[Federal Register Volume 63, Number 129 (Tuesday, July 7, 1998)]
[Notices]
[Pages 36688-36691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17831]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

[CS Docket No. 98-102, FCC 98-137]


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

AGENCY: Federal Communications Commission.

ACTION: Notice of inquiry.

-----------------------------------------------------------------------

SUMMARY: The Commission is required to report annually to Congress on 
the status of competition in markets for the delivery of video 
programming. On June 23, 1998, the Commission adopted a Notice of 
Inquiry to solicit information from the public for use in preparing the 
competition report that is to be submitted to Congress in December 
1998. The Notice of Inquiry will provide parties with an opportunity to 
submit

[[Page 36689]]

comments and information to be used in conjunction with publicly 
available information and filings submitted in relevant Commission 
proceedings to assess the extent of competition in the market for the 
delivery of video programming.

DATES: Comments are due by July 31, 1998, and reply comments are due by 
August 31, 1998.

ADDRESSES: Office of the Secretary, Room 222, Federal Communications 
Commission, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Marcia Glauberman, Cable Services 
Bureau, (202) 418-7200 or TTY (202) 418-7172.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Inquiry in CS Docket No. 98-102, FCC 98-137, adopted June 23, 
1998, and released June 26, 1998. The complete text of this Notice of 
Inquiry is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room 239), 1919 M Street, NW, 
Washington, DC, 20554, and may also be purchased from the Commission's 
copy contractor, International Transcription Service (``ITS, Inc.''), 
(202) 857-3800, 1231 20th Street, NW, Washington, DC 20036.

Synopsis of the Notice of Inquiry

    1. Section 628(g) of the Communications Act of 1934, as amended 
(``Communications Act''), 47 U.S.C. 548(g), requires the Commission to 
deliver an annual report to Congress on the status of competition in 
markets for the delivery of video programming. The Notice of Inquiry 
(``NOI'') is designed to assist the Commission in gathering the 
information, data and public comment necessary to prepare its fifth 
annual report on competition in markets for the delivery of video 
programming (``1998 Competition Report''). The Commission expects to 
use the information submitted by commenters to supplement publicly 
available information and relevant comments that have been filed in 
other Commission proceedings.
    2. For the 1998 Competition Report, we request information and 
comment regarding the cable industry, existing and potential 
competitors in markets for the delivery of video programming, and the 
prospects for increasing competition in these markets. We seek 
information to update our assessment of the status of competition and 
on changes in the competitive environment since our 1997 Competition 
Report, summarized at 63 FR 10222 (March 2, 1998), was submitted to 
Congress. Commenters also are invited to identify and comment on 
existing statutory provisions and Commission regulations they perceive 
as restraining competition or inhibiting development of robust 
competition in markets for the delivery of video programming. We note 
that, pursuant to section 623(c)(4) of the Communications Act, the 
Commission's authority under section 623(c)(3) to review complaints 
submitted by local franchising authorities concerning increases in 
rates for cable programming service (``CPS'') tiers sunsets on March 
31, 1999. See 47 U.S.C. 543(c)(3) and (c)(4). The information gathered 
in this report will present the last comprehensive picture of the state 
of cable competition prior to the sunset date. For this year's report, 
to the extent feasible, we ask parties to submit data and information 
that are current as June 30, 1998.
    3. As in previous reports, we seek factual information and 
statistical data regarding the status of video programming distributors 
