History International              | Nov.  | Disney, NBC-Universal,  |
|                                    | 98    | Hearst                  |
| (also called History Channel       |       |                         |
| International)                     |       |                         |
+------------------------------------+-------+-------------------------+
| Home & Garden Television (HGTV)    | Dec.  | EW Scripps              |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Home Shopping Network (HSN)        | Jul.  |                         |
|                                    | 85    |                         |
+------------------------------------+-------+-------------------------+
| Home Preview Channel               |       |                         |
+------------------------------------+-------+-------------------------+
| Horse Racing TV                    | Dec.  |                         |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| Hot Net (also called The Hot       | Mar.  |                         |
| Network)                           | 99    |                         |
+------------------------------------+-------+-------------------------+
| Hot Net Plus                       | 2001  |                         |
+------------------------------------+-------+-------------------------+
| Hot Zone                           | Mar.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Hustler TV                         | Apr.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| i - Independent Television         | Aug.  | NBC-Universal, Paxson   |
| (formerly PaxTV)                   | 98    |                         |
+------------------------------------+-------+-------------------------+
| ImaginAsian TV                     | Aug.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Inspirational Life Television      | Jun.  |                         |
| (I-LIFETV)                         | 98    |                         |
+------------------------------------+-------+-------------------------+
| Inspirational Network (INSP)       | Apr.  |                         |
|                                    | 90    |                         |
+------------------------------------+-------+-------------------------+
| i Shop TV                          | Feb.  |                         |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| JCTV                               | Nov.  | Trinity Broadcasting    |
|                                    | 02    | Network                 |
+------------------------------------+-------+-------------------------+

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Jewelry Television                 | Oct.  |                         |
|                                    | 93    |                         |
+------------------------------------+-------+-------------------------+
| KTV -- Kids and Teens Television   |       | Dominion Video          |
|                                    |       | Satellite               |
+------------------------------------+-------+-------------------------+
| Liberty Channel                    | Sep.  |                         |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Lifetime Movie Network             | Jul.  | Disney, Hearst          |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| Lifetime Real Women                | Aug.  | Disney, Hearst          |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Lifetime Television                | Feb.  | Disney, Hearst          |
|                                    | 84    |                         |
+------------------------------------+-------+-------------------------+
| Link TV                            | Nov.  |                         |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Logo                               | Jun.  | Viacom                  |
|                                    | 05    |                         |
+------------------------------------+-------+-------------------------+
| Mav TV - Mav'rick Entertainment    | Oct.  |                         |
| Network                            | 04    |                         |
+------------------------------------+-------+-------------------------+
| Mall TV (also called Outlet Mall   |       |                         |
| TV)                                |       |                         |
+------------------------------------+-------+-------------------------+
| Men's Channel                      | Jan.  |                         |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Military History Channel           | Apr.  | Disney, NBC-Universal,  |
|                                    | 05    | Hearst                  |
+------------------------------------+-------+-------------------------+
| MoviePlex                          | Oct.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| MSNBC                              | Jul.  | NBC-Universal           |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| MTV Hits                           | May   | Viacom                  |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| MTV Jams                           | May   | Viacom                  |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| MTV                                | Aug.  | Viacom                  |
|                                    | 81    |                         |
+------------------------------------+-------+-------------------------+
| MTV 2                              | Dec.  | Viacom                  |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| NASA Television                    | Jul.  |                         |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| National Geographic Channel        | Jan.  | News Corp.              |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| NBA TV                             | Nov.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| NFL Network                        | Nov.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Nick 2 (also called Nick Too)      | May   | Viacom                  |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| Nickelodeon-Games & Sports (also   | Mar.  | Viacom                  |
| called GAS)                        | 99    |                         |
+------------------------------------+-------+-------------------------+
| Nickelodeon/Nick at Nite           | Apr.  | Viacom                  |
|                                    | 79    |                         |
+------------------------------------+-------+-------------------------+
| Nicktoons                          | Jan.  | Viacom                  |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Noggin/The N                       | Feb.  | Viacom                  |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Oasis TV                           | Sep.  |                         |
|                                    | 97    |                         |
+------------------------------------+-------+-------------------------+
| Ovation: The Arts Network          | Apr.  | New York Times (6)      |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Oxygen                             | Feb.  | \(3\)                   |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| Outdoor Channel                    | Apr.  |                         |
|                                    | 93    |                         |
+------------------------------------+-------+-------------------------+
| Outdoor Channel 2HD                |       |                         |
+------------------------------------+-------+-------------------------+
| Pentagon Channel                   | May   |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Playboy TV                         | Nov.  |                         |
|                                    | 82    |                         |
+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Playgirl TV                        | Mar.  |                         |
|                                    | 05    |                         |
+------------------------------------+-------+-------------------------+
| Pleasure                           | Jun.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| PIN (Product Information Network)  | Apr.  |                         |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| QTN (Q Television Network)         | Jul.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| QVC                                | Nov.  | Liberty Media           |
|                                    | 86    |                         |
+------------------------------------+-------+-------------------------+
| Research Channel                   | 2000  |                         |
+------------------------------------+-------+-------------------------+
| RFD TV                             |       |                         |
+------------------------------------+-------+-------------------------+
| Safe TV                            |       |                         |
+------------------------------------+-------+-------------------------+
| Sci-Fi Channel                     | Sep.  | NBC-Universal           |
|                                    | 92    |                         |
+------------------------------------+-------+-------------------------+
| Shop at Home                       | Jun.  | EW Scripps              |
|                                    | 86    |                         |
+------------------------------------+-------+-------------------------+
| Shop NBC                           | Oct.  | NBC-Universal           |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| Short TV                           | Jan.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Showtime                           | Jul.  | Viacom                  |
|                                    | 76    |                         |
+------------------------------------+-------+-------------------------+
| Showtime HD                        |       | Viacom                  |
+------------------------------------+-------+-------------------------+
| Showtime Beyond                    | Sep.  | Viacom                  |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Showtime PPV                       | 1979  | Viacom                  |
|                                    |       |                         |
| (formerly Showtime Event           |       |                         |
| Television, SET)                   |       |                         |
+------------------------------------+-------+-------------------------+
| Showtime Extreme                   | 1998  | Viacom                  |
+------------------------------------+-------+-------------------------+
| Showtime Family (also called       | Mar.  | Viacom                  |
| Showtime Family Zone)              | 01    |                         |
+------------------------------------+-------+-------------------------+
| Showtime Next                      | Mar.  | Viacom                  |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Showtime Showcase                  | Jul.  | Viacom                  |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Showtime Too                       | 2001  | Viacom                  |
+------------------------------------+-------+-------------------------+
| Showtime Women                     | Mar.  | Viacom                  |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| SOAPNet                            | Jan.  | Disney                  |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| Speed Channel                      | Jan.  | News Corp.              |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Spice 1                            | May   |                         |
|                                    | 89    |                         |
+------------------------------------+-------+-------------------------+
| Spice 2                            | 1999  |                         |
+------------------------------------+-------+-------------------------+
| A Taste of Spice                   |       |                         |
+------------------------------------+-------+-------------------------+
| Spice Platinum (formerly Vivid TV) | 2000  |                         |
+------------------------------------+-------+-------------------------+
| Spice HD                           | 2004  |                         |
+------------------------------------+-------+-------------------------+
| Spice Live                         | 2003  |                         |
+------------------------------------+-------+-------------------------+
| Spice Hot                          | 2002  |                         |
+------------------------------------+-------+-------------------------+
| Spice Ultimate                     | 2004  |                         |
+------------------------------------+-------+-------------------------+
| Spike TV                           | Mar.  | Viacom                  |
|                                    | 83    |                         |
+------------------------------------+-------+-------------------------+
| SPIRIT Television                  |       |                         |
+------------------------------------+-------+-------------------------+

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Sportsman Channel                  | Apr.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Starz!                             | Mar.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Starz! Cinema                      | May   | Liberty Media           |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Starz! Kids & Family               | May   | Liberty Media           |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Starz! HD                          | Dec.  | Liberty Media           |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Starz! Comedy                      | Mar.  | Liberty Media           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Starz! Edge                        | Mar.  | Liberty Media           |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Starz! In Black (formerly Black    | Feb.  | Liberty Media           |
| Starz!)                            | 97    |                         |
+------------------------------------+-------+-------------------------+
| Stuff TV                           |       |                         |
+------------------------------------+-------+-------------------------+
| Sundance Channel                   | Feb.  | Viacom, NBC-Universal   |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Trinity Broadcasting Network (TBN) | May   | Trinity Broadcasting    |
|                                    | 73    | Network                 |
+------------------------------------+-------+-------------------------+
| TBN Enlace USA                     | May   | Trinity Broadcasting    |
|                                    | 02    | Network                 |
+------------------------------------+-------+-------------------------+
| Three Angels Broadcasting Network  | Nov.  |                         |
|                                    | 86    |                         |
+------------------------------------+-------+-------------------------+
| The Erotic Network (TeN)           | Sep.  |                         |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| TeN Blox                           | Jan.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| TeN Blue                           | Jan.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| TeN Clips                          | May   |                         |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| TeN Xtasy                          | Feb.  |                         |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| The Tennis Channel                 | May   |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| The Movie Channel (TMC)            | Dec.  | Viacom                  |
|                                    | 79    |                         |
+------------------------------------+-------+-------------------------+
| TMC HD                             | Dec.  | Viacom                  |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| TMC XTRA                           | 1997  | Viacom                  |
+------------------------------------+-------+-------------------------+
| Toon Disney                        | Apr.  | Disney                  |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| Total Living Network               |       |                         |
+------------------------------------+-------+-------------------------+
| TR!O (5)                           | Sep.  | NBC-Universal           |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| TVU/TVU Live                       |       |                         |
+------------------------------------+-------+-------------------------+
| TV Games Network -- TVG            | Jul.  | News Corp.              |
| Interactive Horse Racing           | 94    |                         |
+------------------------------------+-------+-------------------------+
| TV Guide Channel                   | Jan.  | News Corp.              |
|                                    | 88    |                         |
+------------------------------------+-------+-------------------------+
| TV Guide Interactive               | Oct.  | News Corp.              |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| TV Land                            | Apr.  | Viacom                  |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| TVN Entertainment PPV              | Feb.  |                         |
|                                    | 98    |                         |
| (previously 33 PPV networks, now 1 |       |                         |
| PPV network)                       |       |                         |
+------------------------------------+-------+-------------------------+
| Universal HD (formerly Bravo HD+)  | Dec.  | NBC-Universal           |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| USA Network                        | Apr.  | NBC-Universal           |
|                                    | 80    |                         |
+------------------------------------+-------+-------------------------+
| VH1                                | Jan.  | Viacom                  |
|                                    | 85    |                         |
+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| VH1 Classic                        | May   | Viacom                  |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| VH1 Soul                           | Aug.  | Viacom                  |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| VH1 Country                        | Aug.  | Viacom                  |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| VTV: Varsity Television            | Jan.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Weather Channel                    | May   | Landmark Communications |
|                                    | 82    |                         |
+------------------------------------+-------+-------------------------+
| Weatherscan Local                  | Oct.  | Landmark Communications |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Weather Plus                       |       | NBC-Universal           |
+------------------------------------+-------+-------------------------+
| WGN Superstation                   | Nov.  | Tribune Company         |
|                                    | 78    |                         |
+------------------------------------+-------+-------------------------+
| Wisdom Television                  | Jul.  |                         |
|                                    | 97    |                         |
+------------------------------------+-------+-------------------------+
| The Word Network                   | Feb.  |                         |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| The Worship Network                | 1992  |                         |
+------------------------------------+-------+-------------------------+
| World Harvest Television           | Aug.  |                         |
|                                    | 92    |                         |
+------------------------------------+-------+-------------------------+
| Xy.tv                              | Dec.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| **Spanish Language**               |       |                         |
|                                    |       |                         |
| **Spanish/Latin American           |       |                         |
| Cultures**                         |       |                         |
+------------------------------------+-------+-------------------------+
| AYM Sports                         | Nov.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Bandamax                           | May   | Univision               |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Azteca America                     | Aug.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Canal 24 Horas                     | Jun.  |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Cine Latino                        | Jun.  |                         |
|                                    | 94    |                         |
+------------------------------------+-------+-------------------------+
| Canal 52 MX                        |       |                         |
+------------------------------------+-------+-------------------------+
| Canal Sur                          |       |                         |
+------------------------------------+-------+-------------------------+
| Casa Club                          | Jul.  |                         |
|                                    | 97    |                         |
+------------------------------------+-------+-------------------------+
| Caracol TV                         |       |                         |
+------------------------------------+-------+-------------------------+
| CCTV-E&F                           |       |                         |
+------------------------------------+-------+-------------------------+
| Centroamerica TV                   |       |                         |
+------------------------------------+-------+-------------------------+
| CNC Columbia                       | May   |                         |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| De Pelicula                        | May   | Univision               |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| De Pelicula Clasico                | May   | Univision               |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| ESPN Deportes                      | Jan.  | Disney, Hearst          |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Ecuavisa Internacional             |       |                         |
+------------------------------------+-------+-------------------------+
| EWTN en Español                    |       |                         |
+------------------------------------+-------+-------------------------+
| Fox Sports en Español              | Nov.  | News Corp.              |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| HITN                               | Jul.  |                         |
|                                    | 87    |                         |
+------------------------------------+-------+-------------------------+
| Galavision                         | Oct.  | Univision               |
|                                    | 79    |                         |
+------------------------------------+-------+-------------------------+

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Gol TV                             | Mar.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Mexicanal                          |       |                         |
+------------------------------------+-------+-------------------------+
| Grandes Documentales               | 1996  |                         |
+------------------------------------+-------+-------------------------+
| MTV Español                        | Aug.  | Viacom                  |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| Mun2                               | Oct.  | NBC-Universal           |
|                                    | 01    |                         |
+------------------------------------+-------+-------------------------+
| Once Mexico                        |       |                         |
+------------------------------------+-------+-------------------------+
| History Channel en Español         | May   | Disney, NBC-Universal,  |
|                                    | 04    | Hearst                  |
+------------------------------------+-------+-------------------------+
| Playboy en Español                 |       |                         |
+------------------------------------+-------+-------------------------+
| Ritmoson Latino                    | May   | Univision               |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Puma TV                            | 1997  |                         |
+------------------------------------+-------+-------------------------+
| HTV (Hispanic TV)                  | Aug.  |                         |
|                                    | 95    |                         |
+------------------------------------+-------+-------------------------+
| La Familia Network                 | May   |                         |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| SiTV                               | Feb.  | \(4\)                   |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Sorpressa                          | Mar.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Sur                                | Aug.  |                         |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| Telefe Internacional               | Apr.  | Univision               |
|                                    | 90    |                         |
+------------------------------------+-------+-------------------------+
| Telefutura                         | Jan.  | Univision               |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| Telehit                            | May   | Univision               |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Telemundo                          | Jan.  | NBC-Universal           |
|                                    | 87    |                         |
+------------------------------------+-------+-------------------------+
| Telemundo Puerto Rico              | Mar.  | NBC-Universal           |
|                                    | 00    |                         |
+------------------------------------+-------+-------------------------+
| Toon Disney en Español             |       | Disney                  |
+------------------------------------+-------+-------------------------+
| TV Internacional                   | 2003  |                         |
+------------------------------------+-------+-------------------------+
| Univision                          | Sep.  | Univision               |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| Utilisima                          | Mar.  |                         |
|                                    | 96    |                         |
+------------------------------------+-------+-------------------------+
| VH Uno                             | Nov.  | Viacom                  |
|                                    | 99    |                         |
+------------------------------------+-------+-------------------------+
| Mexico 22                          |       |                         |
+------------------------------------+-------+-------------------------+
| NDTV Color Vision                  |       |                         |
+------------------------------------+-------+-------------------------+
| Sur Peru                           |       |                         |
+------------------------------------+-------+-------------------------+
| Television Española Internacional  |       |                         |
+------------------------------------+-------+-------------------------+
| TV Chile                           |       |                         |
+------------------------------------+-------+-------------------------+
| TV Columbia                        |       |                         |
+------------------------------------+-------+-------------------------+
| TyC Sports                         |       |                         |
+------------------------------------+-------+-------------------------+
| Video Rola                         | 1998  |                         |
+------------------------------------+-------+-------------------------+
| WAPA America                       |       |                         |
+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| **Chinese**                        |       |                         |
+------------------------------------+-------+-------------------------+
| CCTV-4 (China Central Television)  | 1995  |                         |
+------------------------------------+-------+-------------------------+
| CTI Zhong Tian Channel             | 1995  |                         |
+------------------------------------+-------+-------------------------+
| ATV Home Channel America           |       |                         |
+------------------------------------+-------+-------------------------+
| Beijing TV                         |       |                         |
+------------------------------------+-------+-------------------------+
| CCTV-9                             |       |                         |
+------------------------------------+-------+-------------------------+
| CCTV                               |       |                         |
+------------------------------------+-------+-------------------------+
| CCTV Entertainment                 |       |                         |
+------------------------------------+-------+-------------------------+
| CCTV Opera                         |       |                         |
+------------------------------------+-------+-------------------------+
| China Movie Channel                |       |                         |
+------------------------------------+-------+-------------------------+
| CYRTV                              |       |                         |
+------------------------------------+-------+-------------------------+
| Dragon TV                          | Oct.  |                         |
|                                    | 03    |                         |
+------------------------------------+-------+-------------------------+
| Fujian Southeast TV                |       |                         |
+------------------------------------+-------+-------------------------+
| Guandog Southern TV                |       |                         |
+------------------------------------+-------+-------------------------+
| Hunan Satellite TV                 |       |                         |
+------------------------------------+-------+-------------------------+
| Jiangsu International Channel      |       |                         |
+------------------------------------+-------+-------------------------+
| Pacvia TV                          |       |                         |
+------------------------------------+-------+-------------------------+
| Phoenix Info News                  |       | News Corp.              |
+------------------------------------+-------+-------------------------+
| Phoenix North American Chinese     |       | News Corp.              |
| Channel                            |       |                         |
+------------------------------------+-------+-------------------------+
| CTS                                |       |                         |
+------------------------------------+-------+-------------------------+
| CTV                                |       |                         |
+------------------------------------+-------+-------------------------+
| PTS                                |       |                         |
+------------------------------------+-------+-------------------------+
| TTV                                |       |                         |
+------------------------------------+-------+-------------------------+
| Videoland                          |       |                         |
+------------------------------------+-------+-------------------------+
| The Jade Channel                   |       |                         |
+------------------------------------+-------+-------------------------+
| Jadeworld Super                    |       |                         |
+------------------------------------+-------+-------------------------+
| TVBS                               |       |                         |
+------------------------------------+-------+-------------------------+
| The Chinese Movie Channel          |       |                         |
+------------------------------------+-------+-------------------------+
| The Chinese Channel                | Dec   |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Chinese Prime                      |       |                         |
+------------------------------------+-------+-------------------------+
| Chinese Cinema                     |       |                         |
+------------------------------------+-------+-------------------------+
| ET China                           |       |                         |
+------------------------------------+-------+-------------------------+
| ET Drama                           |       |                         |
+------------------------------------+-------+-------------------------+
| ET Global                          |       |                         |
+------------------------------------+-------+-------------------------+

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| ET News                            |       |                         |
+------------------------------------+-------+-------------------------+
| JET TV International               |       |                         |
+------------------------------------+-------+-------------------------+
| YoYo TV                            |       |                         |
+------------------------------------+-------+-------------------------+
| **Korean**                         |       |                         |
+------------------------------------+-------+-------------------------+
| MBC (Munhwa Broadcasting Corp.)    | 2002  |                         |
+------------------------------------+-------+-------------------------+
| tvK 24 (Korean)                    | Sep.  |                         |
|                                    | 04    |                         |
+------------------------------------+-------+-------------------------+
| Arirang TV                         |       |                         |
+------------------------------------+-------+-------------------------+
| JSTV                               |       |                         |
+------------------------------------+-------+-------------------------+
| KBS World                          |       |                         |
+------------------------------------+-------+-------------------------+
| MBN                                |       |                         |
+------------------------------------+-------+-------------------------+
| Korean Channel                     |       |                         |
+------------------------------------+-------+-------------------------+
| Media Korea                        |       |                         |
+------------------------------------+-------+-------------------------+
| **Tagalog-Filipino**               |       |                         |
+------------------------------------+-------+-------------------------+
| Filipino Channel                   | Feb.  |                         |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| The Mabuahy Channel                |       |                         |
+------------------------------------+-------+-------------------------+
| GMA Pinoy                          |       |                         |
+------------------------------------+-------+-------------------------+
| ABS-CBN News Channel               |       |                         |
+------------------------------------+-------+-------------------------+
| Cinema One Global                  |       |                         |
+------------------------------------+-------+-------------------------+
| Pinoy Central TV                   |       |                         |
+------------------------------------+-------+-------------------------+
| **South Asian**                    |       |                         |
+------------------------------------+-------+-------------------------+
| Saigon Broadcasting Television     | Feb.  |                         |
| Network                            | 02    |                         |
+------------------------------------+-------+-------------------------+
| TV Asia                            | Jul.  |                         |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| AAJTAK                             |       |                         |
+------------------------------------+-------+-------------------------+
| B4U                                |       |                         |
+------------------------------------+-------+-------------------------+
| Headlines Today                    |       |                         |
+------------------------------------+-------+-------------------------+
| Sahara One                         |       |                         |
+------------------------------------+-------+-------------------------+
| Sahara Samay                       |       |                         |
+------------------------------------+-------+-------------------------+
| Set Max                            |       |                         |
+------------------------------------+-------+-------------------------+
| Sony Entertainment Television Asia |       |                         |
+------------------------------------+-------+-------------------------+
| Zee Cinema                         |       |                         |
+------------------------------------+-------+-------------------------+
| Alpha ETC Punjabi                  |       |                         |
+------------------------------------+-------+-------------------------+
| Gemini TV                          |       |                         |
+------------------------------------+-------+-------------------------+
| Channel-I                          |       |                         |
+------------------------------------+-------+-------------------------+
| Star Plus                          |       | News Corp.              |
+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Star One                           |       | News Corp.              |
+------------------------------------+-------+-------------------------+
| Star News                          |       | News Corp.              |
+------------------------------------+-------+-------------------------+
| MTV Desi                           |       |                         |
+------------------------------------+-------+-------------------------+
| Vijay                              |       | News Corp.              |
+------------------------------------+-------+-------------------------+
| Sun TV (International)             |       |                         |
+------------------------------------+-------+-------------------------+
| EAASTHA Broadcasting Network       |       |                         |
+------------------------------------+-------+-------------------------+
| NTV Bangla                         |       |                         |
+------------------------------------+-------+-------------------------+
| ETV Gujarati                       |       |                         |
+------------------------------------+-------+-------------------------+
| ETV Telegu                         |       |                         |
+------------------------------------+-------+-------------------------+
| Bangladesh Channel                 |       |                         |
+------------------------------------+-------+-------------------------+
| American Desi                      |       |                         |
+------------------------------------+-------+-------------------------+
| South Asian World                  |       |                         |
+------------------------------------+-------+-------------------------+
| Surya TV                           |       |                         |
+------------------------------------+-------+-------------------------+
| Tara Muzik                         |       |                         |
+------------------------------------+-------+-------------------------+
| Teja TV                            |       |                         |
+------------------------------------+-------+-------------------------+
| Zee Gujarati                       |       |                         |
+------------------------------------+-------+-------------------------+
| Kairali TV                         |       |                         |
+------------------------------------+-------+-------------------------+
| KTV                                |       |                         |
+------------------------------------+-------+-------------------------+
| ZEE TV                             | 1999  |                         |
+------------------------------------+-------+-------------------------+
| **Japanese**                       |       |                         |
+------------------------------------+-------+-------------------------+
| TV Japan                           | Jul.  |                         |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| **Urdu**                           |       |                         |
+------------------------------------+-------+-------------------------+
| Ary Digital                        |       |                         |
+------------------------------------+-------+-------------------------+
| Ary One                            |       |                         |
+------------------------------------+-------+-------------------------+
| GeoTV                              |       |                         |
+------------------------------------+-------+-------------------------+
| PTV Prime                          |       |                         |
+------------------------------------+-------+-------------------------+
| **Middle Eastern Language and      |       |                         |
| Culture**                          |       |                         |
+------------------------------------+-------+-------------------------+
| National Iranian Television (NITV) | 2003  |                         |
+------------------------------------+-------+-------------------------+
| ART (Arab Radio & Television       | 1999  |                         |
| America)                           |       |                         |
+------------------------------------+-------+-------------------------+
| Rang-a-Rang (Iranian)              | 2003  |                         |
+------------------------------------+-------+-------------------------+
| ANA Television Network (Iranian)   | Dec.  |                         |
|                                    | 91    |                         |
+------------------------------------+-------+-------------------------+
| ART Movies                         |       |                         |
+------------------------------------+-------+-------------------------+
| ART Music                          |       |                         |
+------------------------------------+-------+-------------------------+
| Al Arabiaya                        |       |                         |
+------------------------------------+-------+-------------------------+

+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| Al Jazeera                         |       |                         |
+------------------------------------+-------+-------------------------+
| Al Zikr                            |       |                         |
+------------------------------------+-------+-------------------------+
| Dubia Satellite Channel            |       |                         |
+------------------------------------+-------+-------------------------+
| ESC-1\`                            |       |                         |
+------------------------------------+-------+-------------------------+
| Future TV                          |       |                         |
+------------------------------------+-------+-------------------------+
| Kuwait TV                          |       |                         |
+------------------------------------+-------+-------------------------+
| LBC                                |       |                         |
+------------------------------------+-------+-------------------------+
| Middle East Broadcasting Company   |       |                         |
+------------------------------------+-------+-------------------------+
| NBN                                |       |                         |
+------------------------------------+-------+-------------------------+
| New TV                             |       |                         |
+------------------------------------+-------+-------------------------+
| Nile Drama                         |       |                         |
+------------------------------------+-------+-------------------------+
| Melody Arabia                      |       |                         |
+------------------------------------+-------+-------------------------+
| IQRAA                              |       |                         |
+------------------------------------+-------+-------------------------+
| Noursat                            |       |                         |
+------------------------------------+-------+-------------------------+
| National Iranian Television        |       |                         |
+------------------------------------+-------+-------------------------+
| **Farsi**                          |       |                         |
+------------------------------------+-------+-------------------------+
| NITV (Farsi)                       |       |                         |
+------------------------------------+-------+-------------------------+
| Channel One Television             |       |                         |
+------------------------------------+-------+-------------------------+
| T2                                 |       |                         |
+------------------------------------+-------+-------------------------+
| Tapesh                             |       |                         |
+------------------------------------+-------+-------------------------+
| **Hebrew**                         |       |                         |
+------------------------------------+-------+-------------------------+
| The Israeli Network                |       |                         |
+------------------------------------+-------+-------------------------+
| **Polish**                         |       |                         |
+------------------------------------+-------+-------------------------+
| TV Polonia                         | 2003  |                         |
+------------------------------------+-------+-------------------------+
| Kino Polska                        |       |                         |
+------------------------------------+-------+-------------------------+
| Polsatz International              |       |                         |
+------------------------------------+-------+-------------------------+
| TVN 24                             |       |                         |
+------------------------------------+-------+-------------------------+
| ITVN                               |       |                         |
+------------------------------------+-------+-------------------------+
| **Armenian**                       |       |                         |
+------------------------------------+-------+-------------------------+
| Armenia TV                         |       |                         |
+------------------------------------+-------+-------------------------+
| **Russian**                        |       |                         |
+------------------------------------+-------+-------------------------+
| Channel One Russia                 | 2003  |                         |
+------------------------------------+-------+-------------------------+
| Russian TV Network of America      | Aug.  |                         |
| (RTN)                              | 00    |                         |
+------------------------------------+-------+-------------------------+
| NTV America                        |       |                         |
+------------------------------------+-------+-------------------------+
| Programming Service                | L     | Ownership by            |
|                                    | aunch |                         |
|                                    |       | "Other" Media Entity    |
|                                    | Date  |                         |
+------------------------------------+-------+-------------------------+
| RTVI                               |       |                         |
+------------------------------------+-------+-------------------------+
| RTVI Plus                          |       |                         |
+------------------------------------+-------+-------------------------+
| **Italian**                        |       |                         |
+------------------------------------+-------+-------------------------+
| RAI International                  | 1999  |                         |
+------------------------------------+-------+-------------------------+
| Leonardo World                     |       |                         |
+------------------------------------+-------+-------------------------+
| Video Italia                       |       |                         |
+------------------------------------+-------+-------------------------+
| Sky TG24                           |       |                         |
+------------------------------------+-------+-------------------------+
| **French/African**                 |       |                         |
+------------------------------------+-------+-------------------------+
| TV5 (French)                       | Jan.  |                         |
|                                    | 98    |                         |
+------------------------------------+-------+-------------------------+
| 3A Telesud                         |       |                         |
+------------------------------------+-------+-------------------------+
| Trace TV                           |       |                         |
+------------------------------------+-------+-------------------------+
| RFI                                |       |                         |
+------------------------------------+-------+-------------------------+
| ABN America                        |       |                         |
+------------------------------------+-------+-------------------------+
| AIT (African Independent           | 2003  |                         |
| Television)                        |       |                         |
+------------------------------------+-------+-------------------------+
| **German**                         |       |                         |
+------------------------------------+-------+-------------------------+
| Prosiebensal.1 Welt                |       |                         |
+------------------------------------+-------+-------------------------+
| German TV                          | Apr.  |                         |
|                                    | 02    |                         |
+------------------------------------+-------+-------------------------+
| **Greek**                          |       |                         |
+------------------------------------+-------+-------------------------+
| Antenna Satellite                  |       |                         |
+------------------------------------+-------+-------------------------+
| ERT-SAT                            |       |                         |
+------------------------------------+-------+-------------------------+
| Mega Cosmos                        |       |                         |
+------------------------------------+-------+-------------------------+
| Alter Globe                        |       |                         |
+------------------------------------+-------+-------------------------+
| Greek Channel & NGTV               |       |                         |
+------------------------------------+-------+-------------------------+
| TV Globo Internacional             |       |                         |
+------------------------------------+-------+-------------------------+
| **Portuguese**                     |       |                         |
+------------------------------------+-------+-------------------------+
| SPT                                |       |                         |
+------------------------------------+-------+-------------------------+
| Record International               |       |                         |
+------------------------------------+-------+-------------------------+
| RPTI                               |       |                         |
+------------------------------------+-------+-------------------------+
| **Multinational**                  |       |                         |
+------------------------------------+-------+-------------------------+
| SCOLA                              | Aug.  |                         |
|                                    | 87    |                         |
+------------------------------------+-------+-------------------------+

**Notes:**

\(1\) Other media entity is defined as a DBS operator, broadcast
network, or broadcast television station licensee. Liberty Media
programming interests are listed because of Liberty's ownership interest
in News Corp.

\(2\) The National Cable Satellite Corporation (C-SPAN) derives 97
percent of its revenues from affiliate fees (*i.e*., subscriber fees
from MVPDs). The remaining three percent is provided by various
investments. Affiliates have no ownership or program control interests
in C-SPAN.

\(3\) Both Charter Communications' parent company Vulcan Ventures and
Time Warner, Inc. subsidiary AOL have equity interests in Oxygen Media.
Time Warner holds more than a five percent equity share in Oxygen;
however, we have no information with regard to the voting status of that
investment. For purposes of the channel occupancy rules (47 C.F.R.
§76.504), nonvoting stock is not attributable to an MSO. For purposes of
the program access rules (47 C.F.R. §§76.1000-1200), nonvoting stock is
attributable to an MSO if the company holds more than a five percent
equity interest. *See* Vulcan Capital, *Other Portfolio Holdings*,
http://capital.vulcan.com/Template.aspx? contentId=7 (visited Nov. 2,
2005); AOL Time Warner, *Oxygen Media And AOL Time Warner Expand
Strategic Alliance*, Apr. 3, 2001; Clarity Partners, *Portfolio: Oxygen
Media*, at http://www.claritypartners.net/portfolio.html# (visited Oct.
31, 2005).

\(4\) Time Warner Investments has more than a five percent equity
interest in SiTV. However, we have no information with regard to the
voting status of that equity investment, thus we list it as
nonvertically integrated. *See* note (3); s*ee also* Time Warner Inc.,
at http://www.timewarner.com/corp/businesses/detail/tw_investments/
index.html (visited Nov. 28, 2005).

\(5\) NBC-Universal plans to migrate Trio to "online only" format in
2006. Abbey Klaasen, *Trio Cable Operation to Relaunch in Broadband
Format*, [Advertising Age]{.smallcaps}, Nov. 21, 2005.

\(6\) In the *2004 Report*, we reported that Time Warner held a 5.1
percent equity interest in Ovation. Currently, Time Warner holds less
than five percent equity in Ovation, and thus is listed as an
unaffiliated network this year. *See 2004 Report*, 20 FCC Rcd at 2875
Appendix C, Table C-1.

**Sources:**

Sky Angel Channel Lineup, at
http://www.skyangel.com/Programming/Index.asp?IdS=000B06-D4B7650&x=003\|0
01&\~= (visited Nov. 30, 2005).

A&E Television Networks,
http://www.aetv.com/global/corporate/index.jsp?NetwCode=AEN (visited
Nov. 30, 2005).

Walt Disney Company, *Company Overview*, at
http://corporate.disney.go.com/corporate/overview.html (visited Nov. 30,
2005).

HSN Interactive, LLC,
http://www.hsn.com/cnt/program_guide/default.aspx?typ=4&cm_re=C1\*AS\_
Aprilminievent_0401\*Prc... (visited Nov. 16, 2005).

American Life TV Network, at http://www.americanlifetv.com (visited Nov.
30, 2005).

Sky Angel, at
http://www.skyangel.com/Programming/Index.asp?IdS=000CC3-E9733E0&Reference=Pr
ogChanInfo&... (visited Nov. 30, 2005).

Anime Network, at http://www.theanimenetwork.com/ (visited Nov. 23,
2005).

Turner Media Group, at http://www.turnermediagroup.com (visited Nov. 26,
2005).

Viacom Cable Television, at
http://www.viacom.com/cable.jhtml;jsessionid=GMC4ZMAZQR5KQCQB AFLA4CY
(visited Nov. 23, 2005).

Viacom, SEC Filing 10-K for the year ended Dec. 31, 2004, at I-4.

Black Family Channel, at http://www.blackfamilychannel.com/about.htm
(visited Nov. 23, 2005).

Bloomberg Television, at
http://www.bloomberg.com/media/index.html?Intro=intro (visited Nov. 25,
2005).

B Mania Television Network, at http://www.bmania.tv/about.html (visited
Nov. 23, 2005).

NBC Universal Cable Networks, at
http://www.nbccableinfo.com/insidenbccable/home.html (visited Nov. 30,
2005).

BridgesTV, at http://www.bridgestv.com/home.asp (visited Nov. 29, 2005).

Buzztime Entertainment, Inc., at
http://www.buzztime.com/corp/about/index.htm (visited Oct. 26, 2005).

BYU Broadcasting, at http://www.byutu.org/about (visited Nov. 15, 2005).

Trinity Broadcasting Networks, at
http://www.tbn.org/about/images/TBN_Networks_info.pdf (Oct. 31, 2005).

Classic Arts Showcase, at http://www.classicartsshowcase.org (visited
Nov. 16, 2005).

C-SPAN, at http://www.cspan.org/about/index.asp?code=About (visited Nov.
30, 2005).

College Sports Television, at http://www.cstv.com/cstv/ (visited Nov.
30, 2005).

ColoursTV, at http://www.colourstv.com (visited Nov. 15, 2005).

Cornerstone Television, at http://www.ctvn.org/about/history.html
(visited Nov. 14, 2005).

CurrentTV, at http://www.nwitv.com (visited Oct. 28, 2005).

Daystar Television Network, at http://ww2.daystar.com/daystar/about+us
(visited Nov. 16, 2005).

Deep Dish TV, at http://www.deepdishtv.org (visited Oct. 25, 2005).

E.W. Scripps, Co., at
http://www.scripps.com/corporateoverview/businesses/index.shtml

(visited Nov. 30, 2005).

Encore TV, at
http://www.encoretv.com/appmanager/seg/e?\_nfpb=true&\_pageLabel=online_schedule

(visited Nov. 30, 2005).

Epic Sports, at http://www.epicsportstv.com (visited Nov. 30, 2005).

ESPN.com, at http://sports.espn.go.com/sports/tvlisitings/index (visited
Nov. 30, 2005).

EWTN North America, at http://www.ewtn.com/tv/G1Rgrid4.asp (visited Nov.
15, 2005).

Faith TV, at http://www.faithtelevisionnetwork.com/ (visited Nov. 30,
2005).

FamilyNet, at
http://www.familynet.com/site/c.ikITLaMXJvE/b.540545/k/CBCA/Home.htm
(visited Nov. 16, 2005).

Showtime, at http://www.sho.com/site/util/about.do (visited Nov. 30,
2005).

