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ANNUAL ASSESSMENT OF THE STATUS OF COMPETITION IN THE MARKET FOR THE DELIVERY OF VIDEO PROGRAMMING

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Released: December 31, 1969

Federal Communications Commission

FCC 07-206

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Annual Assessment of the Status of
)
MB Docket No. 06-189
Competition in the Market for the
)
Delivery of Video Programming
)

THIRTEENTH ANNUAL REPORT

Adopted: November 27, 2007


Released: January 16, 2009

By the Commission: Chairman Martin, Commissioners Copps, and Adelstein issuing separate statements;
Commissioners Tate and McDowell approving in part, dissenting in part, and 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: 2006 .................................................................................. 4
2. General Findings ....................................................................................................................... 5
3. Specific Findings ....................................................................................................................... 8
II. COMPETITORS IN THE MARKET FOR THE DELIVERY OF VIDEO PROGRAMMING ......... 26
A. Cable Television Service ............................................................................................................... 26
1. General Performance ............................................................................................................... 27
2. Programming Services and Pricing ......................................................................................... 44
3. Financial Performance............................................................................................................. 46
4. Capital Acquisition and Disposition........................................................................................ 51
5. Advanced and Other Services.................................................................................................. 54
B. Direct-to-Home Satellite Service ................................................................................................... 74
1. Direct Broadcast Satellite ........................................................................................................ 74
2. Home Satellite or Large Dish Service ..................................................................................... 93
3. Satellite-Based Advanced Services ......................................................................................... 97
C. Broadband Service Providers....................................................................................................... 100
D. Broadcast Television Service....................................................................................................... 104
1. General Performance ............................................................................................................. 104
2. Digital Television .................................................................................................................. 107
E. Other Wireline Video Services .................................................................................................... 130
1. Local Exchange Carriers ....................................................................................................... 130
2. Open Video Systems ............................................................................................................. 135
3. Electric and Gas Utilities....................................................................................................... 136
F. Other Wireless Video Services .................................................................................................... 139

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1. Private Cable Systems ........................................................................................................... 139
2. Wireless Cable Systems ........................................................................................................ 141
3. Commercial Mobile Radio Service and Other Wireless Providers ....................................... 142
G. Other Entrants .............................................................................................................................. 150
1. Web-Based Internet Video .................................................................................................... 150
2. Home Video Sales and Rentals ............................................................................................. 164
III. MARKET STRUCTURE AND CONDITIONS AFFECTING COMPETITION ............................. 168
A. Market Structure and Ownership Issues ...................................................................................... 168
1. Competitive Issues in the Retail Market for the Distribution of Video Programming
to Consumers......................................................................................................................... 169
2. Competitive Issues in the Program Supply Market ............................................................... 177
B. Vertical Integration and Other Programming Issues.................................................................... 183
1. Status of Vertical Integration................................................................................................. 183
2. Other Programming Issues .................................................................................................... 194
C. Other Competitive Issues ............................................................................................................. 245
1. Competitive Developments in Small and Rural Markets ...................................................... 245
2. Competitive Developments in the MDU Market .................................................................. 250
3. Competitive Developments in Alaska and Hawaii................................................................ 257
IV. TECHNICAL ISSUES ....................................................................................................................... 261
A. Navigation and Reception Devices .............................................................................................. 262
B. Emerging Technologies ............................................................................................................... 270
V. FOREIGN MARKETS....................................................................................................................... 282
VI. ADMINISTRATIVE MATTERS ...................................................................................................... 290
APPENDIX A List of Commenters
APPENDIX B Market Structure and Ownership Tables
APPENDIX C Vertical Integration and Other Programming Tables

I.

INTRODUCTION

1.
This is the Commission's thirteenth annual report ("2006 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 of competition in the marketplace for the
delivery of video programming.


1 Section 628(g) of the Communications Act of 1934, as amended (the "Act") requires the Commission to report
annually on the status of competition in the video marketplace. 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); 2004 Report, 20
FCC Rcd 2755 (2005); and 2005 Report, 21 FCC Rcd 2503 (2006). See Communications Act of 1934 628(g), 47
U.S.C. 548(g).
2 Pub. L. No. 102-385, 106 Stat. 1460 (1992) ("1992 Cable Act").
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A.

Scope of This Report

2.
Consistent with the statutory purpose, we report on developments in the marketplace for
the delivery of video programming and on the factors that have fostered or impeded changes in the
competitive environment over the past year. We present information and analysis regarding changes in
the marketplace since the 2005 Report, and we describe how those changes affect the current state of the
marketplace. 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.4
3.
The marketplace 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 marketplace. 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 licensees. 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; open video systems ("OVS");5 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") and
other wireless providers. We also examine web-based Internet 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, competitive issues in small
and rural markets and multiple dwelling units ("MDUs"), and specific issues related to service in Alaska
and Hawaii. We address numerous technical issues regarding navigation and reception devices and
emerging services in Section IV. Finally, in Section V, we survey developments in foreign markets.

B.

Summary

1.

The Current State of Competition: 2006

4.
While competition in the delivery of video programming services has provided
consumers with increased choice, better picture quality, and greater technological innovation, prices
continue to outpace the general level of inflation.6 DBS competition appears to have led cable operators


3 Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, 21 FCC
Rcd 12229 (2006) ("Notice"). Where possible, we requested data as of June 30, 2006. Appendix A lists
commenters and the abbreviations by which they are identified herein.
4 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.
5 OVS is one of the statutory classifications that LECs may use to enter the video marketplace. See Section II.E.2
infra.
6 See 45 infra.
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to add more programming services to their channel line-ups, it has not constrained cable prices as wireline
competition has done.7 We find that almost all consumers are able to obtain programming through 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 facilities, or web-based Internet video. 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 exercise more control over what, when, and how they receive information.
Further, MVPDs of all kinds are offering nonvideo services in conjunction with their traditional video
services.
2.

General Findings

5.
The MVPD marketplace has continued to grow. While the largest MVPD remains a
cable operator, cable subscribership declined slightly since the 2005 Report. The second and third largest
MVPDs are DBS operators.8 In addition, other delivery technologies continue to serve small numbers of
subscribers in limited areas. LECs, such as AT&T and Verizon, have expanded the areas where they
provide facilities-based video services in the last year, and continue to partner with DBS providers to
offer video service.
6.
Large numbers of consumers continue to subscribe to cable service, which approximately
68 percent of all MVPD households purchase. 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 high-speed Internet access service or telephone service.
The number of cable subscribers selecting digital tiers and advanced services not offered by DBS
continues to grow. DBS operators have responded by offering local broadcast channels, additional sports
and international programming, and advanced set-top boxes with digital video recorder ("DVR")
capabilities. 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. In addition, LECs are upgrading their
traditional copper facilities to digital subscriber line ("DSL") and fiber-based platforms to offer a suite of
video, telephone, and data services.
7.
Existing competitors to incumbent cable operators and potential new entrants into the
video marketplace assert that there continue to be barriers to entry. Overbuilders, including BSPs and


7 Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act of 1992, Statistical
Report on Average Rates for Basic Service, Cable Programming Service, and Equipment
, 21 FCC Rcd at 15088
(2006) ("2005 Cable Price Survey Report").
8 We report information as of June 30, 2006. Subsequently, Adelphia's cable systems were acquired by Comcast
and Time Warner. See Applications for Consent of Assignment and/or Transfer of Control of Licenses from
Adelphia Communications Corporation to Time Warner Cable Inc., and from Adelphia Communications
Corporation to Comcast Corporation
, 21 FCC Rcd 8203 (2006) ("Adelphia Order"). In this Report, we do not
double-count subscribers and, if a cable system is owned by more than one MSO, its subscribers are assigned to the
MSO with the largest ownership stake. Using this methodology, following the Adelphia transactions, Time Warner
became the third largest MVPD and EchoStar became the fourth. Under our attribution rules, however, Time
Warner is the second largest MVPD today when its attributable interest in the Bright House cable systems is
factored in.
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LECs, describe the local franchising process as an impediment to entry into the video marketplace.9 In
particular, they are concerned about build-out requirements mandating that a new entrant overbuild all of
the geographic area served by the cable operator and "level playing field" regulations requiring them to
match all of the concessions previously provided by the incumbent cable operator. We note that in
December 2006 the Commission adopted rules pursuant to Section 621(a)(1) of the Act to ensure that a
local franchising authority does not "unreasonably refuse to award an additional competitive franchise."10
Cable's competitors also maintain that entry and competition are inhibited by: (1) difficulties in obtaining
valuable programming, especially regional sports, as a result of the use of exclusive contracts and the
terrestrial exception to the program access rules;11 and (2) difficulties in gaining access to MDUs as a
result of the existence of long-term exclusive contracts between MVPDs and MDU owners.
3.

Specific Findings

8.
The number of TV households and the number of MVPD subscribers increased in the
past year. As of June 2006, there were 110.2 million TV households, compared to 109.6 million in June
2005. Of that number, approximately 95.8 million TV households, or almost 87 percent of TV
households, subscribe to an MVPD service, as compared to 94.2 million, or approximately 86 percent as
of June 2005. Cable serves the largest percentage of MVPD subscribers, but cable's share of the MVPD
marketplace continues to decline. As of June 2006, 68.2 percent of MVPD subscribers received video
programming from a franchised cable operator, as compared to 69.4 percent as of June 2005.12 DBS
subscribers comprise the second largest group of MVPD households, representing 29.2 percent of total
MVPD subscribers as of June 2006, compared to 27.7 percent in June 2005. The competitive presence of
MVPDs other than cable or DBS declined slightly. The number of MVPD subscribers choosing all other
delivery technologies decreased, representing 2.6 percent of all subscribers in June 2006, as compared to
2.9 percent in June 2005.13
9.
In 2006, the four MVPDs with the largest subscribership served 63 percent of all MVPD
subscribers, the same percentage as in 2005. The share of subscribers served by the top ten MVPDs
decreased slightly, from 88 percent in 2005 to 87 percent, in 2006.14 Relatively few consumers have a
second wireline alternative, such as an overbuild cable system. BSPs and OVS providers, which typically
operate overbuild systems, reported no appreciable change in subscribership since last year, maintaining


9 An overbuilder is an MVPD that builds a second cable system "over" one that already exists.
10 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
, 22 FCC Rcd 5101 (2007).
11 47 U.S.C. 548.
12 This percentage is the result of adding 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.
13 Id.
14 See Appendix B, Tables B-3 and B-4.
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total subscribership of approximately 1.4 million.15 However, LECs have expanded their facilities-based
video service, and now serve over 245,000 subscribers.16
10.

Cable Service

. The number of basic cable subscribers has fluctuated slightly since the
last Report. From June 2005 to year-end 2005, the number of basic cable subscribers declined slightly
from 65.4 million to 65.2 million. From the end of 2005 to June 2006, the number of basic cable
subscribers increased slightly to 65.3 million.17 Kagan, however, projected that the number of basic cable
subscribers would increase to 65.4 million basic subscribers at year-end 2006, and continue to increase
year after year for the next decade.18 Cable penetration (i.e., subscribers/homes passed) declined in 2005,
as the number of subscribers decreased and the number of homes passed increased.19
11.
Cable revenue was projected to grow 11.1 percent in 2006, to $72.9 billion.20 Much of
the increase in revenue comes from advanced services, especially high-speed Internet service and digital
cable services, and from higher 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. Cable operators also offer nonvideo
advanced services, including high-speed Internet access and telephony (circuit-switched telephony and/or
voice over Internet protocol telephony). At year-end 2005, according to industry reports, almost all cable
homes passed were offered digital video services, approximately 93 percent were offered high-speed
Internet access services, and 73 percent were offered telephony service (both VoIP and circuit-
switched).21
12.

Direct-to-Home ("DTH") Satellite Service (DBS and Home Satellite Dish ("HSD"))

.
As of June 2006, almost 28 million U.S. households subscribed to DBS service.22 This represents an
increase of 7.1 percent over the approximately 26.1 million DBS subscribers reported last year. DBS
accounts for approximately 29.2 percent of all U.S. MVPD subscribers. DBS operators continue to add
the signals of local broadcast television stations ("local-into-local service"). In 175 of 210 television
markets (i.e., "designated market areas," or "DMAs"), covering 97 percent of all U.S. TV households, at
least one DBS provider offers local-into-local service. As of June 2006, there were 111,478 households
authorized to receive HSD service, a decrease of approximately 46 percent from the 206,358 we reported
last year.23


15 This year, we report separately on BSPs and OVS providers. However, separate subscriber data are not available
for OVS. See Sections II.C. and II.E.2.
16 See Appendix B, Table B-1.
17 See Table 1. See also Appendix B, Table B-1.
18 Kagan Research, LLC, Pay TV Subscriber History, Broadband Cable Financial Databook, Aug. 2006 ("Cable
Databook"), at 11.
19 See 30, Table 1.
20 See 44, Table 5.
21 See Section II.A.4.
22 See Appendix B, Table B-1.
23 See Section II.B.1.
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13.

Other Wireline MVPD Services

. For the purposes of this report, we consider 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 2006, BSPs served approximately 1.4 million subscribers,
representing 1.5 percent of all MVPD households.24 New OVS activity has been limited, but the
Broadband Service Providers Association ("BSPA") states that some of its members have converted cable
franchises to OVS franchises to eliminate build-out requirements.25 Electric and gas utilities also provide
MVPD and other services. An American Public Power Association ("APPA") survey indicates that 100
of its 2,000 association members provide video services, most using hybrid fiber-coaxial architecture,
although some APPA members are using fiber-to-the-home architecture. APPA reports that the average
subscriber penetration rate for its members offering video service was 50 percent of the homes passed,
and that 40 percent of these subscribers purchase a combination of video and high-speed Internet access
service. APPA also asserts that incumbent cable operators lower prices or offer additional services in
response to utility competition. In addition, a number of electric and gas utilities are offering, or plan to
offer, video using broadband over power line ("BPL") technology.26
14.
In the last year, LECs, most notably Verizon and AT&T, have expanded the areas where
they provide facilities-based video services. LECs continue to focus on offering bundles of services,
including local and long distance telephone service, high-speed Internet service, and video programming
services. In order to offer these services, LECs are entering into joint ventures with MVPD service
providers, such as DBS operators, or are providing MVPD service over their own recently upgraded
facilities. Some LECs are deploying fiber-to-the-home ("FTTH," also known as fiber-to-the-premises, or
"FTTP") infrastructure. In addition, LECs are increasingly utilizing Internet Protocol Television
("IPTV") technologies. Verizon's FTTH network, marketed under the brand name "FiOS," allows
delivery of multichannel video services, in addition to telephony and high-speed Internet access service.
At the end of 2006, Verizon reported that it offered video programming via FiOS to more than 2.4 million
households in 200 cities in 10 states and served 207,000 subscribers.27 At the end of 2006, in addition to
co-marketing EchoStar's Dish Network DBS service, AT&T had deployed its "U-verse" product in
approximately 11 cities in Texas, California, Indiana, and Connecticut. BellSouth notes that it holds 20
franchises to provide cable overbuild service in its local telephone service area and its facilities-based
video service is available to 200,000 households.28 It also continues to have a marketing alliance with
DIRECTV to offer digital satellite service.29 Qwest resells DIRECTV's service and also is pursuing
opportunities to provide bundles of services, including various technological configurations of video
services such as satellite, IPTV, and video delivered via wireless telephones.


24 See Appendix B, Table B-1. See also Section II.C.
25 See Section II.E.2.
26 See Section II.E.3.
27 See Section II.E.1.
28 During the pendency of this proceeding, BellSouth merged with AT&T. We continue to refer to the companies
separately because they submitted separate comments in this proceeding.
29 AT&T has a co-marketing agreement with DIRECTV as a result of its merger with BellSouth as well as its own
co-marketing agreement with EchoStar. Telephone conversation with Jim K. Smith, AT&T, Apr. 2, 2007. See also
AT&T Inc. and BellSouth Corporation Application for Transfer of Control
, 22 FCC Rcd 5662 (2007).
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15.

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 June 2006, unchanged from a year earlier.30
In recent years, major commercial mobile radio service ("CMRS") and other wireless providers have
begun offering services that allow subscribers to access video programming over the air on cellular
phones and other mobile devices. For example, Verizon's V CAST service allows customers to
download games, music, and video clips on-demand, including television programming aired on
networks, such as ESPN, CNN, The Weather Channel, Nickelodeon, MTV, and Comedy Central, as well
as clips of videos uploaded on YouTube.com. Similarly, Sprint Nextel also offers a mobile video service,
Sprint TV, that allows subscribers to view "linear television programming"31 from 20 nonbroadcast
networks, including the Discovery Channel, the Weather Channel, C-SPAN, and Fox News, as well as
video content from several mobile-only channels. 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 900,000 subscribers this year, a decrease of 10 percent from last year's 1 million subscribers.32
16.

Broadcast Television Service

. Nielsen estimates that 15.5 million U.S. TV households,
representing about 14 percent of the 111.4 million total U.S. television households, do not subscribe to an
MVPD service and thus rely solely on over-the-air broadcast television for their video programming.33 In
addition, many households that subscribe to an MVPD also rely on over-the-air signals to receive
broadcast programming on some of their television sets.34 From June 30, 2005, to June 30, 2006, the
number of commercial and noncommercial television stations rose from 1,747 to 1,753. As of January
2007, approximately 1,600 stations nationwide were 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 format.35
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. NCTA reports that, as of June 2006, local cable systems were
carrying the digital signals of 788 unique broadcast stations.
17.

Internet Video

.
The amount of web-based video provided over the Internet continues to
increase significantly each year.36 The overall number of homes with access to the Internet continues to


30 See Appendix B, Table B-1. See also Section II.F.2 and 3.
31 The term "linear programming" generally means traditional one-way program streams of the type provided by
broadcast stations and established nonbroadcast networks for most of their history as opposed to two-way
interactive features or other forms of advanced services.
32 See Appendix B, Table B-1. See also Section II.F.1.
33 See Appendix B, Table B-1. See also Section II.D.1. This percentage is based on Nielsen's estimate of TV
households for the 2006-2007 television season, September 2006-August 2007.
34 See Media Bureau, Staff Report Concerning Over-the-Air Broadcast Television Viewers, MB Docket No. 04-210,
Feb. 28, 2005 ("OTA Report").
35 See Section II.D.2. See also NAB Comments at 6.
36 See Section II.G.1.
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grow, as does the number of Americans who access the Internet via a high-speed broadband connection.
Nearly 70 percent of all U.S. households subscribe to an Internet service, and high-speed connections now
constitute 60 percent of online subscriptions. In July 2006, 107 million Americans, three out of every
five Internet users, viewed video online. In July 2006, about 60 percent of U.S. Internet users
downloaded videos. More than 7 billion videos were downloaded that month.
18.

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.37 Video-on-demand services provided by cable, DBS, and Internet providers also have emerged
as competitive alternatives to home video. For the first time, in 2006, the number of DVD households
surpassed the number of VHS households. Nielsen research shows that 81.2 percent of households own a
DVD player, compared to 79.2 percent that own a VCR.
19.

Cable System Ownership

. Between July 2005 and June 2006, a total of 28 MVPD
transactions were announced. Together these transactions were valued at approximately $5.3 billion and
affected approximately 1.8 million subscribers.38 At the end of 2005, there were 113 "cable clusters"39
with approximately 50.8 million subscribers, compared to 118 clusters and approximately 51.5 million
subscribers at the end of 2004.40
20.

Video Programming Services

. In 2006, using additional data resources we identified 565
satellite-delivered national programming networks, an increase of 34 networks over the 2005 total of 531
networks.41 Of the 565 networks, 84 (14.9 percent) were vertically integrated or affiliated with at least
one cable operator.42 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 affiliated networks are owned, in whole or in part, by one or more of these companies. Of the 565
national nonbroadcast networks we have identified, 357, or 63.2 percent, are not affiliated with any cable
operator or other media entity.43 There are 124 national, satellite-delivered nonbroadcast networks that
are owned by a DBS operator or one or more media entity, including national broadcast networks (i.e.,
Fox, ABC, CBS, NBC Universal, and Univision), and that are not also owned by a cable multiple system
operator ("MSO"). These networks represent 22 percent of the 565 national nonbroadcast networks we
have identified, and 25.8 percent of the 481 networks that are unaffiliated with a cable operator. Twenty-
three national nonbroadcast networks, not owned by a cable MSO, are affiliated with a DBS provider.
During the 2005-2006 television season, the combined audience share of all nonbroadcast networks was


37 See Section II.G.2.
38 See Appendix B, Table B-2. See also Section III.A.2 182.
39 A "cable cluster" is a group of co-owned and co-operated cable systems serving a contiguous geographic area or
region.
40 See Appendix B, Table B-2.
41 See Section III.B.1.
42 Vertical integration means that a company owns or is affiliated with its product input (i.e., a cable operator that
owns the programming that it distributes on its system is said to be vertically integrated). See Appendix C, Table
C-1.
43 See Appendix C, Table C-2.
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higher than that of all broadcast television stations for both all day viewing and prime time viewing. Of
the 20 top-rated prime time nonbroadcast networks, seven are affiliated with a cable operator.44 The
remaining 13 networks are owned by other media entities. In addition, six of the top 20 nonbroadcast
networks ranked by subscribership are vertically integrated with an MSO. Of the other networks, one is
C-SPAN, which is funded, but not directly owned or controlled, by MVPDs; the others are affiliated with
noncable media entities.45
21.
In 2006, we identified 101 regional networks, an increase of six over those identified in
2005.46 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 101 regional networks we
identified, 57 networks, or 56.4 percent, were vertically integrated with at least one MSO. We continue to
monitor the availability of sports programming. There are 43 regional sports networks, representing 42.6
percent of all regional networks, as compared to the 37 we reported last year. Of the 43 regional sports
networks, 19, or 44.2 percent, are vertically integrated with a cable MSO. In addition, Fox continues to
be the leader in the distribution of regional sports networks, owning or holding an ownership interest in
19, or 44.2 percent, of all regional sports networks.
22.

Consumer Equipment and Technical Developments

. The sale of DTV consumer
electronics continues to accelerate. The Consumer Electronics Association ("CEA") estimates that, in
2006, digital televisions ("DTVs") will have outsold analog televisions by 66 percent.47 Kagan Media
Research estimates that, between 1998, when digital television sets were first offered for retail sale, and
year-end 2006, approximately 51.8 million HD-ready and "enhanced-definition" ("ED")-ready monitors
had been shipped to retailers, with 46.4 million of those being HD-ready monitors.48 Of those shipped,
Kagan estimates that a total of 49.6 million have been purchased by consumers, of which 42.9 million
were HD-ready monitors.49 In 2006 alone, Kagan estimates that 22.4 million HD-ready and ED-ready
monitors were shipped to retailers, with 20.8 million of those HD-ready. Of those shipped, Kagan
estimates that more than 21.5 million monitors were purchased by consumers, with 19.8 million of those
being HD-ready. CEA estimates that in 2006 the average retail price of a DTV set declined nearly 25
percent, falling from $1,369 in 2005 to $1,043; the 2006 average price is 67 percent lower than the
average price of $3,147 in 1998.


