Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming
A Notice by the
The Commission is required to report annually to
Interested parties may file comments, on or before
FOR FURTHER INFORMATION CONTACT:
This is a synopsis of the Commission's Annual Assessment of the Status of Competition in the Market for Delivery of Video Programming, Notice of Inquiry (NOI), in MB Docket No. 14-16,
Synopsis of Notice of Inquiry
1. This Notice of Inquiry (NOI) solicits data, information, and comment on the state of competition in the delivery of video programming for the Commission's Sixteenth Report (16th Report). We seek to update the information and metrics provided in the Fifteenth Report (15th Report) and report on the state of competition in the video marketplace in 2013. Using the information collected pursuant to this NOI, we seek to enhance our analysis of competitive conditions, better understand the implications for the American consumer, and provide a solid foundation for Commission policy making with respect to the delivery of video programming to consumers.
2. Section 19 of the Cable Television Consumer Protection and Competition Act of 1992 (1992 Cable Act) amended the Communications Act of 1934, as amended (Act or Communications Act) and directed the Commission to establish regulations for the purpose of increasing competition and diversity in multichannel video programming distribution, increasing the availability of satellite delivered programming, and spurring the development of communications technologies. To measure progress toward these goals,
3. In 1992, when
Scope of the Report
4. In the 16th Report, we plan to continue using the analytical framework first adopted in the 14th Report. Under this framework, we categorize entities that deliver video programming in one of three groups--MVPDs, broadcast television stations, or OVDs. Our placement of entities into groups is an organizational tool to facilitate the presentation of information. This approach is useful for several reasons. First, the three categories reflect the historical evolution of video programming as initially delivered by over-the-air broadcast television stations, then also through MVPDs, and, more recently, via the Internet by OVDs. Second, to some degree the groupings reflect market participants' self-identification. Entities within each group tend to identify other entities in the same group as their foremost competitors in marketing materials and when describing their businesses to shareholders. Third, the business models of entities within a group share more similarities than the business models of entities across groups. Finally, this organization parallels available data sources; some focus on one group (e.g., BIA Kelsey, which focuses on broadcast) and others separately organize data in the same manner we propose (e.g.,
5. We recognize that the three categories are interrelated. For the 16th Report, we seek data, information, and comment on the interrelationships and competitive interactions among the three groups as well as between groups, e.g., the effect of OVDs on MVPDs.
6. Consistent with the 14th and 15th Reports, we plan to describe the providers of delivered video programming in each group, summarize their business models and competitive strategies, and present selected operating and financial statistics. We also plan to examine key industry inputs that may impact the market for the delivery of video programming, including the creators and aggregators of video programming and their distribution strategies as well as consumer premises equipment. In addition, we plan to compare video programming competition in rural and urban areas for each of the three groups and examine consumer behavior.
7. We request comment regarding the providers in each of the three groups, business models and competitive strategies, relevant operating and financial statistics, consumer behavior, urban-rural comparisons, and key industry inputs in the market. We request commenters to provide information and comments on competition using this framework, including the assessment of competition across the three groups.
8. The accuracy and usefulness of the 16th Report will depend on the quality of the data and information we receive from commenters in response to this NOI. We encourage thorough and substantive submissions from industry participants and consumer groups, as well as state and local regulators with knowledge of the issues raised. When possible, we will augment reported information with submissions in other Commission proceedings and from publicly available sources.
9. Following the analytic framework adopted initially in the 14th Report, we categorize entities that deliver video programming into one of three groups: MVPDs, broadcast television stations, or OVDs. Within each of the three groups, we describe the group's:
- Providers, which may include the number, size, and footprint of the entities in the group, horizontal and vertical and/or concentration, regulatory and market conditions affecting entry, and any recent entry or exit from the group; - Business models and competitive strategies, which may include the technologies entities employ to deliver programming, pricing plans, and product and service differences; and - Selected Operating and Financial Statistics, which may include statistics related to the number of subscribers or viewers, revenue, and other financial indicators.
We also look upstream and downstream to examine the influence of industry inputs and consumer behavior on the delivery of video programming. We seek comment on our analytic framework, including how to incorporate a discussion of the interrelationships and competitive interactions across the three groups.
10. We seek data that would help the Commission report on the status of competition in the market for the delivery of video programming. In previous notices of inquiry, we requested data as of
Providers of Delivered Video Programming
11. We seek data, information and comment that will allow us to describe the providers, business models and competitive strategies, and selected operating and financial statistics of MVPDs, broadcast television stations, and OVDs. To improve our description of the video products and services within each group, we seek quantitative and qualitative data and information from companies and trade associations in each group. In addition we request comment from the perspective of consumers, advertisers, content creators, content aggregators, and consumer premises equipment manufacturers on the extent to which the video services of MVPDs, broadcast stations, and OVDs are substitutes.