News Corporation Cable, at http://www.newscorp.com/operations/cable.html
(visited Nov. 30, 2005).

Free Speech TV, at http://www.freespeech,org/html/aboutus.shtml (visited
Nov. 16, 2005).

Game Show Network, at http://www.gsn.com/corporate (visited Nov. 16,
2005).

Golden Eagle Broadcasting, at http://www.golden-eagle-tv.com/ (visited
Oct. 26, 2005).

Good Samaritan Network, at http://www.good-sam.com/ (visited Nov. 30,
2005).

Guardian Television Network, at
http://www.gtn.tv/detailpage.php?body=aboutgtn.inc.php (visited Nov. 14,
2005).

Hallmark Channel, at http://www.hallmarkchannel.com/intindex.jsp
(visited Nov. 30, 2005); Hallmark Movie Channel, at
http://www.hallmarkmoviechannelc.om (visited Oct. 26, 2005).

HDNet, at http://www.hd.net/factsheet.html (visited Nov. 30, 2005).

Here!, at http://www.heretv.com.AAboutPage.php (visited Nov. 16, 2005).

Home Preview Channel, at http://www.hpctv.com/hpc_info.html (visited
Oct. 26 , 2005).

HorseRacing Television, at http://www.horseracingtv.com/aboutus.aspx
(visited Nov. 16, 2005).

Playboy Enterprises, SEC Filing 10-K for the year ended Dec. 31, 2004,
at I-5.

HustlerTV, at http://www.hustlettv.com/home_page/ppv.php (visited Nov.
16, 2005).

Independent Television, at http://www.ionline.tv/contact/faq.cfm
(visited Nov. 16, 2005).

Imaginasiantv, at http://www.apple.com/pro/video/imaginasian/ (visited
Oct. 26, 2005).

ILIFETV, at http://www.ilifetv.com/aboutus.asp (visited Nov. 16, 2005).

Inspiration Network, at http://www.insp.com/about.asp (visited Nov. 16,
2005).

Jewelry Television, at http://www.jewelrytelevision.com/ (visited Nov.
30, 2005).

Liberty Channel, at http://liberty-channel.tv/About.html (visited Oct.
26, 2005).

Lifetime Television, at http://www.lifetimetelevision.com (visited Nov.
30, 2005).

LinkTV, at http://www.worldlinktv.org/about/mission.php3 (visited Nov.
16, 2005).

MavTV, at http://www.mavtv.net/default.aspx?pageid=37 (visited Nov. 16,
2005).

Military History Channel, at http://www.historychannel.com/military/
(visited Nov. 30, 2005).

NASA TV Landing Page, at
http://www.nasa.gov/multimedia/nasatv/index.html (visited Nov. 16,
2005).

NBA TV, at http://www.nba.com/nba_tv/ (visited Nov. 16, 2005).

NFL Network, at http://www.nfl.com/nflnetwork/faq (visited Oct. 16,
2005).

Oasis TV, at http://www.oasistv.com/home.asp (visited Oct. 28, 2005).

Vulcan Capital, at http://capital.vulcan.com/Template.aspx?contentId=7
(visited Nov. 2, 2005).

AOL Time Warner, at
http://www.timewarner.com/corp/newsroom/pr/0,20812,668625,00.html
(visited Nov. 16, 2005).

Top Tech News, *Oxygen Media Draws \$100M Breath*, Dec. 4, 2000, at
http://www.toptechnews.com/

story.xhtml?story_id=5685 (visited Nov. 2, 2005).

The Outdoor Channel, Inc., at
http://outdoorchannel.com/\_innerContent.cfm?site=1&SectionID=1&
defaultContentID=146&SubSection... (visited Nov. 16, 2005).

Pentagon Channel, at http://www.pentagonchanel.mil/about.aspx (visited
Nov. 16, 2005).

Trans Digital Media, LLC., *Playgirl TV Hits The Airwaves*, Mar. 23,
2005, at http://www.tdmllc.com/ news_releases/nr_03232005.html (visited
Nov. 16, 2005).

New Frontier Media, at http://www.noof.com/business/broadcast.html
(visited Nov. 16, 2005).

Product Information Network, at http://www.pinnet.com (visited Oct. 26,
2005).

QTN, at
http://www.qtelevision.com/site/Home/AboutQTN/tabid/97/Default.aspx
(visited Nov. 16, 2005).

QVC, at http://www.qvc.com (visited Nov. 30, 2005).

Research Channel, at http://www.researchchannel.org (visited Nov. 16,
2005).

RFDTV, at http://www.rfdtv.com (visited Nov. 15, 2005).

SafeTV, at http://www.safetv.org/AboutUs.htm (visited Nov. 16, 2005).

E.W. Scripps Co., at
http://www.scripps.com/corporateoverview/businesses/retailtv/index.shtml
(visited Nov. 30, 2005).

ShortTV, at http://www.shorttv.com/flash_movie.html (visited Nov. 16,
2005).

SPIRIT Television, at http://www.spirit-television.com/aboutus.htm
(visited Nov. 14, 2005).

Starz!, at http://www.starz.com/appmanager/seg/s (visited Nov. 30,
2005).

The Sportsman Channel, at http://www.thesportsmanchannel.com/aboutus.asp
(visited Nov. 16, 2005).

Three Angels Broadcasting Network, at http://www.3abn.org/about_3abn.cfm
(visited Nov. 14, 2005).

The Tennis Channel, at http://www.thetennischannel.com (visited Nov. 30,
2005).

Total Living Network, at http://www.tln.com (visited Nov. 30, 2005).

Gemstar-TVGuide, at http://www.gemstartvguide.com/whatwedo/factsheet.asp
(visited Nov. 30, 2005).

TVN Entertainment, at http://www.tvn.com/highlight.asp?x=1&y=2&z=2
(visited Oct. 31, 2005).

TVULive, at http://tvulive.com/about.htm (visited Nov. 14, 2005).

Varsity TV, at http://www.varsitytv.com/videos/index.aspx (visited Nov.
30, 2005).

Landmark Communications, at
http://www.landmarkcom.com/businesses/index.php (visited Nov. 30, 2005).

Superstation WGN, at http://wgnsuperstation.trb.com/ (visited Nov. 30,
2005).

Wisdom TV/Radio, at
http://www.wisdomtv.com/tvrd/want_wisdom/list_providers.asp?Media=TV
(visited Nov. 15, 2005).

The Work Network, at http://www.thewordnetwork.org/corporate/php
(visited Nov. 16, 2005).

Worship.Net, at http://www.worship.net/about (visited Nov. 14, 2005).

World Harvest TV, at http://www.lesea.com/index.cfm/fa/wht (visited Nov.
16, 2005).

History Channel, at
http://www.historychannel.com/global/listings/listings_weekly.jsp?NetwCode=MHC

(visited Nov. 30, 2005).

Time Warner, Inc., Time Warner Investments, at
http://www.timewarner.com/corp/businesses/detail/tw\_ investments
/index.html (visited Oct. 31, 2005).

*Verizon Signs Spanish Language Programming Deals for FiOS TV*, PR
Newswire, Oct. 24, 2005.

TuTV, LLC, *TuTv Telehit, Ritmoson Latino, and Bandamax Ready to
Telecast ACAFEST 2005* (press release), May 12, 2005.

STAR, USA TV Schedules, at
http://www.startv.com/eng/oper_usa.cfm?schedule=true (visited Nov. 15,
2005).

International Networks, List of Channels by Language, at
http://www.internationalnetworks.com/24 hourpaychannels/default.aspx
(visited Nov. 2, 2005).

XY Partners, LP, at http://www.xy.yv (visited Nov. 16, 2005).

**TABLE C-3**

Regional Video Programming Services

By Affiliation

+----------------------------+------+----------------+----------------+
| Programming Services       | La   | MSO Ownership  | Other Media    |
|                            | unch | (%)            | Entity         |
|                            |      |                |                |
|                            | Date |                | Ownership      |
+----------------------------+------+----------------+----------------+
| Altitude Sports &          | Sep. |                |                |
| Entertainment              | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Arabic Channel             | Apr. |                |                |
|                            | 91   |                |                |
+----------------------------+------+----------------+----------------+
| Arizona News Channel       | Nov. | Cox (50)       |                |
|                            | 96   |                |                |
+----------------------------+------+----------------+----------------+
| Bay News 9                 | Sep. | Bright House   |                |
|                            | 97   |                |                |
|                            |      | (Adva          |                |
|                            |      | nced/Newhouse) |                |
+----------------------------+------+----------------+----------------+
| Boston Kids and Family     |      |                |                |
+----------------------------+------+----------------+----------------+
| Bravesvision (Atlanta)     | Jul. | Comcast (100)  |                |
|                            | 03   |                |                |
+----------------------------+------+----------------+----------------+
| California Channel         | Feb. |                |                |
|                            | 91   |                |                |
+----------------------------+------+----------------+----------------+
| Capital News 9-Albany New  |      | Time Warner    |                |
| York                       |      | (100)          |                |
+----------------------------+------+----------------+----------------+
| Central Florida News 13    | Oct. | Bright House   |                |
| (CFN 13)                   | 97   |                |                |
|                            |      | (Adva          |                |
|                            |      | nced/Newhouse) |                |
+----------------------------+------+----------------+----------------+
| ChicagoLand Television     | Jan. |                |                |
| News (CLTV)                | 93   |                |                |
+----------------------------+------+----------------+----------------+
| Chicagoland Korean TV      | 2005 |                |                |
+----------------------------+------+----------------+----------------+
| CN8-The Comcast Network    | Oct. | Comcast (100)  |                |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast Entertainment TV   | Jun. | Comcast (100)  |                |
| (Denver)                   | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast Local (Detroit)    | Aug. | Comcast (100)  |                |
|                            | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast SportsNet          | Oct. | Comcast (84.1) |                |
| (Philadelphia)             | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast SportsNet Chicago  | Oct. | Comcast (30)   |                |
|                            | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast SportsNet Mid      | Apr. | Comcast (100)  |                |
| Atlantic                   | 84   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast SportsNet West     | Nov. | Comcast (100)  |                |
|                            | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Comcast / Charter Sports   | Apr. | Comcast        |                |
| Southeast (CSS)            | 84   | (70.2),        |                |
|                            |      |                |                |
|                            |      | Charter (23)   |                |
+----------------------------+------+----------------+----------------+
| County Television Network  | Jul. |                |                |
| San Diego                  | 96   |                |                |
+----------------------------+------+----------------+----------------+
| Cowboys TV (Dallas)        | Sep. | Comcast (100)  |                |
|                            | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Cox Sports Television      | Oct. | Cox (100)      |                |
|                            | 02   |                |                |
+----------------------------+------+----------------+----------------+
| Ecumenical Television      | 1983 |                |                |
| Channel                    |      |                |                |
+----------------------------+------+----------------+----------------+
| Denver Channel 207         |      |                |                |
+----------------------------+------+----------------+----------------+
| Falconvision (Atlanta)     | Sep. | Comcast (100)  |                |
|                            | 04   |                |                |
+----------------------------+------+----------------+----------------+
| Fox College Sports         |      |                |                |
| Atlantic                   |      |                |                |
+----------------------------+------+----------------+----------------+
| Fox College Sports Central |      |                |                |
+----------------------------+------+----------------+----------------+
| Fox College Sports Pacific |      |                |                |
+----------------------------+------+----------------+----------------+

+----------------------------+------+----------------+----------------+
| Programming Services       | La   | MSO Ownership  | Other Media    |
|                            | unch | (%)            | Entity         |
|                            |      |                |                |
|                            | Date |                | Ownership      |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Arizona     | Sep. |                | News Corp.     |
|                            | 96   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Bay Area    | Apr. | Cablevision    | News Corp.     |
|                            | 90   | (60)           |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Chicago     | Jan. | Cablevision    |                |
|                            | 84   | (100)          |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Detroit     | Sep. |                | News Corp.     |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Florida     | 1989 |                | News Corp.     |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Midwest     | Sep. |                | News Corp.     |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net New England | Jan. | Cablevision    | News Corp.     |
|                            | 88   | (50)           |                |
|                            |      |                |                |
|                            |      | Comcast (50)   |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net New York    | 1989 | Cablevision    |                |
|                            |      | (100)          |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net North       | Mar. |                | News Corp.     |
|                            | 89   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Northwest   | Nov. |                | News Corp.     |
|                            | 88   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Ohio        | Feb. |                | News Corp.     |
|                            | 89   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Pittsburgh  | Apr. |                | News Corp.     |
|                            | 86   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Rocky       | Nov. |                | News Corp.     |
| Mountain                   | 88   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net South       | Aug. |                | News Corp.     |
|                            | 90   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net Southwest   | Jan. |                | News Corp.     |
|                            | 83   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net West        | Oct. |                | News Corp.     |
|                            | 85   |                |                |
+----------------------------+------+----------------+----------------+
| Fox Sports Net West 2      | Jan. |                | News Corp.     |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Gwinnett News &            | May  |                |                |
| Entertainment Television   | 97   |                |                |
+----------------------------+------+----------------+----------------+
| International Television   | Apr. |                |                |
| Broadcasting (ITV)         | 86   |                |                |
+----------------------------+------+----------------+----------------+
| Kansas 22 Now              |      |                |                |
+----------------------------+------+----------------+----------------+
| Las Vegas One News         | Apr. |                |                |
|                            | 98   |                |                |
+----------------------------+------+----------------+----------------+
| Local News on Cable (LNC)  | Feb. |                |                |
| -- Hampton                 | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Madison Square Garden      | Oct. | Cablevision    |                |
| Network (MSG)              | 69   | (100)          |                |
+----------------------------+------+----------------+----------------+
| MetroSports -- Kansas      | Feb. | Time Warner    |                |
| City, Mo.                  | 04   | (100)          |                |
+----------------------------+------+----------------+----------------+
| Michigan Government        | Jul. |                |                |
| Television                 | 96   |                |                |
+----------------------------+------+----------------+----------------+
| New England Cable News     | Mar. | Comcast (50)   | Hearst         |
| (NECN)                     | 92   |                |                |
+----------------------------+------+----------------+----------------+
| New England Sports Network | Mar. |                |                |
| (NESN)                     | 84   |                |                |
+----------------------------+------+----------------+----------------+
| New York 1 News (NY1 News) | Sep. | Time Warner    |                |
|                            | 92   | (100)          |                |
+----------------------------+------+----------------+----------------+
| NY 1 Noticias              | Jun. | Time Warner    |                |
|                            | 03   | (100)          |                |
+----------------------------+------+----------------+----------------+
| News 10 Now -- Syracuse,   | Nov. | Time Warner    |                |
| N. Y.                      | 03   | (100)          |                |
+----------------------------+------+----------------+----------------+
| News 12 Connecticut        | Jun. | Cablevision    |                |
|                            | 95   | (75)           |                |
+----------------------------+------+----------------+----------------+
| News 12 Bronx              | Jun. | Cablevision    |                |
|                            | 97   | (75)           |                |
+----------------------------+------+----------------+----------------+

+----------------------------+------+----------------+----------------+
| Programming Services       | La   | MSO Ownership  | Other Media    |
|                            | unch | (%)            | Entity         |
|                            |      |                |                |
|                            | Date |                | Ownership      |
+----------------------------+------+----------------+----------------+
| News 12 Brooklyn           | 2005 | Cablevision    |                |
|                            |      | (75)           |                |
+----------------------------+------+----------------+----------------+
| News 12 Hudson Valley      | 2005 | Cablevision    |                |
|                            |      | (75)           |                |
+----------------------------+------+----------------+----------------+
| News 12 Long Island        | Dec. | Cablevision    |                |
|                            | 86   | (75)           |                |
+----------------------------+------+----------------+----------------+
| News 12 New Jersey         | Mar. | Cablevision    |                |
|                            | 96   | (75)           |                |
+----------------------------+------+----------------+----------------+
| News 12 Traffic & Weather  | 2005 | Cablevision    |                |
| (formerly Metro            |      | (75)           |                |
|                            |      |                |                |
| Traffic & Weather)         |      |                |                |
+----------------------------+------+----------------+----------------+
| News 12 Westchester        | Nov. | Cablevision    |                |
|                            | 95   | (75)           |                |
+----------------------------+------+----------------+----------------+
| News 8 Austin              | Sep. | Time Warner    |                |
|                            | 99   | (100)          |                |
+----------------------------+------+----------------+----------------+
| News Channel 5+            | S    |                |                |
|                            | ept. |                |                |
|                            | 96   |                |                |
+----------------------------+------+----------------+----------------+
| News 14 Carolina           | Mar. | Time Warner    |                |
| (Charlotte)                | 02   | (100)          |                |
+----------------------------+------+----------------+----------------+
| News 14 Carolina (Raleigh) | Mar. | Time Warner    |                |
|                            | 02   | (100)          |                |
+----------------------------+------+----------------+----------------+
| News Channel 3 Anytime     |      |                |                |
+----------------------------+------+----------------+----------------+
| News Now 53 (Oklahoma      | Jun. | Cox (50)       |                |
| City)                      | 97   |                |                |
+----------------------------+------+----------------+----------------+
| News Now 53 (Tulsa)        | Jun. | Cox (50)       |                |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| News on One                | Oct. | Cox (50)       |                |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| News Watch 15 (New         | Oct. |                |                |
| Orleans)                   | 99   |                |                |
+----------------------------+------+----------------+----------------+
| News Channel 8             | Oct. |                |                |
|                            | 91   |                |                |
+----------------------------+------+----------------+----------------+
| NGTV (National Greek       | Dec. |                |                |
| Television)                | 87   |                |                |
+----------------------------+------+----------------+----------------+
| Nippon Golden Network      | Jan. |                |                |
|                            | 82   |                |                |
+----------------------------+------+----------------+----------------+
| North West Cable News      | Dec. |                |                |
| (NWCN)                     | 95   |                |                |
+----------------------------+------+----------------+----------------+
| Ohio News Network (ONN)    | May  |                |                |
|                            | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Pennsylvania Cable Network | Sep. |                |                |
| (PCN)                      | 79   |                |                |
+----------------------------+------+----------------+----------------+
| Pittsburgh Cable News      | Jan. | Comcast (30)   |                |
| Channel (PCNC)             | 94   |                |                |
+----------------------------+------+----------------+----------------+
| Regional News Network      | Dec. |                |                |
| (RNN)                      | 95   |                |                |
+----------------------------+------+----------------+----------------+
| Rhode Island News Channel  | Sep. | Cox (50)       |                |
|                            | 98   |                |                |
+----------------------------+------+----------------+----------------+
| R News -- Rochester, N. Y. | Jul. | Time Warner    |                |
|                            | 95   | (100)          |                |
+----------------------------+------+----------------+----------------+
| San Diego's News Channel   | Jan. |                |                |
| 15                         | 97   |                |                |
+----------------------------+------+----------------+----------------+
| Six News Now               | Jul. |                |                |
|                            | 95   |                |                |
+----------------------------+------+----------------+----------------+
| Soundtrack Channel (STC)   | Mar. |                |                |
|                            | 02   |                |                |
+----------------------------+------+----------------+----------------+
| SunSports (formerly        | Mar. |                | News Corp.     |
| Sunshine Network)          | 88   |                |                |
+----------------------------+------+----------------+----------------+
| 10 News 2                  |      |                |                |
+----------------------------+------+----------------+----------------+
| Texas Cable News           | Jan. |                |                |
|                            | 99   |                |                |
+----------------------------+------+----------------+----------------+
| Turner South (STC)         | Oct. | Time Warner    |                |
|                            | 99   | (100)          |                |
+----------------------------+------+----------------+----------------+

+----------------------------+------+----------------+----------------+
| Programming Services       | La   | MSO Ownership  | Other Media    |
|                            | unch | (%)            | Entity         |
|                            |      |                |                |
|                            | Date |                | Ownership      |
+----------------------------+------+----------------+----------------+
| TV33                       | Dec. |                |                |
|                            | 95   |                |                |
+----------------------------+------+----------------+----------------+
| 24/7 News Channel          |      |                |                |
+----------------------------+------+----------------+----------------+
| Washington Korean TV       | 1985 |                |                |
| (WKTV)                     |      |                |                |
+----------------------------+------+----------------+----------------+
| Yankee Entertainment       | Mar. |                |                |
| Sports Network (YES)       | 02   |                |                |
+----------------------------+------+----------------+----------------+

**Sources:**

*2004 Report*, 20 FCC Rcd at 2895-7, Table C-4.

*Regional Cable Sports Networks*, Broadcasting & Cable Yearbook 2005, at
E-14-E15.

Association of Regional News Channels, at
http://www.newschannels.org/Members.html (visited Nov. 30, 2005).

Radio-Television News Directors Association & Foundation, *Non-Stop News
-- Local News Channel Directory*, at
http://www.rtnda.org/resources/nonstopnews/text/text_directory.html
(visited Nov. 30, 2005).

*Applications for Consent to the Assignment and/or Transfer of Control
of Licenses, Adelphia Communications Corporation, Assignors, to Time
Warner Cable Inc., Assignees; Adelphia Communications Corporation,
Assignors and Transferors, to Comcast Corporation, Assignees and
Transferees; Comcast Corporation, Transferor, to Time Warner Inc.,
Transferee; Time Warner Inc., Transferor, to Comcast Corporation,
Transferee*, Applications and Public Interest Statement, MB Docket No.
05-192 (filed May 18, 2005), at 9-11, 12, 15-18.

Letter from Arthur H. Harding, Counsel for Time Warner Inc., to Marlene
H. Dortch, Secretary, FCC, MB Docket No. 05-192 (Oct. 21, 2005), at 1-5.

Altitude Sports and Entertainment, at http://www.altitude.tv/About/

Arabic Channel, at http://www.ethnicnet.com (visited Nov. 4, 2005); s*ee
also*, Allied Media Corp.,

Demographics, at
http://www.allied-media.com/ARABTV/the_arabic_channel_NY.html (visited
Nov. 4, 2005).

The Arizona News Channel, at http://www.azfamily.com (visited Oct. 31,
2005); See also RTNDA, at
http://www.rtnda.org/resources/nonstopnews/arizonanews.html (visited
Oct. 31, 2005).

Bay News 9, at http://www. baynews9.com/ContactUs.html (visited Oct. 31,
2005).

Boston Kids & Family, at http://www.cityofboston.gov/cable/BKF_tv.asp
(visited Oct 25, 2005).

Megan Larson, *Comcast Launches BravesVision Digital Cable Net*,
Brandweek.com, Sept. 22, 2004, at
http://brandweek.com/bw/search/article_display.jsp?schema=&vnu_content_id=1000640079
(visited Nov. 1, 2005).

The California Channel, at http://www.calchannel.com/aboutus.htm
(visited Nov. 1, 2005).

Time Warner Cable, *Local News Channels*, at
http://www.timewarner.com/corp/businesses/detail/time\_
warner_cable/index.html (visited Nov. 1, 2005).

Central Florida News 13, at http://www.cfnews13.com/about13.aspx
(visited Nov. 3, 2005).

CLTV.com, at http://cltv/trb/com/about/station (visited Nov. 1, 2005).

Comcast Local, at http://www.comcastlocal.com/ (visited Nov. 1, 2005).

Comcast Sports Net, at http://www.comcastsportsnet.com/ (visited Nov. 3,
2005).

Comcast/Charter Sports SouthEast, at http://csssports.com/about_us.cfm
(visited Nov. 3, 2005).

About CTN, at http://www.co.san-diego.ca.us/ctn/aboutctn.html (visited
Nov. 1, 2005)

Cox Sports Television, at
http://www.coxsportstv.com/About.aspx?page=About&About=Overview (visited
Nov. 1, 2005).

Diocese of Youngstown, at http://www.doy.org (visited Nov. 1, 2005).

Gwinnettdailypost.com, at http://www.gwinnettdailypost.com/ (visited
Nov. 1, 2005).

International Television Broadcasting, Inc. -- ITV & ITV GOLD, at
http://www.itvgold.com/profile.right. htm (visited Nov. 1, 2005).

Vegas ONE, at http://www.vegas.com/about/ (visited Nov. 7, 2005).

Local News on Cable, at
http://www.RTNDA.org/resources/nonstopnews/text/text_lnc.html.

MSGNetwork.com, at http://www.msgnetwork.com/index.jsp (Nov. 3, 2005).

MGTV Online, at http://www.mgtv.org/ (visited Nov. 1, 2005).

New England Cable News, at
http://www.hearstcorp.com/entertainment/property/ent_cable\_
newengland.html (visited Nov. 7, 2005).

New England Sports Network, at http://www.boston.com/sports/nesn/
(visited Nov. 4, 2005).

NY1, at http://www.ny1news.com (visited Nov. 4, 2005).

News 12 Interactive, at http://www.news12.com/Home (visited Nov. 1,
2005).

NewsChannel 5 Network, at http://www.newschannel5.com/content/ (visited
Nov. 1, 2005)

News Now 53, at http://www.kotv.com/promo_newsnow53.htm (visited Nov. 7,
2005).

News on One, at http://wowt.com/ (visited Nov. 1, 2005).

NewsChannel 8, at http://www.newschannel8.net/ (visited Nov. 1, 2005).

Greek TV, at http://www.omogenia.com/news-tv.htm (visited Nov. 4, 2005).

ONN, at http://www.ohionewsnow.com/ (visited Nov. 1, 2005).

PCN, at http://www.pctv.com/ (visited Nov. 1, 2005).

RNN, at http://www.rnntv.com/NewsChooser/pages/multi_column/demo.cfm
(visited Nov. 1, 2005).

SunSports.com, at http://www.sunsportstv.com/about.jsp (visited Oct. 26,
2005).

Time Warner, at
http://www.timewarner.com/corp/businesses/detail/turner_broadcasting/index.html
(visited Nov. 1, 2005).

WKTV, at http://www.wktvusa.com (visited Nov. 3, 2005).

YES Network, at http://www.yesnetworktv.com/ (visited, Nov. 1, 2005).

TABLE C-4

Planned Programming Services

  -------------------------------------- --------------------------------
  Programming Service                    Planned Launch Date, If
                                         Announced

  Africast Television Network            Available for carriage

  America Channel                        Available for carriage

  American David                         

  America National Network               

  AMC's American Pop                     

  Anti-Aging Network                     

  Asia Channel                           

  Auto Channel                           

  BET World Music Beat                   

  Bingo TV                               

  Black Belt TV                          

  Black Education Network                Sept. 2006

  Black Entertainment Network            

  Blue Highways TV                       

  Boating Channel                        

  BOB: Brief Original Broadcasts         

  Booknet                                

  Box TV                                 

  Career Entertainment Television        

  Casino & Gaming Television             

  Classified Channel TV                  

  Collectors Channel                     

  The Crime Channel                      

  Crime & Investigation                  

  CSN (Cable Science Network)            

  Destiny Channel                        

  Documentary Channel                    

  Edge TV                                

  Election Channel                       

  Employment Channel                     1Q06

  Fad TV (Fashion & Design Television)   

  Fifth Avenue Channel                   

  Programming Service                    Planned Launch Date, If
                                         Announced

  Film Festival Channel                  

  Florida Channel                        

  Fox Enhanced TV                        

  Gambling Channel                       

  GETV Program Network                   

  Global Village Network                 

  Government Channel                     

  Home Improvement Channel               

  Honey Vision                           

  The Horror Channel                     

  Ice Channel                            

  Investment TV                          

  JTV (Jewish TV)                        

  Las Vegas Channel                      

  Local News Network                     

  Local News TV                          

  Local Sports TV                        

  Major League Baseball                  

  Moore TV Network                       

  Mountain West TV                       4Q06

  Moviewatch                             

  Native American Nations Program        
  Network                                

  New York Channel                       

  New York Mets                          2006

  Orb TV                                 

  Premiere Horse Network                 

  Puppy Channel                          

  RadioTV Network                        

  Programming Service                    Planned Launch Date, If
                                         Announced

  Real Estate Channel                    

  Real Estate Network (TREN)             

  Reality 24-7                           

  Reality Central                        

  Scream Channel                         

  SCTV (Stand-Up Comedy Television)      

  Senior Citizens Television Network     

  Simulation Channel                     

  Sundance Documentary Channel           

  Theater Channel                        

  Tickets On Demand (The Ticket Channel) 

  Tourist Channel                        

  U.S. Military Television Network       

  Vegas Channel                          

  Voy Network                            Available for carriage

  Wheels TV                              

  Wicked TV                              

  Wine Network TV                        

  World Cinema                           
  -------------------------------------- --------------------------------

**Sources:**

Africast Global Africa Network, at http://www.africast.tv (visited Nov.
14, 2005).

TAC Comments, at 2.

Blackbelt TV, at http://www.blackbelttv.com (visited Nov. 15, 2005).

Career Entertainment Television, at
http://ce.tv/article.php?story=20040702201312200&blockmenu=4&
blockmenu=4 (visited Nov. 14, 2005).

Casino and Gaming TV, at http://www.cgtv.com/onair/network.shtml
(visited Nov. 14, 2005).

UPI News Service, *A&E to Launch New Crime & Investigation Television
Network*, [Reality TV World]{.smallcaps}, Feb. 7, 2005, at
http://www.realitytvworld.com/index/articles/story.php?s=1001881
(visited Oct. 26, 2005); *see also* http://www.citv.com.au/ (visited
Oct. 26, 2005).

The Destiny Channel, at http://www.destinychannel.com (visited Oct. 25,
2005).

Edge TV, at http://www.theedgetv.com (visited Nov. 14, 2005).

The Horror Channel, at
http://www.horrorchannel.com/modules.php?op=modload&name=News&file=
article&sid=767&mode=t... (visited Oct. 26, 2005).

Moviewatch Network, at
http://www.moviewatch.com/index.cfm?page=prigrammuing&s=9 (visited Nov.
14, 2005).

Joe Reality, *Reality 24/7 Network, Down But Not Out*, [Reality TV
Magazine]{.smallcaps}, Feb. 16, 2005, at
http://www.realitytvmagazine.com/blog/2005/02/reality_247_net.html
(visited Nov. 14, 2005).

Scream Channel, at http://www.screamchannel.com/about.asp (visited Nov.
14, 2005).

Voy, at http://www.voy.tv/what_is_voy/index.html (visited Nov. 16,
2005).

Wheels TV Network, at http://www.wheelstv.net/pages/about_wheelstv.htm
(visited Nov. 15, 2005).

TransDigital Media, *Wicked TV*, at http://www.tdmllc.com/brands.html
(visited Nov. 15, 2005).

Wine Network, at http://www.winetv.tv/c1.htm (visited Nov. 15, 2005).

**TABLE C-5**

Top 20 Programming Services by Subscribership

+------+------------------+---------------+---------------------------+
| **Ra | **Programming**  | **Number of** | **Ownership Interest in   |
| nk** |                  |               | Network**                 |
|      | **Network**      | **Subscribers |                           |
|      |                  | (             |                           |
|      |                  | Millions)\*** |                           |
+------+------------------+---------------+---------------------------+
| 1    | Discovery        | 90.1          | Cox, Advance/Newhouse,    |
|      | Channel          |               | Liberty Media             |
+------+------------------+---------------+---------------------------+
| 2    | ESPN             | 90.0          | Disney, Hearst            |
+------+------------------+---------------+---------------------------+
| 4    | CNN              | 89.6          | Time Warner               |
+------+------------------+---------------+---------------------------+
| 4    | TNT              | 89.6          | Time Warner               |
+------+------------------+---------------+---------------------------+
| 6    | USA Network      | 89.4          | NBC-Universal             |
+------+------------------+---------------+---------------------------+
| 6    | C-SPAN           | 89.4          | National Cable Satellite  |
|      |                  |               | Corporation \*\*          |
+------+------------------+---------------+---------------------------+
| 9    | TBS              | 89.3          | Time Warner               |
+------+------------------+---------------+---------------------------+
| 9    | Spike TV         | 89.3          | Viacom                    |
+------+------------------+---------------+---------------------------+
| 9    | Nickelodeon      | 89.3          | Viacom                    |
+------+------------------+---------------+---------------------------+
| 11   | A&E              | 89.2          | Disney, Hearst,           |
|      |                  |               | NBC-Universal             |
+------+------------------+---------------+---------------------------+
| 11   | Lifetime         | 89.2          | Disney, Hearst            |
|      | Television       |               |                           |
+------+------------------+---------------+---------------------------+
| 13   | The Weather      | 89.0          | Landmark                  |
|      | Channel          |               |                           |
+------+------------------+---------------+---------------------------+
| 13   | ESPN2            | 89.0          | Disney, Hearst            |
+------+------------------+---------------+---------------------------+
| 15   | QVC              | 88.9          |                           |
+------+------------------+---------------+---------------------------+
| 15   | TLC              | 88.9          | Cox, Advance/Newhouse,    |
|      |                  |               | Liberty Media             |
+------+------------------+---------------+---------------------------+
| 18   | MTV              | 88.6          | Viacom                    |
+------+------------------+---------------+---------------------------+
| 18   | Home & Garden TV | 88.6          |                           |
+------+------------------+---------------+---------------------------+
| 18   | Headline News    | 88.6          | Time Warner               |
+------+------------------+---------------+---------------------------+
| 20   | ABC Family       | 88.5          | Disney                    |
|      | Channel          |               |                           |
+------+------------------+---------------+---------------------------+
| 20   | Home Shopping    | 88.5          |                           |
|      | Network          |               |                           |
+------+------------------+---------------+---------------------------+

**Note:**

\* - In addition to cable systems, other MVPDs such as DBS (direct
broadcast satellite) systems, wireless cable (or MMDS) systems, PCOs
(private cable operators or SMATV) services, and HSD (home satellite
dish) program providers may distribute these signals. Subscriber figures
may include these noncable services.

\*\* - The National Cable Satellite Corporation (C-SPAN) derives 97
percent of its revenues from affiliate fees (*i.e*., subscriber fees
from MVPDs). The remaining three percent is provided by various
investments.

**Source:**

Kagan Research, LLC, *Network Census: July 31*, Cable Program Investor,
August 31, 2005, at 14.

##   {#section .unnumbered}

## TABLE C-6 {#table-c-6 .unnumbered}

## Top 15 Programming Services by Prime Time Rating {#top-15-programming-services-by-prime-time-rating .unnumbered}

  ---------- ------------------------- -----------------------------------
  Rank       Programming Service       Ownership Interest in Network

  1          Nickelodeon               Viacom

  2          TNT                       Time Warner

  3          Nick at Nite              Viacom

  4          USA Network               NBC-Universal

  5          Disney                    Disney

  6          Lifetime                  Disney, Hearst

  7          Toon Disney               Disney

  8          TBS                       Time Warner

  9          Spike TV                  Viacom

  10         Fox News Channel          News Corp.

  11         History Channel           Disney, Hearst, NBC-Universal

  12         ESPN                      Disney, Hearst

  13         MTV                       Viacom

  14         Discovery Channel         Cox, Advance/Newhouse, Liberty
                                       Media

  15         Sci Fi Channel            NBC-Universal
  ---------- ------------------------- -----------------------------------

**Source:**

Kagan Research, LLC., *Prime Time Ratings Averages: April*, [Cable
Program Investor]{.smallcaps}, June 29, 2005, at 16.

**STATEMENT OF**

**CHAIRMAN KEVIN J. MARTIN**

*Re: Annual Assessment of the Status of Competition in the Market for
the Delivery of Video Programming*, MB Docket No. 05-255

In enacting the Cable Television Consumer Protection and Competition Act
of 1992, Congress sought to promote video competition. Competition in
the market for video programming serves to improve quality and customer
service, increase consumer choice, decrease prices, and promote
innovation.

As this year's report reflects, we are seeing wired competitors to cable
trying to enter the market. The Commission should facilitate this entry,
not only because it furthers video competition, but also because it
promotes the deployment of the broadband networks over which the video
services are provided. The widespread deployment of these networks is
critical to the United States' international competitiveness. Further,
it will help improve Americans' lives through applications such as
distance learning and remote medical diagnostics.

Given all of the benefits that additional competition offers for
consumers, we will continue to closely monitor the progress of all new
entrants and seek to eliminate any unreasonable barriers to entry and to
address other issues that we find impede such progress.

**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS**

Re: *Annual Assessment of the Status of Competition in the Market for
the Delivery of Video Programming*

I commend Chairman Martin for holding this Commission meeting outside of
Washington. This is something I have long advocated us doing. We can
learn so much more from getting outside the Beltway to hear directly
from those on the ground who are working to make video competition a
reality. Yesterday and this morning, we have had the opportunity to see
and learn first-hand about a whole new range of video services that are
becoming reality for America's consumers. These visits in Texas will
help us make better decisions as we go about our work in Washington.
Equally important, hearings like this bring the FCC to the American
people, giving them a closer look at issues that inevitably affect them.
I look forward to more such meetings in communities across the country
that can provide greater perspective and information as we address the
complex and difficult issues in front of us. I believe, in fact, that a
regulatory commission like ours has an obligation to do regularly what
we are doing here this week.