44 See Appendix C, Table C-6.
45 See Appendix C, Table C-5.
46 See Appendix C, Table C-3.
47 Technical developments are discussed in Section IV.
48 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.
49 Kagan Research, LLC, Digital TV Set Projection Model, Media Trends 2006, at 118.
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23.
The development and deployment of CableCARDs continued in 2006. CableCARDs
permit the reception of one-way secured digital cable services without the addition of a set-top box. As of
December 22, 2006, more than 216,000 CableCARDs had been deployed by cable operators, up from
90,000 a year ago. As of November 10, 2006, 541 models of Unidirectional Digital Cable Ready
Products ("UDCPs") had been verified for use with CableCARDs. In January 2007, testing began on
multi-stream CableCARDS for use with UDCPs. Cross-industry talks to negotiate an agreement to
provide two-way (i.e., interactive) cable functionality in consumer electronics devices continued in 2006,
but no major developments were made in the industry negotiations. Development of downloadable
security as a means of satisfying separable security requirements also continued.
24.
The video industry is adopting advanced technologies to better position its participants in
the changing marketplace. For example, while the satellite industry has adopted MPEG-4 as a means of
offering high definition local-into-local programming, the cable and consumer electronics industries have
begun adopting technologies such as multimedia over coaxial cable, Home Networking, and Switched
Digital Video to enable new in-home services such as multi-room digital video recorders, viewing outside
the home using portable devices, expanded interactivity, and greater programming options. Further, the
adoption of IP-based transport for video will allow manufacturers and service providers to offer yet
greater integration with personal computers and the Internet.
25.

Foreign Markets

. This year, we focus on developments in the offering of digital tiers
and a la carte services in foreign markets.50 MVPDs in a number of countries provide programming on an
a la carte basis or in mixed bundles, themed tiers, and subscriber-selected tiers. For example, in Hong
Kong, consumers receive a free basic package and also can subscribe to more programming for an
additional charge per channel; in Canada, the largest cable operators offer a la carte services; and in the
United Kingdom, while all digital cable and satellite TV subscribers receive a low-cost service,
consumers may select additional programming services they want, either on a subscription or pay-as-you-
go basis, without first purchasing a monthly basic-tier package.

II.

COMPETITORS IN THE MARKET FOR THE DELIVERY OF VIDEO
PROGRAMMING

A.

Cable Television Service

26.
This section addresses the performance of cable television system operators during the
past year.51 First, we report on the general performance of the industry, including the availability of cable
service and subscribership to basic and premium services. Second, we address programming service and
pricing, including cable system capacity, channel allocation, and cable prices. Third, we discuss the cable
industry's financial performance, including its revenue, cash flow, programming costs, system
transactions, and stock prices. Fourth, we examine the cable industry's acquisition and disposition of


50 Under a la carte, consumers can purchase programming on an individual network basis. See Further Report On
the Packaging and Sale of Video Programming Services to the Public
(MB Feb. 9, 2006), available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-263740A1.pdf. See also Section III.B.2.b., Packaging of
Programming Services, 220 and Section V, Foreign Markets, 282-289.
51 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).
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capital, including financing and capital investment. Fifth, we address the growth of advanced video
services, including digital and high-definition television, video-on-demand ("VOD"), and digital video
recorders ("DVRs"); and non-video advanced services, including high-speed Internet access and voice
over Internet protocol telephony ("VoIP"). Lastly, we discuss cable's entry into mobile telephony.
1.

General Performance

27.
The number of subscribers to basic52 and premium53 cable service declined in 2005.
Basic cable penetration, the ratio of the number of households that subscribe to basic cable to the number
of households passed by cable,54 declined in 2005 and is estimated to have declined further in the first half
of 2006. By all other measures, however, general cable industry performance improved. For example,
premium cable service subscriptions55 and subscriptions to digital video service increased.56 The number


52 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).
53 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 programs provided on a per program basis. PPV service is a
separate category from premium service.
54 Households passed by cable is the total number of households capable of receiving cable television service.
55 Premium service subscriptions are the number of premium services to which households are subscribing.
56 Digital cable service refers to digitally compressed video channels offered on digital service tiers.
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of households passed increased in 2005.57 Channel capacity58 and deployment of video-on-demand,59
digital video recorders,60 and high-definition service all increased during 2005 and the first half of 2006.61
Deployment of non-video advanced services, such as high-speed Internet access service and voice
services, also increased during this period.62
28.

Availability of Cable

. A common measure of cable availability is the percentage of
households passed by cable systems.63 The calculation of cable availability, however, has been a subject
of controversy, in part, because a variety of data sources have been used and no two data sources produce
exactly the same estimate.
29.
In previous years, we have used Kagan data to estimate cable availability. At the end of
2005, Kagan data estimate that there were 111.8 million households, and cable systems passed 110.8
households.64 Accordingly, this data indicates that 99 percent of households were passed by a cable
system.
30.

Subscribership

. The number of basic cable subscribers has fluctuated slightly since the
last Report. From June 2005 to year-end 2005, the number of basic cable subscribers declined slightly
from 65.4 million to 65.2 million. From the end of 2005 to June 2006, the number of basic cable
subscribers increased slightly to 65.3 million.65 Kagan, however, projected that the number of basic cable
subscribers would increase to 65.4 million basic subscribers at year-end 2006, and continue to increase


57 Kagan Research, LLC, Pay TV Subscriber History, Broadband Cable Financial Databook, Aug. 2006 ("Cable
Databook"), at 9.
58 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.
59 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.
60 Digital video recorders ("DVRs") use a hard disk drive to record video programs.
61 High-definition ("HD") service provides television signals with greater detail and fidelity than provided by the
National Television Systems Committee ("NTSC") system used by analog televisions. The high-definition picture
has approximately twice the visual resolution as NTSC. High-definition service also supports 5.1 channel Dolby
Digital surround sound.
62 Cable Databook at 8.
63 Previous Reports calculated cable availability as the percentage of households with a television passed by cable
systems. In this Report, we calculate cable availability to all households (i.e., households with a television and
households without a television). We make the change from television households to households for three reasons.
First, the 70/70 benchmarks in Section 612(g) of the Act refer to households, not television households (see 33
infra). Second, the available data used to estimate cable availability and cable penetration are based on households,
not television households. Third, according to Nielsen Media Research, approximately 98 percent of households
have a television set, so estimates based on households and estimates based on television households should be
similar.
64 Cable Databook at 11.
65 See Table 1. See also Appendix B, Table B-1.
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year after year for the next decade.66 Basic cable penetration (i.e., households that subscribe to
cable/households passed by cable) declined in 2005, as the number of subscribers decreased and the
number of households passed increased. Based on Kagan data, we estimate that cable penetration
declined further in the first half of 2006. The percentage of households that subscribe to basic cable (i.e.,
households that subscribe to basic cable/households) also declined in 2005, as the number of households
that subscribe to basic cable decreased while the number of existing U.S. households increased.67

Table 1: Cable Television Industry Growth: 2003-June 2006 (in millions)

68

Households that

Percent of

Households Passed Subscribe to Basic Percent of Households

Households (H)

69
by Cable (HP) 70

Cable (Subs)

71

Households that

Percent

Percent

Percent

Passed by

Subscribe to Basic Cable

Change Over

Change Over

Change Over

Cable

Basic Cable Penetration

Year

Total Prior Year

Total Prior Year

Total Prior Year

(HP/H)
(Subs/H)
(Subs/HP)
2003
109.9 1.4%
106.0 2.5%
66.0 -0.2%
96.5%
60.1%
62.3%
2004
111.4 1.4%
108.6 2.5%
65.4 -0.9%
97.5%
58.7%
60.2%
2005
111.8 0.4%
110.8 2.0%
65.2 -0.3%
99.1%
58.3%
58.8%

June
200672

112.6 0.7%
111.8 0.9%
65.3 0.2%
99.3%
58.0%
58.4%
31.
Cable companies continue to experience variations in the number of basic subscribers
they serve, as shown in Table 2.


66 Cable Databook at 11.
67 Cable Databook at 11.
68 Some of the data presented in Table 1 differ from previous Reports. Specifically, this year we report households.
In previous Reports, we reported television households. For further explanation, see note 63 supra.
69 The 2003-2005 households numbers are reported by Kagan as total U.S. occupied households. Kagan Research,
LLC, Kagan's 10-Year Cable TV Industry Projections, Broadband Cable Financial Databook, Aug. 2004 ("2004
Cable Databook"), at 11; Kagan Research, LLC, Broadband Cable Financial Databook, Aug. 2005 ("2005 Cable
Databook"), at 11; and Pay TV Subscriber History, Cable Databook at 9. The June 2006 households estimate is an
average calculated from the actual 2005 and the projected 2006 numbers. Cable Databook at 11.
70 The 2003-2005 households passed by cable numbers are reported by Kagan as occupied cable households passed.
Cable Databook at 9. The June 2006 households passed by cable estimate is an average calculated from the actual
2005 and the projected 2006 numbers. Id. at 11.
71 The 2003-2005 households that subscribe to basic cable numbers are reported by Kagan as total basic cable
subscribers. Id. at 9. The June 2006 households that subscribe to basic cable estimate is an average calculated from
the actual 2005 and the projected 2006 numbers. Id. at 11.
72 Percentage change columns in this row are from December 2005 to June 2006.
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Table 2: Top MSOs' Basic Cable Subscribers Year End 2004 to June 2006

Year End

Year End

Gain/(Loss)

June

Gain/(Loss)

Operator

2004
2005
2004-2005
2006
2005-June 2006

Comcast73

21,561,000
21,449,000
(112,000)
21,657,000
208,000

Time

10,919,000
10,957,000
38,000
11,100,000
143,000

Warner74
Charter75

5,991,500
5,884,500
(107,000)
5,876,100
(8,400)

Cablevision76

2,963,001
3,026,994
63,993
3,101,044
74,050

Mediacom77

1,458,000
1,423,000
(35,000)
1,400,000
(23,000)
32.
For the third year in a row, the number of households subscribing to premium cable
services declined. However, total revenue for premium services continued to increase. As shown in
Table 3 below, the number of households subscribing to premium services dropped from 28.1 million in
2004 to 27.8 million in 2005.78 Yet, the number of premium cable service subscriptions increased from to
90.8 million in 2004 to 96.9 million in 2005.79 In other words, although cable systems sold premium
services to fewer households, the average number of premium cable service subscriptions per subscribing
household increased. The data shows growth from an average 3.2 subscriptions per subscribing
household in 2004 to an average 3.5 in 2005.80 The total revenue received from premium services also
increased 2.1 percent in 2005.81


73 Comcast Corp., Comcast Reports Fourth Quarter and Year End 2005 Results (press release), Feb. 2, 2006;
Comcast Corp., Comcast Reports Second Quarter 2006 Results (press release), July 27, 2006.
74 Time Warner Inc., Time Warner Reports Results for 2004 Full Year and Fourth Quarter (press release), Feb. 4,
2005; Time Warner Inc., Form 10-K/A (Amended Annual Report), filed Sept. 13, 2006 for the period ending Dec.
31, 2005; Time Warner Inc., Time Warner Inc. Reports Second Quarter 2006 Results (press release), Aug. 2, 2006.
75 Charter Communications Inc., Charter Reports Fourth Quarter and Full-Year 2005 Financial and Operating
Results
(press release), Feb. 28, 2006; Charter Communications Inc., Charter Communications Reports Second-
Quarter 2006 Financial and Operating Results
(press release), Aug. 8, 2006.
76 Cablevision Systems Corp., Cablevision Systems Corporation Reports Fourth Quarter and Full Year 2005
Results
(press release), Feb. 27, 2006; Cablevision Systems Corp., Cablevision Systems Corporation Reports Second
Quarter 2005 Results
(press release), Aug. 8, 2006.
77 Mediacom Communications Corp., Mediacom Communications Reports Results for Fourth Quarter and Full Year
2005
(press release), Feb. 23, 2006; Mediacom Communications Corp., Mediacom Communications Reports Results
for Second Quarter 2006
(press release), Aug. 9, 2006.
78 Id. at 9.
79 Id.
80 Id.
81 Id. at 8.
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Table 3: Premium Cable Services: 2000 - 2005 (in millions)82

Premium Cable

Premium Cable

Average Number of Subscriptions

Service Subscribers

Service Subscriptions

Per Subscriber

Year

Percent Change

Percent Change

Subscriptions Percent Change

Total

Total

Over Prior Year

Over Prior Year /Subscribers Over Prior Year

2000 28.5
1.8%
65.9
11.7%
2.3
4.5%
2001 29.0
1.8%
75.4
14.4%
2.6
13.0%
2002 29.3
1.0%
81.1
7.6%
2.8
7.7%
2003 28.3
-3.4%
83.4
2.8%
2.9
3.6%
2004 28.1
-0.7%
90.8
8.9%
3.2
10.3%
2005 27.8
-1.1%
96.9
6.7%
3.5
9.4%
33.

Section 612(g) Benchmarks

. Section 612(g) of the Act states that: (1) "at such time as
cable systems with 36 or more activated channels are available to 70 percent of households within the
United States" and (2) "are subscribed to by 70 percent of the households to which such systems are
available, the Commission may promulgate any additional rules necessary to provide diversity of
information sources."83 Data submitted in the record of the 2005 Report raised questions as to whether
the 70/70 test had been satisfied.84 Accordingly, in the 2005 Report, we requested further comment on
the best methodologies and data for measuring the 70/70 thresholds and what, if any, additional action
should be undertaken to achieve the statutory goals, should we find that the thresholds have been met.85
34.
Based on the comments received in response to 2005 Report, there is no disagreement
that the first prong of the 70/70 test has been met. All commenters agree that cable systems with 36 or
more channels are available to more than 70 percent of households within the United States. In the 2005
Report
, we found that cable systems with 36 or more channels were available to 86.3 percent of
households.86 Current Census Bureau data indicate that there are 109,450,000 households.87 According


82 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 2000 through 2005 premium cable service subscriber numbers
are reported by Kagan as subs/cable/pay. Id. at 9. The 2000 through 2005 premium cable service subscription
numbers are reported by Kagan as the sum of premium units and mini-pay units (defined as a pay TV service that
programs less than eight hours per day). Cable premium units include HBO, Cinemax, Showtime, Movie Channel,
Starz, and Playboy. Cable mini-pay units include Sundance, Flix, and Encore. Id. at 9.
83 47 U.S.C. 532(g). This provision was added to the Communications Act by the Cable Communications Policy
Act of 1984 ("1984 Cable Act"), Pub. L. No. 98-549, 98 Stat. 2779.
84 2005 Report, 21 FCC Rcd at 2513-14 33.
85 Id. at 2515 36.
86 Id. at 2513 32.
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to Warren Communications News (Warren) there are 93,373,707 households passed by cable systems
with 36 or more channels.88 Thus, based on these data sources, cable systems with 36 or more channels
are available to 85.3% (93,373,707/109,450,000) households.
35.
Commenters on our last report disagree regarding whether the second prong of the 70/70
test has been met.89 Specifically, they disagreed whether 70 percent of the households passed by cable
systems with 36 or more channels subscribe to these systems.90 At that time, we found that alternative
estimates yielded different conclusions about whether the 70/70 test had been met. In the Notice, we
requested additional information regarding the 70/70 test.91
36.
According to Warren Communications, there were 93,373,707 households passed by
cable systems with 36 or more channels. Warren reports that there were 66,661,544 subscribers to such
systems. Thus, 71.4 percent of households passed by cable systems offering 36 or more channels
subscribe to these systems.92
37.
As described in the 2005 Report, AT&T's calculation of the second prong of the 70/70
test mixed data from different sources.93 We conclude that the calculation of the second prong, which
compares the number of subscribers to the number of households passed, should use the same data source
for both the numerator and denominator, if possible. In this way, the numerator (number of cable
subscribers) is derived from the same households that are used for in the denominator (number of
households passed by cable systems) and a valid comparison can be made between the number of
subscribers and the household passed. Using Warren data for both the numerator and denominator
remedies the deficiency in the estimate submitted by AT&T.94
(Continued from previous page)


87 U.S. Census Bureau, Census Bureau Reports on Residential Vacancies and Homeownership (press release), July
27, 2007, Table 3. See http://www.census.gov/hhes/www/housing/hvs/qtr207/q207press.pdf (visited Oct. 10,
2007).
88 Warren Communications News, Custom Report: from Television and Cable Factbook Datasets, Oct. 10, 2007.
E-mail from Michael Taliaferro, Assistant Publisher, Directories, WARREN COMMUNICATIONS NEWS, Oct.
10, 2007.
89 See, e.g., Comments of AT&T, MB Docket No. 05-255 (filed Apr. 3, 2006); Comments of NCTA, MB Docket
No. 05-255 (filed Apr. 3, 2006); Reply Comments of NCTA, MB Docket No. 05-255 (filed Apr. 25, 2006).
90 Compare Comments of NCTA, MB Docket No. 05-255, at 5 (filed Apr. 3, 2006) (estimating measures for the
second prong of the 70/70 test at 67.8 percent using data from Warren Communications, 62.7 percent using data
from Nielsen Media Research, and 53.1 percent using data from Kagan Research LLC) with Reply Comments of
SBC, MB Docket No. 05-255, at 15 (filed Oct. 11, 2005) (estimating the second prong at 77.2 percent).
91 Notice, 21 FCC Rcd at 12242-43 36-37. No new data were provided in response to our request for additional
data, although NCTA incorporates its previous filing by reference. NCTA Reply Comments at 9.
92 Warren Communications News, Custom Report: from Television and Cable Factbook Datasets, Oct. 10, 2007.
E-mail from Michael Taliaferro, Assistant Publisher, Directories, WARREN COMMUNICATIONS NEWS, Oct.
10, 2007.
93 2005 Report, 21 FCC Rcd at 2513-14 33.
94 We note that Kagan, unlike Warren, does not report data for cable systems with 36 or more channels and thus
does not provide the precise data we need to perform the calculation specified by the statute. We also note that the
Kagan estimate regarding the number of households passed by cable, 113,600,000 is greater than the U.S. Census
Bureau estimate of 109,450,000 total households. See Mariam Rondell, "Kagan Multichannel Projections: Impact
of Telco TV," Cable TV Investor, SNL Kagan, July 31, 2007 at 2.
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38.
Other commenters concur with AT&T. For example, CU uses various public data
sources to derive an estimate of 71.6 percent (63 million/88 million = 71.6%) for the second prong of the
70/70 test.95 MAP submits a report by Dr. Gregory Rose. Dr. Rose used data from ABI Research and
Paul Budde Communications to estimate the ratio of cable subscribers to homes passed by all cable
systems as 77.53 percent (85.99 million /110.91 million = 77.53%).96
39.
Commenters questioned the unit of measurement to be used in the calculation. Section
612(g) refers to the number of "households" passed by cable systems. Warren states that "homes passed
indicates number of homes passed by cable and currently accessible to cable."97 Consistent with
Warren's approach, we note that, according to the Census Bureau, a household refers to a collection of
persons that reside in a housing unit.98 Moreover, the Commission has consistently relied on this
understanding in making 70/70 calculations in the past.99 We further note that Warren indicates that its
data include only cable systems that provide information, noting that many cable operators do not provide
homes passed information, and that basic cable subscriber totals do not include subscribers to systems
that only operate digitally.100
40.
Although Warren's numbers indicate that the second prong of the 70/70 test has
not been met, several others that the Commission has consistently relied upon indicate that it has not been
met. Warren estimates that of the occupied U.S. homes passed by cable systems with 36 or more
channels, 66,661,544 of those households subscribe to cable service offered by such systems. As a
percentage measure, then, the Warren data indicates that 71.4 percent of homes passed
(66,661,544/93,373,707) subscribe to these systems. 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. Using the data in the 2005 Price Survey, 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. Based on data


95 See Letter from Mark Cooper, Research Director, Consumer Federation of America, Gene Kimmelman, Vice
President, Consumers Union, and Ben Scott, Policy Director, Free Press, to Kevin J. Martin, Chairman, FCC (Nov.
16, 2007).
96 See Letter from Harold Feld, Senior Vice President, Media Access Project, and Andrew Jay Schwartzman,
President and CEO, Media Access Project, to Robert M McDowell, Commissioner, FCC, and Deborah Taylor Tate,
Commissioner, FCC, Attachment ("Estimating the Take Rate for the 70/70 Rule: An Alternative Methodology") at
4, (Nov. 16, 2007).
97 See Warren Communications News, Television & Cable Factbook 2007, Cable Directory Description, Plant, at
D-8.
98 A household consists of all people who occupy a particular housing unit as their usual residence. The usual
residence is the place where the person lives and sleeps most of the time. U.S. Department of Housing and Urban
Development and U.S. Census Bureau, American Housing Survey for the United States: 2005, Aug. 2005, Appendix
A at A-9. See also http://www.census.gov/hhes/www/housing/ahs/definitions.html (visited Feb. 23, 2007).
99 See, e.g., 2005 Report, 21 FCC Rcd at 2514 34; 2004 Report, 20 FCC Rcd at 2767 20; 2003 Report, 19 FCC
Rcd at 1621 22.
100 See Letter from Michael Taliaferro, Managing Editor, Television & Cable Factbook, to Commissioners Tate and
McDowell, Nov. 15, 2007.
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submitted to the Commission in the Annual Report of Cable Television Systems (Form 325), our staff
estimates that this figure is 54 percent, the same percent as reported last year. NCTA has submitted other
measures. Using Warren, Nielsen, and Kagan data, NCTA submitted estimates of the second prong of the
70/70 benchmark ranging from 58.1 percent to 68.9 percent.101
41.
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. 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 one data source that we have
traditionally relied on, Warren, shows that the second prong of the 70/70 test has been met. The other
data sources do not demonstrate that the second prong has been met.
42.
In addition, commenters, such as AT&T, the Association of Independent and Video
Filmmakers et al., and CBA, argue that competitors to incumbent cable systems (e.g., overbuilders, DBS
operators, and Internet providers) should be included in the calculation of the 70/70 test.102 With respect
to DBS operators and Internet providers, we disagree: they do not meet the statutory definition of a cable
system and, therefore, should not be included in the 70/70 calculations. An overbuilder, however, appears
to meet the statutory definition of a cable system and, therefore, has been included in past 70/70
calculations. We note that Warren includes most overbuilders103 in its estimates of cable subscribers.104
43.
As a result, we find that the only way to accurately conclude that the 70/70 test has been
met is to have the cable industry provide us with the data with respect to their systems. Therefore, the
Commission requires each cable operator to submit the following information for each system on a zip
code basis within the next 60 days. This information must be filed for calendar year 2006 and cable
operators must also file their most current data for 2007.105


101 See Letter from Kyle McSlarrow, President and CEO, NCTA, to Kevin J. Martin, Chairman, FCC, Michael J.
Copps, Commissioner, FCC, Jonathan S. Adelstein, Commissioner, FCC, Deborah T. Tate, Commissioner, FCC,
and Robert M. McDowell, Commissioner, FCC (Nov. 14, 2007) at 3.
102 See AT&T Comments at 4, AIVF Comments at 5, and CBA Reply at 3-4 filed in response to request for
additional information in the 2005 Report, 21 FCC Rcd 2515 36.
103 For example, including Verizon in Warren's data would increase the total number of cable subscribers to systems
with 36 or more channels by 717,000, thereby increasing the percentage of households subscribing to systems with
36 or more channels to 72.1 percent. We note that adding Verizon's subscribers does not increase the denominator
because doing so would double count homes already passed by cable.
104 See Warren Communications News, Television & Cable Factbook 2007, at D-7. Warren uses the Commission's
definition of a cable system in Section 76.5(a) of the rules, including overbuilders. See 47 U.S.C. 76.5(a).
Moreover, this approach is consistent with our construction of the term in other cable related settings. In the
"effective competition" test relevant to cable rate regulation under Section 623 of the Act, the Commission has
distinguished between vacant and occupied housing units, declining to include vacant housing units within the term
"households" as used in that analysis. Therefore, we conclude here that the calculation of the second prong should
include only occupied housing units in the denominator and only subscribers from such units in the numerator.
105 Any false certification made to the Commission may be punished by fine and/or imprisonment under 18 U.S.C.
1001. We also emphasize that any false information provided to the Commission pursuant to the requirements set
(continued....)
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1. Total number of homes the cable operator currently passes;
2. Total number of homes the cable operator currently passes with 36 or more activated channels;
3. Total number of actual subscribers, including all subscribers in MDUs; and
4. Total number of subscribers with 36 or more activated channels.
2.