using different technologies, and changes that have occurred in the 
past year. We ask for information on multichannel video programming 
distributors (``MPVDs'') using predominantly wired distribution 
technologies, including cable systems, private cable or satellite 
master antenna television (``SMATV'') systems, and open video systems 
(``OVS''). We also request data for those relying predominantly on 
wireless distribution technologies, such as over-the-air broadcast 
television, multichannel multipoint distribution service (``MMDS''), 
instructional television fixed service (``ITFS''), local multipoint 
distribution service (``LMDS''), direct broadcast satellite (``DBS'') 
service, and home satellite dish (``HSD'') service.
    4. In addition to statistical data on each of these delivery 
services, we seek information regarding: (a) the number of homes passed 
(for wired technologies) and the number of homes capable of receiving 
service (for wireless technologies); (b) the number of operators; (c) 
the identities of the ten largest operators (national market only); (d) 
the number of subscribers and penetration rates; (e) channel capacities 
and the number and types of channels offered; and (f) the number and 
types of services offered. In addition, we request financial 
information for each technology, including firm and industry revenues, 
in the aggregate and by sources (e.g., subscriber revenues, advertising 
revenues, programming revenues); cash flow; changes in stock prices; 
investments; capital acquisition; and capital expenditures.
    5. For each video programming distribution technology, we also 
request information describing: (a) technological advances (e.g., 
deployment of digital services) that make or may make the technology 
competitive; (b) the effort (including steps, costs and time) needed to 
increase the number of homes passed or capable of receiving service; 
(c) the effort (including steps, costs and time) needed to increase the 
number of channels and types of services offered; and (d) regulatory 
and judicial developments that affect the use of different 
technologies. In addition, in evaluating the extent of competition 
among various MVPDs' services or technologies, we seek information and 
analysis on the degree to which viewers or consumers consider the 
different types of MVPDs to be substitutes and on the extent to which 
customers have switched from one provider or technology to another one.
    6. In the NOI, we request information on interservice competition 
and service to multiple dwelling unit (``MDU'') buildings. We further 
seek information that will allow us to compare the cost to consumers of 
subscriptions to, and equipment needed to receive, alternative MVPD 
services (cable, DBS, MMDS, SMATV, or OVS) and to permit us to better 
understand the factors considered by consumers when choosing among 
alternative MVPDs. Further, we seek comment on the appropriate method 
for comparing the services and costs of different MVPDs.
    7. As in prior reports, we will provide updated information in the 
1998 Competition Report on the structure of, and rivalry in, markets 
for the delivery of video programming. To evaluate market concentration 
at the local, regional and national levels, we ask commenters to 
provide updated information on industry transactions, including 
information on mergers, acquisitions, consolidations, swaps and trades, 
cross-ownership, and other structural developments that affect 
distributors' delivery of video programming. In local markets where 
incumbent cable operators face competition from one or more other video 
programming distributors, we seek information on: (a) the identity of 
the competitors; (b) the distribution technology used by each 
competitor; (c) the date that each competitor entered the market; (d) 
the location of the market, including whether it is predominantly urban 
or rural; (e) an estimate of the subscribership and market share for 
the services of each competitor; (f) a description of the service 
offerings of each competitor; (g) differentiation strategies each 
competitor is pursuing; and (h) the prices charged for the service 
offerings.