Today's report grows out of our duty to report to Congress annually on
the status of competition in the market for the delivery of video
programming. Here, as throughout the Communications Act, Congress
recognized and emphasized that competition in the delivery of services
is the surest road for bringing significant benefits to consumers. When
people have more options, they reap big rewards---better services,
higher technology, lower prices and more varied content. 

 

Today's report shows an enormous potential for increased competition in
the video programming market. We are seeing large investments not only
from existing participants in the market, but also from telephone
companies and others that are expanding their efforts to deliver video
programming. Cable and telephone companies are beginning to compete to
offer consumers the much-heralded triple play---bundles of telephone,
video and Internet services. The erosion of old industry boundaries can
give way to a more consumer-friendly future, but arriving at that future
will demand not only creative entrepreneurship and considerable
investment, but also FCC policy founded foursquare on advancing the
public interest---our primary charge from Congress.

 

I am happy that this year's report is more rigorous than some of its
predecessors. For example, we admit the limitations of the data we have
received and we go in search of additional comment. We also build on the
discussion in last year's report by, for example, considering what is
happening in certain other countries and including a separate section
that focuses specifically on video program distribution in rural areas.
But we must always look for ways to improve these reports to provide a
more solid foundation for Commission and Congressional actions. For our
next report, I hope we will undertake more pro-active and comprehensive
information gathering efforts in order to obtain independent, verified
data. I also believe we need to conduct some audits of the data we
receive because we need to be sure of its accuracy. 

This is an especially important report this year because it delves into
issues relevant to numerous other pending Commission proceedings. These
include horizontal and vertical cable ownership rules, an area where
Commission action is overdue.   

 

I note with concern that last year---and this seems to be an annual
story---cable rates rose again, out-stripping inflation by a significant
margin. Different interests cite different reasons for these
never-ending consumer cost increases. I know two things. First,
consumers are feeling the pain and paying the cost and not liking it.
And, secondly, we need to better understand what's going on here. We
need to determine which factors are primarily responsible for these
escalating consumer bills, and I would like to see us get a handle on
this important issue in time for the next annual report on cable rates.
 

 

In another area still requiring work, we need to nail down the
percentage of U.S. households which receive their programming from
cable. Congress instructed us in the statute to be attentive to this
because of our obligation to ensure diversity of information sources.
Finally, in the months ahead, I believe we need to understand more
clearly how such things as program access, retransmission consent, and
vertical and horizontal integration affect the state of video
competition. Congress seems to be turning its attention to these
interactions and it is important for us to develop the data and analysis
Congress needs for its consideration and that the Commission requires
for its proceedings. 

 

So this is a major report and we need to ensure that we use it well in
the months ahead because it can help us in so many other proceedings.
The world of program delivery is going through such wide-ranging, even
staggering, changes that the Commission cannot afford to miss a beat as
we attempt to exercise our responsibilities.

 

My thanks to the Bureau for this report and for its many improvements,
and I look forward to being able to cite next year's annual report as
even better than this year's.

 

**STATEMENT OF**

**Commissioner Jonathan S. Adelstein**

*Re: Annual Assessment of the Status of Competition in the Market for
the Delivery of Video Programming*

I want to thank Chairman Martin for taking this meeting outside of
Washington, D.C. I have been attending hearings across the country over
the past three years and I have learned that nothing tops the experience
of getting out into the public and meeting with local officials, company
employees, and consumers to hear their thoughts about media and
telecommunications. Today, we are getting a better sense of what is
happening on the ground with video competition. The effort by some of
the Nation's largest telecommunications companies to provide a
competitive alternative for video services is one that deserves our
attention and encouragement, and we are giving it both through our visit
to Texas as a Commission.

I vote to approve this twelfth annual report on the state of competition
in the video marketplace because it is a promising improvement over
previous years. It attempts, albeit in a limited fashion, to provide at
least more of a semblance of analysis that the Commission should provide
Congress.

While this *Report* continues to simply recite information submitted by
private parties rather than conduct its own in-depth analysis of the
state of competition, it is commendable that, in one significant
respect, we seek comment on whether the criteria set forth in section
612(g) of the Communications Act (generally referred to as the "70-70
test") has been met and, if so, whether the Commission should promulgate
additional rules to achieve the statutory goal of providing diversity of
information sources in video programming. I welcome this inquiry and
look forward to working on it with my colleagues to fulfill the goals of
competition, diversity and localism in U.S. media markets.

As the Report shows, competition in video distribution and programming
markets is intensifying. From 2001 to 2005, the number of cable
subscribers, as a share of total MVPD subscribers, has decreased from 77
percent to 69 percent. Commensurately, DBS subscribership has increased
from 18 percent to 27 percent. Local exchange carriers, electric and gas
utilities, and cellular phone companies have all announced plans to
upgrade their systems to offer video services and, in some cases, are
already offering multimedia programming. Moreover, while 14 percent of
U.S. television households continue to rely solely on over-the-air
broadcast signals, the sale of digital television sets has skyrocketed,
a trend certain to continue as prices are steadily decreasing. The
digital television transition is also supported by the fact that more
than 1,537 stations nationwide are broadcasting digitally.

Of particular significance is the entry of some of the largest local
exchange companies into the video marketplace. LECs are upgrading their
facilities to fiber-based platforms in many areas across the country so
that these carriers can offer a suite of video, voice and data services.
This investment could bring the most substantial new competition into
the video marketplace that this country has ever seen. Equally
significant is the potential for this new revenue stream to drive
broadband deployment, which can benefit consumers and the free flow of
information beyond the video marketplace.

Consumers will benefit not only from more choice, better service and
lower prices, but also stand to gain from a more robust exchange in the
marketplace of ideas. I have long expressed grave concerns about the
negative effects of media consolidation in this country, and have
focused on the problems raised by growing vertical integration of
programming and distribution. Vast new distribution networks promise to
limit the ability of any vertically integrated conglomerates from
imposing an economic, cultural or political agenda on a public with few
alternative choices. I truly believe the benefits of this new
competition extend beyond the normal ones that accrue to consumers, and
can actually improve the health of our overall democracy.

Nothwithstanding these healthy competitive indicators, the Report
highlights areas of serious concern that will likely require our careful
examination and possible action. While the competitive presence of DBS
has reduced cable's dominance, concentration remains a concern: the top
four MVPDs serve 63 percent of all MVPD subscribers, up five percent
from 2004. Vertical integration and program access are also areas of
growing concern. Of the 96 regional networks providing local sports and
news, almost half are vertically integrated with at least one MSO.
Several commenters, particularly small and rural cable operators and
LECs, have raised concerns about securing access to programming at
competitive, nondiscriminatory terms and rates.

The findings discussed in this Report should serve as the factual
foundation to inform future Commission decision as well as providing
Congress with information that can inform the national policy debate.

**STATEMENT OF**

**COMMISSIONER DEBORAH TAYLOR TATE**

*Re: Annual Assessment of the Status of Competition in the Market for
the Delivery of Video Programming*, MB Docket No. 05-255

First, I would like to applaud the Chairman for holding this meeting in
Keller, Texas. I also wish to thank Mayor Tandy and Mayor Moncrief for
not only participating in our open meeting but also their leadership in
championing competition and consumer choice. I want to specifically
acknowledge Commissioner Barry Smitherman from the Texas Public
Utilities Commission, my friend and former colleague, for joining us. I
look forward to our continuing relationship with state and local
officials on these issues which are crucial not only to our nation, but
to communities like Fort Worth and Keller. Finally, thank you for the
warmth and hospitality that has been shown to us while we've been here
in the Great State of Texas.

As stated by the Chairman, I feel it is important for the Commission to
take opportunities such as this to travel outside of Washington, D.C.
Sometimes getting out into wide open spaces just helps put the issues
into perspective; to talk with real people about the innovative products
and services that are transforming the way they work, live, and play.
And, also, to see areas which may not have access to exciting new
services like those we've seen on this trip. I believe that it is
critical that we, as policymakers, do not lose touch with how
communications technology, and the decisions we make in this arena,
affect the lives of all Americans, impact both the local and global
economies, and influence investment decisions in the communications
marketplace.

And so I am delighted to be here, not simply to talk about video
competition in the abstract, but to actually see first-hand the efforts
of new entrants into this market and to hear from consumers, local
government representatives, and the entities actually providing such
services. For example, yesterday we saw a working demonstration of
Broadband over Power Line (BPL) in a neighborhood in Dallas. Current
Communications Group, LLC and TXU are using this innovative new
technology both to provide broadband and to help the electric grid work
smarter and more efficiently. At their model home I was able to talk to
my assistant, Teri, using a Voice over Internet Protocol (VoIP) phone
while watching high-quality video streamed over the Internet. All the
while, the electric company is able to use that same technology to
monitor exactly how much electricity is being used and identify
immediately when and where the power goes out.

This beautiful, new community center in which we are meeting provides
more than just a wonderful setting for our open meeting; it also serves
as an excellent example of the concept of "bundling." Here, under one
roof, the citizens of Keller can enjoy a variety of sports and exercise
options, games, a swimming pool, and childcare -- all in a family
friendly atmosphere. In a similar vein, we are here today to discuss the
fact that an increasing number of entities are providing a bundle of
communications services that can include voice, data, video, and even
wireless. And just as is the case with this community center, many of us
would like to enjoy those bundles -- the so-called "triple play" and
"grand slam" --in a family friendly atmosphere.

Tennesseans are used to hearing me say this, but since I find myself
today in Texas, I will say it again: I am a strong supporter of
competition. Efficiently operating competitive markets do a much better
job of ensuring that the needs of consumers are met than we could ever
hope to accomplish through unnecessary regulatory intervention.
Competitive markets force rivals to be more responsive to the needs of
consumers; to provide lower prices; to innovate; to offer more choices;
and to provide better customer service. To summarize: whatever the
concern may be, robust competition is, in virtually every case, the
preferred solution to government regulation.

The marketplace for the delivery of video programming provides a perfect
example of this point. The significance of video competition cannot be
overstated -- because it has the ability to play a critical role in a
number of high-priority areas:

**Cable TV Prices**: Competition from Direct Broadcast Satellite (DBS)
operators and, as we have witnessed here in Texas, and now traditional
phone companies will continue to drive down prices for consumers.

**Indecency**: In a fully competitive marketplace, there is every reason
to be confident that consumers' concerns about the programming that
enters their homes would be met. Unfortunately, however, the video
programming marketplace -- while much more competitive today than when
the 1992 Cable Act was passed, as this year's Video Competition Report
makes plain -- so far has been unable to adequately address this issue.
But as the number of competitors increases, we are beginning to see
signs of progress in this area. Indeed, the recent announcements by
cable operators and DBS providers regarding the offering of family
tiers, as well as the public statements by AT&T and EchoStar indicating
an interest in providing their customers with programming on an a la
carte basis, could well represent the initial steps in that very
process. But they are only that -- initial first steps.

Competition should be not only about more choices, but about **better**
choices for our families. I am hopeful that, as competition continues to
expand, parents -- and concerned viewers generally -- will be able to
choose from a range of programming options that they find appropriate.
In that regard, I am encouraged by the ability of the video delivery
platforms we have seen on this trip to provide video programming in
customized packages *based on what customers want*. This new technology
will eliminate any technical hurdles that may have been asserted in the
past as a reason not to allow customer choice.

**Broadband Deployment**: Greater video competition also can play an
important role in ensuring that the benefits that broadband can offer
are made available to **all** Americans. Modern telecommunications
networks are capable of providing the so-called "triple play" of voice,
data, and video -- and, when bundled with wireless offerings, the "grand
slam." As a result, the ability to offer video programming services
holds the promise of an additional revenue stream from which the
substantial capital investment required for broadband deployment can be
recovered. In many cases, including in rural and higher cost areas the
additional revenue provided by video programming hopefully will provide
the extra push needed to justify the decision to deploy broadband
facilities.

\* \* \*

So it seems clear that full and vibrant competition in the delivery of
video programming can provide a wide range of benefits. This leads
logically to two follow-up questions: (1) how competitive is the
multichannel video programming distribution market today, not only here
in Texas but throughout the United States?, and (2)  what can we do to
make it even more competitive?

This year's video competition report describes the current state of the
MVPD marketplace. I commend Bureau Chief Gregg and Ms. Glauberman and
their colleagues in the Media Bureau's Industry Analysis Division for
their good work. We must rely upon your expertise along with real-world
experience -- like we are obtaining here today -- in order to make the
best possible decisions. And based upon this report, it appears that
although incumbent cable operators remain the leading provider of
multichannel video programming, their market shares continue gradually
to decline. And while I applaud the DBS providers for the competitive
inroads they have made, particularly in rural areas not served by cable,
I believe that wireline competition should be encouraged as well.

Which leads me to my second question: what can policymakers do to foster
greater video competition envisioned by Congress? Here in Texas,
legislation passed last year to facilitate the entry of new providers
established a streamlined process by which new entrants can obtain
state-issued certificates of franchising authority. Other states are
considering enacting similar laws, and franchising reform also is being
considered at the federal level. Representative Marsha Blackburn from my
home state of Tennessee last June introduced the Video Choice Act of
2005, which would have eliminated cable franchise requirements for
companies already authorized to access public rights-of-way.

Meanwhile, the FCC initiated an investigation into the local cable
franchising process for competitive entrants last November, prior to my
arrival. This Section 621 rulemaking seeks to determine whether the
franchising process serves as an unreasonable barrier to entry for new
providers and, if so, what remedial steps the Commission might take.
Comments are due on Monday, February 13^th^. I look forward to working
with my fellow Commissioners on this proceeding in the months ahead. I
also look forward to hearing from consumers and others here today, and
interested parties everywhere, regarding what we can do to increase
investment, innovation, and deployment of multi-use broadband networks
throughout the United States.

Thank you.

[^1]: The Commission's previous reports appear at: *Implementation of
    Section 19 of the 1992 Cable Act* (*Annual Assessment of the Status
    of Competition in the Market for the Delivery of Video
    Programming*), *1994 Report*, 9 FCC Rcd 7442 (1994); *1995 Report*,
    11 FCC Rcd 2060 (1996); *1996 Report*, 12 FCC Rcd 4358 (1997);
    *1997* *Report*, 13 FCC Rcd 1034 (1998); *1998 Report*, 13 FCC Rcd
    24284 (1998); *1999 Report*, 15 FCC Rcd 978 (2000); *2000 Report*,
    16 FCC Rcd 6005 (2001); *2001 Report*, 17 FCC Rcd 1244 (2002); *2002
    Report*, 17 FCC Rcd 26901 (2002); *2003 Report*, 19 FCC Rcd 1606
    (2004); and *2004 Report*, 20 FCC Rcd 2755 (2005). *See*
    Communications Act of 1934 § 628(g), 47 U.S.C. § 548(g).

[^2]: Pub. L. No. 102-385, 106 Stat. 1460 (1992).

[^3]: *Annual Assessment of the Status of Competition in the Market for
    the Delivery of Video Programming*, 20 FCC Rcd 14117 (2005)
    (*Notice*). Where possible, we requested data as of June 30, 2005.
    Appendix A lists commenters and the abbreviations by which they are
    identified herein.

[^4]: *Study: Average Person Spends More Time Using Media than Anything
    Else*, Radio Business Report, Sept 5, 2005, available at
    http://www.rbr.com/tvepaper/pages/september05/05-190_news1.html,
    citing the Middletown Media Studies 2 from Ball State University.

[^5]: Nielsen Media Research, *Nielsen Reports Americans Watch TV at
    Record Levels* (press release), Sept. 29, 2005. Nielsen's estimates
    are based on its National People Meter service.

[^6]: *Id.*

[^7]: *Id.* Children and teens are spending an increasing amount of time
    using new media. Young people are exposed to 8 hours and 33 minutes
    of media content each day; 3 hours and 51 minutes of which are spent
    watching television and videos. Kaiser Family Foundation, *Media
    Multitasking -- Changing the Amount and Nature of Young People's
    Media Use* (press release), Mar. 9, 2005.

[^8]: *See* paras. 41 *infra.*

[^9]: Following its acquisition of AT&T Corp., SBC changed its name to
    AT&T Inc. We continue to refer to the company as SBC, the name under
    which it submitted its filings in this proceeding. *See* AT&T Inc.,
    *New AT&T Launches* (press release), Nov. 18, 2005.

[^10]: This percentage is the result of adding together the number of
    subscribers to all MVPD services and calculating the percentage of
    this total represented by cable subscribers. *See* Appendix B, Table
    B-1. The 70/70 test, referred to in para. 12, *infra*, measures the
    share of cable subscribers to systems with 36 or more channels as a
    percent of homes to which cable systems with 36 or more channels are
    available.

[^11]: Fiber to the node (also known as fiber to the neighborhood) is a
    hybrid network architecture involving optical fiber from the carrier
    network, terminating in a neighborhood cabinet (or "node"), which
    converts the signal from optical to electrical. The connection from
    the cabinet to the user premises is provided over unshielded twisted
    pair (UTC) or coaxial cable. While fiber to the house is preferable
    in terms of overall performance, it is more expensive to deploy than
    fiber to the node. *See* Harry Newton, [Newton's Telecom
    Dictionary]{.smallcaps} (CMP Books, 17^th^ ed., 2001), at 296.

[^12]: In general, wireless carriers are providing video in clip form,
    allowing users to select segments of news, sporting event recaps,
    weather reports and music videos, although full-length video is
    available. *See, e.g.,* Verizon, http://getitnow.vzwshop.com/
    index.aspx?id=vcast video. *See also* paras. 134, 231-2 *infra*.

[^13]: *See* Media Bureau, Staff Report Concerning Over-the-Air
    Broadcast Television Viewers, MB Docket 04-210, Feb. 28, 2005 (*OTA
    Report*).

[^14]: This does not necessarily include all multicast programming
    available from broadcasters in all markets and may include only
    carriage of special events in certain markets. For example, several
    cable operators agreed to carry CBS stations' extra coverage of the
    2005 NCAA men's college basketball tournament on multicast channels.

[^15]: These figures are for announced transactions, including the sale
    of Adelphia's assets to Comcast and Time Warner currently under
    review by the Commission.

[^16]: A cable system operator is \"any person or group of persons (A)
    who provides cable service over a cable system, and directly or
    through one or more affiliates owns a significant interest in such
    cable system; or (B) who otherwise controls or is responsible for,
    through any arrangement, the management and operation of such a
    cable system.\" 47 U.S.C. § 522(5).

[^17]: Basic cable service, also referred to as the basic service tier
    (BST), is the level of cable television service that must be taken
    by all cable television subscribers. The content of basic cable
    service varies among cable systems but, pursuant to the
    Communications Act, must include all local television signals and
    public, educational, and governmental access channels and, at the
    discretion of the cable operator, may include other video services.
    Expanded basic cable service, also referred to as the cable
    programming service tier (CPST) for purposes of rate regulation,
    offers additional video channels on one or more service tiers. 47
    U.S.C. § 543(b)(7); 47 U.S.C. § 543 (k)(2).

[^18]: Premium services are nonbroadcast networks provided by a cable
    operator on a per-channel basis for an extra monthly fee.
    Pay-per-view (PPV) services are nonbroadcast networks provided on a
    per program basis. PPV service is a separate category from premium
    service.

[^19]: Homes passed is the total number of households capable of
    receiving cable television service.

[^20]: Premium service subscriptions are the number of premium services
    to which homes are subscribing (also known as pay units).

[^21]: Digital cable service refers to digitally compressed video
    channels offered on digital service tiers. Every subscriber of a
    cable system must subscribe to the basic tier in order to subscribe
    to any other tier of video service or to purchase any other video
    service. 47 C.F.R § 76.920.

[^22]: Channel capacity is bandwidth dedicated to video use. Video
    channel capacity can be increased or decreased on any given system
    simply by using more or less bandwidth for other services, such as
    high-speed Internet access services or cable telephony.

[^23]: Video-on-demand (VOD) allows subscribers to select at any time
    movies and other programs they wish to view from a selection of
    titles stored on a remote server.

[^24]: Digital video recorders (DVRs) use a hard disk drive to record
    video programs.

[^25]: High-definition (HD) service provides television signals with
    greater detail and fidelity than provided by the National Television
    Systems Committee (NTSC) system. The high-definition picture has
    approximately twice the visual resolution as NTSC. High-definition
    service also supports 5.1 channel Dolby Digital surround sound.

[^26]: *See Application of EchoStar Communications Corporation, General
    Motors Corporation, and Hughes Electronics Corporation, Transferors
    and EchoStar Communications Corporation, Transferee*, 17 FCC Rcd
    20559, 20611-12 ¶¶ 122-25 (2002) (*EchoStar-Hughes HDO*)
    (designating for hearing the issue of the precise number of
    households that are not served by a cable operator, the number
    served by a low-capacity cable system, and the number served by a
    high-capacity cable system).

[^27]: Homes passed data evaluated in the context of our review of the
    EchoStar-DIRECTV merger application indicated that the number of
    homes not passed by cable might vary from four percent to 21.28
    percent depending on the estimation methods. *EchoStar-Hughes*
    *HDO*, 17 FCC Rcd at 20612 ¶ 124 and n.356.

[^28]: NCTA, *Industry Statistics*, Cable Developments 2005, at 5.
    NCTA's estimate of 108.2 million occupied homes with a television
    that were passed by a cable system is a projection, not a current
    estimate, from Kagan Research, LLC, Broadband Cable Financial
    Databook, Aug. 2004, at 11. NCTA's estimate of 109.6 million homes
    with a television comes from Nielsen Media Research (January 2005).

[^29]: NCTA, *Industry Statistics*, Cable Developments 2005, at 5. NCTA
    calculated the 99 percent figure as follows: 108.2 million/109.6
    million = 98.7 percent.

[^30]: Kagan Research, LLC, Broadband Cable Financial Databook, Aug 2005
    (Cable Databook), at 11. Occupied homes passed by cable systems
    equals total cable homes passed times percent of total housing units
    that are occupied (108.6 million = 120.7 million x (111.4
    million/123.8 million)). Cable Databook at 11 and 13.

[^31]: The 99 percent estimate is derived as follows: 108.6
    million/109.6 million = 99.1 percent. Since the numerator includes
    homes that may not have a television, the calculation may overstate
    cable availability.

[^32]: 47 U.S.C. § 532(g). This provision was added to the
    Communications Act by the Cable Communications Policy Act of 1984,
    Pub. L. No. 98-549, 98 Stat. 2779.

[^33]: We observe that each data source provides different estimates of
    the number of occupied homes, the number of homes passed by cable
    systems, and the number of basic cable subscribers. Some data
    sources identify cable systems with 36 or more channels, while other
    data sources report estimates for all cable systems without
    distinguishing between those with 36 or more channels and those with
    less than 36 channels.

[^34]: U.S. Census Bureau, *Census Bureau Reports on Residential
    Vacancies and Homeownership* (press release), July 28, 2005, Table
    3. *See*
    http://www.census.gov/hhes/www/housing/hvs/qtr205/q205prss/pdf
    (visited Sept. 20, 2005).

[^35]: Warren Communications News, *Custom Report: From Television and
    Cable Factbook Online Datasets*, Sept. 21, 2005.

[^36]: *Id*. Warren defines homes passed as the total number of homes
    passed by cable systems having the potential of being served by a
    cable operator promptly. Specifically, the homes passed must be
    occupied and are assumed to have a television.

[^37]: *See* SBC Reply Comments at 15**.**

[^38]: *Id*.

[^39]: *See* NCTA, at http://www.ncta.com/Docs/
    PageContent.cfm?pageID=86 (visited Oct. 21, 2005). NCTA's website
    indicates that Nielsen Media Research is the source for this
    subscriber number.

[^40]: *See 2004 Report*, 20 FCC Rcd 2768 ¶ 20. The Commission's
    estimate is calculated using data from Warren Communications News,
    *Custom Report: From Television and Cable Factbook Online Datasets*,
    Oct. 19, 2004.

[^41]: *See* SBC Reply Comments at 15.

[^42]: *See 2004 Report*, 20 FCC Rcd 2768 ¶ 20. The Commission's data
    source was Warren Communications News, *Custom Report: From
    Television and Cable Factbook Online Datasets*, Oct. 19, 2004.

[^43]: SBC Reply Comments at 14-16. SBC acknowledges, however, that
    different data sources produce different results and that
    calculations based on available data may not be definitive.

[^44]: SBC Reply Comments at 16.

[^45]: Warren Communications News, *Custom Report: From Television and
    Cable Factbook Online Datasets*, Sept. 30, 2005.

[^46]: *Id*. Warren reports that of the 66,300,059 cable subscribers in
    the United States, 63,145,124 subscribe to cable systems with 36 or
    more channels. Thus, there are 3,154,935 (66,300,059 -- 63,145,124 =
    3,154,935) subscribers to cable systems with fewer than 36 channels.

[^47]: Section 623(k) of the 1992 Cable Act, Pub. L. No. 102-385, 106
    Stat. 1460, codified at 47 U.S.C. § 543(k), requires the Commission
    to publish annually a statistical report on average rates for the
    cable basic service tier, cable programming tier, and equipment. The
    information and analysis provided in the report are based on the
    Commission's survey of a random sample of cable systems. The survey
    collects data on cable system subscribership, channel capacity, and
    homes passed. *See, e.g., Implementation of Section 3 of the Cable
    Television Consumer Protection and Competition Act of 1992*,
    *Statistical Report on Average Prices for Basic Service, Cable
    Programming Services, and Equipment*, 20 FCC Rcd 2718 (2005). Using
    data from the annual Price Survey sample, we calculate
    subscriber-weighted estimates, taking into account our sampling
    procedures, in the same manner that we use for our report on cable
    rates.

[^48]: 47 C.F.R § 76.403 requires that cable television systems notified
    by the Commission shall file FCC Form 325 (Annual Cable Report)
    soliciting general information and frequency and signal distribution
    information. Form 325 data for filing year 2004 is as of December
    31, 2004. All systems with more than 20,000 subscribers and a
    randomly selected sample of smaller systems are required to file the
    Form 325. The Commission based last year's Form 325 estimate on data
    for June 30, 2003. The estimates reported here are unadjusted
    figures from the data reported in Form 325 submissions.

[^49]: *See* Letter from Daniel L. Brenner, Senior Vice President, Law &
    Regulatory Policy, NCTA, to Marlene H. Dortch, Secretary, FCC, Dec.
    15, 2005, at 2 (providing estimates using Warren, Nielsen, and Kagan
    homes passed and subscriber statistics). NCTA estimates that the
    penetration rate for cable systems with 36 or more channels is 68.9
    percent using October 2004 Warren data and 63.3 percent using both
    sample and adjusted Nielsen FOCUS data. NCTA also submits Kagan data
    to calculate a cable penetration rate of 53.1 percent for all cable
    systems to demonstrate that the Warren data understate the number of
    homes passed by cable systems with more than 36 channels. NCTA
    claims that all three data sources demonstrate that the penetration
    rate is below the 70 percent threshold. *Id*.

[^50]: Warren's database includes information on the majority of, but
    not all, cable systems. The Price Survey uses a stratified random
    sample based on system size. The Form 325 data are collected from
    all cable systems with more than 20,000 subscribers and a 5 percent
    sample of systems with fewer than 20,000 subscribers. SBC's estimate
    combines data from several publicly available data sources.

[^51]: *See EchoStar-Hughes HDO*, 17 FCC Rcd at 20611-12 ¶¶ 122-25. *See
    also 2004 Video Competition Report*, 20 FCC Rcd at 2766-68 ¶¶ 18-20;
    and *2003 Report*, 19 FCC Rcd at 1620-21 ¶¶ 21-22.

[^52]: *2004 Video Competition Report*, 20 FCC Rcd at 2766-68 ¶¶ 18-20;
    and *2003 Video Competition Report*, 19 FCC Rcd at 1620-21 ¶¶ 21-22.

[^53]: We recognize that at the time that Congress drafted Section 612,
    very few cable operators were providing services beyond multichannel
    video offerings.

[^54]: SBC Reply Comments at 16.

[^55]: Should our analysis of the further public input here indicate
    that Commission action under Section 612(g) may be warranted, we
    will issue a Notice of Proposed Rulemaking to seek comment prior to
    adoption of any potential new regulations.

[^56]: Cable Databook at 11.

[^57]: Historical data in this table may differ from that previously
    reported because some data have been updated by Kagan. *See* Cable
    Databook at 9, 11.

[^58]: Subscriber data reported here are those reported to the SEC and
    may differ from subscriber numbers reported for other purposes.

[^59]: Comcast Corp., *Comcast Reports Fourth Quarter and Year End 2004
    Results* (press release), Feb. 3, 2005. Pro forma subscriber data
    excludes the results of the 314,000 cable subscribers sold to
    Bresnan Communications in March 2003 and excludes the results of the
    net reduction of 16,000 subscribers associated with the cable
    systems exchanged with Insight Communications in February 2003. Pro
    forma subscriber data includes the results of the 30,000 cable
    subscribers acquired from US Coastal Cable in April 2004 and 54,000
    subscribers acquired in various small acquisitions during the
    periods presented. *Id*. The pro forma methodology permits an
    estimate of the number of Comcast's subscribers after Jan. 1, 2003,
    as if it had sold the cable systems to Bresnan Communications,
    exchanged the cable systems with Insight Communications, and bought
    the cable systems from US Coastal Cable on Jan. 1, 2003. For second
    quarter 2005 results, *see* Comcast Corp., *Comcast Reports Second
    Quarter 2005 Results* (press release), Aug. 2, 2005. Pro forma
    subscriber data include the results of the 30,000 subscribers
    acquired from US Coastal Cable in April 2004 and 60,000 subscribers
    acquired in various small acquisitions during the periods presented.
    *Id*. The pro forma methodology permits an estimate of the number of
    Comcast's subscribers after Jan. 1, 2004, as if it had owned the
    cable systems acquired from US Coastal Cable on Jan. 1, 2004.

[^60]: In addition to its wholly owned systems reported here, Comcast
    holds an attributable interest in systems serving approximately an
    additional 4.6 million subscribers through partnership and other
    ownership interests. *See* Application and Public Interest Statement
    of Adelphia Communications Corporation, Time Warner Inc., and
    Comcast Corporation, MB Docket No. 05-192 (filed May 18, 2005), at
    14 n.27.

[^61]: Time Warner Inc., *Time Warner Reports Results for 2004 Full Year
    and Fourth Quarter* (press release), Feb. 4, 2005. Time Warner
    indicates that its subscriber data include "all subscribers at both
    consolidated entities and investees accounted for under the equity
    method of accounting that are managed by the Company." *Id*. at 29.
    For second quarter 2005 results, *see* Time Warner Inc., *Time
    Warner Inc. Reports Second Quarter 2005 Results* (press release),
    Aug. 3, 2005. Time Warner gained 26,000 basic cable subscribers in
    the first quarter of 2005 and lost 5,000 basic cable subscribers in
    the second quarter of 2005. *See also* Time Warner Inc., *Time
    Warner Inc. Reports First Quarter 2005 Results* (press release), May
    4, 2005.

[^62]: In addition to its wholly owned systems reported here, Time
    Warner holds an attributable interest in systems serving
    approximately an additional 2.2 million subscribers. *See*
    Application and Public Interest Statement of Adelphia Communications
    Corporation, Time Warner Inc., and Comcast Corporation, MB Docket
    No. 05-192 (filed May 18, 2005), at 10-11, 73.

[^63]: Cox Communications Inc., *Cox Communications Announces Fourth
    Quarter and Full-Year Financial Results for 2004* (press release),
    Mar. 16, 2005. Subscriber data are based on the number of
    subscribers who receive analog or digital video service. *Id*. For
    second quarter 2005 results, *see* Cox Communications Inc., *Cox
    Communications Announces Second Quarter and Year-to-Date Financial
    Results for 2005* (press release), Aug. 9, 2005.

[^64]: Charter Communications Inc., *Charter Reports Fourth Quarter and
    Annual 2004 Financial and Operating Results* (press release), Mar.
    1, 2005. Charter's subscribers include all persons that Charter's
    billing records show as receiving service (regardless of their
    payment status), except for complimentary accounts (such as
    Charter's employees). Pro forma subscriber data reflect the sales of
    systems to Atlantic Broadband Finance, LLC in Mar. and April 2004
    and WaveDivision Holdings, LLC, which closed in Oct. 2003, as if
    they both occurred as of Jan. 1, 2003. *Id*. The pro forma
    methodology permits an estimate of the number of Charter's
    subscribers after Jan. 1, 2003, as if Charter sold the cable systems
    to Atlantic Broadband Finance, LLC and WaveDivision Holdings on Jan.
    1, 2003. For second quarter 2005 results, *see* Charter
    Communications Inc., *Charter Communications Reports Second Quarter
    2005 Financial and Operating Results* (press release), Aug. 2, 2005.

[^65]: Cablevision Systems Corp., *Cablevision Systems Corporation
    Reports Fourth Quarter and Full Year 2004 Results* (press release),
    Feb. 23, 2005; Cablevision Systems Corp., *Cablevision Systems
    Corporation Reports Second Quarter 2005 Results* (press release),
    Aug. 9, 2005.

[^66]: From the end of 2004 to the end of June 2005, the ratio of cable
    subscribers to TV households was calculated to remain unchanged at
    59.7 percent. This calculation is the result of holding the number
    of TV households constant at 109.6 million over the entire 2004-2005
    season and assuming that the number of basic subscribers will remain
    unchanged at 65.4 million from January 2004 to June 2005. Cable
    Databook at 11.

[^67]: Cable Databook at 9.

[^68]: *Id*.

[^69]: *Id*. at 8.

[^70]: *Id*. at 9.

[^71]: Historical data included in this table may differ from those
    previously reported because some data have been updated by Kagan.
    *See* Cable Databook at 9. The 1999 through 2004 premium cable
    service subscribers (Pay HH) numbers are reported by Kagan as pay
    subscribers. *Id*. at 9. The 1999 through 2004 premium cable service
    subscriptions (Pay Units) numbers are reported by Kagan as the sum
    of premium units and mini-pay units (defined as a service or pay TV
    that programs less than eight hours per day). Premium units include
    HBO, Cinemax, Showtime, Movie Channel, Starz, and Playboy. Mini-pay
    units include Sundance, Flix, and Encore. *Id*. at 9.

[^72]: *See* U.S. General Accounting Office, *Issues Related to
    Competition and Subscriber Rates in the Cable Television Industry*,
    GAO-04-8, Oct. 2003, at 3, 9.

[^73]: *Id.* at 3, 9-10.

[^74]: *See* U.S. General Accounting Office, *Telecommunications:
    Wire-Based Competition Benefited Consumers in Selected Markets*,
    GAO-04-241, Feb. 2004.

[^75]: The \$60 billion of revenue generated by the cable industry is
    about one-fifth the \$291 billion of revenue generated by the
    telephone industry. Industry Analysis and Technology Division,
    Wireline Competition Bureau, Federal Communications Commission,
    *Telecommunications Industry Revenues: 2003* (rel. Mar. 1, 2005).

[^76]: Kagan estimated that total revenue from residential subscribers
    would grow from \$57.5 billion in 2004 to \$63.1 in 2005. Kagan
    expected total revenue from business subscribers to grow from \$2.6
    billion in 2004 to \$3.4 in 2005. Cable Databook at 13.

[^77]: Cable Databook at 4.

[^78]: We note that installation/miscellaneous varies from year to year.
    It includes installation revenues and any other revenues reported by
    Kagan, but not included in the categories listed separately on Table
    5.

[^79]: The cable industry has long used a cash flow valuation model.
    Cash flow valuation is an effective tool for valuing companies that
    have negative net income because they are building out capital
    infrastructure and accruing significant long-term debt early in
    their life-cycle. The traditional measurement of cash flow, a
    measure of operating profit, has evolved into EBITDA, which ignores
    the expenses of interest, taxes, depreciation and amortization,
    whereas the standard valuation model, net income, includes them. In
    the past year, free cash flow (FCF) has largely replaced EBITDA as a
    critical valuation metric of choice among industry analysts.
    Although a standardized definition of FCF does not exist, FCF
    essentially takes into account the periodic interest that must be
    paid on debt. Some analysts more recently have suggested that the
    cable industry should be valued on the traditional net income model,
    and not cash flow or its various proxies (EBITDA or FCF) because the
    industry has now reached a stage of maturation that would justify
    use of more traditional valuation metrics. *See 2003 Report*, 19 FCC
    Rcd at 1627 ¶ 28 and n.72.

[^80]: Kagan reports that it was high-speed data service that drove
    operating cash flow growth in 2004. Cable Databook at 7. *See also*
    Kagan Research, LLC, *HSD -- Cable's Growth Driver*, Cable TV
    Investor: Deals and Finance (Cable TV Investor), Apr. 26, 2005, at
    8.

[^81]: Home shopping, digital video recorder, business revenue, and
    installation/miscellaneous data for 2003 come from Kagan Research,
    LLC, Broadband Cable Financial Databook, Aug. 2004, at 8-13. All
    other data come from the Cable Databook at 8-13 and 150. Historical
    data included in this table may differ from those previously
    reported because some data have been updated by Kagan.