Programming Services and Pricing

44.

Cable System Capacity and Allocation of Channels

. The Commission's 2005 Cable
Price Survey Report106 provides figures on cable system capacity and the number of analog and digital
video channels being delivered by surveyed cable systems (see Table 4).107 The Cable Price Survey
Report
shows that 87 percent of the sampled cable systems where the Commission has not made a finding
of effective competition and 90 percent of the sampled cable systems where the Commission has made
such a finding have operating capacity of 750 MHz or above.108 The average operating capacity of
systems surveyed for the Report is 734 MHz for cable systems for which the Commission has not made
an effective competition finding and 754 MHz for cable systems for which it has.109 Comparing these
(Continued from previous page)


forth above may be similarly punished under 18 U.S.C. 1621. A cable operator may certify to the Commission
that it does not possess such information for calendar year 2006 and that it is not possible for the operator to compile
such data for calendar year 2006.
106 2005 Cable Price Survey Report. Section 623(k) of the Communications Act, as amended by the Cable
Television Consumer Protection and Competition Act of 1992 ("Cable Act"), requires the Commission to publish
annually a statistical report on average rates for the cable basic service tier, cable programming service tier, and
equipment. See 47 U.S.C. 543(k). The basic service tier includes local broadcast stations and public, educational,
and governmental access channels. See 47 U.S.C. 543(b)(7). The cable programming service tier includes
channels other than channels carried on the basic service tier or for which per channel ("premium") or per program
("pay-per-view") charges apply. See 47 U.S.C. 543(k)(1)(2). Equipment refers to a set-top converter box, remote
control unit, and other equipment used to access cable television programming. See 47 U.S.C. 543(b)(3). The
information and analysis provided in the 2005 Cable Price Survey Report are based on the Commission's survey of
cable industry prices ("Survey") as of January 1, 2005.
107 The Survey requested data from cable operators serving a random sample of communities. The Commission
asked operators to report monthly prices as of January 1, 2005, and January 1, 2004, to permit calculation of an
annual percentage change. In addition, the questionnaire asked for the price of the most highly subscribed digital
service tier, customer-premise equipment charges, and service installation charges. Information was gathered on
factors that may affect prices, including programming expenses; operating capacity; and the number of subscribers
to program tiers, Internet access service, and telephony.
108 The Survey requested data from cable system operators serving a random sample of communities. The
information collected enables the Commission to compare prices charged by operators serving: (1) communities
where operators have not been formally found to meet the statutory test for effective competition ("noncompetitive
communities"); and (2) communities where cable operators have been granted relief from rate regulation for their
basic-service tier because they meet the statutory test for effective competition ("communities relieved from rate
regulation"). In selecting cable operators in the communities relieved from basic-tier rate regulation, we relied on
the Commission's formal legal decisions regarding effective competition, based on the statutory definition of that
term under the Cable Act. See 47 C.F.R 76.905(b). Our list of communities relieved from rate regulation is
limited to adjudicated findings of effective competition. We are unable to take into account those areas of the
country where the conditions for a finding are present, but no finding has been requested or made. If a community is
deemed subject to effective competition, the local franchising authority may no longer regulate basic service tier
rates, unless it seeks and is granted recertification. See 47 C.F.R. 76.916(a). See also 2005 Cable Price Survey
Report
, 21 FCC Rcd at 15088 3-4 & n.5.
109 Cable system operating capacity may be allocated among video and nonvideo services.
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averages with those from the 2004 Price Report, we find that the average operating capacity for cable
systems where the Commission has made a finding of effective competition increased from 734 MHz to
754 MHz, and the average operating capacity for systems where the Commission has not made such a
finding remains unchanged.110 Cable systems where the Commission has not made a finding of effective
competition provide, on average, 226.3 video channels (73.6 analog and 152.7 digital and high
definition). Cable systems where the Commission has made such a finding provide, on average, 234.9
video channels (75.3 analog and 159.6 digital and high definition). While the programming packages
offered by cable operators vary from system to system, the 2005 Cable Price Survey Report indicates that
the average cable system where the Commission has not made a finding of effective competition provides
24.9 channels on its basic service tier and 45.4 channels on its expanded basic service tier. The average
cable system where the Commission has made such a finding provides 24.5 channels on its basic service
tier and 47.5 channels on its expanded basic service tier.111

Table 4: January 2005 Cable System Capacity and Distribution of Channels112

No Commission Finding

Commission Finding

of Effective Competition
of Effective Competition

Average System Capacity (MHz)

734
754

Percentage of Subscribers by Capacity of
Cable System Serving Their Community

System above 750 MHz

18%
24%

System at 750 MHz

69%
66%

System from 331 - 749 MHz

11%
9%

System below 330 MHz

2%
1%

Distribution of Channels113

226.3
234.9

Total number of analog channels

73.6
75.3

Average number of basic channels

24.9
24.5

Average number of expanded basic channels

45.4
47.5

Other analog channels

3.3
3.3

Total number of digital channels

152.7
159.6
45.

Cable Prices

. The average monthly cable rate for the basic plus expanded basic service
tiers increased 5.2 percent from 2004 to 2005.114 Cable rate increases continued to outpace general


110 See 2004 Cable Price Survey Report, 20 FCC Rcd at 2730, Table 9.
111 2005 Cable Price Survey Report, 21 FCC Rcd at 15096, 15105, Table 4, Attachment 4. The "expanded basic
service tier" excludes the basic service tier.
112 Id. at 15096, 15099, Tables 4, 8, and 9.
113 This year we report the distribution of channels in terms of the simple sum of analog and digital channels. In
previous years, we have reported the total number of channels in terms of bandwidth (specifically, the estimated
number of 6 MHz channels) needed to carry the analog and digital channels. See, e.g., 2004 Report, 20 FCC Rcd at
2770-71 24, n.72.
114 2005 Cable Price Survey Report, 21 FCC Rcd at 15093, Table 1.
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inflation.115 The average monthly cable rate increased 5.2 percent for cable systems where the
Commission has not made a finding of effective competition and 4.9 percent for cable systems where the
Commission has made such a finding.116 The prices charged by cable systems where the Commission has
not made a finding of effective competition were on average 7.9 percent higher than the prices charged by
cable systems where the Commission has made such a finding. Where the effective competition finding
was based on competition from a wireline cable provider, prices were notably lower. Specifically, prices
charged by cable systems where the Commission has not made an effective competition finding were 20.6
percent higher than the prices charged by cable systems found to be facing competition from a second
cable operator.117 In dollar amounts, the average monthly cable rate was $43.33 for cable systems in the
first category and $35.94 in the second.118 In contrast, prices charged by cable systems where the
Commission has not made a finding of effective competition were almost the same as the prices charged
by cable systems found to be facing competition from DBS.119
3.

Financial Performance

46.

Cable Industry Revenue

. Total revenue grew to $65.7 billion in 2005, as shown in Table
5 below.120 This represents a 10.3 percent increase over 2004's $59.6 billion. Cable revenue was
projected to grow 11.1 percent in 2006 to $72.9 billion. Average monthly residential revenue per
subscriber grew from $72.87 in 2004 to $79.42 in 2005 and was projected to increase to $87.04 in
2006.121 As shown in Table 5, all revenue categories increased.
47.

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.122 Cash flow from operations is the net result of


115 The Bureau of Labor Statistics ("BLS") publishes a Consumer Price Index ("CPI") that measures general price
inflation through changes in the prices of a selected group of goods and services. By this measure, general inflation
increased by 3.0 percent over the 12 months ending January 2005 compared to an increase of 1.9 percent over the 12
months ending January 2004.
116 Id.
117 Id.
118 Id.
119 The average monthly cable rate was $43.34 for operators relieved from rate regulation due to competition from
DBS. Id.
120 Cable Databook at 9.
121 2005 Cable Databook at 4; Cable Databook at 4.
122 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. 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
(continued....)
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cash inflows from operations (revenues) 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 5 shows, cash
flow from operations increased during 2005.123 In addition, the cash flow margin (cash flow/total
revenue) increased in 2005, as cash flow increased at a greater rate than total revenue, indicating that
revenues grew faster than operating expenses during 2005.

Table 5: Cable Industry Revenue and Cash Flow: 2004 2006124

04-05
05-06
2004
2005

Est. 2006

Percent

Percent

Total

Total

Total

Change

Change

Basic Subscribers (mil.)
65.4
65.2
-0.3%
65.4
0.3%

Revenue Segments (mil.)

Basic Service and
$30,080
$31,075
3.3%
$32,274
3.9%
CPST Tiers
Premium (Pay) Tiers
$6,255
$6,389
2.1%
$6,414
0.4%
VOD/Pay-Per-View125
$1,279
$1,288
0.7%
$1,603
24.5%
Local Advertising
$3,236
$3,381
4.5%
$3,652
8.0%
Home Shopping
$329
$354
7.6%
$384
8.5%
Total Digital Tier
$3,966
$4,563
15.1%
$5,192
13.8%
High-speed Internet
$8,965
$11,245
25.4%
$13,112
16.6%
DVR Service
$150
$361
140.7%
$712
97.2%
Circuit Switch and VoIP
$1,623
$2,158
33.0%
$3,269
51.5%
Miscellaneous126
$1,125
$1,453
29.2%
$1,611
10.9%
Business Services
$2,551
$3,411
33.7%
$4,722
38.4%

Total Revenue (mil.)

$59,559
$65,678
10.3%
$72,945
11.1%
Revenue Per Subscriber
$910.69
$1,007.33
10.6%
$1,115.37
10.7%

Operating Cash Flow (mil.) $23,239

$25,684
10.5%
$28,659
11.6%
Cash Flow per Subscriber
$355.34
$393.93
10.9%
$438.21
11.2%

Cash Flow/Total Revenue

39.0%
39.1%
0.3%
39.3%
0.5%
48.

Programming Costs

. Cable operators' combined program expenditures were $12.68
(Continued from previous page)


maturation that would justify use of more traditional valuation metrics. See 2003 Report, 19 FCC Rcd at 1627 28
and n.72.
123 Cable Databook at 137.
124 Revenue data for VOD/pay-per-view, home shopping, DVR service, and business services for 2004 come from
2005 Cable Databook at 8-13. All other data come from the Cable Databook at 8-12 and 137. Historical data
included in this table may differ from those previously reported because some data have been updated by Kagan.
The 2006 data are Kagan estimates for year-end 2006.
125 Includes VOD, subscription-video-on-demand ("SVOD"), near-video-on-demand ("NVOD"), and PPV.
126 Miscellaneous revenues are derived by summing the revenues from the categories specifically listed in Table 5
and subtracting this sum from total revenue. Miscellaneous revenue categories currently include installation fees,
high-definition set-top rentals, high-definition tiers, home networking, and other residential video.
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billion in 2004 and $15.80 billion in 2005; they were projected to increase to $20.59 billion in 2006.127
Cable programming expenditures include those for existing and new nonbroadcast networks,128 the costs
associated with producing or acquiring local and regional programming (including cable news and public
affairs networks), payments for retransmission consent, and copyright fees. In 2005, cable operators
spent $136.0 million on copyright fees for broadcast signal carriage pursuant to Section 111 of the
Copyright Act.129
49.

Cable System Transactions

. The aggregate value of cable transactions in any year
depends on the number of transactions, the size of the cable systems involved, and the price paid. As
shown in Table 6 below, there were 21 cable transactions proposed, but not necessarily completed, in
2005, involving more than 8.9 million basic subscribers and representing a total dollar value of $31.3
billion.130 The largest proposed transaction was the $17.6 billion acquisition of Adelphia by Comcast and
Time Warner.131 In the first six months of 2006, there were 12 cable transactions proposed, but not
necessarily completed, representing an aggregate value of $1.4 billion.


127 NCTA Comments at 36. NCTA's calculation of programming expenditures includes license fees, copyright fees,
and investments in local programming.
128 In 2006, we identified 565 national nonbroadcast networks. See Section III.B.1.
129 17 U.S.C. 111 et seq. Copyright Office, Library of Congress, Licensing Division Report of Receipts, Jan. 12,
2007.
130 Cable Databook at 154.
131 Id. Applications for Consent to the Assignment and/or Transfer of Control of Licenses from Adelphia
Communications Corporation to Time Warner Cable Inc., and from Adelphia Communications Corporation to
Comcast Corporation
, 21 FCC Rcd 8203 (2006). Comcast and Time Warner completed the acquisition of Adelphia
on July 31, 2006. See Comcast Corp., Time Warner and Comcast Complete Adelphia Communications
Transactions
(press release), July 31, 2006. See also Cris Isidore, Adelphia Deal to Shuffle Cable, CNN, Apr. 21,
2005, at http://money.cnn.com/2005/04/21/technology/adelphia/index.htm (visited Feb. 22, 2007).
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Table 6: System Transactions: 2003 - June 2006132

2003
2004
2005

Jan-June 2006

Number of Cable Transactions
34
21
21
12
Total Number of Subscribers
650,759
2,701,552 8,920,356 508,716
Average Number of Subscribers
19,140
128,645
424,779
42,393
per Cable Transaction
Total Number of Households Passed Sold
1,132,772
4,626,831 17,636,898 1,092,918
Average Number of Households Passed
33,317
220,325
839,852
91,077
per Cable Transaction
Total Dollar Value (mil.)
$1,495
$10,554
$31,281
$1,405
Average Value (mil.) of Cable Transaction
$44
$503
$1,490
$117
National Average Dollar Value per Subscriber $2,297
$3,906
$3,507
$2,762
Dollar Value per Households Passed
$1,319
$2,281
$1,774
$1,286
Cash Flow Multiple
9.5
9.4
12.0
9.2
50.

Stock Prices

. Cable stock prices, as measured by the Kagan Cable MSO Average,133
gained 4.6 percent from June 2005 to June 2006, while the S&P 500 gained 5.7 percent, and the
NASDAQ 4.9 percent.134 One analyst reported that, despite strong cash flow growth, cable stocks
continue to trade at relatively depressed multiples of 9.0 times cash flow.135
4.

Capital Acquisition and Disposition

51.

Industry Financing

. Table 7 shows the amount of financing raised per year by source.
In past years, much of the money raised by cable operators was used to upgrade and rebuild cable
systems. In 2004 and 2005, the majority of money raised was used for refinancing.136 Kagan reports that
in 2005, cable companies spent $2.3 billion repurchasing stock, and they reduced public debt by $7.5
billion.137


132 Data for 2003-2005 come from Cable System Sales Summary (Annually Through December), Cable TV Investor,
Jan. 31, 2006, at 14. Data for January to June 2006 come from Cable System Sales Summary, Cable TV Investor,
July 31, 2006, at 14. The numbers for January to June 2006 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.
133 The Kagan Cable MSO Average includes the following companies (stock symbol): Charter (CHTR), Rogers B
(RG), Comcast (CMCSA), Pegasus (XAN), Comcast Sp. A (CMCSK), Cablevision (CVC), Mediacom (MCCC),
Washington Post (WPO), Alaska Comm. Sys. (ALSK), General Comm. (GNCMA), Liberty Media Int. A (LINTA),
Time Warner (TWX), Liberty Media Int. B (LINTB), NTL Inc. (NTLI).
134 Cable TV Investor, July 29, 2005, at 19; Cable TV Investor, July 31, 2006, at 16.
135 Cable TV Investor, July 31, 2006, at 1.
136 Cable Databook at 136.
137 Id. at 136, 141.
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Table 7: Acquisition of Capital: 2000 - June 2006 ($ in millions)138

Private Equity

Public Equity

Net New

(Private Placement
(Common and

Private Debt139

Public Debt

and Venture Capital) Preferred)

Total

Percent

Percent

Percent

Percent Capital

of Total
of Total
of Total
of Total Raised

Amount Raised Amount Raised Amount Raised

Amount Raised

In

Year

Raised

in Year Raised
in Year Raised
in Year

Raised

In Year Year140

2000
$7,255
60.3%
$4,288
35.7%
$101
0.8%
$380
3.2%
$12,024
2001
$6,668
31.4%
$10,678 50.2%
$623
2.9%
$3,282
15.4%
$21,251
2002
$2,544
25.2%
$3,942
39.0%
$15
0.1%
$3,608
35.7%
$10,109
2003
$1,791
66.5%
$734
27.2%
$116
4.3%
$54
2.0%
$2,695
2004
$12,674 159.7% -$4,863 -61.3%
$125
1.6%
$0
0%
$7,936
2005
$1,008
-19.7%
-$7,457 145.8% $1,334
-26.1%
$0
0%
-$5,115

Jan-June

$4,200 67.2% $1,900 30.4% $150
2.4%
$0
0%
$6,250
2006
52.

Capital Expenditures/Capital Investment

. NCTA states that cable operators have
invested over $100 billion to construct advanced two-way fiber optic networks. Kagan estimates that
cable companies spent $10.6 billion on capital improvements in 2005 and will spend $11.1 billion in
2006.141 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.
53.
Capital expenditures for rebuilding and upgrading cable systems have been reduced in
recent years as many cable systems have completed their two-way fiber optic networks.142 In the first half
of 2006, however, capital expenditures for customer premises equipment increased. Over the same
period, the number of advanced service subscriptions grew.143 Table 8 provides information regarding
capital expenditures by major MSOs.


138 Data for 2004 come from Cable Databook at 141. Data for January 2006 to June 2006 come from Cable TV
Investor, July 31, 2006, at 15. Historical data included in this table may differ from those previously reported
because some data have been updated by Kagan. See Cable Databook at 141.
139 Kagan reports private debt as the sum private debt by acquisitions and private debt by other. Id.
140 Total capital raised is the sum of private debt, net new public debt, private equity, and public equity. Id.
141 Cable Databook at 137. See also NCTA Comments at 27.
142 Rebuilds are significant improvements made to existing systems that do not retain a significant percentage 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.
143 See Mariam Rondeli, HSD, Cable Telephony Headline Q2 Earnings Season, Cable TV Investor, July 31, 2006, at
6-7.
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Table 8: Capital Expenditures by Major MSOs ($ in millions)

Operator

2005

Jan.-June 2006

Customer

Customer

Total144

Plant

Total

Plant

Premises

Premises

Upgrades

Upgrades

Equipment

Equipment

Comcast145

$3,567
$265
$1,876
$1,834
$135
$1,012

Time
Warner146

$1,975
$132
$866
$1,066
$47
$536

Charter147

$1,088
$49
$434
$539
$23
$258

Cablevision148

$695
$8
$450
$469
$2
$302

Mediacom149

$228
$42
$124
$105
$23
$50
5.

Advanced and Other Services

54.
In addition to traditional analog video services, most cable operators offer subscribers
advanced video services, including digital video, video-on-demand, DVRs, and high-definition television;
and non-video advanced services, including high-speed Internet access and telephony (circuit-switched
telephony and/or voice over Internet protocol telephony).150 Mid-sized and smaller cable operators also
are deploying advanced services. Our review of five mid-sized and smaller cable operators shows that all
offer digital cable service and high-speed Internet service, and many offer high-definition television,


144 Total capital expenditures include expenditures for customer premises equipment, scalable infrastructure, line
extensions, plant upgrades and rebuilds, and support.
145 Comcast Corp., Comcast Reports Fourth Quarter and Year End 2005 Results (press release), Feb. 2, 2006;
Comcast Corp., Comcast Reports Second Quarter 2006 Results (press release), July 27, 2006.
146 Time Warner Inc., SEC Form 10-K/A (Amended Annual Report), filed Sept. 13, 2006, for the period ending Dec.
31, 2005; Time Warner Inc., SEC Form 10-Q (Quarterly Report), filed Aug. 2, 2006, for the period ending June 30,
2006, at 34.
147 Charter Communications Inc., Charter Reports Fourth Quarter and Full-Year 2005 Financial and Operating
Results
(press release), Feb. 28, 2006; Charter Communications Inc., Charter Communications Reports Second-
Quarter 2006 Financial and Operating Results
(press release), Aug. 8, 2006.
148 Cablevision Systems Corp., Cablevision Systems Corporation Reports Fourth Quarter and Full Year 2005
Results
(press release), Feb. 27, 2006; Cablevision Systems Corp., Cablevision Systems Corporation Reports Final
Second Quarter 2006 Results and Files Restated Financial Statements for Prior Periods
(press release), Sept. 21,
2006.
149 Mediacom Communications Corp., Mediacom Communications Reports Results for Fourth Quarter and Full
Year 2005
(press release), Feb. 23, 2006; Mediacom Communications Corp., Mediacom Communications Reports
Results for Second Quarter 2006
(press release), Aug. 9, 2006.
150 Subscription data for advanced services shown in this Report are primarily for residential service, but also may
include some small business service. Although most cable operators report business revenue separately, there may
be telecommuters and businesses operating in households that are included in residential subscription data. See also
2005 Report
, 21 FCC Rcd at 2525 50 n.117.
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video-on-demand, DVRs, and telephone service.151
55.

Digital Video Services

. Almost all households passed by cable systems can subscribe to
digital video service. Most cable companies require digital cable subscribers to rent or buy a digital set-
top box from them and then allow the customer to purchase one or more digital service tiers. Digital tiers
provide a variety of programming similar to that offered in basic tiers, or theme tiers, such as a movie tier,
a sports tier, and a non-English-language tier. Digital cable subscribers also may purchase one or more
premium digital packages, such as HBO, Showtime, Cinemax, The Movie Channel, Starz!, and
international programming.152 A high-definition service tier also is available to many digital cable
subscribers. In addition, cable operators are offering interactive digital services to digital cable
subscribers, such as DVRs and video-on-demand.153 Data from the 2005 Form 325 indicate that nearly 96
percent of households passed have access to digital video, and 85 percent of systems have digital video
capability.154 The number of digital cable subscribers increased from 25.4 million at the end of 2004, to
28.6 million at the end of 2005, a 12.6 percent increase.155 NCTA states that the number of digital cable
subscribers increased to 32.9 million at the end of June 2006.156
56.
As shown in Table 9 below, as of June 2006, the five largest publicly-traded cable
operators had sold digital cable services to between 35 and 73 percent of total basic cable subscribers.