Multichannel Video Programming Distributors
12. MVPDs include all entities that make available for purchase multiple channels of video programming. In the 15th Report, we determined that most MVPD subscribers use cable, DBS, or telephone MVPDs for their video service. Less than one percent of MVPD subscribers use other types of MVPDs such as home satellite dishes (HSDs), open video systems (OVS), wireless cable systems, and private cable operators (PCOs). For each type of MVPD, we seek data on the number of providers, the number of homes passed, the number of subscribers for delivered video programming, the number of linear channels and amount of non-linear programming offered, and the ability of subscribers to watch programming on multiple devices both inside and outside the home.
13. We request updated information on the number of markets where DBS operators provide local-into-local broadcast service. With respect to non-contiguous states, do DBS MVPDs offer the same video packages at the same prices in
14. Horizontal Concentration. In the 15th Report, we provided one measure of horizontal concentration estimating the number of housing units nationwide with access to two, three, and four or more MVPDs. We seek comment on this measure of concentration. We invite analysis regarding the relationship between the number of MVPDs available to a consumer and competition. Does competition differ based on the type of MVPDs available to consumers?
15. Vertical Integration. In the 1992 Cable Act,
16. Regulatory and Market Conditions Affecting Entry and Competition. We seek comment on the impact of the
17. We request data on the number of channels MVPDs dedicate to must-carry; public interest, including public, educational, and governmental (PEG); and leased access programming.
18. We seek comment on the impact of market conditions on MVPD entry and competition. Market conditions include economies of scale, capital requirements, first-mover advantages, access to content (e.g., exclusive deals), and reaction from existing competitors. We also request information on the exit of MVPDs and comment on the reasons why MVPDs leave the video marketplace.
MVPD Business Models and Competitive Strategies
19. Business Models and Competitive Strategies. MVPDs decide the types of delivered video services they will offer, the programming they offer consumers, how they package the programming and the complementary product features they will offer (e.g., high definition programming (HD), DVRs (digital video recorders), video-on-demand (VOD), and TV Everywhere). MVPDs also make decisions regarding bundles, pricing, advertising, customer service, and vertical integration with suppliers of video programming. We seek descriptions of MVPD business models and competitive strategies in the market for the delivery of video programming. How do the business models and competitive strategies of MVPDs affect broadcast stations and OVDs? We request information on MVPDs' investment in and deployment of new technologies. What benefits do these technologies provide to consumers?
Selected MVPD Operating and Financial Statistics
20. In the 15th Report, we provided the following MVPD operating and financial statistics: video packages and pricing, number of video subscribers and penetration rates, revenue, investment, and profitability. We seek data on these operating and financial statistics. Are these the most relevant operating and financial statistics for reporting the status of competition in the market for the delivery of video programming? We request comment on whether there are better statistics and, if so, we request data that would allow us to report such statistics.
Broadcast Television Stations
Broadcast Television Station Providers
21. Providers of broadcast television service include both individual and group-owned stations that hold licenses to broadcast video programming to consumers. Broadcast stations package video programming and deliver it directly over the air to consumers who do not subscribe to an MVPD, as well as to MVPD subscribers who own television sets that are not connected to an MVPD service. We seek data concerning the number of households that rely on over-the-air broadcast television service, either exclusively or supplemented with OVD service. We request information regarding the demographic and geographic characteristics of such households. How many MVPD subscribers routinely view broadcast programming over-the-air on television sets that are not connected to their MVPD service?
22. Horizontal Concentration. We are interested in tracking common ownership of broadcast stations nationally and by DMA. Does horizontal concentration strengthen the competitive position of group owned broadcast stations in the market for the delivery of video programming? What is the impact of group ownership on the competitive position of independently-owned stations? We seek information regarding the number of existing joint sales agreements (JSAs), local marketing agreements (LMAs), and shared services agreements (SSAs) and the impact of these arrangements on the competitiveness of and service provided by broadcast stations.
23. Vertical Integration. We are interested in tracking the vertical integration of broadcast television stations with broadcast networks and cable networks. We seek information on vertical integration between television stations and broadcast networks or cable networks. Does vertical integration strengthen a broadcast station's ability to negotiate carriage rights with MVPDs? Are broadcast stations that are vertically integrated with broadcast networks stronger competitors in the market for the delivery of video programming?