[^82]: Includes VOD, subscription-video-on-demand (SVOD),
    near-video-on-demand (NVOD), and PPV.

[^83]: Installation/Miscellaneous revenue includes revenues derived from
    basic installation and pay installation, high-definition television,
    interactive games, home networking, and equipment charges. We note
    that there is often no additional cost for the standard-definition
    version of HDTV channels. In many cases, MSOs charge for HDTV
    channels that are not offered in a standard-definition version. Some
    MSOs do not charge higher prices for an HD set-top box, but most
    apply a professional installation fee. *See* Time Warner Cable, at
    http//ww.timewarnercable.com/
    corporate/products/digitalcable/hdtv.html (visited Oct. 7, 2005);
    Cablevision Systems Corp., at http://www.io.tv/
    index.jhtml?pageType=hdtv (visited Oct. 7, 2005); Comcast Corp., at
    http://comcast.p.delivery.net/m/p/com/ mic/HD_Index.asp (visited
    Oct. 7, 2005); Charter Communications, at
    http://www.charter.com/products/hdtv/ hdtv.aspx (visited Oct. 7,
    2005).

[^84]: NCTA Comments at 40. NCTA's calculation of programming
    expenditures includes license fees, copyright fees, and investments
    in local programming.

[^85]: In 2005, we have identified 531 nonbroadcast networks. *See*
    para. 157 *infra*.

[^86]: Copyright Act, 17 U.S.C. § 111 *et seq*. Copyright Office,
    Library of Congress, *Licensing Division Report of Receipts*, Sept.
    13, 2005. Copyright fees are due on a specific date, but are
    collected on a rolling basis.

[^87]: Cable Databook at 171.

[^88]: Cox Enterprise Inc. acquired the 38 percent of Cox Communications
    it did not already own. *Id*.

[^89]: Cable TV Investor, Jan. 31, 2005, at 8.

[^90]: Cable Databook at 171. Analysis of transactions over the past six
    years shows that smaller systems sold for an average of \$1,731 per
    subscriber and larger systems sold for an average of \$4,445 per
    subscriber. *Id*.

[^91]: *Adelphia Deal: More Efficient Industry, Attractive Price*, Cable
    TV Investor, Apr. 26, 2005, at 1-3; *Dolans Bid To Take Cablevision
    Private for \$4,377/Sub,* Cable TV Investor, June 30, 2005, at 8.
    Adelphia reached agreements for Time Warner and Comcast to acquire
    substantially all of the assets of Adelphia for \$12.7 billion in
    cash and 16 percent of Time Warner Cable's common equity. The
    applications of Adelphia, Comcast, and Time Warner to transfer
    control of and/or assign Adelphia's Commission licenses are pending
    before the Commission. *Applications for Consent to the Assignment
    and/or Transfer of Control of Licenses, Adelphia Communications
    Corporation, Assignors, to Time Warner Cable Inc., Assignees;
    Adelphia Communications Corporation, Assignors and Transferors, to
    Comcast Corporation, Assignees and Transferees; Comcast Corporation,
    Transferor, to Time Warner Inc., Transferee; Time Warner Inc.,
    Transferor, to Comcast Corporation, Transferee, Applications and
    Public Interest Statement*, MB Docket No. 05-192 (filed May 18,
    2005). *See also* Adelphia Communications Corp., *Adelphia
    Communications to be Acquired by Time Warner and Comcast* (press
    release), Apr. 21. 2005. Cablevision Systems Corp., *Response from
    Cablevision Systems Corporation Regarding Proposal by the Dolan
    Family Group* (press release), June 22, 2005. On Oct. 25, 2005, the
    Dolan Family Group withdrew their June 19, 2005, proposal to acquire
    the cable and telecommunications businesses of Cablevision because
    they were unable to reach agreement with Cablevision on the terms of
    their proposal. Dolan Family Group, *Dolan Family Group Withdraws
    Cablevision Going Private Proposal and Recommends That the Board of
    Directors Consider a Special Pro Rata Dividend of \$3 Billion*
    (press release), Oct. 25, 2005, at
    http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/
    www/story/10-25-2005/0004193917&EDATE= (visited Nov. 15, 2005). *See
    also* Cablevision Systems Corp., *Cablevision Statement on Dolan
    Family Group Proposal* (press release), Oct. 25, 2005, at
    http://www.cablevision.com/index.jhtml?page Type=financial_news
    (visited Nov. 15, 2005).

[^92]: Insight Communications Co., Inc., *Insight Communications and
    Insight Acquisition Corp. Enter into Definitive Merger Agreement*
    (press release), July 29, 2005.

[^93]: Data for 2004 come from *Cable System Sales Summary (Annually
    Through December),* Cable TV Investor, Jan. 31, 2005, at 9. Data for
    January to June 2005 come from *Cable System Sales Summary*, Cable
    TV Investor, July 29, 2005, at 15. The numbers for January to June
    2005 include all announced and proposed deals. Historical data
    included in this table may differ from those previously reported
    because some data have been updated by Kagan. *See* Cable Databook.

[^94]: The Kagan Cable MSO Average includes the following companies
    (stock symbol): Adelphia (ADELQ), Rogers B (US\$) (RG), Charter
    (CHTR), Cable & Wireless (CWP), Alaska Comm. Sys. (ALSK), Washington
    Post (WPO), General Comm. (GNCMA), Mediacom (MCCC), Time Warner
    (TWX), Liberty Media A (L), NTL (NTLI), Comcast (CMCSA), Comcast
    Special A (CMCSK), Pegasus (PGTV), Telewest (TLWT), Insight (ICCI),
    Cablevision (CVC), and Liberty Media B (LMCB).

[^95]: Cable TV Investor, July 29, 2004, at 23; Cable TV Investor, July
    29, 2005, at 19, 23.

[^96]: Cable *MSOs: Private Market Valuations*, Cable TV Investor, June
    30, 2005, at 12; *Kagan Multichannel Projections: There's Life After
    DBS and Telco Competition*, Cable TV Investor, July 29, 2004, at 1.

[^97]: *How Important are Telco Franchising Gains?,* Cable TV Investor,
    July 29, 2005, at 1-2.

[^98]: Cable Databook at 149.

[^99]: *Id*.

[^100]: For example, Comcast completed a \$1.3 billion stock repurchase.
    Comcast Corp., *Comcast Reports Fourth Quarter and Year End 2004
    Results* (press release), Feb. 3, 2005.

[^101]: Cable Databook at 149. Kagan reports that no money was raised
    through public equity, \$125 million was raised through private
    equity, and approximately \$1.315 billion was spent by cable
    companies to buy back stock shares. Thus, net equity declined
    approximately \$1.190 billion. *Id*. at 154.

[^102]: Data for 2004 come from Cable Databook at 154. Data for January
    2005 to June 2005 come from Cable TV Investor, July 29, 2005, at 13.
    Historical data included in this table may differ from those
    previously reported because some data have been updated by Kagan.
    *See* Cable Databook at 154.

[^103]: Rebuilds are significant improvements made to existing systems
    that do not retain much of the old system plant and equipment.
    Upgrades are improvements to existing cable systems that do not
    require the replacement of the entire existing plant and equipment.

[^104]: NCTA Comments at 25. Kagan estimates annual cable infrastructure
    expenditures from 1996 to 2005 that total approximately \$104.2
    billion. *See* Cable Databook at 150.

[^105]: NCTA Comments at 25.

[^106]: *Advanced Services Spread Across Cable Systems,* Cable TV
    Investor, Apr. 26, 2005, at 5.

[^107]: Cable Databook at 150. *But see* NCTA projection that total
    capital expenditures will decrease from \$10.1 billion in 2004 to
    \$9.6 billion in 2005. NCTA, *Industry Statistics*, Cable
    Developments 2005, at 10.

[^108]: Comcast Corp., *Comcast Reports Fourth Quarter and Year End 2004
    Results* (press release), Feb. 3, 2005; Comcast Corp., *Comcast
    Reports Second Quarter 2005 Results* (press release), Aug. 2, 2005.

[^109]: Time Warner Inc., *Time Warner Reports Results for 2004 Full
    Year and Fourth Quarter* (press release), Feb. 4, 2005; Time Warner
    Inc., *SEC Form 10-Q Quarterly Report for the Period Ending June 30,
    2005*, at 31.

[^110]: Cox Communications Inc., *Cox Communications Announces Fourth
    Quarter and Full-Year Financial Results for 2004* (press release),
    Mar. 16, 2005; Cox Communications Inc., *Cox Communications
    Announces Second Quarter and Year-to-Date Financial Results for
    2005* (press release), Aug. 9, 2005. For second quarter 2005
    results, Cox did not report capital expenditures devoted to plant
    upgrades and CPE.

[^111]: Charter Communications Inc., *Charter Reports Fourth Quarter and
    Annual 2004 Financial and Operating Results* (press release), Mar.
    1, 2005; Charter Communications Inc., *Charter Communications
    Reports Second Quarter 2005 Financial and Operating Results* (press
    release), Aug. 2, 2005.

[^112]: Cablevision Systems Corp., *Cablevision Systems Corporation
    Reports Fourth Quarter and Full Year 2004 Results* (press release),
    Feb. 23, 2005; Cablevision Systems Corp., *Cablevision Systems
    Corporation Reports Second Quarter 2005 Results* (press release),
    Aug. 9, 2005.

[^113]: Subscription data for advanced services shown in this *Report*
    are primarily for residential service, but also may include some
    small business service. For example, Comcast offers a business
    Internet service for teleworkers called Comcast Teleworker, and a
    business Internet service for small to medium-sized businesses
    called Comcast Workplace. Similarly, Time Warner also offers a
    business Internet service called Road Runner Business Class to small
    and medium-sized businesses, home offices, and telecommuters.
    Subscribers to these services are included in the reported numbers.
    Cable companies also sold \$2.6 billion in services to business in
    2004 under separately run subsidiaries. For example, Cox Business
    Services offers high-speed Internet access, local and long distance
    telephone, advanced voice and data transport to businesses of all
    sizes; and Charter Business offers high-speed Internet access
    services and video services to small and large businesses. Small
    operators also offer advanced services to business customers.
    Bresnan, for example, provides high-speed Internet access, voice and
    data transport and video to large and small businesses under its
    Bresnan Business Services subsidiary; Susquehanna Communications
    offers businesses advanced communications services, including local
    and long distance telephone services, high-speed Internet access,
    and data transport and video; and Sunflower Broadband offers
    Sunflower Broadband Business Services providing high-speed Internet,
    telephone service, and professional IT support. Cable Databook at
    13; Comcast Corp., at http://work.comcast.net/ (visited Sept. 26,
    2005); Time Warner, Inc., at http://www.timewarnercable.com/
    corporate/products/highspeedinternet/default.html (visited Sept. 26,
    2005); Cox Communications, Inc., at
    http://www.coxbusiness.com/index.html (visited Sept. 26, 2005);
    Charter Business, at http://www.charter-business.com (visited Sept.
    26, 2005); Bresnan Communications, at http://www.bresnan.com/
    unst/products/business (visited Sept. 26, 2005); Susquehanna
    Communications, at http://www.suscom.com/ home/business.php (visited
    Sept. 26, 2005); Sunflower Broadband, at
    http://www.sunflowerbroadband.com/business (visited Sept. 26, 2005).

[^114]: To receive a digital premium channel, a subscriber must
    subscribe to the premium channel. For example, to receive digital
    HBO, a subscriber must subscribe to HBO.

[^115]: The high-definition service tier requires a high-definition
    set-top box or CableCARD. Most high-definition programming is
    available at no additional charge. For example, the high-definition
    service from the broadcast networks is often available at no
    additional charge. In addition, high-definition service from a
    premium channel often is included with a subscription to the premium
    channel. Other high-definition programming may require additional
    fees.

[^116]: The digital video recorder service offered by cable operators
    requires a DVR set-top box.

[^117]: NCTA Comments at 26-27.

[^118]: 2004 FCC Form 325 data.

[^119]: *Advanced Services Spread Across Cable Systems*, Cable TV
    Investor, Apr. 26, 2005, at 5.

[^120]: Cable Databook at 11; Kagan Research, LLC, Broadband Cable
    Financial Databook, Aug. 2004, at 11.

[^121]: *See* NCTA, at
    http://www.ncta.com/Docs/PageContent.cfm?pageID=91 (visited Oct. 20,
    2005); *Broadband Evolution 2004-2015*, Cable TV Investor, June 30,
    2005, at 2.

[^122]: Comcast Corp., *Comcast Reports Second Quarter 2005 Results*
    (press release), Aug. 2, 2005; Comcast Corp., *Comcast Reports
    Fourth Quarter and Year End 2004 Results* (press release), Feb. 3,
    2005.

[^123]: Time Warner Inc., *Time Warner Inc. Reports Second Quarter 2005
    Results* (press release), Aug. 3, 2005; Time Warner Inc., *Time
    Warner Reports Results for 2004 Full Year and Fourth Quarter* (press
    release), Feb. 4, 2005.

[^124]: Cablevision Systems Corp., *Cablevision Systems Corporation
    Reports Second Quarter 2005 Results* (press release), Aug. 9, 2005;
    Cablevision Systems Corp., *Cablevision Systems Corporation Reports
    Fourth Quarter and Full Year 2004 Results* (press release), Feb. 23,
    2005.

[^125]: Cox Communications Inc., *Cox Communications Announces Fourth
    Quarter and Full-Year Financial Results for 2004* (press release),
    Mar. 16, 2005; Cox Communications Inc., *Cox Communications
    Announces Second Quarter and Year-to-Date Financial Results for
    2005* (press release), Aug. 9, 2005.

[^126]: Charter Communications Inc., *Charter Reports Second Quarter
    2005 Financial and Operating Results* (press release), Aug. 1, 2005;
    Charter Communications Inc., *Charter Reports Fourth Quarter and
    Annual 2004 Financial and Operating Results* (press release), Mar.
    1, 2005.

[^127]: NCTA Comments at 26-28.

[^128]: NCTA Comments at 28; APTS Comments at 2. *See also* NCTA,
    *Public Television and Cable Announce Major Digital Carriage
    Agreement* (press release), Jan. 31, 2005.

[^129]: Comcast Comments at 45.

[^130]: *Id*.

[^131]: *Implementation of Section 304 of the Telecommunications Act of
    1996, Commercial Availability of Navigation Devices, Compatibility
    between Cable Systems and Consumer Electronics Equipment*, 18 FCC
    Rcd 20885 (2003).

[^132]: NCTA reports that 90,000 CableCARDs have been deployed by the 10
    largest cable operators. *See* Letter from Neal M. Goldberg, General
    Counsel, NCTA, to Marlene H. Dortch, Secretary, FCC, CS Docket No.
    97-80 (Dec. 29, 2005), at 1.

[^133]: *See* para. 211 *infra*. For a description of the progress of
    negotiations between the consumer electronics and cable industries,
    s*ee* Consumer Electronics Association, Joint Status Report of the
    Consumer Electronics Association and the National Cable &
    Telecommunications Association, Oct. 14, 2005, at
    http://gullfoss2.fcc.gov/prod/ecfs/
    retrieve.cgi?native_or_pdf=pdf&id_document=6518169296 (visited Oct.
    21, 2005). *See also* Paul Gluckman, *Talks Progress on 2-Way Plug &
    Play, But Much Remains Undone, Report Says*, [Communications
    Daily]{.smallcaps}, Oct. 17, 2005.

[^134]: CableLabs, *Samsung Electronics Gains CableLabs Certification on
    2-Way Digital Television* (press release), Aug. 23, 2005.

[^135]: Samsung, *Samsung and Time Warner Cable Depoly World's First
    Interactive OCAP TV* (press release), Jan. 11, 2006.

[^136]: CEA Comments at 5. With most cable systems, use of the digital
    cable-ready television set requires that cable subscribers obtain a
    CableCARD containing security and other circuitry for particular
    local cable systems. The CableCARD is a removable security module
    which, when inserted into an OpenCable certified device, enables
    delivery of digital cable service and other services. CableCARDs are
    provided directly by the cable operator to customers who request
    them. CableLabs, at http://www.cablelabs.com/news/glossary.html#C
    (visited Sept 27, 2005). *See* para. 211 *infra*.

[^137]: *See* Ed Bott, *More Two-Way CableCARD Products*, [Ed Bott's
    Media Central]{.smallcaps}, Sept. 29, 2005, at
    http://www.edbott.com/mediacenter/archives/more-two-way-cablecard-products
    (visited Oct. 8, 2005). *See also* Greg Tar, *Samsung Readies
    Two-Way Cable Products*, [TWICE]{.smallcaps}, Aug. 22, 2005, at
    http://www.twice.com/article/
    CA6250081.html?verticalid=820&industry=Video&industryid=23099&pubdate=08/22/2005
    (visited Oct. 8, 2005).

[^138]: VOD differs from PPV. PPV is a pay television service for which
    cable subscribers pay a one time fee for each program viewed. The
    programs are generally available at pre-set times and in some cases
    are time shifted across several channels to increase the opportunity
    for viewing. Once initiated, the program cannot be paused, rewound
    or fast-forwarded.

[^139]: *Advanced Services Spread Across Cable Systems*, Cable TV
    Investor, Apr. 26, 2005, at 5.

[^140]: Cable Databook at 12.

[^141]: Comcast Comments at 48. For an overview of Comcast's VOD
    service, s*ee* http://www.comcast.com/Benefits/CableDetails/
    Slot5PageOne.asp (visited Sept. 27, 2005). *See also* Comcast Corp.,
    at http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-digital
    (visited Sept. 29, 2005).

[^142]: Jonathan Make, *Comcast Customers Will Use Its VOD Service 50%
    More Times by Year-End*, [Communications Daily]{.smallcaps}, Sept.
    20, 2005.

[^143]: Comcast Comments at 48-49.

[^144]: For example, Select On Demand's "Wheels and Wings" channel
    focuses on content for car enthusiasts, while "Anime Selects" offers
    an array of animation programs. Comcast Comments at 51.

[^145]: The eight markets are: San Diego, California; Oklahoma City,
    Oklahoma; Hampton Roads, Virginia; Las Vegas, Nevada; New Orleans,
    Louisiana; Omaha, Nebraska; New England (markets in Connecticut and
    Rhode Island); and Orange County, California. Cable TV Investor,
    July 29, 2005, at 3.

[^146]: *Id*. For an overview of Cox VOD service, *see*
    http://www.cox.com/DigitalCable/ondemand (visited Sept. 27, 2005).

[^147]: Each of Time Warner's cable operating divisions is a cluster of
    cable franchises.

[^148]: For an overview of Time Warner's Premiums on Demand VOD service,
    *see* http://www.
    timewarnercable.com/corporate/products/digitalcable/premiumsondemand.html
    (visited Sept. 27, 2005).

[^149]: For an overview of Time Warner's Movies on Demand VOD service,
    s*ee* http://www.timewarnercable.com/corporate/
    products/digitalcable/moviesondemand.html (visited Sept. 27, 2005).

[^150]: For an overview of Cablevision's VOD service, *see*
    http://www.io.tv/index.jhtml?pageType= on_demand (visited Sept. 27,
    2005).

[^151]: For an overview of Charter's VOD service, *see*
    http://www.charter.com/services/ondemand/ ondemand.aspx (visited
    Sept. 27, 2005).

[^152]: At the end of June 2005, there were approximately 8.3 million
    subscribers to DVR services in the U.S. *See* Nick Wingfield, *TiVo
    Slashes Recorder Price in Half, \$50*, [Wall Street
    Journal]{.smallcaps}, Sept. 7, 2005, at D1. TiVo, the leading seller
    of DVRs, has almost 3.6 million subscribers, although its lead is
    vanishing as cable and satellite operators are offering their own
    DVRs to subscribers. *Id*. *See also* Joe Mandese, *DVR Threat Gets
    Downgraded*, [Broadcasting & Cable]{.smallcaps}, Sept. 12, 2005, at
    20.

[^153]: *Advanced Services Spread Across Cable Systems*, Cable TV
    Investor, Apr. 26, 2005, at 5.

[^154]: Comcast Corp., at
    http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-digital (visited
    Sept. 29, 2005).

[^155]: Comcast Comments at 52.

[^156]: Comcast Corp., *Comcast and TiVo Announce Strategic Partnership*
    (press release), Mar. 15, 2005.

[^157]: Jane L. Levere, *In a Challenge to TiVo, DirecTV Promotes Its
    Own Box*, [New York Times]{.smallcaps}, Oct. 7, 2005, at
    http://www.nytimes.com/2005/10/07/business/07adco.html (visited Oct.
    27, 2005).

[^158]: *See* Cox Communications, at
    http://www.cox.com/Fairfax/Digitalcable/dvrfaqs.asp (visited Oct. 4,
    2005).

[^159]: *Cox Turns Attention to Advanced Video Services*, Cable TV
    Investor, July 29, 2005, at 3.

[^160]: Time Warner Inc., *Time Warner Inc. Reports Second Quarter 2005
    Results* (press release), Aug. 3, 2005; Time Warner Inc., *Time
    Warner Reports Results for 2004 Full Year and Fourth Quarter* (press
    release), Feb. 4, 2005.

[^161]: *See* Charter Communications, at
    http://www.charter.com/services/dvr/dvr.aspx (visited Oct. 4, 2005).

[^162]: HDTV service typically includes a mix of broadcast, basic cable,
    and premium nonbroadcast networks.

[^163]: *See* Comcast, at
    http://comcast.p.delivery.net/m/p/com/mic/HD_Index.asp (visited Oct.
    20, 2005); Cox, at
    http://.cox.com/Fairfax/digitalcable/hdtvrates.asp (visited Oct. 7,
    2005); Time Warner, at
    http://timewarnercable.com/corporate/products/digitalcable/hdtv.html
    (visited Sept. 30, 2005); Cablevision, at
    http://www.io.tv/index.jhtml?pageType=hdtv (visited Oct. 20, 2005);
    Charter, at http://www.charter.com/products /hdtv/hdtv.aspx (visited
    Oct. 7, 2005).

[^164]: *Advanced Services Spread Across Cable Systems*, Cable TV
    Investor, Apr. 26, 2005, at 5. *See also* NCTA Comments at 26.

[^165]: *Advanced Services Spread Across Cable Systems*, Cable TV
    Investor, Apr. 26, 2005, at 5.

[^166]: NCTA Comments at 26.

[^167]: *Id*. at 27. These include Cinemax HDTV, Comcast SportsNet HDTV,
    Discovery HD Theater, ESPN HD, ESPN2 HD, FSN HD, HBO HD, HDNet,
    HDNet Movies, INHD, INHD2, MSG Networks in HD, NBA TV, NFL Network
    HD, Outdoor Channel 2 HD, Showtime HD, Spice HD, STARZ! HDTV, The
    Movie Channel HD, TNT in HD, Universal HD, and YES-HD.

[^168]: Comcast Comments at 47-48.

[^169]: *Id*.

[^170]: *See* Comcast, at
    http://www.comcast.com/Benefits/CableDetails/Slot4PageOne.asp
    (visited Oct 6, 2005).

[^171]: *Id*. Comcast also offers regional sports networks in
    high-definition, including Comcast SportsNet Philadelphia,
    Mid-Atlantic, Chicago, and West. In addition, Comcast offers
    high-definition VOD service. A monthly equipment charge applies for
    an HDTV-enabled digital cable set-top box. *See*
    http://www.cmcsk.com/ phoenix.zhtml?c=147565&p=irol-digital (visited
    Sept. 30, 2005).

[^172]: Cox subscribers pay \$3.50 per month for a digital set-top box
    and \$10 per month for an HDTV set-top box. *See* Cox
    Communications, at http://www.cox.com/fairfax/rates.asp (visited
    Oct. 7, 2005).

[^173]: *See* Cox Communications, at
    http://www.cox.com/fairfax/digitalcable/hdtvrates.asp (visited Oct.
    7, 2005).

[^174]: *Id*.

[^175]: *See* Time Warner, at
    http://www.timewarnercable.com/albany/products/hdtv/default.html
    (visited Oct. 6, 2005).

[^176]: *See* Time Warner, at
    http://www.timewarnercable.com/corporate/products/digitalcable/hdtv.html
    (visited Sept. 30, 2005).

[^177]: *Id*.

[^178]: Cablevision Systems Corp., *iO Adds WB11-HD to Industry-Leading
    High-Definition Line-Up* (press release), July 18, 2005.

[^179]: *Id*.

[^180]: *Id*.

[^181]: *Id*.

[^182]: *See* Charter Communications, Inc., at
    http://www.charter.com/products/hdtv/hdtv.aspx (visited Oct. 7,
    2005).

[^183]: *Id*.

[^184]: *Id*.

[^185]: *Id*.

[^186]: 2004 FCC Form 325 data.

[^187]: NCTA Comments at 31.

[^188]: *10-Year Projections: Cable's Growth Story Persists*, Cable TV
    Investor, June 30, 2005, at 2-3. *See also* Table 4 *supra.*

[^189]: *Id*.

[^190]: FCC, *High-Speed Services for Internet Access: Status as of
    December 31, 2004,* July 2005, at Chart 6. This report and previous
    releases of the *High-Speed Services for Internet Access* report are
    available at http://www.fcc.gov/wcb/iatd/comp.html (visited Nov. 15,
    2005).

[^191]: *See* Global Broadband Penetration per 100 Inhabitants,
    International Telecommunications Union, at
    http://www.itu.int/osg/spu/newslog/ITUs+New+Broadband+Statistics+For+1+January+2005.aspx
    (visited Oct. 28, 2005).

[^192]: FCC, *High-Speed Services for Internet Access: Status as of
    December 31, 2004,* July 2005, at Chart 6. This report and previous
    releases of the *High-Speed Services for Internet Access* report are
    available at http://www.fcc.gov/wcb/iatd/comp.html (visited Nov. 15,
    2005).

[^193]: FCC, *High-Speed Services for Internet Access: Status as of
    December 31, 2003,* June 2004, at Chart 6. This report and other
    releases of the *High-Speed Services for Internet Access* report are
    available at http://www.fcc.gov/wcb/iatd/comp.html (visited Nov. 15,
    2005).

[^194]: *See* paras. 135-39 *infra*.

[^195]: *See 2001 Report*, 17 FCC Rcd at 1266-67 ¶¶ 46-47 and n.136;
    *see also Inquiry Concerning High-Speed Access to the Internet Over
    Cable and Other Facilities, Internet Over Cable Declaratory Ruling,
    Appropriate Regulatory Treatment for Broadband Access to the
    Internet Over Cable Facilities, Declaratory Ruling and Notice of
    Proposed Rulemaking*, 17 FCC Rcd 4798 (2002) (*High-Speed Access
    Declaratory Ruling and NPRM*). In the *High-Speed Access Declaratory
    Ruling and NPRM*, the Commission concluded that "cable modem
    service, as it is currently offered, is properly classified as an
    interstate information service, not as a cable service, and that
    there is no separate offering of telecommunications service."
    *High-Speed Access Declaratory Ruling and NPRM*, 17 FCC Rcd at 4802
    ¶ 7. *See AT&T v. City of Portland*, 216 F.3d 871 (9th Cir. 2000).
    *See also Brand X Internet Services v. FCC*, 345 F.3d 1120 (9^th^
    Cir. 2003), *reversed and remanded,* *National Cable &
    Telecommunications Ass'n v. Brand X Internet Services*, 125 S. Ct.
    2688 (2005).

[^196]: *See* Time Warner Cable, at
    http://www.timewarnercable.com/houston/products/cable
    /packagesandpricing.html?menu=CustomerService (visited Oct. 11,
    2005). *See also*
    http://www.timewarnercable.com/houston/products/internet/earthlink.html
    (visited Oct. 11, 2005).

[^197]: Comcast Corp., *Comcast Reports Second Quarter 2005 Results*
    (press release), Aug. 2, 2005.

[^198]: Although there is no standard method for reporting penetration
    rates for advanced services, high-speed Internet service penetration
    rates usually are calculated by dividing the number of high-speed
    Internet subscribers by the number homes passed where high-speed
    Internet service is available. This is the method often used when
    high-speed Internet services are not yet available to every home
    passed by a cable system. Cablevision, however, has completed its
    system upgrade and makes high-speed Internet service available to
    all homes passed by its cable systems. As such, Cablevision
    calculates its penetration rate for high-speed Internet service by
    dividing the number of high-speed Internet service subscribers by
    the number of homes passed by its cable system.

[^199]: Comcast Corp., *Comcast Reports Second Quarter 2005 Results*
    (press release), Aug. 2, 2005; Comcast Corp., *Comcast Reports
    Fourth Quarter and Year End 2004 Results* (press release), Feb. 3,
    2005.

[^200]: Cox Communications Inc., *Cox Communications Announces Second
    Quarter and Year-to-Date Financial Results for 2005* (press
    release), Aug. 9, 2005; Cox Communications Inc., *Cox Communications
    Announces Fourth Quarter and Full-Year Financial Results for 2004*
    (press release), Mar. 16, 2005.

[^201]: Time Warner Inc., *Time Warner Inc. Reports Second Quarter 2005
    Results* (press release), Aug. 3, 2005; Time Warner Inc., *Time
    Warner Reports Results for 2004 Full Year and Fourth Quarter* (press
    release), Feb. 4, 2005.

[^202]: Cablevision Systems Corp., *Cablevision Systems Corporation
    Reports Second Quarter 2005 Results* (press release), Aug. 9, 2005;
    Cablevision Systems Corp., *Cablevision Systems Corporation Reports
    Fourth Quarter and Full Year 2004 Results* (press release), Feb. 23,
    2005.

[^203]: Charter Communications Inc., *Charter Reports Second Quarter
    2005 Financial and Operating Results* (press release), Aug. 1, 2005;
    Charter Communications Inc., *Charter Reports Fourth Quarter and
    Annual 2004 Financial and Operating Results* (press release), Mar.
    1, 2005.

[^204]: Marguerite Reardon, *Comcast Revs Up Downloads*,
    [CNET]{.smallcaps}, July 12, 2005, at
    http://news.com.com/Comcast+revs+up+downloads/2100-1034_3-5785081.html?tag=st.rn
    (visited Oct. 25, 2005).

[^205]: NCTA Comments at 35.

[^206]: *Id*.

[^207]: *Id*. at 35-36.

[^208]: Comcast Comments at 53. *See also* Comcast Corp., at
    http://www.comcast.com/Benefits CHSIBenefits.asp?LinkID=51 (visited
    Oct. 20, 2005).

[^209]: *Id*.

[^210]: *See* Cox, at http://www.cox.com/Fairfax/HighSpeedInternet
    (visited Oct. 7, 2005).

[^211]: The price applies to customers that subscribe to both high-speed
    internet service and digital cable service. Time Warner Cable, at
    http://www.timewarnercable.com/houston/products/internet/default.html
    (visited Oct. 7, 2005).

[^212]: Cablevision Systems Corp., at
    http://www.cablevision.com/index.jhtml?pageType=ool_product (visited
    Oct. 7, 2005).

[^213]: Cablevision Systems Corp., *Latest Value Enhancement from
    Optimum Online: Essential PC Maintenance Protection for PC Care at
    No Additional Cost* (press release), Sept. 7, 2005.

[^214]: Charter Communications Inc., at
    http://www.charter.com/products/highspeed/highspeed.aspx (visited
    Oct. 7, 2005).

[^215]: A circuit-switched cable telephony voice call and an IP
    telephony voice call provided by a cable operator both begin with
    special equipment that connects a household's twisted pair
    infrastructure with the cable infrastructure. Cable circuit-switched
    telephony, however, eventually turns the call over to the public
    switched telephone network (PSTN), while IP telephony turns the call
    over to an Internet IP gateway for IP processing onto the PSTN or a
    managed IP Network. IP telephony processes voice telephone calls
    much like data on the Internet; that is, digitized pieces of data
    are divided into discrete packets and are transported over an IP
    network following any path that does not resist transfer.

[^216]: *Advanced Services Spread Across Cable Systems*, Cable TV
    Investor, Apr. 26, 2005, at 5. One analysis shows that cable
    operators offered VoIP service to 16.9 million homes, or 15 percent
    of all households at the end of 2004. The analysis also projects
    that VoIP service will be available to 46.2 million homes, or 41
    percent of all households, by the end of 2005. Craig Moffett, *et.
    al.*, *Quarterly VoIP Monitor: How High is Up for Cable VoIP?*,
    Bernstein Research Call, Sanford C. Bernstein & Co., Mar. 24, 2005,
    at 1. Cable companies also are adding mobile phone service to their
    telephony offerings. Anne Veigle, Howard Buskirk, *Cable Likely to
    Pursue Deals Similar to Time Warners' Sprint Offering*,
    [Communications Daily]{.smallcaps}, Dec. 30, 2004. Time Warner began
    marketing Sprint mobile phones to its subscribers in Kansas City,
    Missouri. Jim Hu, *Time Warner Cable Begins Cell Phone Trials*,
    [CNet]{.smallcaps}, Mar. 31, 2005, at
    http://news.com.com/Time+Warner+Cable+begins+cell+phone+trials/2100-1039_3-5648954.html
    (visited Oct. 14, 2005). Cablevision also reached agreement to sell
    Sprint's wireless telephone service. Harry Berkowitz, *Cablevision,
    Sprint Team Up*, [CED]{.smallcaps}, May 3, 2005, at
    http://www.cedmagazine.com/cedailydirect/
    2005/0505/cedaily050503.htm (visited Oct. 17, 2005). Comcast, Time
    Warner, Cox, and Advanced/Newhouse have reached an agreement with
    Sprint Nextel to deliver cellular phone service to their cable
    subscribers. Yuki Noguchi, *5 Firms to Link Cable and Cell Phones*,
    [Washington Post]{.smallcaps}, Nov. 3, 2005, at
    <http://www.washingtonpost.com/wp-dyn/content/article/2005/11/02/AR2005110200609.html>
    (visited Jan. 17, 2006).

[^217]: *The Evolution of Cable: 1955-2004*, Cable TV Investor, July 29,
    2005, at 4.

[^218]: NCTA Comments at 37.

[^219]: *Id*. at 38.

[^220]: Cox's VoIP service includes unlimited local and nationwide
    calling plus these features: Call Forwarding, Call Waiting, Speed
    Dial 8, Caller ID, Three-Way Calling, Call Return, Busy Line Redial,
    Selective Call Acceptance, Selective Call Rejection, Call Forwarding
    -- Busy, Call Forwarding -- No Answer, Call Forwarding of Call
    Waiting, Priority Ringing, Long Distance Alert, Call Waiting ID,
    Selective Call Forwarding, and Voice Mail (optional). *See* Cox
    Communications Inc., at
    http://www.cox.com/Fairfax/telephone/rates.asp (visited Oct. 21,
    2005).

[^221]: *See* Comcast Corp., at
    http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-telephone
    (visited Oct. 11, 2005).

[^222]: Comcast Comments at 52.

[^223]: *See* Comcast Corp., at
    http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-telephone
    (visited Oct. 11, 2005).

[^224]: Cox Communications Inc., *Cox Names New 2005 Telephone Markets*
    (press release), Aug. 1, 2005.

[^225]: *Id*.

[^226]: *Id*.

[^227]: Letter from Arthur H. Harding, Counsel for Time Warner, Inc., to
    Marlene H. Dortch, Secretary, FCC, MB Docket No. 05-192 (Nov. 10,
    2005) at 4.

[^228]: *See* Time Warner Cable, at
    http://www.timewarnercable.com/CustomerService/FAQ/
    TWCFaqs.ashx?faqID=1178&MarketID=19&CatID=1392 (visited Oct. 11,
    2005).

[^229]: Cablevision Systems Corp., *Optimum Voice Adds Valuable New
    Features, Debuts Enhanced and User-Friendly Web Portal* (press
    release), Aug. 17, 2005; Cablevision Systems Corp., *Cablevision
    Systems Corporation Reports Fourth Quarter and Full Year 2004
    Results* (press release), Feb. 23, 2005.

[^230]: Cablevision Systems Corp., *Optimum Voice Adds Valuable New
    Features, Debuts Enhanced and User-Friendly Web Portal* (press
    release), Aug. 17, 2005.

[^231]: *Id*.

[^232]: *See* *C**ablevision Integrates Home Security Systems in VoIP
    Service*, [Converge Network Digest]{.smallcaps}, June 29, 2005, at
    http://www.convergedigest.com/searchdisplay.asp?ID=15207&SearchWord=cablevision
    (visited Oct 28, 2005).

[^233]: Charter Communications Inc., *Charter Reports Fourth Quarter and
    Annual 2004 Financial and Operating Results* (press release), Mar.
    1, 2005; Charter Communications, at http://www.charter.com/products/
    telephone/telephone.aspx (visited Sept. 15, 2005).

[^234]: Charter Communications Inc., *Inland Empire and High Desert
    Residents Will be First in California to Experience Charter
    Telephone Service* (press release), Oct. 5, 2005.