151 The five cable operators are Mid-Hudson Cable, Northland Cable Television, Cebridge Connections,
CableAmerica, and GCI.
152 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.
153 The digital video recorder service offered by cable operators requires a DVR set-top box.
154 2005 FCC Form 325 data.
155 Cable Databook at 11; 2005 Cable Databook at 11.
156 NCTA Comments at 27.
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Table 9: Digital Cable Subscribers for Top MSOs (in millions)

2005

Jan.-June 2006

Operator

Digital

Percent of Basic

Digital

Percent of Basic

Subscribers

Cable Subs

Subscribers

Cable Subs

Comcast157

9.8
46%
10.5
49%

Time
Warner158

5.4
49%
5.8
53%

Cablevision159

2.0
65%
2.3
73%

Charter160

2.8
48%
2.9
49%

Mediacom161

0.5
35%
0.5
35%
57.
NCTA reports that, as of the end of June 2006, cable operators were carrying the digital
broadcast signals of 788 broadcast television stations.162 NCTA also states that an agreement between
cable operators and public television stations ensures that local public television digital programming is
being carried on cable systems throughout the country.163
58.

High-Definition Television ("HDTV")

. HDTV features dramatically improved, highly
detailed picture quality; improved audio quality; and a wide-screen display. To obtain the full visual
effect of HDTV, a cable subscriber also needs an HDTV set. By June 2006, 97 million households were
passed by cable operators offering HDTV channels and additional HDTV programming using video-on-
demand.164 In addition to broadcast networks, 27 nonbroadcast networks now offer HDTV


157 Comcast Corp., Comcast Reports Fourth Quarter and Year End 2005 Results (press release), Feb. 2, 2006;
Comcast Corp., Comcast Reports Second Quarter 2006 Results (press release), July 27, 2006.
158 Time Warner Inc., SEC Form 10-K/A (Amended Annual Report) filed Sept. 13, 2006 for period ending Dec. 31,
2005, at 24; Time Warner Inc., Time Warner Inc. Reports Second Quarter 2006 Results (press release), Aug. 2,
2006.
159 Cablevision Systems Corp., Cablevision Systems Corporation Reports Fourth Quarter and Full Year 2005
Results
(press release), Feb. 27, 2006; Cablevision Systems Corp., Cablevision Systems Corporation Reports Second
Quarter 2006 Selected Operating and Financial Measures
(press release), Aug. 8, 2006.
160 Charter Communications Inc., Charter Reports Fourth Quarter and Full-Year 2005 Financial and Operating
Results
(press release), Feb. 28, 2006; Charter Communications Inc., Charter Reports Second Quarter 2006
Financial and Operating Results
(press release), Aug. 8, 2006.
161 Mediacom Communications Corp., Mediacom Communications Reports Results for Fourth Quarter and Full
Year 2005
(press release), Feb. 23, 2006; Mediacom Communications Corp., Mediacom Communications Reports
Results for Second Quarter 2006
(press release), Aug. 9, 2006.
162 NCTA Comments at 29.
163 NCTA Comments at 29. See also NCTA, Public Television and Cable Announce Major Digital Carriage
Agreement
(press release), Jan. 31, 2005.
164 NCTA Comments at 28.
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programming.165
59.
Comcast offers about 20 HDTV channels, including all major broadcast networks,
Discovery HD, Universal HD, TNT HD, ESPN HD, and ESPN2 HD; and premium HD networks such as
HBO, Cinemax, Starz, and Showtime.166 Comcast plans to offer up to 35 HDTV channels in 2007, as
well as 100 hours of HDTV video-on-demand programming.167 Cox offers HDTV programming from
nonbroadcast networks, local public broadcasting stations, and local broadcast network affiliates.168 Time
Warner offers HDTV programming from local broadcast networks and HDTV movies from HBO and
Showtime.169 Cablevision offers 22 HDTV channels and has 455,000 subscribers, a 114 percent increase
in one year.170 Charter offers the HDTV programming provided by local broadcast stations and HDTV
movies from HBO and Showtime.171 Mediacom offers local broadcast stations' HDTV programming and
the HDTV programming from HBO, Showtime, Starz, and The Movie Channel.172
60.

Video-on-Demand ("VOD")

. VOD allows subscribers to order programming from a
central server at any time of day, and to fast-forward, rewind, and pause the programs.173 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 turnover rate (i.e., churn). One analyst estimates that 29 million
households now use VOD service.174
61.
Comcast provides almost 8,000 VOD programs each month, and 95 percent of these
programs are available at no additional charge to digital subscribers.175 In 2005, Comcast's VOD


165 Id.
166 Comcast Comments at 66-67.
167 Id.
168 Cox Reply at 4.
169 See Time Warner Cable, at http://www.timewarnercable.com/corporate/products/digitalcable/hdtv.html (visited
Feb. 2, 2007).
170 Cablevision Systems Corp., WWOR-TV My9 is the Latest Addition to Cablevision's Industry-Leading High
Definition Lineup
(press release), Sept. 20, 2006.
171 See Charter Communications Inc., at http://www.charter.com/Visitors/Products.aspx?ProductItem=6 (visited Jan.
26, 2007).
172 See Mediacom Communications Corp., at http://www.mediacomcc.com/cable_hdtv.html (visited Jan. 26, 2007).
173 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.
174 NCTA Comments at 30.
175 Comcast Comments at 62.
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subscribers watched more than 1.4 billion VOD programs, and on average, subscribers used the service
more than 20 times per month.176 Cox's VOD service provides more than 1,000 hours of a combination
of free, pay-per-view, and subscription programming and is available to almost 60 percent of the
households passed by Cox cable systems.177 Cable operators are using VOD to offer locally oriented
programming. Time Warner, for example, is offering local programming on about two-thirds of its
systems.178 Cablevision's VOD service provides more than 1,800 hours of programming and the
company recently announced the addition of first-run broadcast television series from NBC.179 Charter
VOD service is available to more than 65 percent of Charter's 2.8 million digital video customers
nationwide.180 Charter has been upgrading its VOD video servers to increase the speed of delivery of
VOD programming.181 Charter's VOD service offers more than 1,200 hours of programming.182
Mediacom's VOD service offers nearly 700 different VOD movies and programs each month.183
62.

Digital Video Recorders ("DVRs")

. The DVR service offered by cable operators allows
subscribers to select programs from a program guide and record these programs onto a hard drive that is
often built into the digital set-top box. Typically, DVR service can record two shows at the same time,
and subscribers can watch one recorded program while recording another.184 The newest digital set-top
boxes provide HDTV, VOD, and DVR capability in the same unit. DVR recorded programs can be
played back at any time. A DVR has more features than a VHS recorder, including the ability to pause,
and then restart, live television programming. NCTA states that every major cable operator offers DVR
service.185 In May 2006, 12 percent of households that subscribe to cable also subscribed to cable DVR
service.186


176 Id.
177 Cox Reply at 4.
178 NCTA Comments at 31. In a recent agreement with the North Carolina High School Athletic Association, Time
Warner made available, for free, all eight football championship games on its VOD service. Time Warner Inc.,
Time Warner Cable Reaches Agreement with the North Carolina High School Athletic Association to Televise High
School Sports Championship Games Live and On Demand
(press release), Nov. 7, 2006.
179 Cablevision Systems Corp., Popular NBC Broadcast Series Now Available to iO Customers On Demand (press
release), Sept. 28, 2006. Individual shows from Law & Order SVU, Law and Order CI, The Office, Friday Night
Lights
, and Las Vegas can be watched on Cablevision's VOD service on the day after they first appear on NBC at a
price of 95 cents for a 24-hour rental. Id.
180 Charter Communications Inc., Charter Offers Southeast Division Customers Expanded On-Demand Content
Through Broadbus Platform
(press release), Apr. 4, 2006.
181 Id.
182 NCTA Comments at 31.
183 See Mediacom Communications Corp., at http://www.mediacomcc.com/cable_ppv.html (visited Jan. 26, 2007).
184 See, e.g., Time Warner Cable, at http://www.timewarnercable.com/corporate/products/digitalcable/dvr.html
(visited Jan. 26, 2007).
185 NCTA Comments at 30.
186 NCTA, Competition Works, Consumers Win, at http://i.ncta.com/ncta_com/PDFs/ Consumers_Win_01.31.06.pdf
(visited Feb. 6, 2007).
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63.
Comcast's DVR service allows subscribers to record up to 80 hours of standard-
definition programming, and up to 15 hours of HDTV programming.187 Comcast is also working with
TiVo to include its DVR features in Comcast's set-top boxes. The companies have developed a software
application that will enable Comcast to deploy TiVo's DVR features to compatible set-top boxes without
an additional in-home visit by a technician.188 Cox also has signed an agreement with TiVo to develop
software that will enable Cox to deliver TiVo's DVR features to compatible set-top boxes without
replacing existing DVR boxes, and without an installation appointment.189 Time Warner also offers
"Start Over" service, which allows digital cable subscribers to restart certain programs being aired from
the beginning.190 The free Start Over service, which does not require a DVR, lets viewers pause and
rewind shows in progress but does not permit them to fast-forward through commercials or keep copies of
programs. Cablevision's DVR set-top boxes can record up to 100 hours of standard-definition
programming and up to 24 hours of HDTV programming.191 Charter also offers DVR service with
features similar to that of other cable operators.192 Mediacom's DVR set-top boxes can record up to 60
hours of standard digital programming or 15 hours of HDTV programming.193
64.

High-Speed Internet Service

. As of June 30, 2006, approximately 93 percent of
households passed by cable systems had access to cable high-speed Internet service, and 79 percent of
households passed by incumbent local telephone systems had access to DSL.194 Cable, DSL, wireline,
and wireless technologies provided high-speed Internet service to 50.2 million residential subscribers at
the end of 2005.195 Cable modems provided 55.2 percent of that total, DSL provided 40.1 percent, and
other wireline, fiber, and wireless technologies provided the remaining 4.7 percent.196 Cable's share has


187 Comcast Comments at 67.
188 Id. at 67-68. See also Comcast Corp., Comcast and TiVo Demonstrate Integrated DVR Services at CES (press
release), Jan. 8, 2007.
189 Cox Communications, Cox Communications and TiVo Announce Deployment Agreement: Cox to Deploy TiVo's
DVR and Advertising Software
(press release), Aug. 24, 2006.
190 NCTA Comments at 31. See also Time Warner Cable Plans to Triple Number of `Start Over' Markets, COMM.
DAILY, Jan. 30, 2007, at 7-8.
191 See Cablevision Systems Corp., at http://www.optimum.com/io/dvr/dvr.jsp (visited Jan. 26, 2007). Cablevision's
introduction of a remote DVR service that provides subscribers with full DVR functionality without the need for a
set-top box in their homes has been slowed by a recent court decision that requires Cablevision to obtain licenses
from the programmers it carries. See Twentieth Century Fox Film Corp. v. Cablevision Systems Corp., 478
F.Supp.2d 607, (S.D.N.Y., March 22, 2007).
192 See Charter Communications Inc., at http://www.charter.com/Visitors/Products.aspx?ProductItem=7 (visited Jan.
26, 2007).
193 See Mediacom Communications Corp., at http://www.mediacomcc.com/cable_dvr.html (visited Jan. 26, 2007).
194 FCC, High-Speed Services for Internet Access: Status as of June 30, 2006, Jan. 2007, at 3 and Table 14. 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 Feb. 1, 2007).
195 Id. at Table 3.
196 Id. at Chart 6. NCTA states that 58.9 percent of all high-speed Internet households use cable modems, while
38.3 percent use DSL. NCTA Comments at 39.
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declined from 61 percent at the end of June 2005, while DSL's has increased from 37.2 percent at the end
of June 2005.197 Kagan states that cable companies and telephone companies are competing for high-
speed Internet subscribers using faster speeds and promotional offers.198 According to Kagan, DSL has
been winning more new subscribers in recent months, relative to cable, due to aggressive pricing
discounts.199 Most cable operators provide high-speed Internet service with one proprietary Internet
Service Provider ("ISP") specifically created and owned by the cable operator.200 Although subscribers to
cable systems may use another ISP (e.g., AOL, Earthlink, or NetZero), they often must pay both for the
proprietary service and again for the other ISP. Time Warner and Comcast, however, appear to offer
Earthlink broadband online service without requiring subscribers to pay twice.201 AOL's new free service
offers all cable high-speed Internet subscribers the option of using AOL as their ISP without requiring
subscribers to pay for more than the price of their cable high-speed Internet service.202
65.
As shown in Table 10 below, as of June 2006, the high-speed Internet penetration rate203
of five large cable operators is between 18 percent and 42 percent.204


197 FCC, High-Speed Services for Internet Access: Status as of June 30, 2005, April 2006, Chart 6.
198 Cable Databook at 63.
199 Id.
200 For example, Comcast offers the service under the "Comcast High-Speed Internet" brand name; Cox offers the
service under the "Cox High Speed Internet" brand name; Time Warner Cable offers subscribers its high-speed
Internet service under its "Road Runner High-Speed Online" brand name; Cablevision offers high-speed Internet
service under the brand "Optimum Online"; Charter offers the service under the "Charter High-Speed Internet"
brand name; and Mediacom offers the service under the "Mediacom Online" brand name.
201 See Earthlink, at http://www.earthlink.net/highspeed/pricing/?id=cable (visited Jan. 29, 2007). See also
Earthlink, Earthlink and Time Warner Cable Reach Agreement to Continue to Offer Earthlink Broadband Service to
Time Warner Cable Customers
(press release), July 5, 2006. The FTC Consent Decree in the AOL/Time Warner
transaction, which has since expired, required Time Warner Cable to carry at least three unaffiliated ISPs before
offering AOL to its subscribers. See Federal Trade Commission, FTC Approves AOL/Time Warner Merger with
Conditions
(press release), Dec. 14, 2000, at http://www.ftc.gov/opa/2000/12/aol.htm (visited Mar. 28, 2007).
202 See AOL, at http://free.aol.com/thenewaol/plan_choice.adp (visited Jan. 29, 2007).
203 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 households 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 household passed by a cable system. Cablevision, however,
has completed its system upgrade and makes high-speed Internet service available to all households 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 households passed by its cable system.
Mediacom also reports its penetration rate in terms of the number of households passed by its cable system.
204 Cox reports more than 3.2 million subscribers to its high-speed Internet service. Cox Reply at 6.
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Table 10: High-Speed Internet Subscriptions

Subscribers Subscribers

Penetration Rate

Dec. 31, 2005

June 30, 2006

June 30, 2006

(millions)
(millions)
Comcast205
8.5
9.3
22%
Time Warner206
4.8
5.4
27%
Cablevision207
1.7
1.9
42%
Charter208
2.2
2.4
21%
Mediacom209
0.5
0.5
18%
66.
The standard downstream speed for most cable high-speed Internet service is 6 Mbps.210
Some cable operators offer additional high-speed Internet tiers with faster speeds for higher prices and
lower speeds for lower prices.211 Cable operators also offer a variety of features with their high-speed
Internet services, including storage capacity; multiple e-mail accounts; integrated security suites with
anti-virus, anti-spyware, and firewall protection; pop-up blocking and spam filtering; specialized content;
and home networking. Comcast offers 6 Mbps downstream and 384 Kbps upstream for $42.95 per month
and 8 Mbps downstream and 768 Kbps upstream for $52.95 per month.212 Comcast also provides a
service called PowerBoost, which doubles the speed of a subscriber's broadband connection when


205 Comcast Corp., Comcast Reports Second Quarter 2006 Results (press release), July 27, 2006; Comcast Corp.,
Comcast Reports Fourth Quarter and Year End 2005 Results (press release), Feb. 2, 2006.
206 Time Warner Inc., Time Warner Inc. Reports Second Quarter 2006 Results (press release), Aug. 2, 2006; Time
Warner Inc., SEC Form 10-K/A (Amended Annual Report), filed Sept. 13, 2006 for the period ending Dec. 31, 2005,
at 24.
207 Cablevision Systems Corp., Cablevision Systems Corporation Reports Second Quarter 2006 Results and Files
Restated Financial Statements for Prior Periods
(press release), Sept. 21, 2006; Cablevision Systems Corp.,
Cablevision Systems Corporation Reports Fourth Quarter and Full Year 2005 Results (press release), Feb. 27, 2006.
208 Charter Communications Inc., Charter Reports Second Quarter 2006 Financial and Operating Results (press
release), Aug. 8, 2006; Charter Communications Inc., Charter Reports Fourth Quarter and Full-Year 2005
Financial and Operating Results
(press release), Feb. 28, 2006.
209 Mediacom Communications Corp., Mediacom Communications Reports Results for Second Quarter 2006 (press
release), Aug. 9, 2006; Mediacom Communications Corp., Mediacom Communications Reports Results for Fourth
Quarter and Full Year 2005
(press release), Feb. 23, 2006.
210 NCTA Comments at 42.
211 Id. at 43.
212 See Comcast, Corp., at http://media.corporate-ir.net/media_files/irol/14/147565/Hi_Speed.pdf (visited Jan. 29,
2007).
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downloading a large file (e.g., a movie or video file).213 Cox recently announced speed increases in the
majority of its markets.214 Specifically, it has increased speeds to 7 Mbps downstream and 512 Kbps
upstream for $41.99 per month and 10-15 Mbps downstream and 1 Mbps upstream for $56.99 per
month.215 Cox also provides the PowerBoost service without additional cost to its high-speed Internet
subscribers.216 Time Warner's "Road Runner" high-speed Internet service provides 5 Mbps downstream
at rates starting at $39.95 per month.217 In 2006, Cablevision increased the speed of its Internet service to
up to 15 Mbps downstream and 2 Mbps upstream.218 Cablevision also offers "Optimum Online Boost,"
which increases downstream speeds of up to 30 Mbps and upstream speeds of 5 Mbps for an additional
$14.95 per month.219 In addition, Cablevision offers a special order high-speed Internet service,
"Optimum Online Ultra," which offers 50 Mbps both downstream and upstream for about $200 per
month.220 In 2006, Charter's high-speed Internet service increased speeds to 10 Mbps downstream and 1
Mbps upstream.221 Charter also offers 3 Mbps and 5 Mbps tiers of high-speed Internet service.222
Mediacom offers 10 Mbps for $59.95 per month and 5 Mbps for $45.95 per month.223
67.

Telephony Offered by Cable Operators

. Cable companies are offering facilities-based


213 Comcast Comments at 69. See also Comcast Corporation, Comcast Boosts Customers Broadband Speeds with
New Network Technology
(press release), June 1, 2006.
214 Cox Communications, Cox High Speed Internet Customers Enjoying Dramatically Faster Speeds and
Enhancements
(press release), Oct. 11, 2006.
215 Id. See also Cox Communications, at http://www.cox.com/fairfax/highspeedinternet/rates.asp (visited Jan. 29,
2007).
216 Cox Communications, Cox High Speed Internet Customers Enjoying Dramatically Faster Speeds and
Enhancements
(press release), Oct. 11, 2006.
217 Time Warner Cable, Road Runner Celebrates Its Ten Year Anniversary (press release), Sept. 18, 2006. See also
Time Warner Cable, at http://www.timewarnercable.com/corporate/products/highspeedinternet/roadrunner.html
(visited Jan. 30, 2007).
218 Cablevision Systems Corp., Cablevision's Optimum Online Surpasses 2 Million Customers (press release), Dec.
14, 2006; Cablevision Systems Corp., Optimum Online Completes Significant Value-Added Speed Increase for All
Customers
(press release), June 21, 2006. See also Cablevision Systems Corp., Cablevision Posts '07 Prices
(Cablevision -- message board), Nov. 17, 2006, at http://www.lightreading.com/document.asp?doc_id=110950&site
=cdn (visited Jan. 30, 2007). In last year's Report we stated that Cablevision charged $44.95 per month for its high-
speed Internet service. 2005 Report, 21 FCC Rcd 2535 65.
219 Cablevision Systems Corp., Cablevision's Optimum Online Surpasses 2 Million Customers (press release), Dec.
14, 2006.
220 Id.
221 Charter Communications Inc., Charter Rolls Out Enhanced High-Speed Internet Service; Faster 10 Mbps
Download Speed and Advanced Security Suite Improve the Internet Experience for Customers
(press release), Sept.
21, 2006.
222 Id.
223 See Mediacom Communications Corp., at http://www.mediacomcc/internet_max.html and at
http://www.mediacomcc/internet_online.html (visited Jan. 30, 2007).
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local telephone service using circuit-switched technology and voice-over-Internet protocol ("VoIP")
technology.224 Kagan estimated that, at the end of 2005, 5.7 million cable subscribers purchased cable
telephony service and projected that by the end of 2006, cable companies would provide local phone
service to 8 percent of all U.S. households.225 NCTA states that cable telephony service is currently
available to 73 percent of households and that 8.5 million households subscribe to the service.226
68.
Comcast's telephone service is currently available to approximately 80 percent of the
households passed by its cable systems, and 2.1 million households subscribe to the service.227 Cox
provides telephone service in all of its cable systems, using both circuit-switched and VoIP technologies
and currently has more than 2 million residential telephone subscribers.228 Cox states that its telephone
service is a full life-line service and the network architecture does not require an Internet connection.229
Time Warner has deployed digital phone service in each of its 31 divisions using VoIP technology and
has 1.6 million digital telephone subscribers.230 Cablevision VoIP telephone service has over 1 million
subscribers. 231 More than half of its high-speed Internet subscribers also subscribe to Cablevision's VoIP
telephone service.232 As part of its telephone service, Cablevision offers an international calling plan that
allows subscribers to call anywhere in the world for $19.95 per month.233 Charter offers VoIP telephone
service to 3.9 million households and plans to offer VoIP telephone service to between 6 million and 8
million households by the end of 2006.234 Charter's VoIP telephone service has over 191,000 subscribers.


224 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.
225 Cable Databook at 11 and 63.
226 NCTA Comments at 45.
227 Comcast Comments at 71-72.
228 Cox Reply at 5.
229 Id.
230 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. Time Warner Cable, Time Warner Cable Digital Phone Service Can
Support Monitoring of ADT Security Systems
(press release), Oct. 30, 2006.
231 Cablevision Systems Corp., Cablevision's Optimum Voice Surpasses One Million Customers (press release), July
18, 2006.
232 Id.
233 Id.
234 Charter Communications Inc., Charter Ramps Up Telephone Launches: Add 1 Million Homes Passed in Seven
New Markets; Now Serves 191,000 Phone Customers
(press release), Apr. 17, 2006.
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Charter also offers an unlimited calling plan to anywhere in Mexico for $59.99 per month.235
69.
Some cable companies have added mobile phone service to their telephony offerings. In
November 2005, Comcast, Time Warner, Cox, and Advanced/Newhouse formed a joint venture with
Sprint/Nextel to provide wireless telephone service.236 In the fall of 2006, these same cable companies
and Sprint/Nextel formed a joint venture named SpectrumCo and acquired wireless spectrum licenses that
provide a nationwide footprint.237 Comcast recently introduced wireless telephone service through its
partnership with Sprint Nextel in Boston, Massachusetts, and Portland, Oregon.238
70.