24. Regulatory and Market Conditions Affecting Entry and Competition. Commission rules limit the number of broadcast television stations an entity can own in a DMA as well as limit the aggregate national audience reach of commonly owned broadcast television stations. The Commission's territorial exclusivity rule restricts the geographic area in which a television broadcast station may obtain exclusive rights to video programming. We seek comment on the impact of regulations on broadcast station entry and competition in the market for the delivery of video programming. The Middle Class Tax Relief and Job Creation Act of 2012 provides for voluntary participation of broadcast station licensees in incentive auctions. We seek comment on the impact of the upcoming incentive auction on competition in the market for the delivery of video programming.
25. We seek comment on the impact of market conditions on broadcast television station entry and competition. Market conditions include access to capital and access to programming. With respect to access to capital, we seek comment on the potential impact of our recent Declaratory Ruling regarding foreign broadcast investment. We recognize that broadcast stations depend heavily on advertising and their revenues can be impacted by local and national economic conditions as well as election cycles. We seek comment on the impact of economic conditions and political advertising on broadcast station entry and competition in the market for the delivery of video programming. We also request information and comment on entities that have exited the broadcast station business.
Broadcast Television Station Business Models and Competitive Strategies
26. Business Models and Competitive Strategies. Broadcasters' business models and competitive strategies involve decisions regarding the number of stations they own, their targeted audience demographic, programming, network affiliation, HD and multicast programming, local news, advertising, and participation in JSAs, LMAs, and SSAs. Broadcasters also make decisions regarding their Web sites and their involvement in mobile TV. We seek comment on broadcast station business models and competitive strategies, including those related to retransmission consent fees and selling programming to OVDs. What competitive strategies are broadcast stations using to strengthen their competitive position in the market for the delivery of video programming? How do the business models and competitive strategies of broadcast stations affect MVPDs and OVDs?
27. Several MVPDs itemize or have announced plans to itemize retransmission fees on consumers' monthly bills. We seek comment on the impact of itemizing retransmission fees on monthly statements. Has offering multiple program streams, HD, mobile TV, or Web sites led consumers to switch away from MVPD service to over-the-air service? Do broadcast stations use advertising or marketing to encourage consumers to switch to over-the-air video service?
28. The Advanced Television Systems Committee (ATSC) is soliciting proposals for a third generation broadcast technology and is involved in an international effort to develop a future broadcasting standard. Further, several U.S. broadcast stations have sought waivers of Commission rules to test alternative broadcasting standards. We seek comment on the extent to which these and other new developments in broadcast technology impact the market for the delivery of video programming.
Selected Broadcast Television Station Operating and Financial Statistics
29. In the 15th Report, we reported the following broadcast television station operating and financial statistics: audiences for primary video streams, multicasting streams, Web sites, and mobile TV; revenue from local advertising, national advertising, political advertising, Web site advertising, and mobile TV advertising; revenue from network compensation, retransmission consent fees, and ancillary services; cash flow and pre-tax profits; and capital expenditures. Are these the most relevant operating and financial statistics for reporting the status of competition in the market for the delivery of video programming? Are there better statistics? If so, we request information that would allow us to report such statistics.
30. We seek data on the viewership of broadcast television stations from over-the-air reception, MVPD carriage, online viewing, and mobile TV. We also seek data on broadcast television station revenues from advertising, network compensation, retransmission consent fees, and ancillary services. Are there changes to the network/affiliate relationships that affect broadcast stations' revenues? We seek information and comment on the impact, if any, of JSAs, LMAs and SSAs on retransmission consent negotiations and fees. We seek data on relevant measures of broadcast station profitability and data on investment by licensees in broadcast television stations.
Online Video Distributors
31. OVDs use the Internet to deliver video content to consumers. Because OVDs are relatively new entities in the market for the delivery of video programming, data regarding this category tends to be more dispersed and less standardized and reliable, relative to more long-established data for the MVPD and broadcast station categories. We seek comment on the most comprehensive and most reliable data sources for OVDs, individually and as a group. In the 15th Report, we categorized OVDs in terms of their affiliation with the primary business of a parent company. Is there a better way to categorize OVDs?
32. Horizontal Concentration. OVDs are the newest group in the market for the delivery of video programming, and no widely-recognized measure of horizontal concentration has been established. What is the appropriate measure of OVD horizontal concentration? We seek relevant data for assessing the level of concentration.
33. Vertical Integration. Many OVDs are vertically integrated with providers of key inputs to the market for the delivery of video programming. Other OVDs have affiliations with retailers and/or manufacturers. Do these relationships strengthen the competitive positions of OVDs?