[^235]: Letter from Angie Kronenberg, Counsel for Adelphia, to Marlene
    H. Dortch, Secretary, FCC, MB Docket No. 05-192 (Dec. 22, 2005) at
    161. *See also* n.95 *supra* (application for transfer of control of
    Adelphia to Comcast and Time Warner).

[^236]: 2004 FCC Form 325 data.

[^237]: The six mid-sized and smaller cable companies include Bresnan
    Communications, Service Electric Cable TV & Communications,
    Susquehanna Communications, Buckeye CableSystem, US Cable Group, and
    Sunflower Broadband. S*ee also* Michael Hopkins, *Thriving (Albeit
    Small) Empires: Independent MSOs Retool Systems, Expand Offerings in
    Highly-Competitive Markets*, [The Bridge]{.smallcaps}, Sept. 30,
    2005.

[^238]: Cable operators have signed agreements with telephone companies
    to assist in the provision of VoIP. For example, Sprint Corporation
    provides VoIP provisioning, switching, interconnections with the
    public switched telephony network, enhanced 911 services, local
    number portability, and directory assistance to Massillon Cable TV
    Inc., Wave Broadband, and Blue Ridge Communications. Karen Brown,
    *Sprint Lands Trio of Cable Deals, Passes Milestone*,
    [CED]{.smallcaps}, Apr. 4, 2005, at
    http://www.cedmagazine.com/cedailydirect/2005/
    0405/cedaily050404.htm#6 (visited Oct. 14, 2005).

[^239]: *See* Bresnan Communications, at
    http://www.bresnan.com/unst/about (visited Sept. 19, 2005).
    Bresnan's first VoIP market was Grand Junction, Colorado where
    service began in February 2005. K.C. Neel, *Triple-Play Junction:
    Grand Junction System is the Jewel of Bresnan's Eye*, [Multichannel
    News]{.smallcaps}, Feb. 28, 2005, at
    http://www.multichannel.com/article/CA506703.html?display=Search+Results&text=
    Triple%2DPlay+Junction (visited Oct. 14, 2005).

[^240]: *See* Service Electric Cable TV & Communications, at
    http://www.sectv.com/comp.shtml (visited Sept. 19, 2005). *See also*
    NCTA, *Top 25 MSOs Ranked by Number of Customers*, Cable
    Developments 2005, at 24.

[^241]: *See* Service Electric Cable TV & Communications, at
    http://www.sectv.com/prod.shtml (visited Sept. 19, 2005).

[^242]: *See* Susquehanna Communications, at
    http://www.suscom.com/about/pfaltzgraff.php (visited Sept. 19,
    2005).

[^243]: *Id*.

[^244]: *See* Susquehanna Communications, at http://www.suscom.com/home
    (visited Oct. 6, 2005).

[^245]: *See* Buckeye CableSystem, at
    http://www.buckeyecablesystem.com/index.html#indtop (visited Oct. 6,
    2005). *See also* NCTA, *Top 25 MSOs Ranked by Number of Customers*,
    Cable Developments 2005, at 24.

[^246]: *See* Buckeye CableSystem, at
    http://www.buckeyecablesystem.com/main_tol.html (visited Oct. 6,
    2005).

[^247]: *See* US Cable Group, at
    http://www.uscablegroup.com/operating_companies.htm (visited Sept.
    19, 2005).

[^248]: *See* US Cable Group, at http://www.uscable.com/aboutus.htm
    (visited Sept. 19, 2005).

[^249]: *Id*.

[^250]: *See* Sunflower Broadband, at http://www.sunflowerbroadband.com
    (visited Sept. 19, 2005).

[^251]: *Id*.

[^252]: *Id*.

[^253]: We define the Direct Broadcast Satellite Service as "\[a\]
    radiocommunication service in which signals transmitted or
    retransmitted by space stations, using frequencies specified in §
    25.202(a)(7), are intended for direct reception by the general
    public. For the purposes of this definition, the term direct
    reception shall encompass both individual reception and community
    reception." 47 C.F.R. § 25.201. *See also 2004 Report*, 20 FCC Rcd
    at 2792 ¶ 53. We note that this definition of DBS does not cover
    services offered in the Ka-band, although DBS operators have
    indicated that they plan to use this frequency band to provide
    future direct-to-home video services to subscribers.

[^254]: Dominion holds licenses for eight channels at the 61.5° W.L.
    orbital position.

[^255]: Cablevision Systems Corporation, *Cablevision to Sell Rainbow
    Direct Broadcast Satellite and Certain Related Assets to EchoStar
    for \$200 Million* (press release), Jan. 20, 2005.

[^256]: *See* *2004 Report*, 20 FCC Rcd at 2792 ¶ 54.

[^257]: *See* Appendix B, Table B-1 *infra*.

[^258]: Doug Shapiro, *4Q Wrap-Up: Connecting the Pixels*, Banc of
    America Securities Equity Research, Mar. 23, 2005. Shapiro also
    credits DIRECTV's mandatory set-top box security upgrade for
    improving DIRECTV's subscriber growth. Last year, we reported that
    analysts attributed DBS growth to an increase in niche programming,
    increased availability of local broadcast stations, and free set-top
    box equipment. *2004 Report*, 20 FCC Rcd at 2792 ¶ 54.

[^259]: *See* U.S. Government Accountability Office, *Direct Broadcast
    Satellite Subscribership Has Grown Rapidly, but Varies Across
    Different Types of Markets*, GAO-05-257, Apr. 2005. According to
    GAO, in 2001, DBS penetration rates were nearly 26 percent in rural
    areas, 14 percent in suburban areas, and about 9 percent in urban
    areas. By 2004, DBS penetration rates had increased to approximately
    29 percent in rural areas, 18 percent in suburban areas, and 13
    percent in urban areas. Over the 2001 to 2004 time frame, the DBS
    penetration rate grew about 50 percent and 32 percent in urban and
    suburban areas, respectively, compared with a growth rate of 15
    percent in rural areas. *Id.* at 3.

[^260]: *Id.* at 11.

[^261]: *Id.* at 15.

[^262]: The DIRECTV Group, Inc., *SEC Quarterly Report Form 10-Q
    Pursuant to Section 13 or 15(d) of the Securities Act of 1934 for
    the Quarterly Period Ended June 30, 2005*, at 40.

[^263]: EchoStar Communications Corp., *SEC Quarterly Report Form 10-Q
    Pursuant to Section 13 or 15(d) of the Securities Act of 1934 for
    the Quarterly Period Ended June 30, 2005*, at 25.

[^264]: Sky Angel's subscribership was provided in a telephone
    conversation with Nancy Christopher, Vice President, Public
    Relations, Dominion Video Satellite. We have reported previously
    that Sky Angel had approximately one million subscribers. *See,
    e.g., 2002 Report*, 17 FCC Rcd at 26930 ¶ 59.

[^265]: DIRECTV's Total Choice package, which includes over 135 channels
    of nonbroadcast programming and local broadcast stations, costs
    \$41.99 per month; Total Choice Plus, which includes 155 channels of
    nonbroadcast programming and local broadcast stations, costs \$45.99
    per month; and Total Choice Premier, which includes over 215
    channels of nonbroadcast programming and local broadcast stations,
    costs \$93.99 per month. If local broadcast stations are not
    available in a particular market, DIRECTV deducts \$3.00 per month
    from the price of the package.

[^266]: EchoStar Comments at 15; EchoStar Communications Corp.,
    Programming, at http://www.dishnetwork.com/ content/
    programming/packages/index.shtml.

[^267]: EchoStar requires the purchase of an additional dish in order to
    receive certain channels in Alaska and Hawaii. EchoStar broadcasts
    the majority of its basic and premium programming from its
    satellites located at the 119° and 110° W.L. orbital locations.
    According to EchoStar, customers residing in Alaska or Hawaii are
    not able to receive the 110° satellite signal or any of the channels
    broadcast from this satellite with EchoStar's standard 20-inch dish.
    It offers a 24-inch satellite dish to subscribers in Alaska and
    Hawaii. Nevertheless, some programming is entirely inaccessible.
    *See* EchoStar Communications Corp., at
    http://www.dishnetwork.com/content/programming/ packages/
    hawaii/top_60_120/index.shtml. According to DIRECTV, its service
    offerings in Hawaii are identical to the national programming
    available on the mainland. *See* Letter from Stacy Fuller, Vice
    President, Regulatory Affairs, DIRECTV, to Marlene H. Dortch,
    Secretary, FCC, MB Docket No. 03-82 (Nov. 16, 2005).

[^268]: *Ergen Laments Price Jump, Hints at DISH HD Future*,
    [SkyREPORT]{.smallcaps}, Jan. 11, 2005. EchoStar's America's Top 60
    with local channels programming package price increased \$2.00 per
    month, or 6.7 percent, to \$31.99; America's Top 120 and America's
    Top 180 without local channels increased \$3.00, or 8.5 percent, to
    \$37.99 and, 6 percent, to \$47.99, respectively. The America's
    'Everything' Package increased \$4.00 per month, or 5 percent, to
    \$81.99. One analyst described EchoStar's price increases as larger
    than the percentage price increases of large cable operators in 2004
    because EchoStar's increases applied to its entire video package,
    including channels that would be available on cable operators'
    digital tiers, while cable operators' price increases tend to affect
    their basic video tiers. George Mannes, *EchoStar Launches Price
    Hike*, TheStreet.com, Jan. 5, 2005, citing Sanford Bernstein analyst
    Craig Moffett.

[^269]: DISH Latino with 30 channels and local broadcast stations is
    \$29.99 per month; DISH Latino DOS with 120 channels and local
    broadcast stations is \$39.99 per month; and DISH Latino MAX with
    over 160 channels and local broadcast stations is \$49.99 per month.
    *See* EchoStar Comments at 15.

[^270]: The cost of discounted equipment is reflected in DIRECTV's and
    EchoStar's subscriber acquisition cost (SAC), which describes the
    cost of acquiring a new subscriber. For example, as of June 30,
    2005, EchoStar's SAC was \$667 per subscriber, up 16 percent from a
    year ago; DIRECTV's SAC was \$646 per subscriber, up almost 5
    percent from a year ago. Christy Rickard, *DBS Net Adds Down,
    Profits Up*, The DBS Report (Kagan Research LLC), Aug. 29, 2005, at
    3.

[^271]: For example, EchoStar's America's Top 120 Digital Home Advantage
    package costs \$42.99 per month for up to two televisions and
    increases to \$47.99 for subscribers using three or four multi-room
    receivers. In addition, under this plan, EchoStar charges \$4.98 per
    month per multi-room receiver. *See* EchoStar Communications Corp.,
    at http://wwwidshnetwork.com/images/getdish/
    promotions/dha/dha_price.gif.

[^272]: DIRECTV Comments at 18.

[^273]: Linda Moss, *DIRECTV Opts For a Leasing Model*, [Multichannel
    News]{.smallcaps}, Jan. 23, 2006.

[^274]: Based on Nielsen's 2004-2005 U.S. Television Households in 210
    DMAs. Last year, we reported that at least one DBS provider offered
    local broadcast stations in 155 of 210 DMAs. *2004 Report*, 20 FCC
    Rcd at 2795 ¶ 58.

[^275]: In 64 DMAs, EchoStar requires the use of a "SuperDISH," which
    enables customers to receive signals from three orbital locations,
    the third of which allows customers to receive local programming.
    *See* EchoStar Satellite, LLC,
    http://www.dishnetwork.com/content/programming/locals/index.asp.

[^276]: The DIRECTV Group, Inc., Local Channel Markets, at
    http://www.directv.com/DTVAPP/see/ LocalChannels_markets.jsp. In 60
    of these markets, DIRECTV requires the use of a DIRECTV
    Multi-Satellite System, and in 26 markets, it requires the use of a
    second 18-inch DIRECTV dish. In October 2005, DIRECTV announced that
    it would offer local broadcast channels in Mankato and Rochester,
    Minnesota, and Zanesville, Ohio by the end of 2005. *See* The
    DIRECTV Group, Inc., *DIRECTV Will Offer Local Channels in Three
    More Markets by Year-End* (press release), Oct. 13, 2005. The
    DIRECTV Group serves Puerto Rico through its DIRECTV Latin America
    subsidiary, which offers local stations.

[^277]: EchoStar Comments at 15. EchoStar charges \$4.99 where only
    three of the four major networks are offered, and it charges \$3.99
    where only two of the four are offered.

[^278]: Pub. L. No. 108-447, 118 Stat 2809 (2004) (codified in scattered
    sections of 17 and 47 U.S.C.). SHVERA was enacted as Title IX of the
    Consolidated Appropriations Act, 2005. SHVERA extended certain
    provisions of the Satellite Home Viewer Improvement Act, primarily
    those pertaining to the distant signal copyright license and
    retransmission consent negotiations, for five years. It also added
    new provisions to the Communications and Copyright Acts pertaining
    to the retransmission by DBS of distant broadcast signals, including
    the option to carry broadcast stations deemed "significantly viewed"
    by the Commission. As required by the Satellite Home Viewer
    Improvement Act of 1999 (SHVIA), the Commission established rules to
    implement carriage of broadcast signals, retransmission consent, and
    program exclusivity with respect to satellite carriage of broadcast
    stations. SHVIA provides DBS carriers with the opportunity to carry
    local stations in a Designated Market Area (DMA) pursuant to a
    statutory copyright license similar to the one provided cable
    operators. If a DBS operator selects this option in a DMA, however,
    it must carry all the local stations in the DMA, effective January
    1, 2002. *See also Implementation of the Satellite Home Viewer
    Improvement Act 1999: Broadcast Signal Carriage Issues,
    Retransmission Consent Issues*, 16 FCC Rcd 1918 (2000);
    *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Broadcast Signal Carriage Issues*, 16 FCC Rcd 16544 (2001);
    *Implementation of the Satellite Home Viewer Improvement Act of
    1999: Retransmission Consent Issues: Good Faith Negotiation and
    Exclusivity*, 16 FCC Rcd 15599 (2001).

[^279]: *Implementation of Section 207 of the Satellite Home Viewer
    Extension and Reauthorization Act of 2004, Reciprocal Bargaining
    Obligation*, 20 FCC Rcd 10339 (2005).

[^280]: *Implementation of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004 to Amend Section 338 of the
    Communications Act*, 20 FCC Rcd 14242 (2005). SHVERA amended certain
    rules concerning the carriage of local television broadcast stations
    by satellite carriers, specifically by requiring satellite carriers
    to carry the analog and digital signals of television broadcast
    stations in local markets in states that are not part of the
    contiguous United States.

[^281]: *Retransmission Consent and Exclusivity Rules: Report to
    Congress Pursuant to Section 208 of the Satellite Home Viewer
    Extension and Reauthorization Act of 2004*, Sept. 8, 2005.

[^282]: *Id.* at ¶ 86.

[^283]: *See Implementation of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004, Implementation of Section 340 of the
    Communications Act*, 20 FCC Rcd 17278 (2005).

[^284]: *See Report to Congress, The Satellite Home Viewer Extension and
    Reauthorization Act of 2004, Study of Digital Television Field
    Strength Standards and Testing Procedures,* 20 FCC RCd 19504 (2005).
    In the Report, the Commission concluded that it did not need to make
    changes to the digital television field strength standards. We did
    determine, however, that a rulemaking proceeding should be conducted
    to specify procedures for measuring the field strength of digital
    television signals at individual locations that are generally
    similar to the current procedures for measuring the field strength
    of analog television stations. We also concluded that the existing,
    Individual Location Longley-Rice model should be used for predicting
    whether a household is unserved by digital television signals.

[^285]: *See Implementation of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004, Procedural Rules*, 20 FCC Rcd 7780
    (2005) (amending rules as specified in SHVERA).

[^286]: *See* The DIRECTV Group, Inc., *Boeing Delivers Next-Generation
    Commercial Satellite to DIRECTV, Inc.* (press release), Oct. 10,
    2005. *See also* The DIRECTV Group, Inc., *DIRECTV's Spaceway F1
    Satellite Launches New Era in High-Definition Programming; Next
    Generation Satellite Will Initiate Historic Expansion of DIRECTV
    Programming* (press release), Apr. 26, 2005.

[^287]: *Spaceway Bird Finally Takes Flight,* [Satellite Business News
    FAXUPDATE]{.smallcaps}, Nov. 18, 2005.

[^288]: According to DIRECTV, Spaceway 1 and Spaceway 2 will have the
    capacity for more than 500 local HD broadcast channels. Two other
    satellites to be launched in early 2007 will have combined capacity
    for more than 1,000 local HD broadcast channels and more than 150
    national HD channels. All four satellites will use spot-beam
    technology to deliver local channels. *See* John Mansell, *New
    Strategies for DIRECTV and EchoStar*, The DBS Report (Kagan
    Research), Jan. 24, 2005, at 8; The DIRECTV Group, Inc., *DIRECTV
    Announces First 12 Markets to Receive Local Channels in
    High-Definition This Year* (press release), Jan. 6, 2005; The
    DIRECTV Group, Inc., *DIRECTV Spaceway F2 Satellite Will Expand
    Local Digital/HD Services for DIRECTV Customers* (press release),
    May 25, 2005.

[^289]: DIRECTV Comments at 4.

[^290]: The DIRECTV Group, Inc., *DIRECTV Announces First 12 Markets to
    Receive Local Channels in High-Definition This Year* (press
    release), Jan. 6, 2005. According to DIRECTV, it will transmit all
    local HD and other new services using MPEG-4 AVC, a new standard in
    digital video compression, and advanced modulation that it states
    will improve DIRECTV's Ka-band capacity. To receive the HD
    programming, subscribers will require a new, slightly larger dish
    antenna and a new HD set-top box compliant with the MPEG-4 standard.

[^291]: The DIRECTV Group, Inc., *DIRECTV 8 Satellite Will Strengthen
    Service to DIRECTV Customers* (press release), May 22, 2005.

[^292]: EchoStar Communications Corp., *Quarterly Report Pursuant to
    Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
    Quarterly Period Ended September 30, 2005*, at 13.

[^293]: HSD systems are typically designed to receive programming from
    several different satellites at several different orbital locations.
    Most HSDs include motors that permit the receiving dishes to rotate
    and receive signals from these many satellites. Space considerations
    and zoning regulations restrict many viewers' ability to install the
    large antenna needed for HSD reception.

[^294]: *C-Band Decline Continues*, Satellite Business News FAXUpdate,
    July 6, 2005. The number is based on a report from Motorola's Access
    Control Center, which oversees authorizations and de-authorizations
    of satellite receivers using Motorola's proprietary conditional
    access systems.

[^295]: Jeffrey Krauss, *The End of the Big, Ugly Dish?*, CED Magazine,
    June 2005, at http://www.cedmagazine.com/ ced/2005/0605/06cc.htm.

[^296]: Comments of National Programming Service and Reply Comments of
    EchoStar Acquisition L.L.C filed in *2000 Biennial Regulatory Review
    Streamlining and Other Revisions of Part 25 of the Commission's
    Rules Governing the Licensing of, and Spectrum Usage by, Satellite
    Network Earth Stations*, 20 FCC Rcd 5593 (2005) (*2000 Satellite
    Biennial*). In April 2004, EchoStar purchased Superstar/Netlink
    Group, LLC. *See 2004 Report*, 20 FCC Rcd at 2799 ¶ 64, n. 342.

[^297]: 4DTV is Motorola's proprietary digital television receive-only
    communications satellite receiver box and uses the Motorola
    DigiCipher II, or DCII, standard of signal encryption and
    compression. 4DTV receivers are also capable of receiving analog
    satellite transmissions. *See* Motorola, Inc., at
    http://www.4dtv.com/ (visited Jan. 14, 2005). VideoCipher is the
    conditional access system used by most C-band receivers to decode
    subscription based and premium satellite TV channels. DigiCipher II,
    or DCII, is Motorola's proprietary video distribution system that is
    used by most digital satellite channels.

[^298]: *2004 Report*, 20 FCC Rcd at 2799 ¶ 65. The price of a receiver
    is often significantly discounted with the purchase of a programming
    package. For example, C-band programming provider Skyvision offers
    the Motorola 4DTV DSR922 receiver, with a retail price of \$550.00,
    for \$399.00 with the purchase of a programming package. *See*
    Skyvision, Inc., at http://www.skyvision.com/store/mi4509029.html.

[^299]: *2000 Satellite Biennial*, 20 FCC Rcd at 5625 ¶ 88.

[^300]: WildBlue is a joint venture of the National Rural
    Telecommunications Cooperative, Intelsat, Ltd., Liberty Media
    Corporation, and Kleiner Perkins Caufield and Byers, a venture
    capital firm.

[^301]: WildBlue Communications Inc., *WildBlue Installs First Customer*
    (press release), June 3, 2005.

[^302]: WildBlue offers two business plans for \$69.95 and \$79.95 with
    download speeds of 1.0 Mbps and 1.5 Mbps, respectively, and upload
    speeds of 200 Kbps and 256 Kbps, respectively.

[^303]: WildBlue Communications, Inc., Packages and Pricing, at
    http://www.wildblue.com/forYourHome/index.jsp.

[^304]: In December 2004, The DIRECTV Group agreed to sell 50 percent of
    its subsidiary, Hughes Networks Systems, to SkyTerra Communications
    Inc., an affiliate of Apollo Management, L.P., a New York-based
    private equity firm. The transaction closed in April 2005. *See* The
    DIRECTV Group, Inc., *SkyTerra Communications to Acquire 50 Percent
    of Hughes Network System from THE DIRECTV Group* (press release),
    Dec. 6, 2004; Hughes Network Systems, LLC, *SkyTerra Communications
    and The DIRECTV Group Complete New Ownership Structure for Hughes
    Network Systems* (press release), Apr. 25, 2005.

[^305]: Hughes Network Systems, LLC, *Hughes Network Systems Achieves 26
    percent Growth in Consumer and Small Business Subscribers for
    DIRECWAY Service* (press release), July 12, 2005. According to
    Hughes, this represents a 26 percent increase from June 2004.

[^306]: Hughes Network Systems, LLC, *Hughes Network Systems Boosts
    Speed and Performance of DIRECWAY Satellite Broadband* (press
    release), Sept. 12, 2005. DIRECWAY offers two residential pricing
    plans. The Home Plan costs \$599.00 for equipment and installation
    and \$59.99 per month with a 15-month commitment. The Home Plan
    provides download speeds up to 700 Kbps and upload speeds up to 128
    Kbps. The Professional Plan is \$599.00 for equipment and
    installation and \$69.99 per month with a 15-month service contract.
    It provides download speeds up to 1.0 Mbps and upload speeds up to
    200 Kbps. Alternatively, subscribers can choose to pay \$99.99
    upfront for equipment and installation and \$99.99 per month for the
    Home Plan or \$109.99 per month for the Professional Plan, including
    a 15-month term service contract. After the 15-month contract
    period, the monthly subscription rate converts to the standard
    subscription rates described above. DIRECWAY also provides two
    service plans for businesses, both of which cost \$999.99 for
    equipment and installation. The Small Office plan costs \$99.99 per
    month and provides download speeds up to 1.5 Mbps and upload speeds
    up to 300 Kbps. The Business Internet Plan is \$199.00 per month and
    provides download speeds up to 2 Mbps and upload speeds up to 500
    Kbps. Both plans require a 2-year service contract. *See* Hughes
    Network Systems, LLC, Service Offerings, at http://www.direcway.com.

[^307]: *See 2004 Report*, 20 FCC Rcd at 2799 ¶ 66.

[^308]: *Id*. at ¶ 67.

[^309]: *ALLTEL Offering Dish Network*, [Multichannel News]{.smallcaps},
    Oct. 19, 2005, at http://www.multichannel.com/
    article/CA6275774.html. *See* EchoStar Communications Corp., *ALLTEL
    Signs Agreement to Offer DISH Network TV Service* (press release),
    Mar. 8, 2005.

[^310]: EchoStar Communications Corp., *Frontier Communications
    Announces Strategic Alliance with EchoStar* (press release), Apr. 6,
    2005.

[^311]: Christy Rickard, *EchoStar Inks New Deal with SBC*, The DBS
    Report (Kagan Research LLC), Sept. 30, 2005, at 3. Under the terms
    of the agreement, EchoStar will bear installation and equipment
    costs, while SBC will provide customer service and billing. SBC will
    receive a commission and a share of revenue from the subscribers it
    signs up. The agreement covers the 31.4 million households within
    SBC's local exchange telephone network service area.

[^312]: *Id*. at 4.

[^313]: DISH Network HD Pak costs \$9.99 per month. VOOM Original HD Pak
    retails for \$5.00 per month, and is only available with a
    subscription to DISH Network HD Pak. Premium channel HD programming
    is included free of charge with a subscription to the premium
    programming. Subscribers must have a DISH Network HD receiver, HD
    television and a dish antenna pointing at the appropriate orbital
    location. Some subscribers may require a second dish antenna to
    receive certain HD programming. EchoStar Communications Corp., at
    http://www.dishnetwork. com/content/programming/hdtv/index.shtml.

[^314]: EchoStar's DISH 811 retails for \$399.00 and its DISH Player-DVR
    942 retails for \$699.00, which offers HD and DVR functionality with
    a 250 GB hard drive. The DISH Player-DVR 942 can record up to 180
    hours of standard-definition programming, or up to 25 hours of HD
    programming.

[^315]: Craig Moffett, Tom Wolzien, *View from the Back Office*,
    Bernstein Research, Jan. 7, 2005. DIRECTV sells a 30-inch LCD TV for
    \$1,600 and 40-inch TV for \$4,000, including delivery,
    installation, satellite dish, and the DISH 811 HD set-top box.

[^316]: EchoStar Communications Corp., *Dish Network Launches Local TV
    Stations in High Definition in Los Angeles via Satellite* (press
    release), Feb. 2, 2006; EchoStar Communications Corp., *Dish Network
    Launches Local TV Stations in High Definition in New York City via
    Satellite* (press release), Feb. 2, 2006.

[^317]: *See* The DIRECTV Group, Inc., HD Programming, at
    http://www.directv.com/ DTVAPP/imagine/ HDTV_programming.jsp.

[^318]: For example, DIRECTV subscribers have two ways to receive
    satellite-delivered Fox HD programming. First, customers who have an
    HD receiver and a Total Choice programming package can receive Fox
    HD programming from either WNYW (located in New York) or KTTV
    (located in Los Angeles), depending upon their geographic location.
    The select markets where eligible customers may receive the feeds
    are: New York; Los Angeles; Chicago; Philadelphia; Boston; Dallas;
    Washington D.C.; Minneapolis; Detroit; Atlanta; Houston; Tampa Bay
    and Orlando; Cleveland; Phoenix; Denver; St. Louis; Milwaukee;
    Kansas City; Salt Lake City; Birmingham; Memphis; Austin' and
    Greensboro, North Carolina. The second option, available only to
    unserved households, is to receive Fox HD programming as part of
    their Distant Network Service. Subscribers must have an HD capable
    TV set, a DIRECTV HD receiver, and a satellite dish capable of
    receiving signals from three separate DIRECTV satellites. *See* The
    DIRECTV Group, Inc., Local Channels in HD, at
    http://www.directv.com/DTVAPP/imagine HDTV_localchannels.jsp.

[^319]: Initially, DIRECTV plans to deliver local HD broadcast channels
    to the following television markets: New York, Los Angeles, Chicago,
    Philadelphia, Boston, San Francisco, Dallas, Washington, D.C.,
    Atlanta, Detroit, Houston and Tampa. The DIRECTV Group, Inc.,
    *DIRECTV Announces First 12 Markets to Receive Local Channels in
    High-Definition This Year* (press release), Jan. 6, 2005. DIRECTV
    states that it will carry each of the primary broadcast networks
    that offer an HD feed in the market and its customers who subscribe
    to a local channel package will receive both the standard-definition
    and HD signal. According to DIRECTV, HD local programming can be
    received via a new model of dish and customers will require new HD
    set-top boxes compatible with the new MPEG-4 compression standard.

[^320]: DIRECTV is providing high definition local channels in Boston,
    Massachusetts, Dallas and Houston, Texas, Tampa, Florida,
    Washington, D.C., Detroit, Michigan, New York, New York, and Los
    Angeles. *See e.g.*, *DIRECTV Lights Up HD Locals in Detroit*,
    Satellite Business News [FAXUPDATE]{.smallcaps}, Oct. 21, 2005; The
    DIRECTV Group, *DIRECTV Delivers High-Definition Local Channels to
    Boston, Dallas, Houston, Tampa, and Washington, D.C.* (press
    release), Dec. 9, 2005; The DIRECTV Group, *DIRECTV Transmits
    High-Definition Local Channels in New MPEG-4 Transmission Standard
    to Los Angeles* (press release), Dec. 28, 2005; The DIRECTV Group,
    *DIRECTV Brings High-Definition Local Channels to New York Today*
    (press release), Dec. 28, 2005. DIRECTV is carrying the HD local
    broadcast feed of the ABC, NBC, CBS, and Fox affiliates.

[^321]: DIRECTV Comments at 18.

[^322]: DIRECTV is expected to introduce its new DVR in late 2005. Ian
    Olgeirson, *DIRECTV Hit By DVR Delays, But Forecast Looks Bright*,
    The DBS Report (Kagan Research LLC), Aug. 29, 2005; Steve Donohue,
    *DIRECTV DVR Retail Debut Delayed*, [Multichannel News]{.smallcaps},
    Oct. 21, 2005.

[^323]: DIRECTV Comments at 18. The DIRECTV Plus receiver has a 160-hour
    recording capacity, but DIRECTV is reported to be making only 100
    hours available for consumers to use for their own recording. The
    remaining 60 hours will be used by DIRECTV to deliver programming,
    which subscribers can purchase for an additional fee. For example,
    DIRECTV will deliver select NBC Universal programming from the NBC
    broadcast network and NBC Universal cable networks, such as USA, Sci
    Fi and Bravo, to its subscribers' DIRECTV Plus DVRs, which can be
    accessed on a commercial-free basis for \$0.99 per episode. *See*
    Brook Barnes and Peter Grant, *CBS, NBC Deals Accelerate Shift in TV
    Landscape*, [Wall Street Journal]{.smallcaps}, Nov. 8, 2005; The
    DIRECTV Group. Inc., *NBC Universal and DIRECTV Announce First Ever
    On Demand Deal for Primetime Network Programming; Top NBC Universal
    Content On Demand for \$0.99* (press release), Nov. 7, 2005.

[^324]: DIRECTV does not charge subscribers for DVR service if they are
    subscribers to its Total Choice Premier programming package, which
    costs \$93.99 per month. Existing customers seeking to upgrade their
    service must purchase a DVR equipped set-top box and agree to a new
    programming contract.

[^325]: Craig Moffett, Tom Wolzien, *View from the Back Office*,
    Bernstein Research, Jan. 7, 2005.

[^326]: Ian Olgeirson, *DIRECTV Hit By DVR Delays, But Forecast Looks
    Bright*, The DBS Report (Kagan Research LLC), Aug. 29, 2005, at 1.
    As of March 31, 2005, DIRECTV was reported to have 1.68 million DVR
    subscribers. Craig Moffett, Amelia Wong, and Lauren M. Pastrich,
    *DIRECTV (DTV): A Much Brighter Outlook for SSCF*, Bernstein
    Research Call, May 3, 2005, at 3.

[^327]: *2004 Report*, 20 FCC Rcd at 2800 ¶ 68. Kagan forecasts that
    DIRECTV and EchoStar will reach approximately 5.3 million DVR
    customers by the end of 2005, or approximately one-fifth of total
    DBS subscribers. *See* Kagan Research, LLC, *DIRECTV Hit By DVR
    Delays, But Forecast Looks Bright*, The DBS Report, Aug. 29, 2005,
    at 1.

[^328]: The term BSP is not intended to imply anything with respect to
    Commission's policy or proceedings that might involve broadband
    services. Usually, the services of a BSP can be purchased separately
    as well as in a bundle. *See 2001 Report*, 17 FCC Rcd at 1296-97 ¶
    3. *See also* *2002 Report*, 17 FCC Rcd at 26948-52 ¶¶ 102-11.

[^329]: *2004 Report*, 20 FCC Rcd at 2801 ¶ 70. An overbuilder is an
    MVPD that "overbuilds" a second cable network where one already
    exists.

[^330]: Most, if not all, OVS providers are also overbuilders. We treat
    them in a separate section to highlight the separate regulatory
    classification that Congress created. 47 U.S.C. §571(a)(3)-(4);
    *1996 Report*, 12 FCC Rcd at 4395-98 ¶¶ 68-71. The OVS framework was
    designed to streamline the process of entering local MVPD markets
    and it subjects OVS certified providers to regulation under Title VI
    somewhat different than that applied to cable operators. Among other
    things, an open video system's carriage rates are entitled to a
    presumption that they are just and reasonable where one or more
    unaffiliated video programming providers occupy channel capacity on
    the system at least equal to that of the open video system operator
    and its affiliates. We are not aware of any OVS operator carrying
    programming offered by an unaffiliated program packager. Open video
    systems are subject to, among others, the Commission's rules
    governing must carry, retransmission consent, program access, sports
    exclusivity, network nonduplication, syndicated exclusivity, and
    public, educational and governmental (PEG) access channels. *Id.*
    When it authorized the OVS framework, Congress abolished the
    Commission's video dialtone (VDT) framework under which LECs
    previously had offered video services.

[^331]: For a complete list of OVS certifications, *see* Current Filings
    For Certification of Open Video Systems, at
    http://www.fcc.gov/mb/ovs/csovscer.html (visited Oct. 10, 2005).

[^332]: BSPA Comments at 6-7. OPASTCO reports that less than 8 percent
    of its members provide service under OVS certification. OPASTCO
    Reply Comments at 3.

[^333]: BSPA Comments at 19.

[^334]: *Id*.

[^335]: RCN Comments at 1-2.

[^336]: Kagan Research, LLC, *Top Cable System Operators as of 6/05*,
    Cable TV Investor, Aug. 25, 2005, at 11.

[^337]: *Id*.

[^338]: *Id.*

[^339]: *See* Grande Communications Holdings, Inc., *Grande
    Communications Holdings, Inc. Announces Results for the Second
    Quarter Ending June 30, 2005* (press release), Aug. 15, 2005.

[^340]: RCN Comments at 2 n.2.

[^341]: BSPA Comments at 6.

[^342]: GAO, *Direct Broadcast Satellite Subscribership Has Grown
    Rapidly, but Varies Across Different Types of Markets*, GAO-05-257,
    Apr. 2005 (*GAO 2005 Report*). The *GAO 2005 Report* studies how DBS
    penetration varies across different types of markets (rural,
    suburban, and urban) and against different types of cable systems
    (not upgraded, partially upgraded, and fully upgraded). The report
    finds that DBS penetration is highest in rural areas and lowest in
    urban, and highest in areas served by a cable system that has not
    been upgraded and lowest in areas served by a cable system that has
    been fully upgraded.

[^343]: BSPA Comments at 7-12.

[^344]: GAO, *Telecommunications: Wire-Based Competition Benefited
    Consumers in Selected Markets*, GAO-04-241, Feb. 2004.

[^345]: BSPA Comments at 10.

[^346]: Comcast Reply Comments at 37-41. *See also* Time Warner Reply
    Comments at 1-4.

[^347]: Nielsen Media Research, *Broadcast Calendar (TV Season) Share of
    Audience Report, Prime Time and Total Day,* Sept., 2005. Nielsen
    reports audience shares that exceed 100 percent when totaled due to
    simultaneous multiple set viewing. We have normalized audience
    shares to equal 100 percent.

[^348]: Includes basic (BST and CPST) networks, as well as premium and
    PPV networks, distributed by MVPDs.

[^349]: We note that individual broadcast networks generally attract
    higher audience shares than individual nonbroadcast networks. For
    example, during the 2004-2005 television season, six of the seven
    broadcast networks attained average prime time audience shares
    ratings greater than the average prime time audience rating of the
    highest rated nonbroadcast networks. Nielsen Media Research.

[^350]: Nielsen Media Research, *Broadcast Calendar (TV Season) Share of
    Audience Report, Prime Time and Total Day,* Sept., 2005.

[^351]: *Compare* Federal Communications Commission, *Broadcast Station
    Totals as of June 30, 2004* (FCC News Release), Aug. 20, 2004,
    *with* Federal Communications Commission, *Broadcast Station Totals
    as of June 30, 2005* (FCC News Release), Aug. 29, 2005.

[^352]: Television Bureau of Advertising, *2004 TV Ad Revenue Figures,*
    at http://www.tvb.org/rcentral/adrevenuetrack //
    revenue/2004/ad_figures (visited Sept. 21, 2005).

[^353]: *Id.*

[^354]: Robert J. Coen, *U.S. Advertising Volume 2000-2005*, Universal
    McCann, Sept. 22, 2005.

[^355]: *Review of the Commission's Rules and Policies Affecting the
    Conversion to Digital Television*, 17 FCC Rcd 15978, 15995-96 ¶¶
    39-40 (2002).

[^356]: *Summary of DTV Applications Filed and DTV Build Out Status,* at
    http://www.fcc.gov/mb/video/files/ dtvonairsum.html (visited Oct.
    2005).