Bundling

. Cable companies are combining video, high-speed Internet, and telephone
services into bundles of two or three products and offering them at discounted introductory prices and/or
savings on long-term prices, when compared with the price of buying each service separately. For
example, some cable companies are offering a three-product bundle of video, high-speed Internet, and
telephone service for $99 per month.239 Cox claims that subscribers to its bundle of all three services can
save up to 11 percent off the price of buying each service separately.240 For subscribers with one service,
cable companies often offer discounted introductory prices to encourage purchase of a second service.
For example, Cox basic cable video subscribers can purchase digital cable service, high-speed Internet
service, or telephone service at a discounted price for the first three months.241 Cox maintains that
bundling multiple services has increased the number of new subscribers and reduced the loss of existing
subscribers.242 Comcast credits its telephone service as driving its success in selling the triple bundle of
video, high-speed Internet, and voice service.243 Since the launch of digital telephone service, Comcast
states that all of the company's digital services have experienced increased penetration rates.244
71.
Cable companies also are combining video, high-speed Internet, and telephone services
to attract business subscribers. For example, Charter offers the "Charter Business Bundle," which


235 Charter Communications Inc., Charter Telephone Introduces Unlimited Calling to Mexico For Customers in
Southern California
(press release), July 12, 2006.
236 Time Warner Cable, Cable Consortium Acquires Spectrum Licenses Covering National Footprint (press release),
Oct. 5, 2006.
237 Id. See also Comcast Comments at 72-73.
238 Comcast Comments at 72.
239 Comcast Comments at 71; Cox Reply Comments at 1-2; and Cable Databook at 63. See also Cox
Communications, at http://www.cox.com/fairfax/ bundle.asp (visited Jan. 31, 2007).
240 See Cox Communications, at http://www.cox.com/fairfax/bundle.asp (visited Jan. 31, 2007).
241 See Cox Communications, at http://www.cox.com/fairfax/promotions/default.asp (visited Jan. 31, 2007).
242 Cox Communications, A Decade of Bundling Delivers Cox Communications Considerable Competitive
Advantages
(press release), Jan. 30, 2007.
243 Cablevision Systems Corp., Cablevision's Optimum Voice Surpasses One Million Customers (press release), July
18, 2006.
244 Id.
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includes "Charter Business Video" and Charter Business Internet Plus," for $99.99 per month.245
Cablevision offers a bundle of high-speed Internet and telephone service called "Optimum Double Play,"
which it claims can save businesses up to 60 percent compared to AT&T and Verizon.246 Cox states that
the greater availability of telephone service to business has resulted in a 28 percent increase in business
subscribers in the past year.247
72.

Mid-sized and Smaller Cable Operators

. The FCC Form 325 collects data from a
random sample of cable systems with between 5,000 and 20,000 subscribers and a random sample of
cable systems with fewer than 5,000 subscribers. Findings from 2005 Form 325 data show that, for
systems with between 5,000 and 20,000 subscribers, 96 percent offer digital cable service, 96 percent
offer high-speed Internet service, 25 percent offer telephone service, and 74 percent have capacities of
750 MHz or greater. For systems with 5,000 or fewer subscribers, 43 percent offer digital cable service,
34 percent offer high-speed Internet service, 5 percent offer telephone services, and 22 percent have cable
plants with capacities of 750 MHz or greater.248
73.
Last year, we examined six mid-sized and smaller cable operators to identify the
advanced services they provided.249 This year, we examine five other cable operators and identify their
offered advanced services.250 All provide digital video service, but not all offer VOD, HDTV, and DVR
service. All provide high-speed Internet service, and most provide telephone service. Mid-Hudson Cable
serves Catskill, New York, and offers a full range of advanced services that include digital video, HDTV,
VOD, DVR, high-speed Internet service, and digital telephone service.251 Northland Cable Television
operates smaller market cable systems in Georgia, South Carolina, North Carolina, Mississippi, Alabama,
Texas, Washington, California, and Idaho.252 Northland offers digital video service, high-speed Internet
service, and digital telephone service, but does not appear to offer HDTV, VOD, or DVR service.253
Cebridge Connections provides cable service to more than 1.3 million subscribers in 15 states and offers
digital video service, HDTV, DVR, high-speed Internet service, and telephone service, but does not
appear to offer VOD.254 Like Cebridge, GCI, which operates cable systems in Alaska, offers digital video


245 Charter Communications Inc., Charter Business Introduces the Charter Business Bundle (press release), June 1,
2006.
246 See Cablevision Systems Corp., at http://www.optimum.com/business/ool/dp.jsp (visited Jan. 31, 2007).
247 Cox Communications, Business Customers Fuel Cox's Strong Third Quarter (press release), Nov. 6, 2006.
248 2005 FCC Form 325 data.
249 2005 Report, 21 FCC Rcd at 2537-38 68-69.
250 The five mid-sized and smaller cable companies include Mid-Hudson Cable, Northland Cable Television,
Cebridge Connections, CableAmerica, and GCI.
251 See Mid-Hudson Cable, at http://www2.mhcable.com/index.html (visited Apr. 20, 2007).
252 See Northland Cable Television, at http://www.northlandcabletv.com/ (visited Apr. 20, 2007).
253 See Northland Cable Television, at http://www.northlandcabletv.com/products/cable/default.asp?area=&office=
(visited Apr. 20, 2007).
254 See Cebridge Connections, at https://www.cebridge.net/cebridge/ctl?vo=pager&page=about_us/about_us.vm
(visited Apr. 20, 2007).
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service, HDTV, DVR, high-speed Internet service, and digital telephone service, but does not appear to
offer VOD.255 CableAmerica serves 50,000 subscribers in Arizona, California, Michigan, and
Missouri.256 CableAmerica offers digital video service, HDTV, VOD, DVR, and high-speed Internet
service, but does not appear to offer VOD or telephone service.257

B.

Direct-to-Home Satellite Service

1.

Direct Broadcast Satellite

74.
DBS service is provided via satellite to small parabolic "dish" antennas located at the
individual residences of consumers or at business or educational organizations.258 There are three
licensed U.S. DBS operators: DIRECTV, EchoStar (marketed as the "DISH Network"), and Dominion
Video Satellite, Inc. (marketed as "Sky Angel").259
75.

Subscribership.

As of June 2006, approximately 27.97 million U.S. households
subscribed to DBS service. This represents an increase of 7.1 percent over the 26.12 million DBS


255 See GCI, at http://www.gci.com/ (visited Apr. 20, 2007).
256 See CableAmerica, at http://www.cableamerica.com/corp.hist.html (visited Apr. 20, 2007).
257 See CableAmerica, at http://www.cableamerica.com/ (visited Apr. 20, 2007).
258 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 are already
beginning to use this frequency band to provide direct-to-home video services to subscribers.
259 DBS services operate in the 12.2-12.7 GHz frequency band. See 47 C.F.R. 25.201 and 25.202(a)(7).
DIRECTV is authorized to provide DBS service using 11 channels at the 119 W.L. orbital location, three channels
at the 110 W.L. orbital location, and 32 channels at the 101 W.L. orbital location. EchoStar, through its affiliates,
is authorized to provide DBS service using 21 channels at the 119 W.L. orbital location and 29 channels at the 110
W.L. orbital location. Combined, these two Commission-licensed DBS providers operate from all three full-
CONUS orbital locations using all 96 channels assigned to these locations for DBS service. There currently are two
or more operational DBS satellites at each of the three full-CONUS locations that, in combined operation, use all 32
channels at each station. See Amendment of the Commission's Policies and Rules for Processing Applications in the
Direct Broadcast Satellite Service
, 21 FCC Rcd 9443 (2006) ("DBS NPRM"). Dominion holds licenses for eight
channels at the 61.5 W.L. orbital position. The Commission has authorized EchoStar and Dominion Video, Inc.
("Dominion") to provide service from the 32 channels at the 61.5 W.L. orbital location serving the eastern United
States. EchoStar is assigned 22 channels at the location, and operates pursuant to special temporary authority on an
additional two channels. The eight Dominion channels are operated by EchoStar and Dominion, through a
commercial arrangement, over the EchoStar-3 satellite. EchoStar is authorized to provide service from the 32
channels at the 148 W.L. orbital location, serving the western United States. It is operating two satellites at that
location on all 32 channels. DBS NPRM, 21 FCC Rcd at 9540 14. Both DIRECTV and EchoStar lease additional
capacity on FSS and BSS satellites. Additionally, GlobeCast WorldTV, a subsidiary of France Telecom, delivers a
DTH subscription package of foreign channels directly to U.S. customers on the FSS Intelsat 5 satellite.
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subscribers we reported last year.260 DBS accounts for approximately 29.2 percent of all U.S. MVPD
subscribers.261
76.
DIRECTV is the largest DBS provider and second largest MVPD.262 It served 15.51
million subscribers as of June 2006, an increase of 843,000, or 5.7 percent, from the 14.67 million
subscribers it had as of June 2005.263 This compares with growth of 12.5 percent reported in the previous
year. As of June 2006, EchoStar was the second largest DBS provider and third largest MVPD, with
approximately 12.46 million subscribers as of June 30, 2006, an increase of approximately 1 million, or
almost 9 percent, over the 11.45 million subscribers it had a year earlier.264 In 2005, EchoStar reported
growth of 13 percent. Dominion Video Satellite's Sky Angel service serves fewer than 500,000
subscribers.265
77.

Financial Information.

Analysts attribute DBS's continued growth to higher than
expected new subscribership, lower churn than expected for existing subscribers, and higher revenue
yields per customer.266 For the two major providers, reported average revenue per user ("ARPU")267 grew
and customer turnover remained relatively constant or increased slightly. For DIRECTV, ARPU was
$70.73 for the six months ended June 2006, compared with $66.91 at mid-year 2005.268 For EchoStar,
ARPU rose to $62.71 in mid-year 2006 from $58.46 in mid-year 2005.269 EchoStar's turnover rate rose
slightly from 1.69 percent in mid-year 2005 to 1.70 percent in mid-year 2006,270 while DIRECTV's fell
from 1.69 percent in mid-year 2005 to 1.59 percent in mid-year 2006.271


260 See 2005 Report, 20 FCC Rcd at 2792 54.
261 See Appendix B, Table B-1.
262 See Appendix B, Table B-3.
263 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, 2006
("DIRECTV 10-Q"), at 19.
264 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, 2006
("EchoStar 10-Q"), at 28. See also Appendix
B, Table B-3.
265 Sky Angel's subscribership was provided in an e-mail from Nancy Christopher, Vice President, Corporate
Communications, Dominion Video Satellite, Inc., March 26, 2007.
266 DIRECTV 4Q Reaction, SKYREPORT, Feb. 12, 2007 at 1 and SKYREPORT, Subscription Media Flourishes,
Bright Future
, Jan. 11, 2007, at 1. Last year, we reported that analysts attributed DBS growth to increased
availability of local broadcast stations; service enhancements, including multiple room viewing solutions and
HDTV; and the ability to co-market DSL service. 2005 Report, 20 FCC Rcd at 2792 72.
267 ARPU is the revenue generated by an individual customer per month and is calculated by dividing revenues by
the average number of subscribers during the period.
268 DIRECTV 10-Q, at 19.
269 EchoStar 10-Q, at 28.
270 EchoStar 10-Q, at 28.
271 DIRECTV 10-Q, at 19.
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78.

Programming Services and Pricing

. DIRECTV and EchoStar offer numerous
programming packages. DIRECTV offers five English language and six Spanish language packages.272
EchoStar offers seven English language and four Spanish language program packages.273 EchoStar and
DIRECTV also offer packages to subscribers in Hawaii and Alaska; DIRECTV and EchoStar offer local
stations as well, but Sky Angel service is not available in Hawaii or Alaska because its service comes
from a satellite located at 61.5 that cannot reach those states.274 Both major DBS providers announced
price increases to take effect in 2007. In December 2006, EchoStar raised prices averaging 4 percent
across all programming packages, a smaller price increase than the 6.5 percent average increase reported
by EchoStar last year, with HDTV rates shifting to a flat $20 per month added to programming
packages.275 In January 2006, DIRECTV announced price increases that averaged 7 percent across all
tiers, raising prices for new lower-tier subscribers nearly 10 percent, but holding prices steady for existing
higher-tier subscribers.276
79.
DBS providers continued to expand their HD offerings in 2006. DIRECTV's Plus HD
Package includes ESPN HD, ESPN2 HD, TNT HD, Discovery HD Theater, Universal HD, HD Net, HD
Net Movies for $9.99 per month.277 DIRECTV delivers the national HD broadcast feed of ABC, CBS,
Fox, NBC, CW and MyNetworkTV in select markets.278 As of November 2006, DIRECTV had launched


272 DIRECTV's family package, which includes more than 40 channels of nonbroadcast programming and local
broadcast stations and two XM Radio audio channels, costs $29.99 per month; Choice Extra, which includes more
than 185 channels of nonbroadcast programming and local broadcast stations and 68 XM Radio audio channels,
costs $54.99 per month; Plus, which augments the Choice Extra services with a digital video recorder service, costs
$59.00 per month; Plus HD, which adds 8 network and local high-definition channels to Choice Extra services,
costs $69.99 per month; and Premier, which includes more than 250 channels of nonbroadcast and premier
programming and local broadcast stations and 68 XM Radio audio channels, plus DVR services and HD channels,
costs $99.99 per month. Where local channels are not available, DIRECTV deducts $3.00 per month from the price
of the package. Programming information available at http://www.directv.com/DTVAPP/global/secondaryIndex.jsp
?assetId=1300025 (visited Feb. 8, 2007).
273 EchoStar's Dish Family, which includes more than 40 channels of nonbroadcast programming, costs $19.99 per
month; Americas's Top 100, which includes more than 100 channels of nonbroadcast programming, costs $29.99
per month; America's Top 100 Plus, which adds local sports programming where available, costs $39.99 per
month; America's Top 200, which includes an additional 100 nonbroadcast programs to the America's Top 100 and
more than 30 audio channels, costs $42.99 per month; America's Top 250, which adds NBA TV and additional
audio channels, costs $52.99 per month; and America's Everything Pack, which adds 31 premium channels, costs
$89.99 per month. Programming information available at http://www.dishnetwork.com/content/whats_on_dish/
programming_packages/index.shtml (visited Feb. 8, 2009).
274 DBS providers are required, if technically feasible, to serve the entire United States, including Alaska and
Hawaii. 47 CFR 25.148(c). See Section III.C.3., infra, at 257.
275 Small Price Increase at DISH, Big Jump in HDTV Costs, SKYREPORT, Jan. 3, 2007.
276 DIRECTV Unveils 2007 Price Increases, SKYREPORT, Jan. 19, 2007. See also Linda Moss, DIRECTV Sets
New Prices, Packages
, MULTICHANNEL NEWS, Jan. 22, 2007.
277 See The DIRECTV Group, Inc., HD Programming, at http://www.directv.com/DTVAPP/packProg/channelChart
2.jsp?assetId=1100084 (visited Feb. 12, 2007).
278 See The DIRECTV Group, Inc., Local Channels in HD, at http://www.directv.com/DTVAPP/packProg/channel
Chart2.jsp?assetId=1100086 (visited Feb. 12, 2007).
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HD local broadcast stations in 49 select markets.279 DIRECTV announced plans to expand to 100 non-
broadcast HD channels by the end of 2007, capitalizing on expanded satellite capacity from the expected
launch of two new satellites in 2007.280 The new offerings would deliver more than 1,500 local HD
broadcast and 150 national non-broadcast HD channels.
80.
In last year's report, we noted that Cablevision had sold its Rainbow 1 DBS satellite to
EchoStar.281 As a result of this transaction, EchoStar began offering VOOM's HD programming services,
carrying 15 channels, in January 2006.282 EchoStar currently offers 31 HD channels, as part of its
DishHD programming package, which costs $20 and is offered as an add-on to the base programming
package.283 EchoStar also offers an HD receiver and an HD DVR,284 and has packages offering a flat
panel LCD television with its HD set-top boxes to offer an all-in-one equipment and service package.285
EchoStar offers HD local channels in 30 markets.286
81.

Equipment Pricing.

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.287 With respect to equipment, DIRECTV and EchoStar offer a


279 See DIRECTV Lights Up HD Locals in Detroit, Satellite Business News FAXUPDATE, 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.
280 DIRECTV, Inc., DIRECTV to Offer 100 National HD Channels in 2007 (press release), Jan. 8, 2007.
281 2005 Report, 21 FCC Rcd at 2539 71.
282 EchoStar Communications Corp., DISH Network Launches Nation's Largest HD Package - DishHD, Featuring
Local HD Channels and New VOOM HD Channels
(press release), Jan. 6, 2006.
283 EchoStar Communications Corp., Dish Network Expands High Definition Programming Lineup to 31 Channels
(press release), Feb. 1, 2007. New DISH Network customers can also subscribe to the DishDVR Advantage
package, an all-inclusive TV package including over 200 channels, local channels where available, a DVR serving
two TVs and free installation for $49.99 per month. Id.
284 EchoStar's DishNetwork MPEG-4 ViP211 receiver supports standard or high definition programming on one
television, and retails for an estimated $240.00, The DishNetwork MPEG-4 ViP622 DVR dual-output tuner retails
for around $700.00 and supports up to two televisions, one HDTV and one standard. It can record up to 200 hours
of standard-definition programming, up to 30 hours of high-definition programming, or a combination of the two.
285 Craig Moffett, Tom Wolzien, View from the Back Office, Bernstein Research, Jan. 7, 2005. In addition,
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.
286 EchoStar Communications Corp., DISH Network Offers Free High Definition DVR (press release), Jan. 8, 2007.
EchoStar Comments at 21.
287 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, 2006, EchoStar's
SAC was $683 per subscriber, down 1.3 percent from $692 in mid-year 2005. See EchoStar 10-Q. As of June 30,
(continued....)
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wide range of set-top box receivers. In March 2006, DIRECTV began a lease program for standard and
HD set-top and DVR receivers available to new and existing customers.288
82.
EchoStar and DIRECTV also continue to develop their DVR services.289 In December
2005, DIRECTV began offering a new DVR which allows customers to automatically record an entire
season of the viewer's favorite shows and tracks changes to the programming schedules. The DVR also
allows viewers to record all pay-per-view movies and only pay for those shows actually viewed.
Moreover, the DVR allows viewers to mark their favorite scenes in a recorded program and jump back to
them at any time while viewing the program.290 EchoStar continued to offer new DVR options for DISH
Network customers, including offering customers the opportunity to bundle programming with a DVR
option included for a flat rate.291 In February 2007, EchoStar began offering new DISH Network
customers an HD DVR option.292
83.
Both EchoStar and DIRECTV offered interactive-capable receivers, permitting them to
offer their customers a variety of interactive applications. For example, DIRECTV previewed its
interactive applications with an interactive advertising campaign, followed by interactive content for
football and baseball viewers, and plans for a subscription-based Game Lounge gaming platform
available for a monthly subscription of $5.95 or for $1.95 on a pay-per-day basis.293 EchoStar offers 40
different virtual and enhanced channels and reports interactive television set-top boxes in 12 million
households. The company plans to expand its interactive offerings to include auto racing and cricket
coverage.294
84.

Availability of Local Broadcast Stations.

In approximately 175 of 210 television
markets (i.e., designated market areas, or DMAs), which represent 97 percent of all U.S. television
households, at least one DBS provider offers the signals of local broadcast stations ("local-into-local"
(Continued from previous page)


2006, DIRECTV's SAC was $422.10 per subscriber, down 34 percent from $646 in mid-year 2005. See DIRECTV
10-Q.
288 Linda Moss, DIRECTV Opts For a Leasing Model, MULTICHANNEL NEWS, Jan. 23, 2006.
289 See 2005 Report, 21 FCC Rcd at 2547-8 86.
290 DIRECTV, Inc., DIRECTV's Most Advanced DVR Now Available at Retailers Nationwide; New DIRECTV Plus
DVR Offers Innovative Features to Help Simplify the Lives of Consumers
(press release), Dec. 1, 2005.
291 EchoStar Communications Corp., DISH Network(TM) Launches DishDVR Advantage Package (press release),
Jan. 8, 2007. On May 2001, the U.S. Patent and Trademark Office issued TiVo a patent on the time warp
technology for DVRs that allows viewers to pause, rewind and fast-forward live television shows. On April 13 2006
a jury in United States District Court in the Eastern District of Texas concluded that EchoStar violated TiVo's DVR
technology patent and, therefore, awarded TiVo $74 million in damages. Subsequently, the United States Court of
Appeals granted EchoStar's request to lift TiVo's injunction effectively preventing EchoStar customers' DVR usage.
The case remains pending.
292 EchoStar Communications Corp., DISH Network Offers Free High Definition DVR (press release), Jan. 8, 2007.
293 DIRECTV, Inc., DIRECTV and Dodge Launch 2007 Caliber Interactive Advertising Campaign; Four New
Interactive Ads Make it Easy for DIRECTV Customers to Experience the All-New Dodge Caliber Without Having to
Leave Their Couch
(press release), May 5, 2006; YES Interactive only on DIRECTV'' Launches as First-Ever
Interactive Content for Major League Baseball Telecasts
(press release), July 25, 2006; and DIRECTV Redefines
Casual Gaming with Launch of Game Lounge and Exclusive Mattel Agreement
(press release), Feb. 13, 2007.
294 EchoStar Communications Corp., DISH Network(TM) Expands Interactive TV Offerings (press release), Jan. 8,
2007.
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service).295 EchoStar offers local-into-local service in more than 174 cities, and charges $5.99 per month
for inclusion of local broadcast stations in each service plan.296 DIRECTV offers local broadcast stations
in 143 markets across the country and provides local programming in HD in 42 cities.297
85.