34. Regulatory and Market Conditions Affecting Entry and Competition. We request comment on regulatory and market conditions that affect OVD entry and competition. What influence have the Commission's Open Internet rules and IP closed captioning requirements for video programming had on OVD entry and competition? How does the relative lack of regulation for OVDs affect entry and competition?
35. What market conditions affect OVD entry and competition? For example, OVDs depend on unaffiliated ISPs to deliver video content to consumers. Does this dependence hinder entry or weaken the ability of OVDs to compete in the market for the delivery of video programming? Does the growing amount of Internet traffic associated with the delivery of OVD video programming affect OVD entry and competition? What is the impact, if any, of ISP data caps, tiered pricing, or other user fees on OVD entry and competition? To what extent are OVDs developing content delivery networks (CDNs) to ease Internet traffic congestion and to improve consumers' viewing experience? Do OVDs encounter unique issues (relative to MVPDs and broadcast stations) when acquiring content rights that impact OVD entry and competition? We request information on recent OVD entrants as well as new features of OVDs. Are there market conditions that have resulted in OVDs exiting the video marketplace?
OVD Business Models and Competitive Strategies
36. OVDs are a relatively new group in the market for the delivery of video programming and their business models and competitive strategies are less established, relative to MVPDs and broadcast stations. Some OVDs rely on subscriptions or per-program fees, others rely on advertising, and some OVDs rely on a combination of subscription and advertising revenue. Some offer tens-of-thousands of video programs, others offer much fewer. Some OVDs have ownership interests in little or no video programming, while others have significant ownership interests in all or most of the video programming they make available over the Internet. Some OVDs only distribute video programming previously available through other delivery technologies, while others are creating their own content. We seek comment on whether differences in business models should serve as a basis for organizing our discussion of OVD providers. We seek information on the business models and competitive strategies OVDs use to compete in the market for the delivery of video programming. How do the business models and competitive strategies of OVDs affect MVPDs and broadcast stations?
37. Do OVDs compete primarily against other OVDs or do they compete against MVPDs and broadcast stations as well? What incentives do OVDs have to attract consumers away from MVPD services and broadcast stations? Do OVDs encourage consumers to switch away from MVPD service to OVD service, or are OVDs viewed as a supplement to MVPD and broadcast service? What types of investments and innovations are OVDs making to strengthen their competitive position in the market for the delivery of video programming?
Selected OVD Operating and Financial Statistics
38. In the 15th Report, we provided the following OVD operating and financial statistics: audiences, number of subscribers, revenue, profitability, and investment. Are these the appropriate statistics? What are the best sources of data for operating and financial statistics for OVDs as a group, as well as for individual OVDs? We seek information concerning the amount and type of video programming OVDs offer. We seek data on the number of consumers who view OVD programming, the number of programs they view, and the amount of time they spend viewing. We seek data on OVD revenue from subscriptions, advertising, and fees for video rentals and sales. We seek data on relevant measures of OVD profitability. Are vertically integrated OVDs more profitable than non-vertically integrated OVDs?
Rural Versus Urban Comparison
39. Section 628(a) of the Communications Act sets as a goal increasing the availability of video programming to persons in rural and underserved areas. As in previous reports, we plan to compare competition in the market for the delivery of video in rural markets with that in urban markets. We seek data and comment on the competitive alternatives facing consumers in the market for the delivery of video programming in rural areas relative to those facing consumers in urban areas. Are there major differences between the video services available in rural areas, relative to those available in urban areas? What percentage of consumers in rural areas lack access to a cable MVPD? Do consumers in rural areas rely more on over-the-air broadcast signals than urban consumers? Does access to high-speed Internet service needed to obtain OVD services differ between rural and urban areas?
40. We also request data and comment regarding the differences in the prices consumers pay for delivered video services in rural areas relative to urban areas. Do consumers in rural areas pay more than consumers in urban areas for similar MVPD video services? Are there significant differences in the costs paid for key industry inputs in rural areas, relative to the costs paid for similar inputs in urban areas? Do rural MVPDs pay higher programming costs and retransmission consent fees?
Key Industry Inputs
Video Content Creators and Aggregators
41. Creators of video programming are major production studios and independent production companies. Video content aggregators are entities that combine video content into packages of video programming for distribution. We seek comment on the value of continuing to discuss content aggregators and/or content creators in the 16th Report. To the extent that this information continues to be relevant, we request information regarding the number and size of content creators and aggregators. We seek information concerning the relationships between content creators and aggregators and MVPDs, broadcast stations, and OVDs. Do content creators and aggregators use different competitive strategies when dealing with MVPDs, broadcast stations, and OVDs? Is this a result of regulatory or market conditions? We seek information on trends in vertical integration among studios and networks and any effects this has on MVPDs, broadcast television stations, and OVDs.