[^357]: *Media Bureau Staff Report Concerning Over-the-Air Broadcast
    Television Viewers*, MB Docket 04-210, Feb. 28, 2005. (*OTA
    Report*).

[^358]: *Media Bureau Seeks Comment on Over-the-Air Broadcast Television
    Viewers*, Public Notice, 19 FCC Rcd 9468 (2004).

[^359]: *See Media Bureau Staff Report Concerning Over-the-Air Broadcast
    Television Viewers*, MB Docket 04-210, Feb. 28, 2005 (*OTA Report*).
    *See also 2004 Report*, 20 FCC Rcd at 2869-70. Our estimates of
    households that do not subscribe to an MVPD service may include a
    number of households that are using MVPD service without paying for
    it, and thus overstate the number of OTA households. On the other
    hand, estimates of MVPD households may be overstated considering
    that as many as three percent of television households may subscribe
    to both cable and DBS services. The net effect of these inaccuracies
    is unknown. In addition, these figures are based on a nationwide
    average. It appears that the percent of OTA households varies
    substantially from one market to another. For example, in ten DMAs,
    over 80 percent of TV households subscribe to cable service. When
    DBS subscribers to local-into-local service are added, the total
    MVPD subscribership in most of these markets exceeds 85 percent. In
    contrast, in 13 DMAs, fewer than 50 percent subscribe to cable.
    *Id*. at 2872.

[^360]: *See* Appendix B, Table B-1. According to Table B-1, there are
    109,590,170 TV Households, of which 94,226,357 subscribe to an MVPD.
    This means that at least 15.36 million TV households do not
    subscribe to an MVPD. *Id*. In the past it has been estimated that
    approximately 3 percent of all cable households may subscribe to
    more than one MVPD (3 percent of current cable subscribership is 1.9
    million households), but with DBS carriage of local-into-local
    service, this figure is declining. *See id*. at note (i).

[^361]: *OTA Report*.

[^362]: *Id*.

[^363]: Nielsen Media Research, *U.S. Television Household Estimates*,
    Sept. 2004, at 1. Nielsen's estimate of 15.43 million households is
    similar to our own estimate of 15.36 million households.

[^364]: NAB Comments at 2; NAB Reply Comments at 8-10. NAB argues that
    those households relying solely on over-the-air broadcasting are
    predominantly lower income and include relatively greater numbers of
    racial and ethnic minorities. NAB Comments at 3.

[^365]: CEA Comments at 7. CEA argues that the decision not to subscribe
    to an MVPD generally is not driven by economic reasons and that
    those who do not subscribe watch, on average, 30 percent less
    television per week than MVPD subscribers. CEA Comments at 7-8. CEA
    also notes that three-quarters of antenna-only households are
    willing to take some sort of voluntary action to ensure that they
    continue to receive television programming when analog broadcasts
    end. CEA Comments at 9.

[^366]: NCTA Comments at 15.

[^367]: NAB Comments at 7.

[^368]: *Id.*

[^369]: *Summary of DTV Applications Filed and DTV Build Out Status,* at
    http://www.fcc.gov/mb/video/files/ dtvonairsum.html (visited Oct.
    2005). *See also* NAB Comments at 7.

[^370]: APTS Comments at 4-5.

[^371]: *Id.*

[^372]: NCTA Comments at 26, 27. NCTA estimates that 92 million
    television households were passed by at least one cable system
    offering HDTV service in January 2005. *Id*.

[^373]: NCTA Comments at 28. *See* para. 53 *supra*.

[^374]: *Notice*, 20 FCC Rcd 14142 ¶ 69-71.

[^375]: Comcast Comments at 31.

[^376]: Comcast Comments at 31-32.

[^377]: NAB Comments at 1, 7, 8.

[^378]: The 937,000 hours represented multicast programming broadcast by
    the 13 largest commercial and non-commercial national broadcast
    networks (ABC, CBS, Fox, NBC, Paxson, PBS, TBS, TBN, Telemundo,
    Univision, UPN, WB, and Paxson), their affiliates, or independent
    television stations. This includes digital simulcast and unique
    programming multicast stations. Decisionmark Corp., *Multicast
    Analysis*, Nov. 2005. PBS and its affiliates accounted for 47.5
    percent of this programming. ABC, NBC, and Paxson each accounted for
    more than 10 percent of the total multicast programming available
    (10.25 percent, 10.35 percent and 10.45 percent, respectively).
    *Id*.

[^379]: NAB Comments at 7-8. *See also* APTS Comments at 4-7.
    Approximately 10 percent of all multicast programming during October
    2005 was news programming, about 8.8 percent was children's or
    educational programming, 7.3 percent was documentary or nature
    programming, 7.2 percent was comedy or drama programming, 6.4
    percent was weather, and 2.8 percent was sports. Decisionmark Corp.,
    *Multicast Analysis*, Nov. 2005.

[^380]: NAB Comments at Attachment.

[^381]: *Id.*

[^382]: APTS Comments at 5-6

[^383]: *Id.* at 5-8.

[^384]: NCTA Comments at 28.

[^385]: Comcast Comments at 44-45. *See also* NCTA Comments at 28.

[^386]: NCTA Comments at 28.

[^387]: John Eggerton, *Tribune FiOS Deal Includes Multicasting*,
    [Broadcasting & Cable]{.smallcaps}, Oct. 28, 2005, at
    http://www.broadcastingcable.com/article/CA6279281.html?display=Breaking+News
    (visited Nov. 30, 2005).

[^388]: Pub. L. No. 106-113, 113 Stat. 1501, 1501A-526 to 1501A-545
    (1999).

[^389]: APTS Comments at 14. In its *Second Report and Order* on digital
    television broadcast signal carriage, the Commission affirmed its
    decision in the *First Report and Order* to interpret the statutory
    term "primary video" to mean a single programming stream. If a
    digital broadcaster elects to divide its digital spectrum into
    several separate programming streams, only one of these streams is
    entitled to mandatory carriage. *Carriage of Digital Television
    Broadcast Signals: Amendment to Part 76 of the Commission's Rules,*
    Second Report and Order and First Order on Reconsideration, 20 FCC
    Rcd 4516, 4518 ¶ 3 (2005); *see also Carriage* *of Digital
    Television Broadcast Signals: Amendment to Part 76 of the
    Commission's Rules,* First Report and Order and FNPRM, 16 FCC Rcd
    2598 (2001). On April 21, 2005, the Commission received five
    petitions for reconsideration, filed by the following: ABC
    Television Affiliates Association, CBS Television Affiliates
    Association, NBC Television Affiliates, ABC Owned Television
    Stations, and NBC and Telemundo Stations; DIC Entertainment
    Corporation; Minority Media and Telecommunications Council; National
    Association of Broadcasters and the Association for Maximum Service
    Television, Inc.; and Paxson Communications Corp. In its reply
    comments in this proceeding, Paxson reiterates that, in the absence
    of full digital multicast must carry, the Commission should not
    encourage broadcasters to offer ancillary and supplementary services
    in lieu of free over-the-air programming on their DTV stations.
    Paxson Reply Comments at 5-7.

[^390]: APTS Comments at 17.

[^391]: *Id.* at 36. Verizon replies that the Commission should not
    impose new regulation that discriminates against, and adds new
    burdens on, new entrants in the video market. Verizon Reply Comments
    at 13-14.

[^392]: Commercial and noncommercial educational DTV broadcast station
    licensees report annually, using Form 317, whether they have
    provided ancillary or supplementary services at any time during the
    12 month period preceding September 30. Licensees that earn revenues
    from such services are required to pay fees to the Commission. *FCC
    Annual DTV Ancillary/ Supplementary Services Report*, 18 FCC Rcd
    23972 (2003). *See also* 47 U.S.C. § 336 (a), (e). To date, the
    provision of ancillary and supplementary services has been modest.
    In the most recent year, the ancillary and supplementary services
    provided most often were pay television service and broadband
    Internet access. Reports on activity during 2005 were due on
    December 1, 2005. *See also Media Bureau Reminds Digital Television
    to File Report on Ancillary or Supplementary DTV Services on or
    before Dec. 1, 2005*, 20 FCC Rcd 19078 (2005).

    NUMBER OF

    DTV LICENSEES

    THAT REPORTED GROSS REVENUES FEES COLLECTED

    [YEAR]{.underline} [FEEABLE SERVICES]{.underline} [FROM FEEABLE
    SERVICES]{.underline} [FROM FEEABLE SERVICES]{.underline}

    1999 0 \$0 \$0

    2000 4 \$570,000 \$28,500

    2001 2 \$390,000 \$19,500

    2002 6 \$148,280 \$7,414

    2003 3 \$45,000 \$2,250

    2004 10 \$78,625 \$3,931

[^393]: Video-on-Demand via over-the-air broadcast signals may be
    provided several ways. It may use a model similar to that
    contemplated by DBS where VOD programming is broadcast and then
    stored in a local DVR. With the addition of an internet connection,
    it is also possible to provide true VOD by using broadcast for the
    downstream transmission of video and an internet connection for the
    comparatively low bandwidth control signals.

[^394]: *See 2004 Report*, 20 FCC Rcd at 2807 ¶ 84.

[^395]: *Id.*

[^396]: U.S. Digital Television, Inc., at
    http://www.usdtv.com/company_info.php (visited Oct.19, 2005).

[^397]: U.S. Digital Television, Inc., at
    http://www.usdtv.com/GET-USDTV.html (visited Nov. 28, 2005). *See
    also* U.S. Digital Television, Inc., *USDTV Selects the Norfolk
    Virginia Market as First East Coast Launch of its All-Digital
    Low-Cost Cable Alterative* (press release), Jan. 5, 2006.

[^398]: Linda Moss, *USDTV Gets Cash Infusion*, M[ultichannel
    News]{.smallcaps}, Sept. 26, 2005, at
    http://multichannel.com/article/CA6260559.html?

[^399]: U.S. Digital Television, Inc., *USDTV Signs Agreement With Major
    Broadcasters to Expand "Over-the-Air" Digital Subscription TV*
    (press release), Sept. 26, 2005.

[^400]: APTS Comments at 10.

[^401]: *Id*. at 9-14.

[^402]: *I**d*. at 10-14.

[^403]: *Id*.

[^404]: *Id*. at 13-14. The Commission recently examined issues
    pertaining to EAS in digital services in the *Review of the
    Emergency Alert System*, 20 FCC Rcd 18625 (2005).

[^405]: *See* iBlast Inc., *What is iBlast?*, at http://www.iblast.com
    (visited Oct. 18, 2005); *see also* Dotcast, Inc., at
    http://www.dotcast.com/(visited Oct. 18, 2005). *See also* *2004
    Report*, 20 FCC Rcd at 2808 ¶ 86.

[^406]: CEA notes that digital television has been adopted twice as
    quickly as color television. While it took color television 10 years
    to achieve 5 percent penetration from introduction, digital
    television products are already in 16 million American homes. CEA
    Comments at 2.

[^407]: Kagan Research, LLC, *Digital TV Set Projection Model*, The
    State of High Definition Television 2005, at 269; Kagan Research,
    LLC, *Digital TV Set Projection Model*, Media Trends 2005, at 112.
    "Enhanced-definition" (ED) refers to digital television signals with
    a resolution somewhere between standard-definition (current analog
    signals) and high-definition (HD). Enhanced-definition is
    approximately DVD-quality. "HD-ready" and "ED-ready" mean that a
    television is capable of displaying an HD signal or an ED signal,
    but does not include a digital tuner for over-the-air reception of
    digital broadcast signals.

[^408]: Kagan Research, LLC, *Digital TV Set Projection Model*, The
    State of High Definition Television 2005, at 269; Kagan Research,
    LLC, *Digital TV Set Projection Model*, Media Trends 2005, at 112.

[^409]: *Id*.

[^410]: CEA Comments at 2-3, 5.

[^411]: *Id*. at 5.

[^412]: *Id*.

[^413]: *Id*.

[^414]: *Id*. at 6.

[^415]: *Id*. at 5.

[^416]: *Id*. at 3.

[^417]: *Id*. at 5.

[^418]: *Id*.

[^419]: NAB Comments at 5. Twelve consumer electronics firms submitted
    proposals in the process. *Id.* at 5-6.

[^420]: CEA Reply Comments at 2. *See also* Association for Maximum
    Service Television, Inc., *Thomson and LG Electronics Partner with
    Broadcasters to Develop Terrestrial Digital-to-Analog Converter
    Boxes*, Oct. 5, 2005.

[^421]: *Id.* at 2-3.

[^422]: National Association of Broadcasters, *Thomson and LG
    Electronics Partner with Broadcasters to Develop Terrestrial
    Digital-to-Analog Converter Boxes* (press release), Oct. 5, 2005.
    Neither NAB nor its partners have indicated when working prototypes
    would be available.

[^423]: *2004 Report*, 20 FCC Rcd at 2809-2811 ¶¶ 89-96.

[^424]: *See* Deficit Reduction Act of 2005, PL 109-171 (2006). Among
    other things, Title III, entitled the Digital Television Transition
    and Public Safety Act of 2005, establishes a hard deadline of
    February 17, 2009 for the end of analog transmissions and the
    transition to digital television. It allocates approximately \$990
    million of the estimated \$10 billion in proceeds from the auction
    of the broadcast spectrum for a digital-to-analog converter box
    program.

[^425]: *See Carriage of Digital Television Broadcast Signals: Amendment
    to Part 76 of the Commission's Rules,* Second Report and Order and
    First Order on Reconsideration, 20 FCC Rcd 4516 (2005) (*Digital*
    *Must Carry Second Report and Order* and *Digital Must Carry First
    Reconsideration*) (released in a single proceeding). *See also* 47
    C.F.R. § 1.429 (setting forth basis for granting petitions for
    reconsideration).

[^426]: *See Second Periodic Review of the Commission's Rules and
    Policies Affecting the Conversion to Digital Television*, 19 FCC Rcd
    18279 (2003) (*Second DTV Periodic Review*).

[^427]: *Amendment of Parts 73 and 74 of the Commission's Rules to
    Establish Rules for Digital Low Power Television, Television
    Translator, and Television Booster Stations and to Amend Rules for
    Digital Class A Television Stations*, 19 FCC Rcd 19331 (2004) (*LPTV
    Report and Order*). *See also 2004 Report*, 20 FCC Rcd at 2811 ¶ 95.

[^428]: *See* *LPTV Report and Order,* 20 FCC Rcd at 19374-19381 ¶¶
    127-148.

[^429]: *FCC Commences Accepting Applications For On-Channel Digital
    Conversion of Low Power TV and TV Translator Stations and Announces
    Availability of Revised Application Forms 346 and 301-CA* (Public
    Notice), Oct. 4, 2005 (announcing, among other things, that all of
    the rules and forms outlined in the *LPTV Report and Order* received
    the approval of the Office of Management and Budget (OMB)).

[^430]: At the end of the DTV transition, 108 MHz of spectrum in the 700
    MHz band currently used by broadcast channels 52-69 will be made
    available for wireless services -- 24 MHz for urgent public safety
    needs and the remainder for advanced commercial wireless services.

[^431]: *Negotiated Channel Election Arrangements*, 20 FCC Rcd 10141 (MB
    2005).

[^432]: *DTV Tentative Channels Designations for 1,554 Stations
    Participating in the First Round of DTV Channel Elections*, 20 FCC
    Rcd 10983 (MB 2005).

[^433]: *Tentative Digital Channel Designations for Stations
    Participating in the First Round of DTV Channel Elections and Second
    Round Election Filing Deadline*, 20 FCC Rcd 15785 (MB 2005).

[^434]: *See* *Deadline for Filing FCC Form 384, Digital Channel
    Election Form, Second Round Election, Extended Until October 31,
    2005*, 20 FCC Rcd 16581 (MB 2005).

[^435]: *FCC Advances DTV Channel Election Process* (FCC News Release),
    June 8, 2005.

[^436]: *2004 Report*, 20 FCC Rcd 2811-13 ¶¶ 97-103.

[^437]: CheckHD includes information about local channels and
    programming, antenna selection by zip code, and DTV equipment. CEA
    provides educational materials and information for the site,
    including the consumer brochure and the HDTV Guide. NAB Comments at
    6; CEA Comments at 16.

[^438]: Antennaweb.com determines the free over-the-air DTV signals that
    can be received in a given geographic area or television market and
    what type of antenna is needed to receive those signals over the
    air. CEknowhow.com provides training products for retail sales
    associates. *The Connections Guide*, www.ce.org/connectionsguide/,
    is designed to help consumers better understand how to connect their
    DTV products. CEA Comments at 14-15. *See also* CEA, at
    http://www.ce.org/hdtv.

[^439]: CEA has hosted 25 "HDTV Updates" conventions nationwide. CEA
    Comments at 15.

[^440]: "DTV Lessons" describes DTV concepts in language accessible to
    the average viewer. NAB Comments at 6.

[^441]: CEA Comments at 16-17.

[^442]: 47 U.S.C. § 571(a)(1).

[^443]: 47 U.S.C. § 571(a)(2).

[^444]: 47 U.S.C. § 571(a)(3).

[^445]: 47 U.S.C. § 571(a)(3)-(4). *See also* para. 88 *supra.*

[^446]: *2004 Report*, 20 FCC Rcd at 2823 ¶ 125. BellSouth, for example,
    reports that 400,000 BellSouth telephone customers added DIRECTV
    service. BellSouth Comments at 2. *See also* Comcast Comments at
    15-16.

[^447]: *See Availability of Advanced Telecommunications Capability in
    the United States, Fourth Report to Congress*, 19 FCC Rcd 20540,
    20555-57. Some commenters use the term fiber to the premises (FTTP)
    instead of the term fiber to the home; the terms are equivalent.
    Additionally, some LECs are not deploying full FTTH, but instead are
    deploying fiber-to-the node (FTTN), which provides fiber facilities
    to the neighborhood node, and copper facilities from the
    neighborhood node to the residence. *See also* para. 15, n.11
    *supra*.

[^448]: Fiber-to-the-Home Council, *Number of U.S. Fiber-to-the-Home
    Communities Tops 650* (press release), Oct. 4, 2005.

[^449]: Comcast Comments at 12-22; NCTA Comments at 16-18. In addition,
    the NRTC intends to offer its members IP technology and content by
    early 2006, and cable operator Time Warner is currently testing
    IP-based computer access of up to 75 cable channels of programming
    to certain subscribers in its San Diego system. NRTC Comments at 3,
    4-6; Comcast Comments at 24.

[^450]: BellSouth Comments at 1-2.

[^451]: BellSouth Comments at 2-3. Microsoft is providing software to
    BellSouth to assist in its delivery of video service. *See* Jim Hi,
    *Bell South Begins Microsoft IPTV Trials*, [News.com,]{.smallcaps}
    Jan. 6, 2005[.]{.smallcaps} For general comments on IPTV, *see*
    *also* Network Domain Comments, *generally*; Alcatel Comments at
    7-8.

[^452]: Qwest Comments at 1 n.3.

[^453]: SBC Comments at 7-8. Alcatel and Microsoft are working to assist
    SBC in its deployment of video service. SBC Comments at 2-3, 8-9;
    Alcatel Comments at 1-3. In February 2005, Alcatel entered into an
    agreement with Microsoft to develop an integrated IP delivery
    technology. Alcatel Comments at 1-3; Colin, C. Haley, *Alcatel,
    Microsoft to Hand Over Your IPTV*, [Internet News.com,]{.smallcaps}
    Feb. 22, 2005; *Alcatel, Microsoft Unveil IPTV Partnership*, [Comm.
    Daily]{.smallcaps}, Feb. 23, 2005, at 4.

[^454]: SBC Comments at 8.

[^455]: SBC Communications, Inc., *SBC CIO Confirms Project Lightspeed
    Timing, Milestones at Analyst Conference* (press release), Nov. 3,
    2005.

[^456]: Verizon Comments at 5.

[^457]: Verizon Communications, Inc., *City of Woburn Awards Video
    Franchise to Verizon, Providing More Choice and Benefits to
    Consumers* (press release), Sept. 30, 2005. *See also* Verizon
    Communications, Inc., *Howard County Council Grants Verizon
    Authority to Offer FiOS TV to More Than 265,000 Potential Viewers*
    (press release), Jan. 4, 2006.

[^458]: Verizon Reply Comments at 1-4. *See also* Verizon
    Communications, Inc., *Verizon FiOS TV Is Here! New Video Service
    Harnesses the Speed and Capacity of Broadband With the Power of
    Broadcast to Offer Consumer Choice in TV* (press release), Sept. 22,
    2005; *More Verizon Customers in North Texas Get Competitive Choice,
    Greater Value for TV Service as Verizon Launches FiOS TV in 7 More
    Communities* (press release), Jan. 5, 2006.

[^459]: Verizon Communications, Inc., *Verizon to Launch FiOS TV in
    Herndon; First Rollout in East, New Video Service Harnesses Speed
    and Capacity of Fiber-Based Broadband With Power of Broadcast to
    Offer Consumer Choice in TV* (press release), Nov. 21, 2005.

[^460]: Verizon Communications, Inc., *Verizon to Launch FiOS TV in
    Temple Terrace; First Rollout in Florida, New Service Offers
    Customers Better Television Technology, True Competitive Choice and
    Greater Value* (press release), Dec. 6, 2005.

[^461]: *See* Letter from Leora Hochstein, Executive Director, Federal
    Regulatory Affairs, Verizon Communications, to Marlene H. Dortch,
    Secretary, FCC (Nov. 22, 2005).

[^462]: NRTC Comments at 4-5; NTCA Comments at 1-3.

[^463]: Qwest Comments at 1 n.3.

[^464]: Cincinnati Bell Comments at 1-5.

[^465]: CenturyTel Comments at 1.

[^466]: Cincinnati Bell Comments at 1-4; Century Tel Comments at 9. *See
    also* APTS Comments at 25-32; Comcast Reply Comments at 4-6.

[^467]: *See* *2004 Report*, 20 FCC Rcd at 2826 ¶ 131.

[^468]: *Id.* at 2826 ¶ 132.

[^469]: *Id*.

[^470]: Steven S. Ross, *Fiber Communities,* [Broadband Properties,
    J]{.smallcaps}une 2005, at 10-22. An example of a partnership
    arrangement is Jackson, Tennessee, through its Jackson Energy
    Authority, which is building a fiber-optic network in partnership
    with Aeneas Internet & Telephone, to offer high-speed Internet, VoIP
    and video service. *Id.; Jackson Energy Authority and Aeneas
    Internet & Telephone Deliver VoIP over FTTP,* at
    http://lw.Pennnet.com/
    Article_Display.cfm?Section=OnlineArticles&SubSection=Display&PU
    (visited Nov. 9, 2005). Douglas Electric Cooperative, Douglas
    County, Oregon, provides FTTH, which will include Internet,
    telephone and video services. [broadband properties,]{.smallcaps}
    June 2005 at 10-22*.;* http://www.ftthciybcuk.org, *U.S. Optical
    Fiber Communities 2005* (visited Oct. 4, 2005). Examples of
    municipal utilities which provide video, voice, and Internet access
    services to their residents include Sylacauga, Alabama, Dalton,
    Georgia, Kutztown, Pennsylvania, Provo, Utah, and Bristol, Virginia.
    In Washington State, systems are being built by public utility
    districts. These include the counties of Bainbridge Island, Chelan
    County, Clallam County, and Grant County, which are offering
    Internet, voice, and video services. *Id; see also* *Community
    Broadband: Separating Fact From Fiction,* American Public Power
    Association, Jan. 2004, at 31. In addition, Palo Alto, California,
    and Taunton, Massachusetts, are conducting trials for the provision
    of Internet, voice and video. [Broadband Properties,]{.smallcaps}
    June 2005, at 10-22.

[^471]: George S. Ford, *Does Municipal Supply of Communications
    Crowd-Out Private Communications Investment? An Empirical Study,*
    Applied Economic Studies, Feb. 2005, at 1.

[^472]: American Public Power Association, *2005-06 Annual Directory and
    Statistical Report,* at 230.

[^473]: 1996 Act, sec. 301(a)(2), 47 U.S.C. § 522(7). In addition,
    private cable and SMATV operators: (a) do not pay franchise and
    Federal Communications Commission subscriber fees; (b) are not
    obligated to pass every resident in a given area; (c) are not
    subject to rate regulation; and (d) are not subject to must carry
    and local government access obligations. *1997 Report,* 13 FCC Rcd
    at 1085 n.296.

[^474]: *See 2004 Report,* 20 FCC Rcd at 2759 ¶10.

[^475]: Kagan Research, LLC, *Basic Cable Network Economics, 2004-2014*,
    Media Trends 2005, at 69.

[^476]: In 2004, we reported that IMCC had 135 members operating
    throughout the United States. *See 2004 Report*, 20 FCC Rcd at 1666
    ¶ 110. For a list of members, *see* Independent Multi-Family
    Communications Council, at http://www.imcc-online.org/membership
    (visited Sept. 2, 2005).

[^477]: Telephone conversation with William Burhop, Executive Director,
    IMCC, Oct. 12, 2005.

[^478]: This delivery technology was previously known as multipoint
    distribution service (MDS) and instructional television fixed
    service (ITFS) until the Commission renamed them in *Amendment of
    Parts 1, 21, 73, and 74 of the Commission's Rules to Facilitate the
    Provision of Fixed and Mobile Broadband Access, Educational and
    Other Advanced Services in the 2150-2162 and 2500-2690 MHz Bands*,
    19 FCC Rcd 14165 (2004).

[^479]: *2004 Report*, 20 FCC Rcd at 2814 ¶¶ 104-106.

[^480]: NCTA, *Analysis of MVPDs: March 2005*, Cable Developments 2005,
    at 15; *see also 2004 Report,* 20 FCC Rcd at 2814 ¶ 104.

[^481]: *2004 Report*, 20 FCC Rcd at 2814 ¶ 106.

[^482]: Telephone conversation with Bennett Ross, General Counsel-D.C.,
    BellSouth, Oct. 25, 2005.

[^483]: W.A.T.C.H. TV Comments at 1.

[^484]: *Id*. at 2-3.

[^485]: *Id.* at 3. W.A.T.C.H. TV also contends that the Commission's
    ongoing rewrite of the BRS and EBS rules in WT Docket No. 03-66 has
    created regulatory uncertainty that threatens its viability, and it
    seeks action on its pending petition for reconsideration and waiver
    request. *Id.* at 1-2, 4-7.

[^486]: *See 2004 Report,* 20 FCC Rcd at 2815 ¶ 107.

[^487]: *See* Li Yuan, *Now, the Very Small Screen*, [Wall Street
    Journal]{.smallcaps}, Sept. 22, 2005, at B1.

[^488]: *Id.* at B9.

[^489]: Comcast Comments at 39.

[^490]: NCTA Comments at 11.

[^491]: *See* Li Yuan, *Now, the Very Small Screen*, [Wall Street
    Journal]{.smallcaps}, Sept. 22, 2005, at B9. Sprint Nextel has
    signed a five-year agreement with the National Football League.

[^492]: Comcast Comments at 39. MobiTV has partnered with Major League
    Baseball to offer mobile phone customers baseball highlights and
    "top plays" and is working toward offering live video of baseball
    games.

[^493]: NCTA Comments at 11.

[^494]: *Id*.

[^495]: Envivio, Inc., at
    http://www.envivio.com/images/products/4CasterB3Datasheet050902.pdf
    (visited Nov. 30, 2005).

[^496]: Codec is short for "compression/decompression." Compression
    refers to the process by which redundant information is removed from
    a digital stream to reduce the bandwidth required to transmit it.
    Decompression is the reverse process of recovering the removed
    information to restore the original digital stream. Advanced video
    codecs are capable of removing more redundant information as
    compared to legacy codecs, with little impact on the video quality.
    Harry Newton, [Newton's Telecom Dictionary]{.smallcaps} (CMP Books,
    17^th^ ed., 2001), at 157.

[^497]: On2Technologies, Inc., at http://www.on2.com (visited Nov. 30,
    2005). *See also* Network Domain Comments at 6.

[^498]: *2004 Report*, 20 FCC Rcd at 2817-8 ¶114.

[^499]: Led by more than 200 U.S. universities, working with industry
    and government, Internet2 is being developed and deployed for
    advanced network applications and technologies for research and
    higher education. The Internet2 cross-country backbone offers 10
    gigabits per second, with the goal of offering 100 megabits per
    second of connectivity between every connected desktop. Internet2,
    at http://www.Internet2.edu (visited Nov. 30, 2005).

[^500]: *See* Morgan Stanley, *Cable/Satellite*, July 20, 2005, at 28.
    *See also* Federal Communications Commission, *High-Speed Services
    for Internet Access*, July 7, 2005, at Table 3 (reporting that, as
    of December 31, 2004, cable, DSL, wireline, and wireless
    technologies provided high-speed Internet access to 35.3 million
    residential and small business subscribers).

[^501]: Arbitron, Inc., *Internet and Multimedia 2005: The On-Demand
    Media Consumer*, Sept. 3, 2005, at 5.

[^502]: Comcast Comments at 24; CSTV Networks, Inc., *CSTV All Access:
    Thousands of Live Games Streamed Right to Your Computer,* at
    http://allaccess.cstv.com/subscriptions/index_xxl.jsp?partnerId=cstv_aamg
    (visited Dec. 27, 2005); America Online, Inc. and Warner Bros., *AOL
    and Warner Bros. Announce 'In2TV,' New Broadband Network on AOL.com,
    Delivering The Largest Offering Of Long-Form Television Programming
    Online* (press release), Nov. 14, 2005.

[^503]: Comcast Comments at 24; AP, *Scripps Takes Latest Channel Direct
    to Web*, [New York Times]{.smallcaps}, Mar. 21, 2005; David Kaplan,
    *Home & Garden Hangs Hat Online*, [MediaPost]{.smallcaps}, Jan. 14,
    2005; Jefferson Graham, *Search Engine Google Sets Sights on Video*,
    [USA Today]{.smallcaps}, Jan. 25, 2005, at B1; Saul Hansell, *Google
    and Yahoo Are Extending Search Ability to TV Programs*, [New York
    Times]{.smallcaps}, Jan. 25, 2005, at C7.

[^504]: *Clear Channel Overhauls Its Net Strategy*,
    [Reuters]{.smallcaps}, Mar. 24, 2005.

[^505]: Gavin O'Malley, *Ladies-On-Demand: Maxim Goes Video Via Deal
    With MSN*, [Media Post]{.smallcaps}, Mar. 31, 2005.

[^506]: Steve Donohue, *MTV Goes Into Overdrive*, [Multichannel
    News]{.smallcaps}, Apr. 6, 2005, at 11.

[^507]: Bob Tedeschi, *Web Sites' Sideline: TV-Type Shows*, [New York
    Times]{.smallcaps}, March 14, 2005, at C5.

[^508]: Walt Disney Company, *Disney, ABC & Apple Announce Deal to Sell
    TV Shows Online Hits to Include "Desperate Housewives," "Lost" and
    "That's So Raven,"* (press release), Oct. 12, 2005.

[^509]: *See* Movielink, LLC, *Downloadable Movies are Here*, at
    http://www.movielink.com/store/web/help/eLanding.jsp (visited Dec.
    27, 2005).

[^510]: Comcast Comments at 27-28.

[^511]: Saul Hansell, *Smaller Video Producers Seek Audiences on Net*,
    [New York Times]{.smallcaps}, Oct. 6, 2005, at C1.

[^512]: Comcast Comments at 28; s*ee* Akimbo Systems, at
    http://www.akimbo.com (visited Nov. 30, 2005). *See also* Comcast
    Reply Comments at 8-9.

[^513]: Comcast Comments at 28.

[^514]: *See 2003 Report,* 19 FCC Rcd at 1675 ¶ 108.

[^515]: *See, e.g*., paras. 56-7 *supra.*

[^516]: Nielsen Media Research, *Television Audience 2004*, Feb. 2005,
    at 4.

[^517]: *Id*. *See also* NCTA Comments at 15-16.

[^518]: NCTA Comments at 15.

[^519]: *Id.*

[^520]: *Id.* at 16*.*

[^521]: Comcast Comments at 35.

[^522]: *Id.* at 37.

[^523]: *See 2004 Report*, 20 FCC Rcd at 2822 n.560.

[^524]: Comcast Comments at 36.

[^525]: *Id.*

[^526]: *Id*. at 29.

[^527]: *Id*.

[^528]: *See* Appendix B, Table B-1. The number of MVPD subscribers is
    the total number of subscribers to all MVPDs listed in the table.
    The share of MVPD subscribers served by cable systems is the result
    of adding together the number of subscribers to all MVPD services
    and calculating the percentage of this total represented by cable
    subscribers.

[^529]: *See* paras. 87-8, 121-5 *supra*. *See also* Appendix B, Table
    B-1.

[^530]: *See Implementation of Section 621(a)(1) of the Cable
    Communications Policy Act of 1984 as amended by the Cable Television
    Consumer Protection and Competition Act of 1992*, Notice of Proposed
    Rulemaking, 20 FCC Rcd 18581 (2005) (*Franchising NPRM*).

[^531]: *See Notice*, 20 FCC Rcd at 14121 ¶ 10.

[^532]: One academic study showed that policies that hinder a new
    entrant's ability to sell video programming, such as requirements
    that entrants obtain a local cable franchise agreement, will
    strongly diminish that entrant's incentive to deploy fiber to
    low-income households. *See* George S. Ford, Thomas M. Koutsky, and
    Lawrence J. Spiwak, *The Impact of Video Service Regulation on the
    Construction of Broadband Networks to Low-Income Households,*
    Phoenix Center Policy Paper No. 23, Sept. 2005. The authors use data
    from the U.S. Census Bureau and create simulations of network
    deployment to show that a new entrant will pass substantially more
    households, particularly low-income households, if that entrant can
    readily offer video with voice and broadband Internet access
    services than it will if its ability to sell video services is
    sharply curtailed or delayed.

[^533]: SBC Comments at 15-19. *See also* Cincinnati Bell Comments at
    5-9; CenturyTel Comments at 4-6 and 7-10; OPASTCO Reply Comments at
    3-4; Qwest Reply Comments at 1-10. BellSouth provides several
    examples of problems it has had in negotiating local franchises.
    BellSouth Comments at 3-12; SBC Reply Comments at 2-5.

[^534]: *See* Verizon Comments at 6-29; Verizon Reply Comments at 4-11;
    CenturyTel Comments at 6-7; USTA Comments at 8-14. *See also* Qwest
    Comments at 9-18; SBC Comments at 10-15; NRTC Comments at 7;
    Consumers for Cable Choice Comments at 2-3; Alcatel Comments at
    8-10; USTA Comments at 14-16; USTA Reply Comments at 9-13; BellSouth
    Reply Comments at 1-9.

[^535]: In describing \"level playing field\" regulations, and franchise
    buildout requirements, Verizon states the following: \"\[I\]ncumbent
    cable providers pressure LFAs (under threat of litigation) to
    require the new entrant to build-out and serve an entire franchise
    area on an expedited basis or to match all of the concessions
    previously provided by the incumbent in order for it to gain its
    original monopoly position in the local area, despite the vastly
    different competitive situation facing the new entrant.\" Verizon
    Comments at 9.

[^536]: RCN Comments at 18. We note that Texas has passed a state-wide
    video franchising regime, and both Verizon and SBC have received
    state-wide franchises. Tex. Util. Code §§ 66.001 - 66.017. Lynn
    Stanton, *Texas PUC Grants SBC Video Franchise*, [TR
    Daily,]{.smallcaps} Nov. 1, 2005. *See also* Verizon Communications,
    Inc., *Verizon to Accelerate Availability of FiOS TV Service in
    Texas* (press release), Sept. 30, 2005; Anne Veigle, *SBC Files for
    Tex. Franchise for Video Service*, [Communications
    Daily,]{.smallcaps} Oct. 12, 2005, at 1-3. Verizon reports that
    passage of this law in Texas will allow it to offer video services
    in 21 additional communities in Texas by the end of 2006. Verizon
    Reply Comments at 3.

[^537]: BSPA Comments at 18-20.

[^538]: *Id*.

[^539]: Verizon Reply Comments at 8-11.

[^540]: NCTA Comments at 18-24. *See also* RCN Comments at 18; NCTA
    Reply Comments at 2-22; Comcast Reply Comments at 15-22.

[^541]: *Id.* at 40-42. *See also* CEA Comments at 17-19.

[^542]: BSPA Comments at 12-15; RCN Comments at 9-14.