Regulatory Issues

. DBS systems in the United States currently operate in the 12.2-12.7
GHz band from satellites in orbital locations that are spaced nine degrees apart. The Commission
recently initiated two rulemaking proceedings in which the Commission proposes to make additional
spectrum available for a new generation of broadband, video, audio, data, multimedia, high definition,
and other services.
86.
First, by international agreement, a new allocation of spectrum for satellite services in the
United States in the 17/24 GHz bands will become effective in April 2007. In June 2006, the
Commission initiated a rulemaking proceeding to consider service rules for this new spectrum, including
the appropriate method for processing applications, access to the U.S. market from non-U.S. licensed
satellites, orbital spacing, and other technical requirements.298
87.
The Commission also began a rulemaking proceeding seeking comment on revisions to
the licensing procedures and technical rules governing DBS service, including "tweener" applications.299
"Tweener" locations refer to orbital positions that would be located between locations originally
designated in the ITU Region 2 Band Broadcast Satellite Service Plan.300 Under this plan, the United


295 See https://customersupport.dishnetwork.com/netqualweb/localmarkets.pdf;
http://directv.com/DTV/global/contentPage.jsp?assetId=1000013; http://nielsenmedia.com/nc/portal/site/Public/.
296 EchoStar Comments at 21. The price for standard definition local channels is $5.99 in markets in which all four
of the major networks are offered; $4.99 where three of the four are offered; and, $3.99 where only two of the four
are offered. See also EchoStar, https://customersupport.dishnetwork.com/customernetqual/prepAddress.do (visited
Feb. 8, 2007).
297 The DIRECTV Group, Inc., Local Channel Markets, at http://directv.com/DTVAPP/
global/contentPage.jsp?assetID=1000013. Where local channels are not available, DIRECTV deducts $3.00 per
month from the price of the package. See DIRECTV http://www.directv.com/DTVAPP/
packProg/localChannels.jsp?assetId=900018 and http://phx.corporate-ir.net/phoenix.zhtml?c=127160&p=irol-
newsArticle&ID=910053&highlight= (visited Feb. 8, 2007).
298 Establishment of Policies and Service Rules for the Broadcasting Satellite Service at the 17.3-17.7 GHz
Frequency Band and at the 17.7-17.8 GHz Frequency Band Internationally, and at the 24.75-25.25 GHz Frequency
Band for Fixed Satellite Services Providing Feeder Links to the Broadcasting-Satellite Service and for the
Broadcasting Satellite Service Operating Bidirectionally in the 17.3-17.7 GHz Frequency Band
, 21 FCC Rcd 7426
(2006) ("Broadcasting Satellite Service NPRM").
299 See Amendment of the Commission's Policies and Rules for Processing Applications in the Direct Broadcast
Satellite Service,
21 FCC Rcd 9443 (2006).
300 In the early 1980s, ITU members reached agreement on assigning BSS spectrum at specific orbit locations
among the ITU's Region 2 member countries. (ITU Region 2 includes North, Central, and South America, and
Greenland). See Article 5, Section 1 of the ITU Radio Regulations. The eight U.S. orbital positions, proceeding
from east to west (all West Longitude), are 61.5, 101, 119, 148, 157, 166, and 175. Each of the eight orbital
locations is capable of providing 32 analog channels, each using 24 megahertz of bandwidth. The nine-degree
orbital spacing in the DBS service enables subscribers to use earth station antennas that are smaller than those
generally employed for C and Ku-band services.
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States was assigned eight DBS orbital locations, spaced at intervals of at least nine degrees. Tweener
locations are those other than those in the original Region 2 Plan and also are known as "reduced spacing
or non-nine-degree-spaced" locations. Tweener locations are selected by applicants to provide coverage
using the smaller-sized satellite dishes that consumers have come to expect, while attempting to minimize
interference from adjacent in-orbit satellites.301 If adopted, the revised rules would permit satellite
carriers to launch additional satellites to increase their capacity, which could allow them to increase their
video offerings.
88.
At the end of 2004, the Satellite Home Viewer Extension and Reauthorization Act of
2004 ("SHVERA") was enacted. SHVERA addresses a variety of issues related to the carriage of
broadcast television signals on DBS systems.302 Among its provisions, SHVERA extended satellite
carriers' compulsory copyright license to carry distant signals through the end of 2009.303 Generally, a
DBS operator must terminate distant signal service to any subscriber that elected to receive local-into-
local service and is precluded from providing distant network signals to new subscribers in markets where
local-into-local service is available.304 The statute also permits satellite carriers to deliver the digital
signal of a distant network station to consumers in unserved digital households or to subscribers who have
a waiver from the local television station affiliated with the same network.
89.
In 2006, a district court in Florida issued a nationwide permanent injunction barring
EchoStar from providing any distant network programming pursuant to the statutory copyright license.305
After a failed attempt to reach a settlement with all of the networks involved, EchoStar began shutting off
distant network subscribers in compliance with the District Court's order to do so by December 1, 2006.
In the same timeframe, National Programming Service ("NPS") began offering its All America Direct
distant network service to EchoStar subscribers using satellite transponder capacity leased from Echo
Star. The District Court rejected a broadcaster challenge to the NPS offering; that order is on appeal as of


301 In November 2006, the International Bureau of the Commission issued two conditional authorizations for
Tweener locations. EchoStar Satellite L.L.C., Application to Construct, Launch, and Operate a Direct Broadcast
Satellite at the 86.5 W.L. Orbital Location, Order and Authorization, DA 06-2440
(rel. Nov. 29, 2006); Spectrum
Five, L.L.C., Petition for Declaratory Ruling to Serve the U.S. Market Using Broadcast Satellite Service Spectrum
from the 114.5 W.L. Orbital Location, Order and Authorization, DA 06-2439
(rel. Nov.29, 2006). In one decision,
Spectrum 5 was authorized to access the United States market from a foreign-licensed Tweener orbital location. In
the other decision, EchoStar was licensed to provide service from a Tweener location. The Bureau processed the
Tweener applications on an ad hoc basis. The authorizations were conditioned upon operator-to-operator
coordination, compliance with ITU technical requirements, and compliance with the outcome of the DBS
proceeding.
302 See generally, 2005 Report, 21 FCC Rcd at 2542-3 77.
303 SHVERA can be found at Title IX of the Consolidated Appropriations Act, 2005 (H.R. 4818), codified at 47
U.S.C. 338, 339 and 340.
304 Distant signals are broadcast stations that originate outside the television market where a consumer lives. That
is, the consumer resides in a different Nielsen DMA than the one where the broadcast station's community of license
is located.
305 See CBS v. EchoStar, 472 F. Supp. 2d 1367 (S.D. Fla. 2006).
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this writing.306 On January 8, 2007, the U.S. Supreme Court declined to hear EchoStar's appeal of the
December 1, 2006, shut-down order.307
90.
In April 2006, the Commission issued a Notice of Proposed Rulemaking to begin the
process of implementing recommendations for DTV measurement procedures submitted to Congress.308
In the Notice, we proposed to amend the rules to include procedures for measuring field strength of digital
television signals. Specifically, the Commission sought comment on measurement procedures; on
measurement rules with respect to weather conditions, data recording, and tester availability; and on what
type of antenna should be used to take measurements. Finally, in May 2006 and July 2007, pursuant to
SHVERA, the Commission granted waivers to local network stations of the requirement to submit to a
digital signal strength test.309
91.

Satellite Fleet Developments and Video Capacity.

Both DIRECTV and EchoStar
launched new satellites in 2006. In February, EchoStar's EchoStar X satellite was launched at the 110
W.L. orbital location and began commercial operation during the second quarter of the year.310 The
satellite allows EchoStar to increase the number of markets where local channels are offered, including
high definition local channels, and it will eliminate the need for some of its subscribers to use multiple
dishes to receive programming.311 In October 2006, the DIRECTV 9S satellite was launched at the 101
W.L. orbital location and began commercial operation. Additionally, DIRECTV plans to launch two
additional satellites, DIRECTV 10 at 99 W.L. and DIRECTV 11 at 103 W.L., in 2007 to increase spot-
beam capability for local and national HD channels, as well as capacity for new interactive and enhanced
services and standard-definition programming. A third satellite under construction, DIRECTV 12, will
serve as a ground spare.312 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.313 However, existing DIRECTV subscribers will need to


306 See NPS Adds Distant Station Subs, SATELLITE BUSINESS NEWS FAX UPDATE, Jan. 1, 2007, at 1.
307 See CBS v. EchoStar, 450 F. 3d 505 (11th Cir. 2006), cert denied 1272 S. Ct. 945 (2007).
308 Measurement Standards for Digital Television Signals Pursuant to the Satellite Home Viewer Extension and
Reauthorization Act,
21 FCC Rcd 4735 (2006).
309 Waiver of Digital Testing Pursuant to the Satellite Home Viewer Extension and Reauthorization Act of 2004, 21
FCC Rcd 4813 (2006). The Commission renewed 15 of those waivers in October 2006. Waiver of Digital Testing
Pursuant to the Satellite Home Viewer Extension and Reauthorization Act of 2004
, 22 FCC Rcd 12918 (MB 2007).
310 Boeing Sea Launch, Sea Launch Delivers EchoStar X Satellite to Orbit (press release), Feb. 15, 2006, available
at http://www.boeing.com/news/releases/2006/q1/060215c_nr.html (visited Feb. 9, 2007).
311 EchoStar Communications Corp., Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarterly Period Ended March 30, 2006
, at 13 and 32.
312 The DIRECTV Holdings, LLC, Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Quarterly Period Ended November 30, 2006
, at 17.
313 DIRECTV Group, Inc., DIRECTV 9S Satellite Launches Successfully; Expands DIRECTV Fleet to Nine
Spacecraft
(press release), Oct. 13, 2006, available at http://phx.corporate-ir.net/phoenix.zhtml?c=127160&p=irol-
newsArticle&ID=916210&highlight= (visited Feb. 9, 2007).
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upgrade to a new satellite dish and HD compatible set-top box in order to access the programming
transmitted by the new satellites.314
92.
Additionally, both EchoStar and DIRECTV continued to utilize orbital locations assigned
to other countries under international agreements in order to deliver DBS services to U.S. subscribers.
These arrangements involve agreements to transfer U.S. licensed satellites to foreign entities that are then
licensed by the country to which the orbital location is assigned. Those entities then make available
capacity for U.S. service.315 In addition, on April 7, 2006, the Commission authorized SES Americom,
acting pursuant to a contract with EchoStar, to transfer control temporarily of the Ku-band frequencies on
its AMC-16 spacecraft to Telesat Canada, which would operate those frequencies at the 118.75 W.L.
orbital location, making capacity available for EchoStar's use in the United States.316 The Commission
also authorized EchoStar to receive signals from the Ku-band portion of the satellite in the United States
in order to provide enhanced DTH service.317 On April 18, 2006, the Commission authorized EchoStar to
transfer control of its EchoStar 4 satellite to QuetzSat, S. de R.L. de C.V., a Mexican company, which
would operate the satellite at the 77 W.L. orbital location.318 The Commission also authorized EchoStar
to receive signals in the United States from the satellite, using up to 1 million dishes.
2.

Home Satellite or Large Dish Service

93.
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


314 The DIRECTV Group, Inc., DIRECTV to Deliver Local HD Programming in 67 Markets by Year End (press
release), Oct. 10, 2006. According to DIRECTV, to receive the HD programming, subscribers must purchase a HD
set-top box or HD Receiver/DVR compliant with the MPEG-4 standard, for which DIRECTV offers a $100 rebate.
Existing subscribers must also purchase a new, slightly larger dish antenna, which is offered with an initial upgraded
HD set-top box for $99, and $99 per additional receiver.
315 DIRECTV Enterprises LLC, Order and Authorization, 20 FCC Rcd 11772 (IB 2005) (service to U.S. DTH
subscribers from 72.5 W.L. orbital location assigned to Canada in ITU "planned" band, using DIRECTV 1);
EchoStar Satellite LLC, Order and Authorization, 20 FCC Rcd 11755 (IB 2005) (service to U.S. DTH subscribers
from 129 W.L. orbital location assigned to Canada in ITU "planned" band, using EchoStar 5); DIRECTV
Enterprises LLC
, Order and Authorization, 19 FCC Rcd 15529 (IB 2004) (service to U.S. DTH subscribers from
72.5 W.L. orbital location assigned to Canada in ITU "planned" band, using DIRECTV 5).
316 SES Americom Inc., Order and Authorization, 21 FCC Rcd 3430 (IB 2006). The Ku-Band frequencies at the
118.75 W.L. orbital location are effectively precluded from use by U.S. licensed satellites, and assigned to Canada,
under the 1988 Trilateral Arrangement. See Trilateral Arrangement Regarding Use of the Geostationary Orbit
Reached by Canada, Mexico, and the United States
, Public Notice (Sept. 2, 1988).
317 Direct to Home ("DTH") is a broad industry term that can encompass all satellite-based direct to consumer
services, including DBS, Digital Audio Radio Satellite Service ("DARS"), and Broadcast Satellite Services ("BSS").
The latter is the international term used for a radio communication service in which broadcast signals transmitted or
retransmitted by space stations are intended for direct reception by the general public. See, e.g., 47 C.F.R. 2.1.
Typically, the Commission uses DTH to refer to direct-to-consumer video services provided in frequency bands
allocated for Fixed Satellite Services ("FSS"), rather than DBS-allocated bands of 12.2-12.7 GHz. See 47 C.F.R.
25.201, 25.202(a)(7).
318 EchoStar Satellite LLC, Order and Authorization, 21 FCC Rcd 4077 (IB 2006).
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C-band. Programming available in the C-band consists primarily of nonbroadcast program channels
transmitted to cable operators that they, in turn, distribute to their subscribers through cable systems.
Cable operators pull down the transmissions via C-band receiving dishes at the cable operator's central
technical facility or "headend." C-band channels may be transmitted either as clear channels, available
for free reception, or as scrambled signals.319 In order 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 for authority to receive the channels.320
94.
The number of HSD households continues to decline. As of June 2006, there were
111,478 HSD subscribers, a 45.9 percent drop from the 206,358 we reported last year.321 This trend
continues; in January 2007, there were 68,781 households authorized to receive HSD service, down 38.3
percent in the six months since June 2006.322
95.
C-band programmers continue to market DBS services to their customers, whether as an
alternative or an addition to their free-to-air or subscription C-band HSD services. For example, C-band
program packagers, National Programming Service, LLC ("NPS") and Superstar/Netlink have partnered
with EchoStar to offer DBS services to their C-band customers.323 Additionally, prices have fallen for
technology which allows C-band customers to receive digital-only satellite channels in addition to
available analog programming.324 Motorola's digital home satellite dish technology, 4DTV, currently
sells for approximately $479, compared to $550 last year.325 The 4DTV box allows customers to receive


319 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. 2000 Biennial Regulatory Review Streamlining and other Revisions of Part 25 of the
Commission's Rules Governing the Licensing of Spectrum Usage by, Satellite Network Earth Stations and Space
Stations
, 20 FCC Rcd 5593, 5625 (2005) 88. This proceeding is pending.
320 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, typically ranging from 4 to 8 feet in diameter.
321 2005 Report, 20 FCC Rcd at 2792 80.
322 C-BAND, SKYREPORT, Feb. 12. 19, 2006, at 4 and C-Band Numbers Keep Dwindling, Satellite Business News
FAXUpdate, July 7, 2006. These numbers are 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.
323 See Superstar Netlink and Tuner Vision at http://www.superstar.com/dishnetwork_index.asp and National
Programming Service, LLC., at http://www.callnps.com/smalldish.htm (visited Feb. 9, 2007).
324 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 Feb. 9,
2006). 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.
325 2005 Report, 20 FCC Rcd at 2792 81. 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
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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.
96.
Additionally, GlobeCast WorldTV, a subsidiary of France Telecom, delivers a DTH
subscription package of foreign channels directly to U.S. customers on the FSS Intelsat 5 satellite.326
GlobeCast offers two types of channels: free-to-air ("FTA") and encrypted. The FTA channels are
unscrambled, and thus can be received with any DVB-compliant MPEG-2 receiver package. Encrypted
channels are scrambled, and require a monthly subscription in addition to the receiver package purchase
price.327
3.

Satellite-Based Advanced Services

97.

Broadband Satellite Services.

Satellite broadband connectivity has become available to
nearly any U.S. consumer with line-of-sight view of the satellite, providing a valuable option for rural
residents and businesses.328 Services may be offered either directly by satellite companies or by other
telecommunications providers leasing capacity on existing satellites, and may be integrated with other
services such as direct-to-user video via a single dish.329 Satellite broadband providers served 495,365
subscribers in June 2006, up 31 percent from the 376,837 subscribers reported in June 2005.330
98.
EchoStar and DIRECTV continue to market broadband and DSL services through
relationships with local exchange carriers, as well as satellite and other broadband providers. DIRECTV
maintains relationships with LECs Verizon, BellSouth331 and Qwest, as well as with Earthlink in order to
offer high-speed broadband to standard and HD programming customers for an additional $10.00 per
month.332 EchoStar offers a point-of-sale platform called GetConnected, Inc. that helps customers select
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4DTV DSR922 receiver for $439.00 with the purchase of a programming package. See Skyvision, Inc., at
http://skyvision.com/store/dtv.html (visited Feb. 9, 2007).
326 About GlobeCast WorldTV, available at http://www.globecastwtv.com/ (visited Feb. 2, 2007). In the United
States, satellite video services delivered directly to subscriber homes are provided in two separate sets of frequency
bands. DBS is a radiocommunications service in which signals transmitted or retransmitted by space station in the
12.2-12.7 GHz frequency band are intended for direct reception by the general public. See 47 C.F.R. 25.201 and
25.202(a)(7). DTH satellite service is provided in bands internationally allocated to the FSS using FSS satellites.
See 47 C.F.R. Part 25.
327 See http://www.globecast.com/_2004/_0_library/brochures/GlobeCast_wtv.pdf. Customers can also receive
GlobeCast's WorldTV channels in Alaska, Hawaii, Puerto Rico or the USVI. The company transmits its
programming via Galaxy 25, their satellite which covers the continental United States.
328 For further discussion of broadband services via satellite, see Annual Report and Analysis of Competitive Market
Conditions with Respect to Domestic and International Satellite Communications Services,
22 FCC Rcd 5954 (2007).
329 For example, SES Americom's AMC-15 satellite is dedicated to its Americom2Home service. Its Ka-band
payload optimized to provide these combined services via a single dish.
330 High-Speed Services for Internet Access: 2006 Status Report, note 194 supra at 5.
331 For purposes of this Report, BellSouth and AT&T are treated as separate companies. See note 28 supra.
332 The DIRECTV Group, Inc., Internet Access, at http://www.directv.com/DTVAPP/global/contentPage.jsp?
assetId=900028
(visited Feb. 14, 2007).
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DSL and broadband services from a variety of providers, including AT&T, Verizon, BellSouth, Qwest,
Embarq, WildBlue and Earthlink.333
99.

Mobile Video Services.

Both major DBS providers expanded their mobile or
transportable video services in 2006. Both continue to provide on-board video programming to
commercial airlines for in-flight TV services.334 In 2006, DIRECTV initiated a TOTAL CHOICE Mobile
video service, providing 185 channels of news, weather, traffic, sports and other local entertainment
programming to car video screens for $49.99 per month; users must purchase a specialized tracking
satellite system with a Global Positioning System.335 DIRECTV also announced a portable satellite and
TV system, DIRECTV Sat-Go, offering a brief-case-sized 17" LCD monitor with an integrated receiver,
antenna and battery.336 EchoStar offers three versions of PocketDish, a hand-held video, music, photo
and gaming device which can store up to 20 hours of programming from select DVR receivers.337
EchoStar also announced a TV on the Go service, which will use a roof-rack-mounted mobile in-car
satellite antenna for television viewing.338

C.

Broadband Service Providers

100.
For purposes of this Report, we define 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.339 Most
BSPs are overbuilders competing directly with existing cable operators.340 As we previously reported,
BSPs face considerable challenge, which, the discussion below indicates, continues. BSP competition to


333 EchoStar Communications Corp. DISH Network(TM) Offers Consumers High-Speed Internet Options; Launch of
GetConnected, Inc.'s Platform Allows Consumers to Shop for DISH Network Programming and DSL Service at the
Same Time
(press release), Sept. 21, 2006 and EchoStar Communications Corp., Internet Access, at
https://compass.getconnected.com/v_internet/index.asp (visited Feb. 14, 2007).
334 See, e.g., World Airline Entertainment Association, Airline Inflight Entertainment and Communications (IFE)
Fact Sheet
("IFE Fact Sheet"), available at http://www.waea.org/Press/Latesttrends.pdf and EchoStar
Communications Corp., Virgin America to Offer EchoStar's Dish Network at Every Seat on Every Flight (press
release), Jan. 12, 2007.
335 DIRECTV, Inc., DIRECTV Delivers Live Local Channels to Motorists on the Open Road for the First Time
(press release), Aug. 23, 2006, and Satellite, COMM. DAILY at 13 (Apr. 24, 2006) (story re KVH Industries'
TracVision A5 mobile satellite system).
336 DIRECTV, Inc., DIRECTV Anywhere, Anytime, Anyplace (press release), Jan. 8, 2007. The service costs $4.99
per month and permits use of the same channels received at home.
337 Joel Meyer, EchoStar Turns Out PocketDish, BROADCASTING & CABLE: The Business of Television, available at
http://www. broadcastingcable.com/article/CA6268924.html?display=Breaking+News&referral=SUPP.
338 EchoStar Communications Corp., DISH Network's MobileDISHTM Provides Travelers with their Favorite TV
Programs While on the Road
, (press release), Jan. 8, 2007.
339 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; 2002 Report, 17 FCC Rcd at 26948-52 102-11. See also BSPA
Comments at 2-4. BSPs include companies such as RCN, Champion Broadband, Knology, and SureWest
Communications.
340 2004 Report, 20 FCC Rcd at 2801 70.
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cable is limited to relatively few markets.
101.
The Broadband Service Providers Association ("BSPA") states that the BSPs, all of
whom have entered the marketplace since the 1996 Act, have operations in nearly half the states, with
nearly 10 million homes under active franchises.341 Constructed systems currently pass 4.1 million
homes, and the companies associated with BSPA have 1.2 million customers.342 According to BSPA,
BSPs have an average residential penetration rate of 29 percent.343
102.
BSPs are seeking to compete by offering bundles of service which include telephony and
high-speed Internet service, as well as various video offerings.344 BSPA asserts that the BSP model has
expanded the deployment of advanced services to the average consumer and, because BSPs provide a
combination of video, voice, and Internet service, the companies need not attain the highest market share
for any one service to maintain healthy operations.345 In at least one case, a BSP also is entering into
agreements to allow it to offer wireless service in order to offer even more extensive bundles of service.346
Among existing BSP customers, BSPA reports that 89 percent subscribe to video, 51 percent subscribe to
telephone service, and 63 percent subscribe to high-speed Internet access service. BSPA also reports that,
on average, more than 32 percent of BSP customers buy all three core services (i.e., video, voice, and
data); some BSPs report that more than 50 percent of their customers take all three services.347
103.
BSPA cites a U.S. Government Accountability Office ("GAO") report that studied six
market pairs for which one market of each pair was served by a BSP overbuilder, and the other was not.348
The 2004 GAO Report found that communities with overbuild competition experienced lower rates (an
average of 23 percent lower for basic cable) and higher quality service than did other communities.349
Additionally, BSPA highlights a 2005 GAO study that examined overbuild video systems.350 The report


341 BSPA Comments at 6.
342 Id. at 6.
343 Id. at 7.
344 Id.at 7.
345 Id. at 2-4. See also Comcast Comments at 43-45 (citing past financial difficulties of some BSPs, noting that they
have rebounded and are expanding their service offerings to attract new customers).
346 RCN Corp., RCN Wireless Powers Up Cable/Internet/Telephone Customers in Boston (press release), Sept. 27,
2006.
347 BSPA Comments at 7.
348 Id. at 4 citing GAO, Telecommunications: Wire-Based Competition Benefited Consumers in Selected Markets,
GAO-04-241, Feb. 2004 (GAO 2004 Report). See also 2005 Report, 21 FCC Rcd at 2550 91.
349 BSPA Comments at 4-5 citing GAO, Telecommunications: Wire-Based Competition Benefited Consumers in
Selected Markets
, GAO-04-241, Feb. 2004 (GAO 2004 Report). See also 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
, 22 FCC Rcd 5101(2007); Exclusive Service Contracts for Provision of Video Services in
Multiple Dwelling Units and Other Real Estate Developments,
22 FCC Rcd 5935 (2007).
350 BSPA Comments at 8. 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
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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 an incumbent cable operator as is another wireline
MVPD such as a BSP, and that the variation of DBS penetration across communities indicates that the
Commission should not accept cable industry arguments that cable is no longer dominant in the MVPD
marketplace.351 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.352 BSPA also reports that BSPs continue to face
significant barriers to entry.353

D.

Broadcast Television Service

1.

