Report No. DC-2598 ACTION IN DOCKET CASE May 19, 1994 FCC INITIATES INQUIRY TO GATHER INFORMATION FOR ITS ANNUAL REPORT TO CONGRESS ON THE STATUS OF COMPETITION IN THE MARKET FOR THE DELIVERY OF VIDEO PROGRAMMING (CS DOCKET NO. 94-48) The Commission today initiated a proceeding to gather information necessary for its compliance with a statutory directive of the 1992 Cable Act to report annually to Congress on the status of competition in the market for the delivery of multichannel video programming. "Under the Cable Act, only those cable operators not subject to effective competition are subject to rate regulation," Chairman Hundt said. "The Commission welcomes the advent of competition and recognizes the importance to consumers and the industry of monitoring the progress being made toward creating a competitive market." The Commission stated the goals of this initiative are threefold: 1) to gather information sufficient to prepare a preliminary analysis for Congress on the current state of competition to wired cable provided by alternative distribution technologies; 2) to collect information on whether and the extent to which the conduct and practices of multichannel video programming programmers and distributors have changed; and, 3) to identify the information required to enable the Commission to prepare more comprehensive analyses in its future reports and the appropriate means of obtaining it. In order to comply with the statutory directive to provide an annual assessment of the status of competition in the market for the delivery of video programming, the Commission believes it must engage in an ongoing process of evaluating whether, where, and how competition to cable television operators has developed. The Commission intends to prepare a preliminary analysis of competition to cable television by various emerging alternative technologies. In this report, the Commission seeks to establish a reference point for future comparisons of the status of the multichannel video programming marketplace by updating the information contained in Appendix G of its 1990 Cable Report to Congress with respect to horizontal ownership levels and vertical integration. (over) -2- In addition, the Commission seeks to identify the appropriate means of analyzing the relevant programming and distribution markets, and to compile information that will be used to assess the status of effective competition in the market for the delivery of video programming. The Commission emphasized that provision of the requested information is voluntary, not mandatory. The inquiry describes the type of information the FCC will eventually seek to write its future, more comprehensive annual reports to Congress. The Commission seeks comment on appropriate methods for obtaining such information and data. Through this report, the Commission also seeks to examine the effect that the 1992 Cable Act and the Commission's implementing rules, and the changes in the multichannel video programming marketplace resulting from the Act and the Commission's rules, have had on the entry and development of competitors in the marketplace. Accordingly, the Commission requests comments on specific conduct and practices relating to the negotiation, sales, marketing, and carriage practices of multichannel video programming distributors. The Commission believes that there are additional issues that might be addressed in a more comprehensive analysis. For example, an evaluation of the specific growth over time, in terms of market penetration, of alternative multichannel video programming distributors, would be relevant to a comprehensive competitive analysis. A detailed analysis of distribution trends, as well as trends in ownership and vertical integration of various programming distributors, would also be relevant. The Commission believes further that the best approach for developing a complete record for such an analysis is to solicit comments on the relevant analytical scope and the appropriate economic model for analyzing the data. Thus, commenters are asked to identify and define particular issues, and the appropriate parameters, including the specific type of information necessary to engage in such analysis of the multichannel video programming marketplace. Commenters are asked to suggest appropriate means of gathering this information, as well as suitable ways to limit the amount of information required so as to minimize as much as possible the burdens imposed on licensees and those entities regulated pursuant to the 1992 Cable Act. Comments are due June 29, replies July 29, 1994. -3- Action by the Commission May 19, 1994, by Notice of Inquiry (FCC 94-119). Chairman Hundt, Commissioners Quello and Barrett. -FCC- News Media contact: Patricia A. Chew and Audrey Spivack at (202) 632-5050. Cable Services Bureau contact: Diane L. Hofbauer at (202) 416- 0807 and Nina M. Sandman at (202) 416-1168.