[^543]: SBC Comments at 19-27; Verizon Comments at 29-35; Qwest Comments
    at 19-24; NRTC Comments at 4-6; Cincinnati Bell Comments at 9-11;
    CenturyTel Comments at 10-12; NTCA Comments at 9-10; USTA Comments
    at 16-17; Qwest Reply Comments at 10-11; USTA Reply Comments at 13;
    Verizon Reply Comments at 11-13; SBC Reply Comments at 5-7.
    BellSouth argues that consolidation and clustering in the cable
    industry increases the ability of cable operators to gain exclusive
    contracts with unaffiliated cable networks. BellSouth Comments at
    12-16. Smaller video providers stress the difficulties they face in
    negotiations with and receiving "reasonable rates" from large video
    programmers. NTCA Comments at 3-7. OPASTCO also raises the issue of
    the lack of access to affordable programming and states that
    expensive programming makes it difficult to create a workable
    business model for rural telecommunications providers offering video
    service. OPASTCO Reply Comments at 4-6. Comcast counters that no
    commenter denied access to programming can point to a violation of
    Commission rules. Comcast Reply Comments at 23-30. *See also* NCTA
    Reply Comments at 22-30.

[^544]: BSPA Comments at 20-23.

[^545]: Verizon Comments at 35-39.

[^546]: NTCA Comments at 7-9; BSPA Comments at 15-18. *See also* RCN
    Comments at 14-16.

[^547]: BSPA Comments at 15-18.

[^548]: Comcast Reply Comments at 41-43.

[^549]: Congress adopted Section 613(f) of the Communications Act as
    part of the 1992 Cable Act to address the consequences of horizontal
    concentration and vertical integration in the cable television
    industry. Section 613(f) was adopted as Section 11(c) of the Cable
    Television Consumer Protection and Competition Act of 1992, Pub. L.
    No. 102-385, 106 Stat. 1460, codified at 47 U.S.C. § 533(f). In
    *Time Warner Entertainment Co. v. FCC* (240 F.3d 1126 (D.C. Cir.
    2001)), the United States Court of Appeals for the D.C. Circuit
    reversed and remanded the Commission's rules implementing Section
    613(f). The Commission has an ongoing proceeding to respond to the
    ruling of the court. *See Implementation of Section 11 of the Cable
    Television Consumer Protection and Competition Act of 1992,* 16 FCC
    Rcd 17312 (2001); *The Commission's Cable Horizontal and Vertical
    Ownership Limits*, *Second Further Notice of Proposed Rulemaking*,
    20 FCC Rcd 9374, 9412-3 ¶¶ 67-70 (2005).

[^550]: *See* Appendix B, Table B-4. In this section, reported
    statistics for 2004 are based on March data since June data
    comparable to that used in previous years were unavailable. This
    year, June data were available, so we reverted to June data for
    2005.

[^551]: *Id*.

[^552]: *Id. See also* Appendix B, Table B-3; *2004 Report*, 20 FCC Rcd
    at 2872, Appendix B, Table B-3.

[^553]: *1998 Report*, 13 FCC Rcd at 24363 n.562. The HHI is a measure
    of concentration that is calculated by summing the squared market
    shares of the participants in the market. It is a measure of
    concentration that takes account of the distribution of the size of
    firms in the market. The HHI varies with the number of firms in the
    market and degree of inequality among firm size. Generally, the HHI
    increases when there are fewer and unequal sized firms in the
    market. HHI is usually employed to examine concentration in markets
    in which products are sold directly to consumers, not intermediate
    markets like the market for cable programming networks, but a
    comparison of HHIs from previous years shows a general trend in
    ownership concentration. The HHI calculation is based on the MVPD
    shares of cable companies serving over 91 percent of all subscribers
    and the two largest DBS operators. The addition of the shares of
    other cable operators and smaller MVPDs would change the HHI only by
    a small fraction.

[^554]: In the *2003 Report*, we reported a 2003 HHI of 1031. *See*
    *2003 Report*, 19 FCC Rcd at 1689-90, 1721 ¶ 140, Appendix B, Table
    B-3. We have revised the 2003 HHI for this *Report* due to a
    revision of previous years' cable industry and MVPD subscribers to
    allow for use of a consistent data source in the tables in Appendix
    B.

[^555]: *Applications for Consent to the Assignment and/or Transfer of
    Control of Licenses, Adelphia Communications Corporation, Assignors,
    to Time Warner Cable Inc., Assignees; Adelphia Communications
    Corporation, Assignors and Transferors, to Comcast Corporation,
    Assignees and Transferees; Comcast Corporation, Transferor, to Time
    Warner Inc., Transferee; Time Warner Inc., Transferor, to Comcast
    Corporation, Transferee, Applications and Public Interest
    Statement*, MB Docket No. 05-192, at 49-60. Numerous parties filing
    comments in this transaction dispute this characterization of the
    increased clustering that will result from the sale.

[^556]: BellSouth Comments at 12-16.

[^557]: Kagan Research, LLC, *Cable System Sales Summary*, [Cable TV
    Investor]{.smallcaps}, Aug. 25, 2005, at 14; Jan. 31, 2005, at 9;
    and July 29, 2004, at 13. These figures include announced
    transactions, most notably the proposed Adelphia transaction that is
    still pending before the Commission.

[^558]: *See* Appendix B, Table B-2. The way the clusters were counted
    by Kagan Research, LLC has changed between this year and last,
    leading to difficulties in directly comparing the two. In previous
    years, all of Comcast's subscribers in the Northeast and
    Mid-Atlantic were counted as part of one "supercluster." Beginning
    this year, those subscribers were broken out into separate clusters.
    This is probably a more accurate approach, but it causes direct
    year-to-year comparisons to be uninformative.

[^559]: *See* *id*. This figure has remained constant since 2002.

[^560]: *See* 47 U.S.C §§ 533, 548.

[^561]: Beneficial effects can include efficiencies in the production,
    distribution, and marketing of video programming, and providing
    incentives to expand channel capacity and create new programming by
    lowering the risks associated with program production ventures.
    *See, e.g.,* H.R. Rep. No. 862, 102nd Cong., 2d Sess. 56 at 41-43
    (1992).

[^562]: Possible detrimental effects can include unfair methods of
    competition, discriminatory conduct, and exclusive contracts that
    are the result of coercive activity. *See 1995 Report*, 11 FCC Rcd
    at 2135 ¶ 157; *Implementation of Section 11(c) of the Cable
    Television Consumer Protection and Competition Act of 1992 Vertical
    Ownership Limits,* 10 FCC Rcd 7364, 7365 ¶ 4 (1995).

[^563]: Appendix C, Table C-1.

[^564]: *See* Appendix C, Table C-1. *See* Tables C-1 and C-2. We count
    each unique programming service of a multiplexed package separately.
    This includes the Spanish language simulcast of a particular
    network, such as Discovery en Español. We do not, however, count
    services that are not unique, as in a multiplexed programming
    service that is merely time shifted. *See 1998 Report*, 13 FCC Rcd
    at 24376, n.661. *See also 2000 Report*, 16 FCC Rcd at 6079, n.579*.
    See also* Appendix C, Table C-1. This year we also do not count the
    "on-demand" multiplexes because these versions of on-demand networks
    are often aggregated into a single "on-demand" channel operated by
    the MVPD for selection and playback. In addition, we note that last
    year our nonbroadcast network total included 35 multiplexed iN
    DEMAND channels and two iN DEMAND HD channels. Based on information
    obtained this year, we have identified 60 multiplexed iN DEMAND
    channels and two iN DEMAND HD channels. *See e.g.*, MLSnet.com,
    *Order the MLS Direct Kick Package: Available on DIRECTV, Dish
    Network, Digital Cable via iN DEMAND*, Oct. 21, 2005, at
    http://mlsnet.com/MLS/schedule/tv.jsp (visited Oct. 26, 2005). Last
    year, we also identified six Starz! networks, one Starz! HD network,
    and a 13 channel "Starz! Super Pack." Based on information obtained
    this year, we have determined that the "Starz Super Pack" is a
    collection of networks already counted in our network totals,
    including six separately counted Starz! networks and seven
    separately counted Encore networks. *See* DIRECTV, Inc., *Starz
    Super Pack -- The Best Movie Value from DIRECTV*, at
    http://www.directv.com/DTVAPP/learn/ Packages_TotalChoice_Starz.jsp.

[^565]: *2004 Report,* 20 FCC Rcd at 2832 ¶ 145. Although for purposes
    of this report we make every effort to identify ownership interests
    establishing vertical integration, we have not attempted to
    ascertain definitively whether certain vertical relationships would
    be cognizable under the Commission's attribution rules, nor would we
    wish to do so without reference to a particular rule or proceeding
    in which we could explore thoroughly all pertinent information.
    Hence, we do not intend here to render determinations regarding the
    application of the Commission's attribution rules.

[^566]: This year we have included more information from programmers
    directly, and information from channel lineups of MVPDs currently
    offering programming. *See* Appendix C, Tables C-1 and C-2
    *Sources*.

[^567]: TAC Comments at 8-9, 15-17. TAC argues that the *2004 Report*
    did not adequately examine the ownership structure of the
    programming networks in existence, and thus did not thoroughly
    assess the health of competition in the video programming market or
    its impact on consumers' access to programming. TAC Comments at 3,
    5, 9-10.

[^568]: This year, we focused our research efforts more closely than in
    the past on international networks. MVPDs may have carried some of
    those networks prior to the release of last year's report.

[^569]: *See* Appendix C, Table C-1. Traditionally, the Commission has
    counted each channel of several multiplexed networks separately
    (*e.g.,* 60 channels for iN DEMAND) for the total number of networks
    and for these calculations. *See 2004 Report,* 20 FCC Rcd at 2875
    Appendix C, Table C-1. Time Warner, Comcast, and Cox each have an
    interest in iN DEMAND, which we treat as a single network for
    purposes of determining the number of networks in which each MSO has
    an ownership interest. *See* iN DEMAND Networks, at
    http://indemand.com/about/faqDetailsIndemand.jsp?faqCat=1#6 (visited
    *See also* DIRECTV v. In DEMAND, LLC, File No CSR-6901-C (filed June
    29, 2005); EchoStar Satellite, LLC v. In DEMAND, LLC, File No.
    CSR-6913P (filed July 5, 2005).

[^570]: *See* Appendix C, Table C-1.

[^571]: *Notice,* 20 FCC Rcd at 14121 ¶¶ 12-13.

[^572]: *See* Appendix C, Table C-2.

[^573]: *See* Appendix C, Tables C-1, C-2.

[^574]: *Id*. The WB network, through its parent company Time Warner,
    has ownership interests in 34 national nonbroadcast networks. *See*
    Appendix C, Table C-1*.* UPN (United Paramount Network) through its
    parent Viacom, also the parent of CBS, has ownership interests in 40
    national nonbroadcast programming networks. *See* Viacom, at
    http://www.viacom.com/broadcast.jhtml (visited Nov. 8, 2005). In
    addition, EchoStar jointly owns G4videogameTV with Comcast, and PBS
    Kids Sprout is a joint venture between Comcast and PBS. *Id.*

[^575]: News Corp., *Company Information*, at http://www.directv.com.
    News Corp also owns one national network jointly with Comcast. *See*
    Appendix C, Table C-1.

[^576]: Disney also owns two national networks jointly with Comcast.
    *See* Appendix C, Table C-1.

[^577]: *See* Appendix C, Tables C-1 and C-2.

[^578]: *See* Table 10 and Appendix C, Table C-2.

[^579]: *See* Appendix C, Table C-5.

[^580]: *See 2004 Report,* 20 FCC Rcd at 2901, Appendix C, Table C-6.

[^581]: They include: Time Warner, Cox, Disney, General Electric
    (NBC-Universal), Hearst, Liberty Media, Advance Newhouse, Viacom,
    Landmark Communications, E.W. Scripps, and C-SPAN (National Cable
    Satellite Corporation).

[^582]: *See* Appendix C, Table C-6.

[^583]: A share is the percent of all households using television during
    the time period that are viewing the specified station(s) or
    network(s). Due to simultaneous multiple set viewing, Nielsen
    reports audience shares that exceed 100 percent when totaled. We
    have normalized audience shares to equal 100 percent.

[^584]: Nonbroadcast network shares include basic (BST and CPST)
    networks, premium networks, and PPV networks distributed by MVPDs.

[^585]: Broadcast shares include network affiliates, independent, and
    public television stations.

[^586]: Prime time viewing is Monday through Saturday, 8 p.m.-11 p.m.,
    and Sunday, 7 p.m.-11 p.m. Nielsen Media Research, *Broadcast
    Calendar (TV Season) Share of Audience Report, Prime Time and Total
    Day,* Sept. 2005. The most popular nonbroadcast networks continue to
    receive a lower audience share for all day and prime time viewing
    than any of the major broadcast television networks.

[^587]: NCTA Comments at 41.

[^588]: *2004 Report,* 20 FCC Rcd at 2895-2897, Appendix C, Table C-3.

[^589]: *See* n.579 *supra.*

[^590]: *See* Appendix C, Table C-4. *See also 2004 Report,* 20 FCC Rcd
    at 2885, Appendix C, Table C-5.

[^591]: *See 1995 Report,* 11 FCC Rcd at Appendix H, Tables 3 and 4;
    *1996 Report,* 12 FCC Rcd at Appendix G, Tables 3 and 4; *2004
    Report* 20 FCC Rcd at 2835 ¶ 152.

[^592]: 47 U.S.C. § 548. *See also* U.S.C. § 521(a)(5)-(6) nt.

[^593]: *See Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992, Development of Competition and
    Diversity in Video Programming Distribution: Section 628 (c)(5) of
    the Communications Act, Sunset of Exclusive Contract Prohibition,*
    17 FCC Rcd 12124, 12158 ¶ 73 (2002).

[^594]: *See, e.g*., RCN Comments at 12-14; USTA Comments at 16-17;
    DIRECTV Comments at 4; EchoStar Comments at 4-5; Verizon Comments at
    30-33; BSPA Comments at 13; SBC Comments at 21-23.

[^595]: RCN Comments at 13; USTA Comments at 17.

[^596]: SBC Comments at 22-25; USTA Comments at 17; EchoStar Comments at
    11; BellSouth Comments at 16; CenturyTel Comments at 14; BSPA
    Comments at 15; Verizon Comments at 32; RCN Comments at 16.

[^597]: Comcast Reply Comments at 25-26.

[^598]: *Id*.

[^599]: EchoStar Comments at 13; Qwest Comments at 20. Pursuant to 47
    U.S.C. § 325(b)(3)(C)(ii)), MVPDs are prohibited from retransmitting
    the signal of any commercial broadcasting station without the
    express authority of the originating station. Exclusive
    retransmission consent agreements are prohibited. Initially, the
    exclusivity provisions were to sunset on Dec. 31, 2005, but the
    sunset of the exclusivity provisions was extended to Jan. 1, 2010,
    in SHVERA.

[^600]: Verizon Comments at 35.

[^601]: CenturyTel Comments at 12.

[^602]: NCTA Reply Comments at 22.

[^603]: Comcast Reply Comments at 42.

[^604]: BSPA Comments at 16.

[^605]: EchoStar Comments at 13.

[^606]: ACA Comments at 6. ACA does not identify the media
    conglomerates.

[^607]: RCN Comments at 17.

[^608]: Cincinnati Bell Comments at 10; OPASTCO Comments at 5.

[^609]: Comcast Reply Comments at 29-30.

[^610]: DIRECTV Comments at 15.

[^611]: TAC Comments at 13-14. We note earlier that 257 of the 531 and
    all of the top 15 non-broadcast programming networks are affiliated
    with a cable operator and/or another media entity. We will seek
    further information and comment on program carriage issues and their
    impact on various types of independent programming networks,
    including minority programming networks, for our next report on the
    status of competition in the market for delivery of video
    programming.

[^612]: TAC Comments at 21-24. It submits a license fee analysis based
    on information provided in Kagan Research's *Economics of Basic
    Cable Networks 2006, 12^th^ Annual Edition,* to illustrate this
    difference. *Id.* at Exhibit A.

[^613]: TAC Comments at 16-19.

[^614]: Comcast Reply Comments at 32-35; Time Warner Reply Comments at
    6-7.

[^615]: Time Warner Reply Comments at 5-6. *See also,* GAO,
    *Tele-communications: Issues Related to Competition and Subscriber
    Rates in the Cable Television Industry,* GAO-04-08, Oct. 2003, at
    29.

[^616]: 47 U.S. C. § 521(a)(19) note; Pub. L. No. 102-385, 106 Stat.
    1460, Oct. 5, 1992.

[^617]: 47 U.S.C. §§ 534(b), 535(b). *See also* 47 C.F.R. § 76.56.

[^618]: Pub. L. No. 106-113, 113 Stat. 1501, 1501A-526 to 1501A-545
    (Nov. 29, 1999).

[^619]: 47 C.F.R. § 76.66.

[^620]: 47 C.F.R. § 76.64.

[^621]: 47 C.F.R. § 76.60.

[^622]: *See* *2004 Report*, 20 FCC Rcd at 2805 ¶ 79.

[^623]: *See Notice*, 20 FCC Rcd at 14140 ¶ 64.

[^624]: Joint Cable Commenters Reply Comments at 17.

[^625]: ACA Comments at 7-8; OPASTCO Reply Comments at 5.

[^626]: *Id*.

[^627]: BSPA Comments at 24.

[^628]: Qwest Comments at 22-23.

[^629]: NRTC Comments at 8.

[^630]: NAB Reply Comments at 2-3.

[^631]: Affiliates Associations Reply Comments at 8.

[^632]: Hearst Argyle Television Inc., *SEC 10-Q Filing for Period
    Ending September 30, 2005*, at 16.

[^633]: Disney Comments at 37-38.

[^634]: Affiliates Associations Reply Comments at 6-9.

[^635]: NAB Reply Comments at 3-5.

[^636]: EchoStar Comments at 8-9.

[^637]: OPASTCO Reply Comments at 6.

[^638]: Joint Cable Commenters Reply Comments at 17.

[^639]: Disney Comments at 39.

[^640]: *2004 Report*, 20 FCC Rcd at 28462841 ¶ 166. *See, e.g*., SBC
    Comments at 22-25; USTA Comments at 17; EchoStar Comments at 11;
    BellSouth Comments at 16; CenturyTel Comments at14; BSPA Comments at
    15; Verizon Comments at 32; RCN Comments at 16.

[^641]: *See* Appendix C, Table C-3.

[^642]: *Id*.

[^643]: The Commission remains cognizant that Fox's ownership of
    numerous regional sports programming networks may pose a public harm
    when combined with DIRECTV's nationwide distribution platform. The
    Commission imposed conditions on News Corp. requiring it to enter
    into arbitration where negotiations fail to produce a mutually
    acceptable set of prices, terms and conditions. In addition, News
    Corp. cannot offer any existing or future regional programming
    services on an exclusive basis to any MVPD and shall make such
    services available to all MVPDs on a non-exclusive basis. *See News
    Corp Order*, 19 FCC Rcd at 531-2, 543, 552-555, 626, ¶¶ 127,
    147-48,172-79, 366.

[^644]: NCTA, *Directory of Programming Services,* Cable Developments
    [2005,]{.smallcaps} at 84-85.

[^645]: News Corp., *Cablevision Swap Sports Nets,* [Satellite Business
    News Faxupdate,]{.smallcaps} Feb. 23, 2005, at 2.

[^646]: R. Thomas Umstead, *The End of an Empire,* [Multichannel
    News,]{.smallcaps} Jan. 21, 2005, at
    http://www.multichannel.com/article/CA498108.html (visited Jan. 26,
    2005).

[^647]: National Basketball Association, at
    http://www.nba.com/bobcats/news/c-set_050628.html (visited Oct. 27,
    2005).

[^648]: [CableFAX]{.smallcaps} Daily, Oct. 28, 2005, at 1.

[^649]: On June 14, 2005, TCR Sports Broadcasting Holding, L.L.P. (TCR)
    d/b/a Mid-Atlantic Sports Network, Inc. (MASN) filed a Carriage
    Agreement Complaint and an Emergency Petition for Injunctive Relief
    requesting that the Commission direct Comcast to comply with 47
    C.F.R. § 76.1301 by ceasing its discriminatory activities against
    TCR and mandate carriage of TCR's programming of Washington
    Nationals games on MASN on Comcast's systems in the Washington
    region. Prior to TCR's filings with the Commission, Comcast filed a
    related lawsuit against TCR in Montgomery County, Maryland, Circuit
    Court on April 21, 2005, claiming that TCR had violated its
    agreement with Comcast for the production and exhibition of
    Baltimore Orioles games. In October, 2005, the Maryland Circuit
    Court dismissed Comcast's lawsuit, and in November, 2005, Comcast
    appealed the judgment. *See Comcast SportsNet Mid-Atlantic, L.P.,
    Plaintiff v. Baltimore Orioles L. P., TCR Sports Broadcasting
    Holding, L.L.P., Major League Baseball, Mid-Atlantic Sports
    Network,* Complaint, Civ. Action No. 260751-V (Md. Circ. Ct), filed
    April 21, 2005. *See also* *Comcast SportsNet Mid-Atlantic, L.P.,
    Plaintiff v. Baltimore Orioles L. P., TCR Sports Broadcasting
    Holding, L.L.P., Major League Baseball, Mid-Atlantic Sports Network,
    Defendants*, Court's Order and Notice of Judgment, Civ. Action No.
    260751-V (Md. Circ. Ct), entered October 6, 2005; *see also Comcast
    SportsNet Mid-Atlantic, L.P., Plaintiff v. Baltimore Orioles L. P.,
    TCR Sports Broadcasting Holding, L.L.P., Major League Baseball,
    Mid-Atlantic Sports Network, Defendants*, Notice of Appeal, Civ.
    Action No. 260751-V (Md. Circ. Ct), dated November 2, 2005.

[^650]: RCN Comments at 12; DIRECTV Comments at Appendix B2. In October
    2005, Charter announced an agreement to carry MASN.
    [CableFAXDaily]{.smallcaps}, Oct. 28, 2005, \]at 1. In a meeting
    with Media Bureau Staff, Comcast noted that it disputes the
    complaint and that the Commission is actively addressing the
    resolution of this issue in another proceeding. Comcast meeting with
    Media Bureau Staff, Nov. 21, 2005.

[^651]: *See Notice,* 20 FCC Rcd at 14122 ¶ 14.

[^652]: *See* Appendix C, Table C-3.

[^653]: Allison Romano, *Local News Taps Into Cable VOD,* [Broadcasting
    & Cable,]{.smallcaps} May 2, 2005, at 10.

[^654]: [CableFAXDaily,]{.smallcaps} June 2, 2005, at 3.

[^655]: *See Notice,* 20 FCC Rcd at 14122 ¶ 14.

[^656]: Mike Rhodes, *Media Democracy and the Struggle for Cable
    Access*, San Francisco Bay Area Independent Media Center, Aug. 9,
    2004, at http://www.fresnoalliance.com/home/pegca leaccess.htm
    (visited Oct. 20, 2005).

[^657]: 47 U.S.C. § 531. Local franchise authorities are allowed to
    establish procedures under which the cable operator may utilize
    unused PEG channel capacity for other services. 47 U.S.C. §
    531(d)(1).

[^658]: *What's at Stake: Community Access*, at
    http://www.hearusnow.org/tvradiocable/whatsatstake/communityaccess
    (visited Oct. 20, 2005).

[^659]: The Vermont Public Service Board has established PEG obligations
    based on cable system channel capacity. Cable systems with a channel
    capacity of less than 21 channels must provide at least one
    full-time activated PEG channel and higher capacity systems are
    required to have up to three channels for such use, with one channel
    designated for each type of programming (*i.e.*, public,
    educational, and governmental programming). *See* Vermont Department
    of Public Service, at
    http://publicservice.vermont.gov/cable/cable-pegaccess.html (visited
    Oct. 25, 2005).

[^660]: *See Implementation of Section 25 of the Cable Television
    Consumer Protection and Competition Act of 1992, Direct Broadcast
    Satellite Public Interest Obligation*, 19 FCC Rcd 5647 (2004).

[^661]: *See* 47 U.S.C. § 25.701.

[^662]: EchoStar currently carries the following public interest
    channels: Brigham Young University, Classic Arts Showcase, Colours
    TV, Free Speech TV, Good Samaritan Network, Hispanic Information &
    Telecommunications Network, Worldlink TV, Northern Arizona
    University, Panhandle Area Education, PBS YOU, Research Channel,
    RFDTV, University of California, and University of Washington.
    EchoStar Comments at 13.

[^663]: DIRECTV currently carries the following public interest
    channels: HITN-TV, C-SPAN 1, Daystar, EWTN, Link TV, NASA TV, PBS
    YOU, TBN, The WORD Network, ONCE Mexico, BYU TV, and RFD-TV.
    *HITN-TV To Join DIRECTV Programming Lineup*, DIRECTV In The News,
    at http://www.directv.com?DTVAPP/
    aboutus/headline.jsp?newsld=06_13_2004A (visited Oct. 24, 2005).

[^664]: EchoStar Comments at 13-16.

[^665]: DIRECTV Comments at Exhibit D.

[^666]: Comcast Comments at 46.

[^667]: APTS Comments at 3-4.

[^668]: Radio-Television News Directors Foundation, *A Look At Regional
    News Channels and State Public Affairs Networks,* May
    [2004,]{.smallcaps} at 12; Comcast Comments at 44.

[^669]: *See* Letter from Martha E. Heller, Wiley, Rein & Fielding, to
    Marlene Dortch, Secretary, FCC, MB Docket No. 05-192 (Nov. 15, 2005)
    at Attachment; Comcast meeting with Media Bureau Staff, Nov. 21,
    2005. *See also* Comcast Corp., *Comcast and CBS Announce Deal to
    Offer Hit Shows through Video on Demand* (press release), Nov. 7,
    2005. *See also* Comcast Comments at 49-50. Comcast's local VOD
    service also includes programming on community service initiatives
    addressing issues such as literacy and substance abuse. *Id.*

[^670]: NAB Comments at 4.

[^671]: NCTA Comments at 42-43.

[^672]: *2004 Report,* 20 FCC Rcd at 2846 ¶ 175.

[^673]: Comcast Comments at 44.

[^674]: RCN Comments at 10-11.

[^675]: *Notice,* 20 FCC Rcd at 14124 ¶ 20. In 1997, the Commission
    adopted phase-in schedules to increase the amount of closed
    captioned video programming over time. *See Closed Captioning and
    Video Description of Video Programming, Implementation of Section
    305 of the Telecommunications Act of 1996, Video Programming
    Accessibility,* Report and Order, 13 FCC Rcd 3272 (1998); Order on
    Reconsideration, 13 FCC Rcd 19973 (1998).

[^676]: 47 C.F.R. § 79.1(b)(1) (phase-in schedule for "new" programming
    which is defined as programming first published or exhibited on or
    after January 1, 1998). Video programming first published or
    exhibited for display on television receivers equipped for display
    of digital transmissions or formatted for such transmission is
    defined as "new" as of July 1, 2002. 47 C.F.R. § 79.1(a)(6)(ii).
    *See* *Closed Captioning Requirements for Digital Television
    Receivers,* 15 FCC Rcd 16788, 16808-09 ¶ 60 (2000) (*Digital
    Captioning Order*). A separate phase-in schedule applies for Spanish
    programming. 47 C.F.R. § 79.1(b)(3)-(4).

[^677]: 47 C.F.R. § 79.1(b)(iv).

[^678]: 47 C.F.R. § 79.1(b)(2) (phase-in schedule for "pre-rule"
    programming). *See also* 47 C.F.R. § 79.1(a)(6) (definition of
    pre-rule programming).

[^679]: 47 C.F.R § 79.1(d).

[^680]: 47 C.F.R § 79.1(f).

[^681]: 47 C.F.R § 79.1(g).

[^682]: DIRECTV Comments at 16.

[^683]: *See also 2004 Report,* 20 FCC Rcd at 2848 at ¶ 178. *See Closed
    Captioning of Video Programming, Telecommunications for the Deaf,
    Inc., Petition for Rulemaking,* 20 FCC Rcd 13211 (2005).

[^684]: *Notice*, 20 FCC Rcd at 14122 ¶ 16.

[^685]: The one exception is Sky Angel's DBS service, which offers a
    family-friendly, faith-based programming service. *See* para. 73
    *supra.*

[^686]: ACA Comments at 12; BSPA Comments at 15; s*ee, e.g.,* Consumers
    Union and Consumer Federation of America Comments and Reply
    Comments, MB Docket No. 04-207, July 15, 2004. *See* Oral Statement
    of Kevin J. Martin, Chairman, FCC, Before the Committee on Commerce,
    Science and Transportation, U.S. Senate, *Open Forum on Decency,*
    Nov. 29, 2005; *Chairman Kevin J. Martin's Statement on the
    Announcement that Cable Companies May Voluntarily Offer Family Tier*
    (FCC News Release) Dec. 12, 2005.

[^687]: According to NCTA, six of the largest MSOs plan to introduce
    family tiers, although they may have different approaches to
    launching these tiers, which are in various stages of development.
    These cable operators are Time Warner, Comcast, Advance/Newhouse
    Communications (Bright House Networks), Insight Communications,
    Bresnan Communications, and Midcontinent Communications. *See* Glen
    Dickson, *Family Tiering Gets Technical,* [Broadcasting &
    Cable]{.smallcaps}, Dec. 19, 2005, at 24.

[^688]: *See* Time Warner, *Time Warner Cable Launches Family Choice
    Tier* (press release), Dec. 15, 2005.

[^689]: The 15 channels are: Broomerang, C-SPAN 2, C-SPAN 3, CNN
    Headline News, The Science Channel, Discovery Kids, Disney Channel,
    DIY Network, FIT-TV, Food Network, HGTV, La Familia, Nick Games &
    Sports, The Weather Channel, and Toon Disney. *Id.*

[^690]: *See* Comcast Corp., *Comcast Announces Family Tier* (press
    release), Dec. 22, 2005.

[^691]: The 16 networks include: Disney Channel, Toon Disney, PBS KIDS
    Sprout, Discovery Kids, Science Channel (Discovery),
    Nickelodeon/Nick Too, Nickelodeon GAS (Games and Sports), TBN
    (Trinity Broadcasting), HGTV, Food Network, DIY, CNN Headline News,
    The Weather Channel, National Geographic, C-SPAN, and C-SPAN 2.
    *Id.*

[^692]: Cox Communications, Inc., *Cox communications Announces Family
    Friendly Package* (press release), Jan. 10, 2006. The 40 channels
    include: local affiliates of ABC, CBS, NBC, PBS, Fox, WB, UPN, and
    Univision, and C-SPAN, WGN, home shopping channels, TV Guide
    Channel, local public, education, and government access channels,
    and the Disney Channel, Discovery Kids, Headline News, National
    Geographic Channel, Home & Garden TV, DIY (Do It Yourself),
    Nickelodeon, Fit TV, Sprout, Discovery Science, Boomerang, and GSN.
    Local systems will be able to tailor the package with The Weather
    Channel or Weatherscan Local, C-SPAN 2 or 3, and additional
    religious and Spanish-language programming.

[^693]: Insight Communications Company, *Insight Communication Announces
    Plans for Family-Friendly Tier of Programming* (press release), Jan.
    17, 2006. The new tier of programming will include: Home &Garden
    Television, Food Network, DIY Network, C-SPAN 2, CNBS, CNN Headline
    News, The History Channel, The Weather Channel, Discovery Kids,
    Discovery Science, Nick Games & Sports, The Disney Channel, Toon
    Disney, PBS KIDS Sprout, and Trinity Broadcasting Network (TBN).

[^694]: *See* Midcontinent, *Midcontinent Communications to Develop
    Family Friendly Choice* (press release), Dec. 12, 2005; Jean
    Spenner, *Cable TV Planning "Family Friendly" Tier*, [The Saginaw
    News,]{.smallcaps} Dec. 16, 2005, at
    http://www.mlive.com/business/sinews/index.ssf?/base/business-1/1134746428242260.xr..
    (visited Dec. 29, 2005).

[^695]: DIRECTV, Inc., *DIRECTV to Offer Family Programming Package*
    (press release), Jan. 18, 2006. DIRECTV's package of programming
    will include: Bloomberg, Boomerang, BYU TV, CNN Headline News,
    C-SPAN 1, C-SPAN-2, Daystar, Discovery Kids, Disney East, Disney
    West, DIY Network, EWTN, Food Network, Hallmark Channel, HGTV, HITN,
    HSN, Link TV, NASA TV, National Geographic Channel, Nickelodeon/Nick
    at Night East, Nickelodeon/Nick at Night West, Nicktoons, Noggin/The
    N, NRB Network, Once TV, PBS Kids Sprout, QVC, RFD TV, Shop at Home,
    Shop NBC, TCT Network, The Science Channel, The Weather Channel,
    Toon Disney, Trinity Broadcasting Network, Word Network, World
    Harvest Network, XM Disney Radio, and XM Kids.

[^696]: EchoStar Communications Corporation, *DISH Network Introduces
    "DishFAMILY" Programming Tier* (press release), Jan. 19, 2006.
    EchoStar's programming package includes: Animal Planet, The
    Biography Channel, Bloomberg TV, Boomerang, BYUTV, C-SPAN, C-SPAN 2,
    CSTV, Discovery Kids, Discovery Times, Do It Yourself Network, EWTN,
    Food Network, Fox News Channel, Great American Country, CNN Headline
    News, HSN, NASA, Nickelodeon East, Nickelodeon West, Nick Games &
    Sports, Nick Toons, Outdoor Channel, RFDTV, Shop at Home, ShopNBC,
    The Science Channel, The Weather Channel, TBN, TV Land, and QVC.

[^697]: *See* Parents Television Council, *PTC Calls "Family Tiers" a
    "Red Herring"* (press release), Dec. 12, 2005.

[^698]: *See* Letter from Jeannine Kenney, Consumers Union, Mark Cooper,
    Consumer Federation of America, and Ben Scott, Free Press, to
    Senators Ted Stevens and Daniel Inouye, Co-Chairmen, Committee on
    Commerce, Science and Transportation, U.S. Senate (Jan. 18, 2006).

[^699]: *See* Concerned Women for America, *CWA: Family-Friendly Tiers
    are Not the Answer* (press release), Dec. 12, 2005.

[^700]: ACA Comments at 12-13.

[^701]: BSPA Comments at 26-27.

[^702]: OPASTCO Reply Comments at 6.

[^703]: Cincinnati Bell Comments at 10.

[^704]: Consumers for Cable Choice Comments at 3-4.

[^705]: Disney Comments at 4-6. Disney attached its comments in response
    to the Commission's *Public Notice* in the *A* *La Carte*
    proceeding, MB Docket No. 04-207, filed July 15, 2004, to its
    comments in this proceeding. In those comments, Disney stated that
    any form of a la carte or tiering would result in consumers paying
    more for less.

[^706]: DIRECTV Comments at Exhibits B, C, and D.

[^707]: E-mail from Nancy Christopher, Vice President, Public Relations,
    Dominion Sky Angel DBS Television and Radio System, Nov. 15, 2005.

[^708]: *Notice,* 20 FCC Rcd at 14125-6 ¶ 23. Pursuant to Section 208 of
    SHVERA, the Commission conducted an inquiry and submitted a Report
    to Congress on the impact on competition in the MVPD market of the
    retransmission consent, network nonduplication, syndicated
    exclusivity, and sports blackout rules, including the impact of
    those rules on the ability of rural cable operators to compete with
    the direct broadcast satellite industry in the provision of digital
    broadcast television signals to consumers. *See Retransmission
    Consent and Exclusivity Rules: Report to Congress Pursuant to
    Section 208 of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004*, Sept. 8, 2005.

[^709]: ACA Comments at 2. According to one analyst, small cable
    operators serve approximately 22 percent of total U.S. cable
    subscribers. *See* Michael Hopkins, *Thriving (Albeit Small)
    Empires*, [The Bridge]{.smallcaps}, Sept. 30, 2005, at 1.

[^710]: *See 2005 GAO Report* at 9-15; Michael Hopkins, *Thriving
    (Albeit Small) Empires*, [The Bridge]{.smallcaps}, Sept. 30, 2005.
    For example, in Vermont, The Bridge reports DTH penetration to be 35
    percent compared to almost 47 percent for cable; in Utah, DTH and
    cable penetration are tied at approximately 33 percent; in Montana,
    DTH penetration is 32 percent and cable penetration 48 percent; in
    Idaho, DTH penetration is 32 percent and cable penetration is 45
    percent; in Missouri, DTH penetration is 30 percent and cable
    penetration is 44 percent. DTH's national average penetration rate
    is 20 percent and cable's is 54 percent. *Id.* at 8.

[^711]: *See, e.g.*, Michael Hopkins, *Thriving (Albeit Small) Empires*,
    [The Bridge]{.smallcaps}, Sept. 30, 2005, at 8; Gerry Blackwell,
    *Rural Cooperative Does IPTV*, ISP Technology, Aug. 22, 2005;
    Stewart Schley, *Declaration of Innovation; Indie Ops Fight Rivals
    by Blazing New Trails*, [Multichannel News]{.smallcaps}, Aug. 1,
    2005; Matt Stump, *Co-op Brings IPTV to OK*, [Multichannel
    News]{.smallcaps}, May 2, 2005; Linda Moss, *Telecom: Key to Rural
    Happiness*, [Multichannel News]{.smallcaps}, Mar. 28, 2005.

[^712]: OPASTCO Comments at 7.