General Performance

104.
Broadcast networks and local stations supply video programming over the air to
consumers. Consumers who do not subscribe to an MVPD service rely on the over-the-air transmission
for reception of local broadcast television signals for video services. Many MVPD households receive
broadcast television programming over the air on television receivers that they have chosen not to connect
to the service. In addition, most U.S. consumers receive broadcast signals via their cable, DBS, or other
MVPD service.
105.
As we reported last year, broadcast television stations' audience shares have continued to
fall. For the 2005-2006 television season, broadcast television stations accounted for a combined average
45 share of prime time viewing among all television households, compared to a 48 share in the previous
season.354 Broadcast stations achieved a 40 share of all-day (24-hour) viewing during the 2005-2006
season, down from a 41 share the previous season. In contrast, nonbroadcast channels' collective
audience share continues to grow. In the 2005-2006 television season, nonbroadcast channels355
accounted for a combined average 55 share of prime time viewing among all television households, up
from the 53 share in the previous season.356 Nonbroadcast channels accounted for a 60 share of all-day
viewing, up from a 59 share in the previous season.357
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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.
351 BSPA Comments at 8-11.
352 Id. at 10.
353 Id. at 11-16.
354 Nielsen Media Research, Broadcast Calendar (TV Season) Share of Audience Report, Prime Time and Total
Day,
Dec. 2006. 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 the reported audience shares by recalculating them on a base
(or denominator) equaling 100 percent, and adjusting the numerators accordingly.
355 Includes basic (BST and CPST) networks, as well as premium and PPV networks, distributed by MVPDs.
356 Nielsen Media Research, Broadcast Calendar (TV Season) Share of Audience Report, Prime Time and Total
Day,
Dec. 2006.
357 Id.
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106.
Since the 2005 Report, the number of commercial and noncommercial television stations
rose from 1,747 as of June 30, 2005, to 1,753 as of June 30, 2006.358 Total television broadcast
advertising revenues declined 2.4 percent from $47.2 billion in 2004 to $46.1 billion in 2005.359
Advertising revenue for the seven most widely distributed broadcast networks (ABC, CBS, Fox, NBC,
PAX, UPN, and WB)360 was estimated at $25 billion in 2005, a slight increase over the $24.9 billion
earned in 2004.361 Nonbroadcast programming networks fared somewhat better, experiencing an 11.4
percent increase in advertising revenue in 2005; they earned $18.2 billion in advertising revenue
compared to $16.3 billion in 2004.362
2.

Digital Television

107.
DTV allows broadcasters to use a single 6 MHz channel to transmit a high-definition
television ("HDTV") signal, several standard-definition television ("SDTV") signals (i.e., multicasting),
or ancillary services in addition to video programming.363 As of January 2007, approximately 1,600
stations nationwide were on the air with DTV operations, including all 119 stations affiliated with the top-
four network affiliates in the top 30 television markets.364 As the transition of the nation's broadcast
television system from analog to digital television ("DTV") nears completion, most, though not all,
broadcasters are required to operate both analog and digital facilities until February 17, 2009, at which
time all full-power television broadcast stations must cease their analog transmissions.365
a.

Over-the-Air Households

108.
Estimates of the number of television households that rely exclusively on over-the-air
television broadcasts to receive video programming vary by source, but all estimates indicate that less


358 Federal Communications Commission, Broadcast Station Totals as of June 30, 2005, at
http://www.fcc.gov/mb/audio/totals/bt050630.html; Federal Communications Commission, Broadcast Station
Totals as of June 30, 2006
, at http://www.fcc.gov/mb/audio/totals/bt060630.html.
359 Television Bureau of Advertising, 2005 TV Ad Revenue Figures, at http://www.tvb.org/rcentral/adrevenuetrack //
revenue/2005/ad_figures_1.asp (visited Jan. 24, 2007).
360 CBS Corporation has merged its UPN network with Time Warner's WB network to form a new network called
The CW. CBS Corp., CBS Corp and Warner Bros. Entertainment Form New 5th Broadcast Network (press release),
Jan. 24, 2007. In July 2005, Pax TV changed its name to i:Independent Television, and then to Ion Television in
January 2007.
361 Id.
362 Robert J. Coen, Insider's Report-Advertising Expenditures, Universal McCann, June 28, 2006.
363 Review of the Commission's Rules and Policies Affecting the Conversion to Digital Television, 17 FCC Rcd
15978, 15995-96 39-40 (2002).
364 Summary of DTV Applications Filed and DTV Build Out Status, at http://www.fcc.gov/mb/video/files/
dtvsum.html (visited Jan. 24, 2007).
365 See Advanced Television Systems and Their Impact Upon the Existing Television Broadcast Service, 21 FCC Rcd
12100 (2006); The Digital Television and Public Safety Act of 2005 ("DTV Act"), amends Section 309(j)(14) of the
Communications Act to establish February 17, 2009, as a new hard deadline for the end of analog transmissions by
full-power stations. See Deficit Reduction Act of 2005, Pub. L. No. 109-171, 120 Stat. 4 (2006) ("DRA"). Title III
of the DRA is the DTV Act. See also 47 U.S.C. 337(e).
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than 20 percent of U.S. households rely exclusively on over-the-air broadcasts to receive television. For
example, on March 1, 2005, the Media Bureau released a staff report concerning over-the-air broadcast
viewers ("OTA Report").366 At the time the OTA Report was released, the Commission estimated that
about 14.86 percent of television households relied exclusively on over-the-air television broadcasts to
receive video programming.367 Nielsen estimates that, as of January 2007, 15.5 million households, or
about 14 percent of the 111.4 million total U.S. television households, rely on over-the-air television
broadcasts for video programming.368 Commenters in this proceeding also provide estimates of the
number of television households relying solely on over-the-air television reception. NAB, for example,
estimates that there are as many as 19.6 million households containing 45.5 million television sets that do
not subscribe to an MVPD and that there are an additional 14.7 million MVPD households with 23.5
million television sets that are not connected to MVPD service.369 CEA estimates that approximately 13
percent of all television households receive their broadcast television signals over the air.370 NCTA notes
that at least 14 percent of television households do not subscribe to an MVPD.371
b.

Programming

109.

Programming Available Over the Air.

NAB indicates that the four major broadcast
networks (ABC, CBS, Fox, and NBC) currently provide their most popular programming in high
definition.372 Broadcasters also transmitted special events, such as the Academy Awards and numerous
major sporting events in HD format over the past year.373 In addition, 1,600 local stations are
broadcasting digital signals, including digital multicast, with some broadcasting their local news in HD


366 Media Bureau Staff Report Concerning Over-the-Air Broadcast Television Viewers (MB Feb. 28, 2005) ("OTA
Report"
), available at http://fjallfoss.fcc.gov/edocs_public/attachmatch/DOC-257073A1.pdf.
367 See id. See also 2004 Report, 20 FCC Rcd at 2869-70 Appendix B, Table B1. The Commission's 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.
368 Nielsen Media Research, National Universe Estimates, Jan. 2007, at 1. This percentage is based on Nielsen's
estimate of TV households for the 2006-2007 television season, September 2006-August 2007.
369 NAB Comments at 2. NAB states that those households relying solely on over-the-air broadcasting are
predominantly lower income and include relatively greater numbers of racial and ethnic minorities. See also NAB
Comments at 3.
370 CEA Comments at 7.
371 NCTA Comments at 18.
372 NAB Comments at 6.
373 Id.
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format.374 In 2006, PBS distributed 144 hours of high-definition content per month to its member
stations.375 In addition, American Public Television ("APT") supplied 91 hours of HD programming each
month to its member public television stations.376 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.377
110.

Programming Available Through MVPDs.

NCTA reports that, as of June 2006, local
cable systems were carrying the digital signals of 788 individual broadcast stations, and cable operators
offered over 25 nonbroadcast networks that transmit much of their programming in HD format.378 NCTA
avers that an agreement entered into between cable operators and public television stations in 2005
continues to ensure that local public television digital programming is being carried on cable systems
throughout the country.379 In addition, DBS systems are expanding their carriage of local HDTV stations.
For example, as of January 2007, DIRECTV offered local HD broadcast channels in 49 cities,
constituting more than 65 percent of all U.S. television households.380 DIRECTV has announced that
new satellite launches in 2007 will give it the ability to deliver more than 1,500 local HD and digital
channels.381 In 2006, DISH Network expanded its carriage of local HD channels from five to 24 cities,
and has announced plans to expand into additional cities nationwide.382
111.
APTS states that the Commission should ensure that public television digital
programming is carried on DBS.383 APTS notes that, while DBS providers have introduced both national


374 Summary of DTV Applications Filed and DTV Build Out Status, at http://www.fcc.gov/mb/video/files/
dtvsum.html (visited Jan. 25, 2007). See also NAB Comments at 7-8.
375 APTS Comments at 5-6.
376 Id.
377 Id.
378 NCTA Comments at 28-29.
379 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. See NCTA Comments at
29.
380 DIRECTV to Offer 100 National HD Channels in 2007 (press release), at
http://www.directv.com/DTVAPP/global/contentPage.jsp?assetId=P4130030 (visited Feb. 5, 2007).
381 Id.
382 DISH Network Launches Local TV Stations in High Definition via Satellite in 11 Cities (press release), at
http://phx.corporate-ir.net/phoenix.zhtml?c=68854&p=irol-newsArticle&ID=858026&highlight= (visited Feb. 5,
2007).
383 APTS Comments at 26-34. In a similar vein, we note that CBA states that virtually all viewing of Class A and
low power television ("LPTV") stations is over-the-air, and urges the Commission to ensure that this "most local" of
broadcast services is not cut off from the dominant media distribution technologies. CBA states that Class A and
LPTV stations generally do not have mandatory carriage rights on cable systems and do not have mandatory
carriage rights on broadcast satellites. Furthermore, MVPDs are not required to negotiate in good faith with Class A
and LPTV stations regarding retransmission consent. CBA avers that Class A and LPTV stations have a wide range
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and local digital programming in several markets, digital signals of local public television stations are not
yet carried on DBS.384 Similarly, APTS argues that the Commission should ensure that new LEC video
providers carry the digital signals of local public television stations, asserting that new LEC entrants'
broadband networks have more than enough capacity to accommodate such programming.385 APTS
states that it has reached an agreement with Verizon whereby its FiOS video service will carry the full
digital signal of up to three public television stations within the system's service area, including PBS and
local public stations' HDTV programming and digital multicasts.386 In addition, in March 2006, Verizon
and CBS entered into an agreement under which FiOS agreed to carry CBS television stations and local
VOD content.387
112.

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.388
NAB states that the conversion to digital is "revolutionizing broadcast television service by enabling
stations to offer consumers new program choices, high quality video and audio, and advanced features at
no cost to the public."389 Comcast states that digital technology has enabled broadcasters to multicast
their own multichannel programming, thereby offering consumers additional choices while generating
more advertising revenue from these new channels.390
113.
NAB indicates that, in addition to providing HD format programming, approximately 780
local stations (including stations in medium and small markets) are using their digital channels for
multicast services, an increase of nearly one-third over those that did so in November 2005.391 This
multicast programming includes local news, weather, sports, religious material, and ethnic oriented
programming.392 NAB states that broadcasters also have begun to use their digital capacity to provide
innovative entertainment programming to consumers, such as a multicast channel that provides DVD-like
features for CBS's leading network shows.393 APTS notes that public television stations are taking
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of ownership, and are often licensed to small communities or to serve niche audiences in larger communities. CBA
notes that these are the only class of broadcast services required by statute to provide a minimal amount of locally
produced programming, and that these stations provide highly local information, including emergency information.
See CBA Comments at 1-2.
384 APTS Comments at 26-34.
385 Id.
386 Id.
387 CBS and Verizon Reach Comprehensive Retransmission Consent Agreement (press release), at
http://newscenter.verizon.com/proactive/newsroom/release.vtml?id=93326 (visited Feb. 6, 2007).
388 Notice, 21 FCC Rcd at 12249 59-61.
389 NAB Consumer Electronics and Broadcast Industries Present Consensus Position on Digital TV Transition to
U.S. Commerce Department's NTIA
(press release), at http://www.nab.org/AM/Template.cfm?Section=Search_
Archives&template=/CM/HTMLDisplay.cfm&ContentID=6843 (visited Feb. 7, 2007).
390 Comcast Comments at 38-39.
391 NAB Comments at 7-8.
392 NAB Comments at 7-8. See also APTS Comments at 4-7.
393 NAB Comments at 7-8.
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advantage of digital television's technological flexibility by broadcasting multiple program streams in
order to bring new services to the public that could not be made available under the constraints of a single
analog program stream.394 APTS cites examples of multicasting that have expanded public television
programming distribution of children's educational programming, formal education services and
workforce development services, locally oriented public affairs programming, and programming aimed at
traditionally unserved or underserved communities, such as the elderly.395
114.

Datacasting and Subscription Services.

DTV also allows broadcasters to use part of
their digital bandwidth for subscription video, datacasting, and other pay services.396 These services can
be provided simultaneously with HD or SD digital television programs, and can provide delivery of
virtually any type of data, audio, or video, including text, graphics, software, web pages, video-on-
demand,397 and niche programming.398
115.
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


394 APTS Comments at 5.
395 Id. at 5-8.
396 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, as indicated in the following
chart:
NUMBER OF
DTV LICENSEES
THAT REPORTED
GROSS REVENUES
FEES COLLECTED
YEAR FEEABLE SERVICES
FROM FEEABLE SERVICES
FROM FEEABLE SERVICES
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
2005
11
$176,777
$8,839
2006
36
$687,424
$34,371
Source: FCC Form 317.
397 Video-on-demand via over-the-air broadcast signals may be provided several ways. Broadcasters may use a
model similar to that contemplated by DBS operators whereby 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 using broadcast
spectrum for the downstream transmission of video and an Internet connection for the comparatively low-bandwidth
control signals.
398 See 2004 Report, 20 FCC Rcd at 2807-8 84.
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distribution via DTV streams.399 On November 10, 2006, USDTV announced that NextGen Telecom,
LLC had acquired its assets and would continue to offer a multichannel video programming service
including 20-30 broadcast and nonbroadcast programming channels for $19.95 per month using local
over-the-air DTV spectrum in Salt Lake City, Las Vegas, Albuquerque, and Dallas. 400 However, on
March 5, 2007, USDTV discontinued service due to the withdrawal of funding from its major investor,
who experienced a financial setback in an unrelated business.401
116.
APTS indicates that some public television stations are employing datacasting for
supplemental educational programming and public safety purposes.402 For example, New Jersey
Network's 21st Century Digital Classroom program and WHYY, licensed to Philadelphia, Pennsylvania,
are using datacasting to deliver media-rich video content over the air to students, teachers, and adults in
classrooms and libraries.403 Specifically, students can access educational videos from multiple libraries
on classroom computers through a single portal. The content includes multimedia K-12 curricula,
professional development, and adult education, and workforce training materials.404 In addition, WHYY
is datacasting adult education material, including 58 half-hour video segments and more than 700 pages
of text which are delivered to desktop computers in libraries, community centers, and colleges.405 Rocky
Mountain PBS is working with the Colorado Department of Labor and Employment and the University of
Colorado Health Sciences Center to enhance the education of healthcare professionals. For example, the
Center's emergency room simulations and training sessions are being delivered via datacasting to
classrooms, homes, and office computers.406
117.
APTS also believes public television stations will play an important role in supporting a
national and local digital broadcast emergency alert system ("EAS") through the digital interconnection
infrastructure public broadcasting is developing.407 APTS cites several public television stations and local
networks that have already pioneered public safety datacasting networks, such as those in Kentucky, New
Jersey, Nashville, New York City, Cincinnati, and Rochester, New York.408 APTS asserts that public


399 See 2005 Report, 21 FCC Rcd at 2556 106.
400 NexGen Telecom Acquires USDTV Assets and Continues Providing Unique Over-the-Air Cable Alternative
(press release), at http://www.usdtv.com/about/release-11-9-2006.html (visited Feb. 5, 2007); U.S. Digital
Television, Inc., at http://www.usdtv.com/GET-USDTV.html (visited February 5, 2007). See also Linda Moss,
USDTV Emerges for Another Try, MULTICHANNEL NEWS, Nov. 20, 2006.
401 U.S. Digital Television, Inc., USDTV Discontinues Low-Cost Family Friendly Digital TV Service (press release),
Mar. 5, 2007.
402 APTS Comments at 18.
403 Id.
404 Id.
405 Id. at 18-19.
406 Id. at 19.
407 Id. at 19-21. The Commission examined issues pertaining to EAS and digital services in the Review of the
Emergency Alert System
, 20 FCC Rcd 18625 (2005).
408 Id. at 20-21.
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safety datacasting systems provide many advantages, including nearly instantaneous transmission of data
and the ability of agencies to pinpoint the households to which the data is sent.409 APTS states that
because public television stations reach nearly every American household, their digital infrastructure
could eventually supplement the digital broadcast Emergency Alert System as a national alert system to
reach all homes, schools, businesses, and hospitals via computers.410
118.
In addition, digital spectrum can be used to provide service on 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, personal digital assistants ("PDAs"), and MP3 players.411
c.

DTV Equipment

119.
The sale of DTV consumer electronics continues to accelerate; CEA estimated that in
2006, DTVs outsold analog televisions by 66 percent.412 Kagan Media Research estimated that between
1998, when digital television sets were first offered for retail sale, and year-end 2006, approximately 51.8
million HD-ready and enhanced-definition ("ED")-ready sets had been shipped to retailers, with 46.4
million of those being HD-ready.413 Of those shipped, Kagan estimates that a total of 49.6 million have
been purchased by consumers, of which 42.9 million were HD-ready.414 In 2006 alone, Kagan estimates
that 22.4 million HD-ready and ED-ready sets were shipped to retailers, with 20.8 million of those HD-
ready. Of those shipped, Kagan estimates that more than 21.5 million sets were purchased by consumers,
with 19.8 million of those HD-ready.415 We note that HD-ready sets do not necessarily have DTV tuners.
Households with HD-ready sets that do not have DTV tuners must purchase a DTV tuner to receive
digital television over the air, or must subscribe to an MVPD that retransmits digital signals.
120.
CEA estimates that between 1998 and mid-2006, more than 35 million DTV sets have
been sold to American consumers, and Americans have spent over $50 billion to purchase DTV
products.416 CEA states that HDTV displays and receivers account for 80 percent of the DTV products
sold to date.417 CEA reports that, during the first quarter of 2006, DTV set sales grew by more than 100
percent, and estimates that in 2006, Americans will have purchased more than 19.7 million DTV sets and
displays, a 73 percent increase from 2005.418 CEA forecasts that by 2010, Americans will have invested


409 Id. at 19.
410 Id.
411 See iBlast Inc., What is iBlast?, at http://www.iblast.com (visited Feb. 4, 2007); see also Dotcast, Inc., at
http://www.dotcast.com/(visited Feb. 4, 2007). See also 2005 Report, 22 FCC Rcd at 2557 108.
412 CEA Comments at 4.
413 Kagan Research, LLC, Digital TV Set Projection Model, Media Trends 2006, at 118.
414 Id.
415 Id.
416 CEA Comments at 4-5.
417 Id. at 4.
418 Id. at 5.
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more than $145 billion in DTV products.419 It estimates that in 2006, approximately 30 million American
households will have tuned into digital broadcasts, a 16 percent increase from 2005.420 CEA also
forecasts that in 2007, 58.5 percent of American households will tune into digital programming,
increasing to 95.6 percent by 2010.421 It is reported that the current average household income of HDTV
owners is $89,500, or 42 percent above the national average.422
121.
CEA estimates that in 2006 the average retail price of a DTV set declined nearly 25
percent, to $1,043 from $1,369 in 2005.423 By comparison, the average retail price of a DTV set in 1998
was $3,147, approximately three times the estimated average of $1,043 for 2006.424 CEA also estimates
that, the average DTV price will drop to $819 in 2007.425
122.
In 2005, NAB and the Association for Maximum Service Television, Inc. ("MSTV")
announced plans to develop a high-quality, low-cost digital-to-analog converter box for terrestrial DTV
reception.426 In 2006, the performance of the resulting boxes was reported in a joint filing by NAB,
MSTV, and CEA in the U.S. Commerce Department's National Telecommunications and Information
Administration ("NTIA") proceeding on implementing a converter box coupon program.427 The joint
filing recommended minimum performance requirements for digital boxes, and endorsed an industry-
wide education campaign.428 In addition, in September 2006, NAB, MSTV, CEA, and more than a dozen
public interest groups, trade associations, and companies submitted a letter to NTIA endorsing a set of
principles to support a successful DTV transition.429 In March 2007, NTIA announced the final rule for
the digital-to-analog converter box coupon program.430 Manufacturers of converter boxes that can be


419 Id.
420 Id. at 2.
421 Id.
422 See Leichtman Research Group, HDTV 2006: Consumer Awareness, Interest and Ownership, at
http://www.leichtmanresearch.com/research.html (visited Feb. 7, 2007).
423 CEA Comments at 5.
424 Id.
425 Id.
426 NAB Comments at 5.
427 Id. See also CEA Comments at 1-2. Congress set a deadline of February 17, 2009, for the end of the DTV
transition and the termination of analog television broadcasting. Congress charged NTIA with developing a
program to provide consumers with low-cost, digital-to-analog converter boxes that will enable analog television
receivers to function after the transition.
428 Id.
429 NAB Comments at 5.
430 NTIA, Commerce Department Issues Final Rule To Launch Digital-to-Analog Converter Box Coupon Program
(press release), Mar. 12, 2007.
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purchased with coupons must build devices that include specific features and meet certain performance
specifications identified in the final rule.431
d.

DTV Transition

123.
In the 2005 Report, the Commission described several rulemaking decisions adopted
during 2005 intended to accelerate or promote the transition to DTV.432 This year, we report on the
Commission's continuing efforts to foster the DTV transition.433
124.

DTV Signal Carriage Proceeding.

In February 2005, the Commission issued the Digital
Must Carry Second Report and Order and Digital Must Carry First Reconsideration.434 The Commission
continues to consider 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.435
125.

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) select their ultimate "in-core" DTV channel (i.e., channels 2-51).436
Under this process, licensees elected their preferred post-transition channel over the course of three


431 Id.
432 2005 Report, 21 FCC Rcd at 2559-60 113-117.
433 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 analog broadcast spectrum for a digital-to-analog converter box
program.
434 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)
(affirming the tentative conclusion not to require carriage of both a broadcaster's analog and digital signals during
the transition). See also 47 C.F.R. 1.429 (setting forth basis for granting petitions for reconsideration).
435 Id. PSIP is data that is transmitted along with a station's DTV signal that tells DTV receivers information about
the station and what is being broadcast. PSIP provides a method for DTV receivers to identify a DTV station and to
determine how a receiver can tune to it. See ATSC's PSIP website at http://www.psip.org/. PSIP identifies both the
DTV channel and the associated NTSC channel and enables DTV receivers to associate the two channels, thereby
making it easy for viewers to tune to the DTV station even if they do not know the channel number. In addition to
identifying the channel number, PSIP tells the receiver whether multiple program channels are being broadcast and,
if so, how to find them. It also identifies whether the programs are closed captioned, and conveys available v-chip
information, among other things. See Second Periodic Review of the Commission's Rules and Policies Affecting the
Conversion to Digital Television
, 19 FCC Rcd 18279, 18343-5 (2004) ("Second DTV Periodic Review").
436 See Second DTV Periodic Review. Because digital technology allows DTV channels to be spaced more closely
together, the spectrum allocated to broadcast television will shrink. 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.
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rounds.437 In 2005, the Media Bureau announced tentative DTV channel designations and interference
conflicts for licensees participating in the first round,438 and in 2006 for licensees participating in the
second and third rounds.439 In October 2006, the Commission undertook the final step in the channel
selection process by proposing a new DTV table of allotments that will provide all eligible stations with
channels for DTV operations after the DTV transition.440
126.