42. In recent years, some content owners have altered the timing of release of specific video content through the various delivery windows (windowing), and the prices charged for content in each window. How have these windows changed in recent years? What effects have these changes had on competition in the market for the delivery of video programming? Do the creators of sports programming have different competitive strategies, relative to other video content creators? Have there been significant changes in the bargaining power between content owners and MVPDs, broadcast stations, and OVDs?
Consumer Premises Equipment
43. Consumer premises equipment (CPE) includes numerous devices that receive and display video (e.g., televisions, computers, tablets, and smartphones), MVPD set-top boxes, recording equipment (e.g., DVRs), video game consoles and streaming devices (e.g., Xbox,
44. Although many CPE devices can be purchased at retail stores, a few CPE devices (e.g., some MVPD set-top boxes) must be leased from the entity offering delivered video programming. We seek information and comment regarding the market for retail set-top boxes. In the 15th Report, we discussed the development of CableCARDs, which are intended to reduce consumer dependence on MVPD-leased set-top boxes. We also noted that, on
45. We understand that there are certain things MVPDs, broadcasters, and OVDs must coordinate with electronics manufacturers (e.g., DRM, codecs, and connectors) in order to deliver video programming to consumers. How do these coordinating activities impact competition in the market for the delivery of video programming?
46. We seek information regarding trends in consumer behavior and their impact on the products and services entities offer in the market for the delivery of video programming. We request data on the number or percentage of households that have HD televisions, Internet-connected televisions, and/or DVRs. We also seek data on trends that compare consumer viewing of linear video programming with time-shifted programming. To what extent are consumers dropping (cord cutting) or limiting (cord shaving) MVPD service in favor of OVDs or a combination of OVDs and over-the-air television? Do some consumers view OVD services separately or in conjunction with over-the-air broadcast television service as a potential substitute for some or all MVPD video services? Do consumers who do not subscribe to MVPD services share common characteristics? We recognize that most consumers of OVD services also subscribe to MVPD services. Do these consumers view OVD services as a supplement to MVPD services or as a substitute for some or all MVPD services? We seek comment on the relationship between consumer behavior (e.g., the practice of watching multiple episodes of a television show in one sitting, sometimes referred to as binge viewing) and the business models and competitive strategies of entities in the market for the delivery of video programming.
47. Entities in the market for the delivery of video programming advertise using television, newspapers, mailings, and Web sites to reach potential consumers and provide information about services and prices. Do consumers have sufficient information to easily compare service and price offerings? What do consumers value most when choosing between and among MVPDs, broadcast stations, and OVDs? What reasons do consumers give for switching MVPDs or switching from MVPD service to reliance on broadcast stations and/or OVDs?
48. With this NOI, we seek data, information and comment on a wide range of issues in order to report on the status of competition in the market for the delivery of video programming. To make the 16th Report as useful as possible, are there other issues, additional information, or data we should include in the report on competition in the market for the delivery of video programming? In the interest of streamlining the report, we request comment on issues, information, and data that could be modified or eliminated without impairing the value of the report for evaluating the status state of competition in the market for the delivery of video programming.
49. Authority. This NOI 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. 54(i), 154(j), 403, and 548(g).
50. Ex Parte Rules. There are no ex parte or disclosure requirements applicable to this proceeding pursuant to 47 CFR 1.204(b)(1).
51. Comment Information. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). All filings concerning matters referenced in this Public Notice should refer to MB Docket No. 12-203.
52. Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
53. Paper Filers: Parties who choose to file by paper must file an original and one copy 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
All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at
Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to
People With Disabilities: Contact the
54. For further information about this Notice of Inquiry, please contact
[FR Doc. 2014-03100 Filed 2-11-14;
BILLING CODE 6712-01-P
TNS 24KuanRap-140212 30FurigayJof-4635043 30FurigayJof
Most Popular Stories
- Koch Brothers Step up Anti-Obamacare Campaign
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Elizabeth Vargas' Husband Marc Cohn Addresses Rumors
- Quiznos Files for Chapter 11
- Keurig Adds Peet's coffee, Alters Starbucks deal
- U.S. to Relinquish Gov't Control Over Internet
- FDIC Sues Big Banks Over Rate Manipulation
- U.S. Consumer Sentiment Falls in Early March
- Vybz Kartel Convicted of Murder
- SoCalGas Reaches Record Spend on Diversity Suppliers