[^713]: *See, e.g.*, OPASTCO Comments at 4; NTCA Comments at 12.

[^714]: NRTC Comments at 2. NRTC reports that, in March 2005, it and the
    National Rural Electric Cooperative Association's Cooperative
    Research Network entered into a partnership to conduct two pilot
    projects to study the performance of broadband-over-powerline in
    rural communities. NRTC Comments at 4.

[^715]: OPASTCO reports that based on a survey of its membership,
    approximately 50 percent use coaxial cable/hybrid fiber coax; 20
    percent use IPTV over DSL; 14 percent use radio frequency based
    fiber to the home; 13 percent use asynchronous transfer mode; 8
    percent use IP-based fiber to the home; and one percent use IP-based
    VDSL. Some members use more than one technology. OPASTCO Comments at
    3, n.7.

[^716]: NRTC Comments at 4. NRTC states that a majority of rural
    telephone companies are exploring video distribution systems using
    IPTV over digital subscriber lines (DSL). NRTC asserts that video
    platform costs are a limiting factor for small and rural LECs
    seeking to provide video services in their territories. According to
    NRTC, a head-end supporting the MPEG-2 video compression standard
    costs \$1 million, and a system using the newer MPEG-4 compression
    standard can cost \$3 million, but due to the limited number of
    households served by the average rural cable operator or LEC, such
    an investment is not feasible. NRTC Comments at 5-6. According to
    NRTC, its members believe they must choose IPTV-over-DSL platforms
    that support the more costly MPEG-4 standard because it will allow
    them to deliver multiple channels simultaneously and enable delivery
    of HD programming, which is not possible using MPEG-2 compression
    over DSL. *Id.* at 5 n.5.

[^717]: NRTC Comments at 6. NRTC states that the initial capital cost
    for a fully deployed IPTV/MPEG-4 system capable of delivering up to
    200 channels of video programming will be \$100,000.

[^718]: NRTC Comments at 6.

[^719]: Michael Hopkins, *Thriving (Albeit Small) Empires*, [The
    Bridge]{.smallcaps}, Sept. 30, 2005. According to one small cable
    operator executive, most cable operators face a rise in programming
    costs of 10 percent to 20 percent annually. *Id*. at 6.

[^720]: NTCA Comments at 3-6.

[^721]: *Id*. at 12. NTCA reports that one of its members, which
    provides analog cable television service to only 50 subscribers,
    would be required to incur an expenditure of \$180,000-\$250,000 to
    upgrade its network to a digital platform, but the cost of the
    upgrade would require a substantial increase in rates that would put
    it at a disadvantage relative to DBS operators. *Id.*

[^722]: NRTC Comments at 5.

[^723]: ACA Comments at 15.

[^724]: *Id*. at 3-4.

[^725]: NCTC, at http://www.cabletvcoop.org/welcome.asp?t=/index.asp.

[^726]: Disney Comments at 5.

[^727]: The incumbent provider is not necessarily the incumbent cable
    operator. Private cable operators are the incumbent video provider
    for many MDUs. We note that a Commission proceeding regarding
    certain issues of inside and home run wiring is still pending. *See
    Telecommunications Services Inside Wiring, Customer Premises
    Equipment,* 19 FCC Rcd 1498 (2004).

[^728]: DIRECTV estimates that as many as half of MDU residents cannot
    receive DIRECTV service. DIRECTV Comments at 9.

[^729]: *DirecTV Says Single Wire Simplifies MDU Delivery,*
    [Communications Daily,]{.smallcaps} Aug. 19, 2005, at
    3[.]{.smallcaps}

[^730]: BSPA Comments at 20-23.

[^731]: Verizon Comments at 35-39.

[^732]: *See Review of the Commission's Rules and Policies Affecting the
    Conversion to Digital Television*, 17 FCC Rcd 15978 (2002).

[^733]: *See Requirements for Digital Television Receiving Capability*,
    20 FCC Rcd 11196 (2005).

[^734]: *See id.* ¶ 1. Previously, the deadline for 100 percent
    compliance was July 1, 2006. The date for 50 percent compliance for
    TV receivers with screen sizes 25"-36" remained July 1, 2005.

[^735]: *See Requirements for Digital Television Receiving Capability*,
    20 FCC Rcd 18607 (2005). Previously, the deadline for small sets
    (13"-24") and for other TV receiving devices was July 1, 2007.

[^736]: *See id*. ¶ 1.

[^737]: NCTA Comments, CS Docket No. 97-80, filed Dec. 29, 2005; *see
    also* NCTA Comments, CS Docket No. 97-80, filed Oct. 3, 2005.

[^738]: *See 2004 Report,* 20 FCC Rcd at 2852 ¶ 187.

[^739]: NCTA Comments, CS Docket No. 97-80, filed Dec. 29, 2005.

[^740]: *Implementation of Section 304 of the Telecommunications Act of
    1996: Commercial Availability of Navigation Devices; Compatibility
    Between Cable Systems and Consumer Electronics Equipment*, 18 FCC
    20885 (2003). Video-on-demand and pay-per-view each require two way
    communications to function properly, VOD for ordering and program
    control and PPV for ordering. With unidirectional CableCARDs, VOD
    will not function and PPV requires a separate ordering method. Some
    interactive electronic program guides (EPGs) also require two-way
    communication.

[^741]: CableLabs, *Samsung Electronics Gains CableLabs Certification on
    2-Way Digital Television* (press release), Aug. 23, 2005.

[^742]: *See* Alan Breznick, *NCTA Unveils Downloadable Conditional
    Access Plan*, [Cable Digital News]{.smallcaps}, Jan. 1, 2006.

[^743]: *Implementation of Section 304 of the Telecommunications Act of
    1996: Commercial Availability of Navigation Devices*, 20 FCC Rcd
    6794 (2005) (*Second Report and Order*). "Integrated" set-top boxes
    are those that have not separated conditional access and security
    functions from the tuning, navigation, and other features of the
    box. To ensure cable compliance with the third-party compatibility
    requirements of separated security, the Commission has determined a
    date on which cable operators must rely on separated security.
    Currently, the Commission plans to ban the "integration" of set-top
    box functionality and security after July 1, 2007.

[^744]: *Id*. Conditional access is the means by which cable operators
    restrict access to their programming. It is generally considered to
    consist of an encryption technology, which makes digital content
    inaccessible, and an access provisioning system by which access is
    granted.

[^745]: Letter from James L. Casserly, Counsel for Comcast, to Marlene
    H. Dortch, Secretary, FCC, CS Docket 97-80 (July 18, 2005).

[^746]: Letter from James L. Casserly, Counsel for Comcast, to Marlene
    H. Dortch, Secretary, FCC, CS Docket 97-80, (Nov. 30, 2005).

[^747]: Letter from Daniel L. Brenner, Senior Vice President for NCTA,
    to Marlene H. Dortch, Secretary, FCC, CS Docket 97-80 (Nov. 30,
    2005).

[^748]: *Id.*

[^749]: "Plug and Play" refers to *Implementation of Section 304 of the
    Telecommunications Act of 1996, Commercial Availability of
    Navigation Devices, Compatibility Between Cable Systems and Consumer
    Electronics Equipment*, 18 FCC Rcd 20885 (2003) (*Plug and Play
    Rules*), recon. pending.

[^750]: Specifically, that DOCSIS 2.0 specifies an upstream path that is
    not consistent with the IP over Ethernet (IEEE 802.3i) alternative
    for upstream transmission.

[^751]: Middleware is a term of art for software that acts as an
    interpretation layer between the operating system and specific
    devices of a piece of hardware and software. OCAP is related to the
    more familiar Java platform developed by SUN Microsystems. For each
    operating system (such as Microsoft Windows or Apple Mac OS), a
    version of the Java Virtual Machine must be adapted. Once this is
    done, any program written in Java will run properly. Once OCAP has
    been tested and certified on a platform (or set-top box, television,
    or other consumer electronics device), application developers,
    including the MSOs themselves, may write a single version of their
    application and test it on one OCAP implementation and be assured it
    will run on all OCAP implementations.

[^752]: CableLabs, *Twenty-eight Firms Demonstrate Interoperability on
    OCAP and eTV Platforms at CableLabs Event* (press release), Aug. 17,
    2005.

[^753]: *See 2003 Report,* 19 FCC Rcd at 1712-5 ¶¶ 187-192. *See also
    Nondiscrimination in the Distribution of Interactive Television
    Services Over Cable*, 16 FCC Rcd 1321 (2001) *(ITV NOI)*.

[^754]: Letter from Neal M. Goldberg, General Counsel, NCTA, to Marlene
    H. Dortch, Secretary, FCC, CS-Docket 97-80, (Oct. 14, 2005).

[^755]: Rodolfo La Maestra, *2005 HDTV Report, Part 4: Satellite, Cable,
    Broadcasting,* [HDTV Magazine]{.smallcaps}, Oct. 14, 2005, at
    http://www.hdtvmagazine.com/articles/2005/10/2005_hdtv_repor_2.php?page=1,
    at 3 (visited Dec. 8, 2005).

[^756]: CableLabs, *Cable Television Industry Voices Support for OCAP
    and Two-Way Digital Cable-Ready Product Deployments* (press
    release), Jan. 11, 2006.

[^757]: CableLabs, *Samsung Electronics Gains CableLabs Certification on
    2-Way Digital Television* (press release), Aug. 23, 2005. Samsung,
    *Samsung and Time Warner Cable Deploy World's First Interactive OCAP
    TV* (press release), Jan. 11, 2006.

[^758]: *Panasonic Signs CableLabs Licenses for Two-Way Digital Cable
    Products*, [SPECS News and Technology Vol. 17 No. 2]{.smallcaps},
    March/April 2005, at
    http://www.cablelabs.com/news/newsletter/SPECS/MarApr_2005 (visited
    Dec. 8, 2005).

[^759]: Panasonic, *Panasonic and Comcast Announce Industry-First
    Agreement for Enhanced OCAP HD-DVR Set-Top Boxes and OCAP Software
    License* (press release), Jan. 4, 2006.

[^760]: Advanced Television Systems Committee, *ATSC Publishes "ACAP"
    Standard For Interactive Television* (press release), Sept. 6, 2005.

[^761]: Linda Haugsted, *Verizon*, *FiOS TV Launch is "Seismic,"*
    [Multichannel News]{.smallcaps}, May 22, 2005, at
    http://www.multichannel.com/article/CA6259344.html (visited Sept.
    22, 2005).

[^762]: Vince Vittore, *Verizon Uses RF for FiOS TV*, Telephony Online,
    Sept. 26, 2005, at
    http://telephonyonline.com/fttp/marketing/telecom_verizon_uses_rf/index.html
    (visited Sept. 26, 2005).

[^763]: *Id*. *See* paras. 224-5 *infra*.

[^764]: *Id*. at 18.

[^765]: *Id*. at 21.

[^766]: Verizon, *Verizon FiOS FAQ*, at
    http://www22.verizon.com/FiOSforhome/channels/FiOS/root/faq.asp
    (visited Oct. 19, 2005).

[^767]: Utah Telecommunications Open Infrastructure, at
    http://www.utopianet.org/ (visited Oct. 19, 2005).

[^768]: Provo City Telecom, *IProvo General Information*, at
    http://www.iprovo.net/modules/xoopsfaq/ index.php?cat_id=1 (visited
    Oct. 19, 2005).

[^769]: The Commission's Spectrum Policy Task Force has recommended that
    digital television broadcasters be permitted to operate single
    frequency low power distributed transmission systems within their
    present service areas. *See* *Spectrum Policy Task Force Report*, ET
    Docket No. 02-135 (Nov. 2002), available at http://www.fcc.gov/sptf/
    reports.html.

[^770]: *Second Periodic Review of the Commission's Rules and Policies
    Affecting the Conversion to Digital Television*, 19 FCC Rcd 18279,
    18283, 18355-57, ¶¶ 9, 174-78 (2004) (*Second DTV Periodic Report
    and Order*).

[^771]: *Digital Television Distributed Transmission System
    Technologies*, 20 FCC Rcd 17797 (2005).

[^772]: *Id*.

[^773]: Advanced Television Systems Committee, *ATSC Approves
    Enhancements to DTV Standard* (press release), July 20, 2004.

[^774]: Multimedia over Coax Alliance, at
    http://www.mocalliance.org/en/index.asp (visited Oct. 20, 2005).
    *See also* *Digital Entertainment without Compromise*,
    [CableNet]{.smallcaps}, at
    http://www.cablenet.org/participants/demos/MoCA.pdf (visited Oct.
    20, 2005).

[^775]: Multimedia over Coax Alliance, *MoCA Concludes Successful Field
    Trials for Home Networking of Dig*ital Entertainment Using Coax
    (press release), Apr. 4, 2005.

[^776]: DLNA Promoter Members are: Fujitsu, Hewlett Packard, Huawei,
    IBM, Intel, Kenwood, Lenovo, Microsoft, Motorola, NEC, Nokia,
    Panasonic, Philips, Pioneer, Samsung, Sharp, Sony, ST, Texas
    Instruments, Thomson, and Toshiba. For the complete list of member
    companies, *see* Digital Living Network Alliance, *DLNA Member
    Companies,* at http://www.dlna.org/about/roster/ (visited Nov. 7,
    2005).

[^777]: Digital Living Network Alliance, at http://www.dlna.org/home
    (visited Nov. 7, 2005).

[^778]: CableLabs CableHome, at
    http://www.cablelabs.com/projects/cablehome/ (visited Oct. 20,
    2005).

[^779]: TiVo, *TiVoToGo Transfers*, at http://www.tivo.com/4.9.19.asp
    (visited Oct. 20, 2005).

[^780]: A hotspot is a place where the public can access Wi-Fi service,
    either for free or for a fee. Hotspots are available at coffee
    shops, airport lounges, train stations, convention centers, hotels
    and many other public meeting areas. Corporations, campuses, and
    local governments also are implementing hotspots to provide wireless
    Internet access to their visitors and guests. Wi-Fi Alliance,
    *Glossary of Terms,* at http://www.wi-fi.com/OpenSection/
    glossary.asp?TID=2 (visited Jan. 14, 2005).

[^781]: Wi-Fi is an interoperability certification for wireless local
    area network (LAN) products based on the Institute of Electrical and
    Electronics Engineers (IEEE) 802.11 standard.

[^782]: Alan Breznick, *MSOs Seek Winning Wi-Fi Forumula,* [Cable
    Digital News]{.smallcaps}, Apr. 1, 2005.

[^783]: *Id*.

[^784]: Intel Corporation, *WiMAX -- Broadband Wireless Access
    Technology,* at http://www.intel.com/netcomms/ technologies/WiMAX
    (visited Oct. 20, 2005).

[^785]: Intel Corp., *Broadband Wireless Access:* *IEEE 802.16 and WiMAX
    White Paper,* Aug. 2003, at
    http://www.intel.com/technology/magazine/standards/st08031.pdf
    (visited Dec. 8, 2005).

[^786]: WiMAX Forum, *[WiMAX Forum Launches Certification Program,
    Expects First Equipment in Market by
    Year-end](http://www.wimaxforum.org/news/press_releases/WiMAX_CertificationLaunch_FINAL_04_18_05.pdf)
    (*press release), Apr. 18, 2005.

[^787]: WiMAX Forum, *The WiMAX Forum Showcases Equipment and Breadth of
    Applications, Opens Test Lab* (press release), July 13, 2005.

[^788]: Simon Hendery, *WiMAX Not Up To Billing*, [New Zealand
    Herald,]{.smallcaps} Oct. 18, 2005, at
    http://www.nzherald.co.nz/section/
    story.cfm?c_id=5&objectid=10350750 (visited Oct. 20, 2005).

[^789]: Marsha Walton, *Is Wifi on Steroids the Next Big Thing?*, CNN,
    Oct. 17, 2005, at
    http://www.cnn.com/2005/TECH/10/17/wireless.WiMAX/index.html
    (visited Oct. 20, 2005).

[^790]: Michael Grebb, *Cities Unleash Free Wi-Fi*, [Wired
    News]{.smallcaps}, Oct. 19, 2005, at
    http://www.wired.com/news/technology/wireless_special/0,2914,68999,00.html
    (visited Oct. 20, 2005).

[^791]: *Id*.

[^792]: A mesh network is a network that provides a direct connection
    between each site and every other site. Through the use of
    intelligent internetworking devices, each transmission might be
    routed over an alternative path should the primary (direct) path
    between the two sites be either congested or in a state of failure.
    *See* Harry Newton, [Newton's Telecom Dictionary]{.smallcaps} (CMP
    Books, 17^th^ ed., 2001), at 434.

[^793]: Jay Wrolstad, *Cities Take on Wi-Fi Challenge*, CIO
    [Today]{.smallcaps}, Oct. 5, 2005, at
    http://www.cio-today.com/news/Cities-Take-on-Wi-Fi-Challenge/story.xhtml?story_id=011000UKI4MH
    (visited Oct. 19, 2005).

[^794]: Leslie Cauley*, Debate Swirls over City Wi-Fi Networks*, [USA
    Today]{.smallcaps}, Oct. 4, 2005, at
    http://www.usatoday.com/tech/products/services/2005-10-04-wifi-networks_x.htm
    (visited Oct. 19, 2005).

[^795]: *Id*.

[^796]: Jeff Baumgartner, *Blowing It Up*, [CED Magazine]{.smallcaps},
    June 2005, at 38-46.

[^797]: Letter from Neal M. Goldberg, General Counsel, NCTA, to Marlene
    H. Dortch, Secretary, FCC, CS Docket 97-80, (Oct. 14, 2005).

[^798]: DBS providers DIRECTV and EchoStar are turning to MPEG-4 as a
    way to increase their video offerings within the limited bandwidth
    available through their existing satellites. New entrants, such as
    SBC, are using advanced codecs as a way to maximize the benefits of
    their initial investments by carrying the greatest number of
    channels in the minimum amount of bandwidth.

[^799]: At least one affordable HD-DVD player will be available by the
    end of the year. JVC, *JVC Unveils Affordable, High Definition DVD
    Player* (press release), June 8, 2005. Playstation 3 will have a
    Blu-ray player and is due out in early 2006. *See* Tony Smith, *Sony
    Unveils PS3,* [The Register]{.smallcaps}, May 17, 2005, at
    http://www.theregister.co.uk/2005/05/17/sony_unveils_ps3/ (visited
    Oct. 20, 2005).

[^800]: Currently, the ATSC Technology and Standards Group is
    considering the possibility of specifying one or two advanced video
    codecs for the E-VSB mode. CS/TSG-658 and CS/TSG-659, developed by
    the Specialist Group on Video and Audio Coding (TSG/S6), define the
    video system characteristics for VC-1 and AVC, respectively.

[^801]: Robert Heron, *DirecTV's HD Future is MPEG-4,* [PC
    Magazine]{.smallcaps}, Jan. 6, 2005, at
    http://www.pcmag.com/article2/0,1759,1748991,00.asp (visited Oct.
    20, 2005).

[^802]: Junko Yoshida, *Cell Phone Video Gets Real,* [EE
    Times]{.smallcaps}, Sept. 20, 2004.

[^803]: Texas Instruments, *Texas Instruments Brings Live Digital TV to
    Your Cell Phone* (press release), Oct. 21, 2004. *See also* Crown
    Castle, *Crown Castle Mobile Media Becomes Modeo: Showcases Live
    Mobile TV at International Consumer Electronics Show* (press
    release), Jan. 4, 2006.

[^804]: *Verizon Wireless Seen Offering TV via Crown Castle*,
    [eWeek.com]{.smallcaps}, Oct. 4, 2005, at http://www.eweek.com
    (visited Oct. 20, 2005).

[^805]: Doug Lung, *Broadcasting to Cell Phones*, [TV
    Technology]{.smallcaps}, Sept. 7, 2005, at
    http://www.tvtechnology.com (visited Sept. 7, 2005).

[^806]: QUALCOMM, *QUALCOMM Conducts First Live Demonstration of FLO
    Technolog*y *on a Wireless Handset* (press release), Sept. 27, 2005.

[^807]: Ed Oswald, *Verizon Wireless VCast Goes Live,*
    [BetaNews.com]{.smallcaps}, Feb. 1, 2005, at
    http://www.betanews.com/article/Verizon_Wireless_VCAST_Goes_Live/1107259065
    (visited Dec. 12, 2005). *See also* NCTA Comments at 10-11.

[^808]: David Hayes, *Sprint Presents Live TV on Phone*, [Kansas City
    Star]{.smallcaps}, Apr. 19, 2005, at
    http://www.kansascity.com/mld/kansascity/business/technology/11428413.htm
    (visited Oct. 20, 2005). Viewers see the broadcast at just under 15
    frames per second, the minimum required for humans to perceive
    continuous motion. *See also* NCTA Comments at 11.

[^809]: On2 Technologies, Inc., *XM Satellite Radio Selects On2 True
    Motion VP6* (press release), Jan. 5, 2005.

[^810]: Jefferson Graham, *With MobiTV, It's Television on the Go*, [USA
    Today]{.smallcaps}, Oct. 9, 2005 (*Graham Article*), at
    http://www.indystar.com/apps/pbcs.dll/article?AID=/20051009/BUSINESS/510090347/1003/BUSINESS
    (visited Dec 12, 2005).

[^811]: MobiTV, *Watch Live TV Content On Your Sprint Mobile Phone*
    (press release), Nov. 13, 2003.

[^812]: Jefferson Graham, *TV on Cellphones? Funny but Profitable*, [USA
    Today,]{.smallcaps} Sept. 27, 2005, at
    http://www.usatoday.com/tech/products/services/2005-09-27-mobitv_x.htm
    (visited Dec 12, 2005). *See also* MobiTV, *MobiTV Channel Lineup*,
    at <http://www.mobitv.com/channels/index.html> (visited Oct. 20,
    2005).

[^813]: *Graham Article. See also* NCTA Comments at 11.

[^814]: Apple, *Apple Unveils the iPod; Fifth Generation iPod Now Play
    Music, Photos & Video* (press release), Oct. 12, 2005.

[^815]: *Apple's Wide-Ranging Video Visions,* IPMediaMonitor, Oct. 17,
    2005, at
    http://www.ipmediamonitor.com/subscribers/index.htm?article_id=46&sid=1
    (visited Oct. 20, 2005).

[^816]: Sony, *Most Anticipated Consumer Product Launch of 2005, PSP
    \[Playstation Portable\] Ushers in a New Era In Portable
    Entertainment* (press release), Mar. 24, 2005.

[^817]: MediaNow, *CinemaNow is First to Add Download-To-Own Video
    Option to Online Service* (press release), Jan. 15, 2004.

[^818]: "Throughput" is the actual amount of useful and non-redundant
    information which is transmitted or processed. *See* Harry Newton,
    [Newton's Telecom Dictionary]{.smallcaps} (CMP Books, 17^th^ ed.,
    2001), at 697.

[^819]: *2004 Report*, 20 FCC Rcd 2859 ¶ 209.

[^820]: Alan Breznick, *CableLabs Drops DOCSIS 2.x Plans, Eyes DOCSIS
    3.0 Spec*, [Cable Datacom News]{.smallcaps}, Sept. 2004.

[^821]: An Engineering Change Request (ECR) is the first step in the
    procedure to change CableLabs specifications. CableLabs posts the
    proposed change to their website and sends the ECR to a subject area
    working group mail list for work on the proposed change. CableLabs
    then posts an Engineering Change Order (ECO) to their website with
    indication of an ECO Comment Deadline. The final step in the
    procedure to change specifications is called an Engineering Change
    Notice (ECN), in which the proposed change is officially considered
    to be part of the specification that it modifies. CableLabs,
    *Glossary*, at http://www.cablelabs.com/news/glossary.html#E
    (visited Sep. 17, 2004).

[^822]: Alan Breznick, *CableLabs Drops DOCSIS 2.x Plans, Eyes DOCSIS
    3.0 Spec*, [Cable Datacom News]{.smallcaps}, Sept. 1 2004, at
    http://www.cabledatacomnews.com/sep04/sep04-3.html (visited Oct. 20,
    2005).

[^823]: Douglas Shapiro, *CableLabs Financial Analyst Day*, Banc of
    America Securities, May 20, 2004, at 3.

[^824]: Packet bonding virtually welds together the multiple channels by
    breaking down and spreading the MPEG data packets over two or more
    QAM channels. The cable modem, which already operates in terms of
    packets, then recombines the packets. Packet Bonding is easier to
    implement than MPEG bonding because it is compatible with current
    Cable Modem Termination Service (CMTS, located in the cable headend)
    architecture. *See* Alan Breznick and Michael Harris, *Packet
    Bonding Picked for DOCSIS 3.0*, [Cable Digital News]{.smallcaps},
    May 1, 2005, at
    http://www.cabledatacomnews.com/may05/may05-1.html (visited Nov. 17,
    2005). MPEG bonding, another form of channel bonding, virtually
    fuses together multiple 6 MHz channels, thereby creating one larger
    bandwidth and higher speed channel. *See* Jeff Baumgartner,
    *Drilling for Bandwidth: A Pipeline Full of Options Can Help MSOs
    Keep Pace*, [CED Magazine]{.smallcaps}, Mar. 1, 2005, at
    http://www.bigbandnet.com/news/
    inTheNews/2005/news_030105b.php (visited Nov. 17, 2005).

[^825]: The wideband protocol spreads the DOCSIS frames, consisting of
    the access control and payload increments associated with each IP
    data flow, "vertically" across the multiple QAMs so that each frame
    is delivered in a fraction of the time it would take to deliver it
    in standard DOCSIS single-channel mode. Because DOCSIS frames are
    transported in the larger framework of 188-byte MPEG transport
    frames, the actual breaking up of the flow into vertically stacked
    fragments is done at the MPEG transmission convergence layer,
    leaving intact the DOCSIS physical and media access control (MAC)
    layers*.* *See* *Cisco Unveils Gig-IP Path Uniquely Suited for
    Cable*, [ScreenPlays]{.smallcaps}, Sept. 1, 2005, at
    http://www.screenplays.bz/sp105k.html, (visited Nov. 17, 2005).

[^826]: Alan Breznick and Michael Harris, *Packet Bonding Picked for
    DOCSIS 3.0*, [Cable Digital News]{.smallcaps}, May 1, 2005, at
    http://www.cabledatacomnews.com/may05/may05-1.html (visited Oct. 28,
    2005).

[^827]: Jeff Baumgartner, *"Packet Bonding" to be Part of DOCSIS 3.0 and
    the Modular CMTS*, [CED Broadband Direct]{.smallcaps}, Apr. 18,
    2005, at http://www.cedmagazine.com/article/CA6264575.html (visited
    Dec. 12, 2005).

[^828]: *See* High-Speed Service Report at Table 3; Alan Breznick and
    Michael Harris, *Cable Operators, Baby Bells See Big Drop in Data
    Gains for Q2, (but MSOs Regain Quarterly Market Share Edge as Telcos
    Fall Faster[, ]{.smallcaps}*[Cable Digital News]{.smallcaps}, Sept.
    1, 2005, at http://www.cabledatacomnews.com/sep05/sep05-1.html
    (visited Dec. 12, 2005).

[^829]: CableLabs, *PacketCable Home*, at http://www.packetcable.com
    (visited Oct. 19, 2005). *See Availability of Advanced
    Telecommunications Capability in the United States, Fourth Report to
    Congress*, 19 FCC Rcd at 20554; Letters from Paul Glist, Cole,
    Raywid & Braverman, Counsel for CableLabs, to Marlene Dortch,
    Secretary, FCC, July 28, 2004 and July 29, 2004, at 7-8, 25,
    respectively.

[^830]: CableLabs, *PacketCable Home*, at http://www.packetcable.com
    (visited Oct. 19, 2005).

[^831]: CableLabs, *PacketCable Certified Products*, at
    <http://www.cablemodem.com/downloads/Certified_Products.pdf>
    (visited Oct. 20, 2005). An embedded multimedia terminal adapter
    (E-MTA) is a device used to enable voice services over a cable
    modem.

[^832]: Ellacoya Networks, *Ellacoya Multimedia Service Manager (MSM)
    PacketCable Multimedia-based Application*, at
    http://www.ellacoya.com/products/multimediaMgr.shtml (visited Dec
    12, 2005).

[^833]: Kurt Dobbins, *The Advantages of PacketCable Multimedia
    Technology Beyond Voice*, [SCTE Cable-Tec Expo 2005
    Proceedings]{.smallcaps}, June 14-17, 2005.

[^834]: *See 2004 Report*, 20 FCC Rcd at 2860-62 ¶¶ 213-17.

[^835]: Organization for Economic Co-Operation and Development, *OECD
    Communications Outlook 2005*, 2005, at 96-97, 124-28.

[^836]: *See, e.g.*, International Telecommunications Union, *Europe &
    CIS's Telecommunications/ICT Markets and Trends* (*ITU European
    Trends 2005*), 2005, at 2, at
    http://www.itu.int/ITU-D/ict/statistics/at_glance/
    Europe_RPM_2005.pdf.

[^837]: For example, in Europe, Telecom Italia operates in France,
    Netherlands and Germany; BT Group has operations in Italy, Spain,
    Germany and other countries; and Deutsche Telekom has high-speed
    Internet operations in France, Spain, Austria, and Switzerland. *ITU
    European Trends 2005*, at 10.

[^838]: For example, according to the ITU, competition to European
    incumbent operators is common, with approximately 85 percent of
    local markets, 73 percent of long distance markets, and 74 percent
    of international markets open to other operators. *ITU European
    Trends 2005*, at 1. *See e.g.*, Gerry Blackwell, *IPTV: The Big
    Picture*, ISP Planet, Apr. 15, 2005; Robert Clark, *Going for the
    Treble*, Telecom Asia, June 2005; Evan Ramstad, *Triple Play*, [Wall
    Street Journal]{.smallcaps}, Oct. 24, 2005; *IPTV Builds Momentum in
    Several Markets*, Point Topic.com, Feb. 22, 2005.

[^839]: Approximately 90 percent of broadband Internet connections in
    Europe rely on ADSL infrastructure. *ITU European Trends 2005*, at
    10*.*

[^840]: By one estimate, one percent of Western European households
    subscribed to IPTV services in 2004. IDC, Inc., *European Telcos
    Become Entertainment Providers Through Launch of IPTV Services*
    (press release), Aug. 24, 2005. IDC projects that, by 2009,
    approximately six percent of Western European households will
    subscribe to IPTV services.

[^841]: *See 2004 Report*, 20 FCC Rcd at 2861 ¶ 216.

[^842]: *Video Networks to Roll-Out Homechoice Nationally*, [ipTV
    News]{.smallcaps}, Nov. 3, 2005. Homechoice provides end-to-end
    customer service and installed its own network work equipment in 137
    BT central office facilities.

[^843]: *Video Networks to Roll-Out Homechoice Nationally*, [ipTV
    News]{.smallcaps}, Nov. 3, 2005.

[^844]: *BT IPTV Launch By Summer 2006*, [The Register]{.smallcaps}
    (UK), Sept. 28, 2005.

[^845]: *BT Select Philips as Set Top Box Provider for Broadband
    Services*, [ipTV News]{.smallcaps}, Oct. 26, 2005. In the UK,
    Freeview is the principal over-the-air digital television service,
    allowing the reception of 30 digital broadcast channels, and
    accounts for 5.178 million of the UK's 15.7 million total digital
    television households. *See* Ofcom, *Digital Television Update --
    2005 Q2*, Sept. 15, 2005.

[^846]: *BT Select Philips as Set Top Box Provider for Broadband
    Services*, [ipTV News]{.smallcaps}, Oct. 26, 2005.

[^847]: FastWeb SpA, *FastWeb Files Q3 Prelims* (press release), Oct. 7,
    2005. Last year, we reported that FastWeb had 151,000 customers as
    of June 2004. *See 2004 Report*, 20 FCC Rcd at 2861 ¶ 214. One
    factor contributing to the sharp increase in FastWeb subscribers was
    a promotion in which premium channels showing professional soccer
    games were given away for free with new subscriptions. Gerry
    Blackwell*, IPTV Grows in Europe*, ISP Planet, June 30, 2005.
    FastWeb's network is a combination of fiber optic cable and DSL.
    FastWeb expanded its network following a 2001 Italian anti-trust
    decision that required Telecom Italia, the incumbent telephone
    company, to provide access to cable ducts and rights of way that it
    had built for a cable television network but subsequently abandoned.
    In addition, the Italian government has subsidized the purchase of
    the FastWeb set-top box as part of its effort to foster the
    development of interactive television in Italy. *Id*.

[^848]: FastWeb SpA, *FastWeb Files Q3 Prelims* (press release), Oct. 7,
    2005.

[^849]: FastWeb SpA, *FastWeb's TV Options*, at
    http://www.fastweb.it/principale.php?PAGEST=4_family.php.

[^850]: For example, FastWeb offers Roma Channel, Milan Channel, and
    Inter Channel for \$9.45 each per month; Disney Channel and Cartoon
    Network for approximately \$4.75 each per month; and CNN and ESPN
    Classic Sport for approximately \$2.40 each per month. FastWeb's VOD
    service is also available a la carte for approximately \$9.45 per
    month. *See* FastWeb SpA, FastWeb's TV Options, at
    http://www.fastweb.it/ rincipale.php?PAGEST=4_family.php. In
    addition, FastWeb charges a one time activation fee of approximately
    \$112.

[^851]: Gerry Blackwell*, IPTV Grows in Europe*, ISP Planet, June 30,
    2005.

[^852]: *Telecom Italia Readies "Superphone" and IPTV Launch*, [Converge
    Network Digest]{.smallcaps}, Oct. 27, 2005.

[^853]: France Telecom, *Revenues Up By 3.8% in the Third Quarter of
    2005* (press release), Oct. 27, 2005.

[^854]: *France Telecom Outlines NExT -- New Experience in Telecom
    Services*, [Converge Network Digest]{.smallcaps}, June 30, 2005.

[^855]: France Telecom, *France Telecom Launches NExT : A Three-Year
    Transformation Programme to Make France Telecom the Operator of
    Reference for New Telecom Services in Europe* (press release), June
    29, 2005.

[^856]: *See* Neuf Telecom, at http://www.neuf.com/fr/index.html; Ray Le
    Maistre, *Neuf: Time is Right for IPTV*, Light Reading, Jan. 31,
    2005, available at
    http://www.lightreading.com/document.asp?doc_id=66872.

[^857]: *See* Iliad Group, at
    http://www.iliad.fr/en/activities/internet.html. For example, Free's
    music pack, consisting of three MTV channels and two VH1 channels,
    costs approximately \$2.30 per month.

[^858]: Iliad Group, *Leading Voice over IP and TV over ADSL Operator in
    Europe* (press release), Aug. 2, 2005.

[^859]: *Alcom Launches First IPTV Over DSL Service in Finland Using
    Paradyne's Broadband Access Solutions*, Business Wire, June 13,
    2005.

[^860]: Alcom Datakommikation, Aland.tv -- Digital TV Over Broadband, at
    http://www.alcom.aland.fi/ index.php?page=produkter/aland_tv.php.

[^861]: *Id.*

[^862]: *Stream TV IPTV Service Launches in Russia*, Informitv, May 13,
    2005; Sistema Multimedia, *Sistema Multimedia Launches Interactive
    Television* (press release), May 11, 2005.

[^863]: *See* Jeffrey Soong, *Why is Asia Leading the Global IPTV
    Revolution?*, [Converge Network Digest]{.smallcaps}, June 23, 2005.

[^864]: PCCW Limited, *PCCW Reports 2005 Interim Results* (press
    release), Aug. 18, 2005.

[^865]: Individual channels cost approximately \$0.80 per month; movie
    channels, such as HBO, cost approximately \$6 per month. Bundles of
    channels cost approximately \$15 per month. Evan Ramstad, *Triple
    Play*, [Wall Street Journal]{.smallcaps}, Oct. 24, 2005.

[^866]: NOW employs three-layered content protection comprising
    network-based conditional access, digital copyright protection, and
    analog copyright protection, resulting in no instances of piracy,
    compared to the 15 percent piracy rate of other pay TV operators in
    Hong Kong. This triple layer of digital content protection is
    credited with enabling PCCW to obtain exclusive programming rights
    from programmers concerned with the piracy of their programming on
    IP-based video networks. Jeffrey Soong, *Why is Asia Leading the
    Global IPTV Revolution?*, [Converge Network Digest]{.smallcaps},
    June 23, 2005. PCCW is expected to introduce a network-based DVR
    functionality. Entone Technologies, *Entone Selected for World's
    Largest IPTV VOD Deployment* (press release), Oct. 3, 2005.

[^867]: Ray le Maistre, *China Mulls IPTV Licenses*, Light Reading, Jan.
    13, 2005, available at
    http://www.lightreading.com/document.asp?doc_id=65985.

[^868]: *See* Evan Ramstad, *Triple Play*, [Wall Street
    Journal]{.smallcaps}, Oct. 24, 2005; Ginny Parker Woods, *In the
    Fast Lane*, [Washington Post]{.smallcaps}, Oct. 24, 2005.