[[Page 36690]]

    8. With respect to regional concentration (i.e., ``clustering''), 
for cable and other MVPDs, we seek information on the geographic areas 
served by particular companies and comment regarding the effects 
industry consolidation and clustering have had on competition. We also 
seek data regarding current national subscribership levels of all 
MVPDs, changes in these levels since the 1997 Competition Report, and 
the reasons for these changes, including whether such changes are the 
result of merger and acquisition activity, marketing strategies, or 
other factors. We also would like to evaluate MVPD service providers in 
the economic context of the larger communications marketplace based on 
their relative size and resources (e.g., revenues) and the extent to 
which participants have the ability to enter each others' market.
    9. In the 1998 Competition Report, we will update information on 
existing and planned programming services, with particular focus on 
those programming services that are affiliated with video programming 
distributors. We seek information and ask a variety of questions on 
programming services that are affiliated with cable operators, 
affiliated with non-cable video programming distributors and 
unaffiliated with any MVPD.
    10. For this year's report, we also request information on the 
various program options offered by each MVPD technology, including 
exclusive program offerings, the number of channels available, and the 
comparability of the program options and packages available with each 
technology. We ask whether there are certain programming services or 
specific classes of service that an MVPD needs to provide to 
subscribers in order to be successful. We request information regarding 
the extent that local cable operators or broadcasters are providing 
local or regional news or sports channels. In addition, we solicit 
information on the extent to which MVPDs offer or plan to offer 
electronic programming guides. We also seek information on the extent 
to which MVPDs are now offering or plan to offer consumers discrete 
programming choices (i.e., service on an ``a la carte'' or individual 
channel basis) rather than programming service packages (i.e., tiers of 
programming services) and the technical feasibility of offering 
programming in a customized manner. Moreover, we seek information and 
comment regarding public, educational and governmental (``PEG'') access 
and leased access channels.
    11. We further seek information and analysis regarding the effect 
of increased programming costs on rates, especially for cable service. 
We request information and comment on the factors that affect 
programming costs for cable operators and other MVPDs. We also ask 
about the extent to which the increased programming costs are passed 
through to MVPD subscribers and to advertisers.
    12. As in previous reports, we will update our assessment of our 
program access, program carriage and channel occupancy rules. 
Commenters are asked to provide information regarding the effectiveness 
of these rules. We request information on whether the coverage of the 
program access rules is appropriate, on whether there have been any 
cases of MVPDs being denied programming when a satellite delivered 
service becomes terrestrially delivered or by non-vertically integrated 
programmers, and on any other issues of concern relating to the 
availability and distribution of programming.
    13. We seek updated information on various technological advances 
that may affect industry structure and competition in markets for the 
delivery of video programming, including system upgrades and the 
deployment of digital technology. We ask whether upgrades are being 
undertaken only in specific geographic areas and whether they are 
conducted mainly in response to competitive entry. We seek information 
on the feasibility of combining distribution technologies (e.g., DBS 
and SMATV) and data regarding MVPDs' current use of combined 
distribution technologies. We also solicit data on estimated roll-out 
or launch dates for new technologies. In addition, we note that an 
important aspect of the technological developments taking place relates 
to the deployment of set top boxes, integrated receiver/decoders, or 
receivers that facilitate or differentiate MVPD service offering. We 
ask commenters to identify and describe each type of device, including 
its function and capabilities, its costs and availability to consumers.
    14. Currently, basic and cable programming service rates are 
deregulated where a cable operator faces ``effective competition'' as 
defined in the Communications Act, 47 U.S.C. 543(l). We seek comment on 
whether the existing test for effective competition is an appropriate 
measurement of the existence of competition. Where commenters believe 
it is not the correct measure of competition, all or in part, we ask 
for suggested alternative means for determining competition.
    15. In the last two reports, we examined several case studies of 
local markets where cable operators faced actual competition from MVPD 
entrants. We seek updated information on the effects of actual and 
potential competition in these and other local markets where consumers 
have, or soon will have, a choice among MVPDs, including specific data 
regarding areas where head-to-head competition exists between cable and 
other MVPDs, or among various types of MVPDs, and information on how 
such competition has affected prices, service offerings, quality of 
service, and other relevant factors.
    16. We also would like to gather information on video delivery 
competition for and within MDUs. We request information on how common 
is it for consumers to have options to choose between or among MVPD 
services within a particular MDU and how program offerings and prices 
charged by competing MVPDs serving MDUs compare. We solicit information 
on how many exclusive service contracts, and how many so-called 
``perpetual'' exclusive contracts, exist in MDUs at present and whether 
their use is increasing or decreasing. We request comment on the impact 
that the recent inside wiring, over-the-air reception device 
(``OTARD''), and cable bulk rate rules have had on MDU competition.
    17. Finally, we request information regarding existing or potential 
regulatory impediments that may deter entry or prevent expansion of 
competitive opportunities in video program delivery markets. We also 
ask commenters to identify specific Commission rules, policies or 
regulations that ought to be reexamined in light of current competitive 
opportunities within multichannel video programming markets.

Administrative Matters:

Ex Parte

    18. There are no ex parte or disclosure requirements applicable to 
this proceeding pursuant to 47 CFR 1.1204(a)(4).

Comment Dates

    19. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's Rules, 47 CFR 1.415 and 1.419, interested 
parties may file comments on or before July 31, 1998, and reply 
comments on or before August 31, 1998. To file formally in this 
proceeding, participants must file an original and four copies of all 
comments, reply comments and supporting comments. If participants

[[Page 36691]]

want each Commissioner to receive a personal copy of their comments, an 
original plus ten copies must be filed. Comments and reply comments 
should be sent to the Office of the Secretary, Federal Communications 
Commission, Washington, DC 20554. Comments and reply comments will be 
available for public inspection during regular business hours in the 
FCC Reference Center (Room 239) of the Federal Communications 
Commission, 1919 M Street, NW, Washington, DC 20554.

Ordering Clauses

    20. This Notice of Inquiry is issued pursuant to authority 
contained in sections 4(i), 4(j), 403 and 628(g) of the Communications 
Act of 1934, as amended.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-17831 Filed 7-6-98; 8:45 am]
BILLING CODE 6712-01-P