Third DTV Periodic Review.

The Commission recently adopted its Third DTV Periodic
Review, proposing procedures and rule changes necessary to complete the transition. In view of the
statutory change from a market-by-market transition to a hard deadline (i.e, February 17, 2009), the
Commission's focus has moved from simply ensuring that stations are operating in digital to providing
regulatory flexibility to facilitate broadcasters' construction of their final, post-transition channel with
facilities that will reach viewers in their authorized service areas by the time they must cease broadcasting
in analog.441
e.

Educational Efforts

127.
In the 2005 Report, we provided information on consumer education efforts by CEA, the
Consumer Electronics Retail Coalition ("CERC"), and NAB.442 These educational efforts continue. For
example, these organizations continue to operate web sites, host conventions, and produce videos and
publications designed to provide consumers with information about the transition. A consumer and
retailer web site, 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.443 CEA operates several web sites designed for both retail sales
associates and consumers,444 and continues to host media tours aimed at providing HDTV information


437 Id.
438 See DTV Tentative Channel Designations for 1,554 Stations Participating in the First Round of DTV Channel
Elections
, 20 FCC Rcd 10983 (MB 2005).
439 See Tentative Digital Channel Designations for Stations Participating in the Second Round of DTV Channel
Elections and Third Round Election Filing Deadline
, 21 FCC Rcd 5080 (MB 2006); Tentative Digital Channel
Designations for Stations Participating in the First and Second Rounds of the DTV Channel Election Process
, 21
FCC Rcd 5862 (MB 2006) (one additional first round TCD was announced in addition to the 75 second round
TCDs); Third Round of the DTV Channel Election Process: Tentative Channel Designations, 21 FCC Rcd 9572
(MB 2006).
440 Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service, 21 FCC Rcd
12100 (2006).
441 Third Periodic Review of the Commission's Rules and Policies Affecting the Conversion To Digital Television,
22 FCC Rcd 9478, 9492 (2007) 34.
442 2005 Report, 21 FCC Rcd at 2560-61 118-120.
443 CheckHD includes information about local channels and programming, antenna selection by zip code, and DTV
equipment.
444 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
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updates to local retailers, broadcasters, manufacturer representatives, and cable and satellite providers.445
128.
CERC has issued a retail consumer guide that focuses on the choices that consumers will
have when analog broadcasting ends.446 CEA continues to distribute a consumer and retailer tip sheet,
Buying a Digital Television that it produced in partnership with the Commission and CERC. This "tip
sheet" explains the DTV transition, as well as defining basic DTV terms and technology.447
129.
In addition, several organizations in February 2007 announced the establishment of a
coalition including representatives from private industry, trade associations, civil rights organizations, and
community groups, plus the National Telecommunications and Information Administration ("NTIA"), to
work together on a comprehensive consumer education campaign to increase awareness of the DTV
transition.448 Also, the Digital Television Transition and Public Safety Act of 2005 authorizes $5 million
for NTIA to conduct a consumer education campaign regarding the DTV transition and the availability of
converter equipment.

E.

Other Wireline Video Services

1.

Local Exchange Carriers

130.
The 1996 Act amended Section 651 of the 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 Act;449 (2) provide
transmission of video programming on a common carrier basis under Title II of the Act;450 (3) provide
video programming as a cable system under Title VI of the Act;451 or (4) provide video programming by
means of an open video system ("OVS").452
131.
In recent Reports, we observed that LECs were increasingly interested in providing video
services.453 In the last year, LECs, most notably Verizon and AT&T, have expanded the areas where they
provide facilities-based video services. LECs continue to focus on offering bundles of services, including
(Continued from previous page)


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.
445 CEA has hosted a "Satellite Media Tour" that featured information regarding the transition from analog to
digital. CEA Comments at 15.
446 Id. at 16. CEA notes that in March 2006, it announced a voluntary labeling program for televisions that contain
only analog tuners. CEA Comments at 4.
447 Id.
448 NCTA, Countdown to February 2009: Digital Television Transition (DTV) Coalition Pledges to Alert
Consumers about Transition from Analog to Digital TV
(press release), Feb. 28, 2007.
449 47 U.S.C. 571(a)(1).
450 47 U.S.C. 571(a)(2).
451 47 U.S.C. 571(a)(3).
452 47 U.S.C. 571(a)(3)-(4).
453 For example, Verizon state that it intends to invest $18 billion in net capital from 2004 through 2010 in
deploying its fiber network. See Verizon Communications Inc., Verizon Provides New Financial and Operational
Details on its Fiber Network as Deployment Gains Momentum
(press release), Sept. 27, 2006 ("Verizon Details on
Fiber Network").
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local and long distance telephone, high-speed Internet service, and video programming service.454 In
order to offer these services, LECs are entering into joint ventures with MVPD service providers, such as
DBS operators, or are providing MVPD service over their own recently upgraded facilities. Some LECs
are deploying fiber-to-the-home ("FTTH," also known as fiber-to-the-premises, or "FTTP")
infrastructure. In addition, LECs are increasingly utilizing Internet Protocol Television ("IPTV")
technologies.
132.
Verizon continues to pursue deployment of facilities-based commercial video service in
several communities around the country. Verizon's FiOS FTTH network allows delivery of multichannel
video services in addition to telephony and high-speed Internet access service.455 Verizon first deployed
its FiOS service in Keller, Texas, in September 2005, and continues to obtain franchises and launch the
service in other communities.456 At the end of 2006, Verizon reported that it offered video programming
via FiOS TV to more than 2.4 million households in 200 cities in 10 states and served 207,000
subscribers.457
133.
Since last year's Report, AT&T has increased its video service deployment through its
"U-verse" FTTH product. According to AT&T, as part of its "Project Lightspeed," program, it intends to
offer U-verse services in 41 markets over the next three years.458 At the end of 2006, AT&T served
approximately 11 cities in Texas, California, Indiana, and Connecticut.459 AT&T further notes that this
deployment will provide the full suite of U-verse services, including voice, high-speed Internet access,
and video services, and that, within three years, it expects to serve 5.5 million low income households.460
In addition, AT&T continues to partner with EchoStar Communications to resell Dish Network DBS


454 Fiber-To-The Home Council Comments at 2. According to the Fiber-To-The Home Council, offering the so
called "triple-play" increasingly is becoming a competitive necessity. Id. In addition, AT&T and Verizon seek to
include wireless services as part of this bundle. AT&T plans to offer integrated wireline and wireless designed to
blur the distinctions between local telephone, MVPD, and high speed Internet services. Leslie Cauley, ATT Cable
Plan Includes Wireless
, USA TODAY, Oct. 31, 2006, B-3. Similarly, in addition to offering video programming and
IPTV via FiOS, Verizon is continuing to market video services over its wireless system. See Section II.F.3 infra.
455 Verizon Comments at 4.
456 2005 Report, 21 FCC Rcd at 2562 124.
457 See also Verizon 4Q 2006 Results Cap Strong Organic Growth in Wireless, Broadband and Business Markets
(press release), Jan. 29, 2007.
458 AT&T Initiatives Expand Availability of Advanced Communications Technologies Company Enhances
Broadband Reach Through Innovative Technologies: Satellite, Fixed Wireless and Wimax Details the Availability of
Project Lightspeed to Low-Income Households
(press release), May 8, 2006 ("AT&T May 8, 2006 Press Release").
459 Internet Technology Tests AT&T's Bid For TV Subscribers, WALL STREET JOURNAL, Feb. 7, 2006. In addition,
in October 2006, AT&T stated that it had 3,000 U-verse subscribers. See also AT&T Posts Strong Fourth-Quarter
Earnings Growth, Reaffirms Outlook for Double-Digit Growth Adjusted Earnings Per Share
(press release), Jan. 25,
2007. AT&T reports that it had 635,000 subscribers for all video services including AT&T/Dish Network satellite
television and AT&T U-verse service at the end of 2006.
460 AT&T May 8, 2006 Press Release.
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service and currently has 583,000 co-marketed (or resale) subscribers.461 Prior to its merger with AT&T,
BellSouth noted that it held 20 franchises to provide cable overbuild service in its local telephone service
area.462 According to BellSouth, its facilities-based video service was available to 200,000 households
and had approximately 35,000 subscribers in 14 markets.463 In addition, BellSouth noted that it entered
into a strategic marketing alliance with DIRECTV to offer digital satellite service to BellSouth residential
customers. As of the third quarter of 2006, approximately 756,000 BellSouth customers had added
DIRECTV service to the bundles of services to which they subscribe.464 BellSouth also reported that it is
studying the use of IPTV for further distribution of multichannel video services.465
134.
Qwest also is pursuing opportunities to provide bundles of services, including various
technological configurations of video services such as satellite, IPTV, and video delivered via wireless
telephones.466 Qwest currently resells DIRECTV service throughout its 14-state service region.467 Qwest
also is beginning to take steps to provide IPTV service in its service area.468 In addition, Qwest continues
to seek video franchise agreements and already has agreements in select neighborhoods in Colorado,
Arizona, Nebraska, and Utah.469
2.

Open Video Systems

135.
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.470 BSPs,


461 AT&T's U-verse Planned for 15 Cities, MULTICHANNEL NEWS, OCT. 30, 2006, at 13 ("Multichannel News
October 30, 2006 Article
").
462 BellSouth Comments at 1-2.
463 BellSouth Comments at 1-2.
464 BellSouth Comments 2.
465 BellSouth Comments at 2-3. BellSouth also notes that upon approval of its merger with AT&T, it expects the
combined company to be in a better position to further deploy IPTV in BellSouth's service area. Id.
466 Beth Potter, Qwest To Expand TV Service, DENVER POST, Jul. 5, 2006, at
http://www.denverpost.com/business/ci_4011840 (stating that Qwest has 1 million subscribers taking bundles of
services) ("Denver Post July 5, 2006 Article").
467 Andy Vuong, Qwest: DirecTV Deal Not Window Dressing, DENVER POST, Dec. 19, 2006, at
http://www.denverpost.com/headlines/ci_4863836 ("Denver Post December 19, 2006 Article").
468 Denver Post July 5, 2006 Article. According to this story, Qwest provides its video offerings using high-speed
fiber-optic lines or over copper video digital subscriber lines.
469 Denver Post December 19, 2006 Article.
470 We treat OVS providers 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 by relieving OVS operators of certain regulatory
requirements. Title VI regulations apply somewhat differently to OVS certified providers than they apply 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. Among the rules that apply to open video
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however, are the only significant holders of OVS certifications or local OVS franchises.471 Most, if not
all, OVS providers are also overbuilders.472 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.473 BSPA maintains that build-out requirements limit wireline
video competition by increasing the costs of entry.474 BSPA argues that most incumbent cable operators
have had decades to build, upgrade, expand, and market their networks and services to current service
boundaries with limited or no competition. Significant portions of the funding for this historical
expansion came from ongoing operations rather than the capital markets. Today's new entrants, however,
do not have the advantage of significant ongoing operations, and have to rely more heavily on the capital
markets to finance their expansion. Thus buildout requirements, according to BSPA, are anticompetitive
and a barrier to entry into the video marketplace.475
3.

Electric and Gas Utilities

136.
Last year, we observed that municipal electric and gas utilities continue to move forward
with multichannel video program distribution that provides video services through traditional fiber-optic
networks.476 In the Notice, we sought information regarding utility companies that provide video
services, including broadband over power lines ("BPL").477
137.
APPA, which represents more than 2,000 not-for-profit community and state-owned
electric utilities, reports that a recent APPA survey of municipal broadband service providers found that
100 association members provide video services, many in combination with high-speed Internet service
and telephony, at a discounted price for bundled services.478 The APPA survey indicates that the average
subscriber penetration rate was 50 percent of homes passed by utility video services, and that 40 percent
(Continued from previous page)


systems are 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.
471 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 Feb. 5, 2007).
472 2004 Report, 20 FCC Rcd at 2801 70.
473 BSPA Comments at 6-7. OPASTCO reports that fewer than 3 percent of its members provide service under
OVS certification, a decline from the roughly 8 percent OPASTCO reported last year. Compare OPASTCO Reply
Comments at 3, with 2005 Report, 21 FCC Rcd at 2549 88 n.336.
474 BSPA Comments at 15.
475 Id.
476 2005 Report, 21 FCC Rcd at 2563-7 126-8. See also CEA Comments at 8, Comcast Comments at 55.
477 Notice, 21 FCC Rcd at 12248 54. BPL is a new type of technology that provides access to high-speed Internet
service using electric utility companies' power lines. It has the potential to extend high-speed Internet service to
unserved and underserved areas because power lines reach virtually every U.S. residence and business. It also could
introduce additional competition to existing cable, DSL, and other high-speed Internet services. See Amendment of
Part 15 Regarding New Requirements and Measurement Guidelines for Access Broadband over Power Line
Systems, Carrier Current Systems, Including Broadband Over Power Line Systems,
19 FCC Rcd 21265, 21266
(2004) 2 ("2004 BPL Order").
478 APPA Reply at 1-3. APPA notes that 70 percent of its member utility providers serve communities with less
than 10,000 residents.
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of these subscribers purchase a combination of video and high-speed Internet access service.479 APPA
indicates that incumbent cable operators lower prices or offer additional services in response to utility
competition, and that cable operators have used predatory pricing by lowering subscription rates by 50
percent in some instances where utility competition exists.480 Similarly, the FTTH Council cites the
example of Bristol Virginia Utilities ("BVU"), a municipal MVPD with a 50 percent market share for
video services.481 FTTH Council asserts that BVU offers lower prices than incumbent cable operators for
nearly all services provided, 20 percent lower in some cases.482
138.
In August 2006, the Commission responded to petitions for reconsideration by generally
affirming its technical standards, operating restrictions, and measurement procedures for BPL systems to
minimize interference.483 In November 2006, the Commission classified BPL Internet access service as
an information service under the Act.484 CEA and others assert that these recent Commission actions
remove uncertainty regarding the classification of BPL service and will facilitate the development of this
technology.485 A number of utilities are offering, or plan to offer, video services using BPL technology,
including Current Communications, offering video to 60,000 Cincinnati residents; ANEW Broadband
services, providing on-demand video in hotels and niche markets in Florida; and KlikVU, Inc., which has
announced plans to stream VOD programming, including movies, television, sports, and foreign language
films in Texas.486 In addition, Sharp is introducing flat-screen TVs that will be able to receive video via
BPL.487 Further, Comcast states that 20 percent of national utility services are considering investments in
BPL, but may be awaiting the launch of TXU's BPL network to gain confidence in supporting the new


479 APPA Reply at 4.
480 APPA Reply at 4. See also Vicky Aldous, Cable Wars, ASHLAND DAILY TIDINGS, Mar. 3, 2005, at
http://www.dailytidings.com/2005/0303/030305n1.shtml (visited Jan. 30, 2007).
481 FTTH Comments at 8-9.
482 Id.
483 See Amendment of Part 15 Regarding New Requirements and Measurement Guidelines for Access Broadband
over Power Line Systems, Carrier Current Systems, Including Broadband Over Power Line Systems,
21 FCC Rcd
9308 (2006). See also 2004 BPL Order.
484 United Power Line Council's Petition For Declaratory Ruling Regarding the Classification of Broadband over
Power Line Internet Access Service as an Information Service
, 21 FCC Rcd 13281 (2006).
485 See CEA Comments at 8. See also NCTA Comments at 41; Comcast Comments at 55-57.
486 Comcast Comments at 56-57. BPL operators are expected to include mainstream networks, such as QVC,
Encore, STARZ!, Discovery, A&E, and Lifetime. BPL is attracting significant investment capital. For example,
Current Communications has secured $130 million in funding from TXU Corp, Earthlink, General Electric, Google
Inc., Goldman Sachs & Co., and The Hearst Corp. Id. at 57.
487 Sharp Electronics Corp., Sharp Extends LCD Leadership with One-of-a-Kind Technology Demonstrations (press
release), Jan. 8, 2007.
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infrastructure.488 However, forecasters indicate that BPL technology may face low penetration rates as
the market for bundled services is saturated.489

F.

Other Wireless Video Services

1.

Private Cable Systems

139.
Private cable operator ("PCO") systems, also known as satellite master antenna
("SMATV") systems, are video distribution facilities that do not use any public rights-of-way.490 PCOs
acquire video programming and distribute it via 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. In the last 10 years, PCOs have increasingly used wired, wireless,
and DBS technologies to provide voice and data communications services as well.491 Thus, the packages
PCOs provide their subscribers are comparable to those of cable systems, and they directly compete with
franchised cable operators.
140.
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.492 PCO
subscribership has declined to 900,000 subscribers this year, a decrease of 10 percent from last year's 1
million subscribers.493 The Independent Multi-Family Communications Council ("IMCC"), the trade
association that represents PCOs and the MDUs they serve, indicates that PCOs serve about 1 to 2 percent
of the MVPD marketplace, although they comprise 6 to 8 percent of the market with respect to MDUs of
100 units or more.494 It also states that most PCOs serve between 3,000 and 4,000 customers.495
2.

Wireless Cable Systems

141.
Wireless cable systems use Broadband Radio Service ("BRS") and Educational
Broadband Service ("EBS") spectrum in the 2 GHz band to transmit video programming and provide


488 Comcast Comments at 57.
489 Dinesh Kumar, Analysts Tie BPL Growth in 2007 to Tex. Project's Fate, COMM. DAILY, Jan. 22, 2007, at 5.
490 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.
491 IMCC Reply Comments at 2-3.
492 See 2005 Report, 21 FCC Rcd at 2564 130.
493 Kagan Research, LLC, Basic Cable Network Economics, 2005-2015, Media Trends 2006, at 64.
494 IMCC Reply Comments at 2. In 2005, we reported that IMCC had more than 150 members operating throughout
the United States. 2005 Report, 21 FCC Rcd at 2563 130. For a list of members, see Independent Multi-Family
Communications Council, at http://www.imcc-online.org/membership (visited Feb. 1, 2007).
495 IMCC Reply Comments at 2.
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broadband services to residential subscribers.496 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.497 The number of wireless cable subscribers has declined steadily from a peak of 1.2 million in
1996 to approximately 100,000 in 2006, unchanged from 2005.498 Wireless cable systems provide video
competition to incumbent cable operators on only a limited basis.
3.

Commercial Mobile Radio Service and Other Wireless Providers

142.
In recent years, major commercial mobile radio service ("CMRS") and other wireless
providers have begun offering services that allow subscribers to access video programming over the air
on cellular phones and other mobile devices. Video content available on mobile phones includes:
(1) linear television programming, which matches the programming being aired at the same time on a
television broadcast or nonbroadcast network; (2) mobile-only video channels; (3) on-demand video clips,
available for download, of content aired on television networks or content available exclusively to mobile
phones; (4) full-length, pay-per-view movies; and (5) user-generated videos uploaded to Internet sites,
such as YouTube.com.499 Estimates of the number of users of mobile video services in the United States
range from 2 to 8 million.500
143.
As mentioned in the 2005 Report, Verizon Wireless launched its mobile video and
multimedia service, V CAST, in February 2005.501 The V CAST service allows customers to download
games, music, and video clips on demand, including clips of television programming aired on networks
such as ESPN, CNN, The Weather Channel, Nickelodeon, MTV, and Comedy Central, as well as clips of
videos uploaded on YouTube.com.502 The service is available to Verizon Wireless subscribers whose
mobile devices run on the carrier's CDMA EV-DO mobile broadband network, which allows download
speeds of 400-800 kilobits per second ("kbps").503 In March 2007, Verizon Wireless launched an
expanded mobile television service for V CAST using Qualcomm's MediaFLO technology. As of April


496 This spectrum 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).
497 2004 Report, 20 FCC Rcd at 2814 104-106.
498 NCTA Comments at 9.
499 Comcast Comments at 50-51; CEA Comments at 5-6.
500 Telephia, U.S. Mobile TV Users Hit 2 Million Mark (press release), May 24, 2006 (2 million subscribers as of
First Quarter, 2006); Comcast Comments at 50.
501 See 2006 Report, 21 FCC Rcd at 2566 134.
502 Verizon Wireless - Get It Now, V CAST Browse Clips, at http://getitnow.vzwshop.com/
index.aspx?id=vcast_video_browse (visited Jan. 19, 2007); NCTA Comments at 25-26.
503 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993, Annual Report and
Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services
, 21 FCC Rcd 10947
(2006).
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2007, the service was available in 27 markets and on two handset models.504 The new service will rely on
Qualcomm's MediaFLO video multicasting technology and will enable subscribers to view linear video
programming from networks such as Fox, CBS, MTV, Comedy Central, and Nickelodeon on compatible
mobile devices.505
144.
Sprint Nextel also offers a mobile video service, Sprint TV, to customers whose handsets
are compatible with Sprint Nextel's EV-DO network. Subscribers to this service can view linear
television programming from 20 nonbroadcast networks, including the Discovery Channel, the Weather
Channel, C-SPAN, and Fox News, as well as video content from several mobile-only channels.506 In
addition, in September 2006, Sprint Nextel launched a pay-per-view movie download service that allows
customers to download and view full-length movies on their cell phones.507
145.
MobiTV, launched in November 2003, is a mobile television service available to
subscribers of Sprint Nextel, Cingular, Alltel, U.S. Cellular, and other mobile telephone carriers with a
MobiTV-compatible phone. Customers can watch linear networks, such as MSNBC, CNBC, Fox News,
and TLC, as well as several mobile-only video channels, for an additional $9.99 per month. In January
2007, MobiTV announced that it was testing technology that will allow mobile WiMAX network
operators to offer interactive mobile television services.508
146.
MobiTV also announced in January 2007 that Sprint Nextel planned to use MobiTV's
mobile television technology and service as a means to extend the video services offered through Sprint
Nextel's joint venture with major cable companies, including Comcast, to mobile handsets.509 In 2006,
Sprint Nextel partnered with Comcast and other major cable companies in a joint venture called
SpectrumCo to participate in the Commission's Advanced Wireless Services auction.510 In that auction,


504 Brad Smith, Mobile TV's High Wire Act, Wireless Week, Apr. 15, 2007; Verizon Wireless, V CAST Mobile TV,
www.verizonwireless.com/mobiletv (visited Apr. 18, 2007).
505 Verizon Wireless, Verizon Wireless Lifts Curtain on V CAST Mobile TV; True Broadcast Quality, the Best of TV
(press release), Jan. 7, 2007. MediaFLO is a one-way, multicast video service that uses Qualcomm's spectrum
licenses in the 700 MHz band. The service relies on Verizon Wireless's two-way CDMA network for any uplink
communications.
506 Sprint Nextel, Sprint TV Live Launches on Sprint Multimedia Handsets (press release), Sept. 26, 2005.
507 Sprint Nextel, Sprint Is First to Offer Full-Length "Pay-Per-View" Movies on Mobile Phones in U.S. (press
release), Sept. 5, 2006; NCTA Comments at 25-26. Movies cost between $3.99 and $5.99 each, and, once
purchased, are available to the customer for viewing for a time period ranging from 24 hours to one week depending
on the title. Sprint Nextel, Sprint Is First to Offer Full-Length "Pay-Per-View" Movies on Mobile Phones in U.S.
(press release), Sept. 5, 2006.
508 MobiTV, MobiTV Provides Mobile Television Service for Sprint Cable Companies Joint Venture (press
release), Jan. 8, 2007. WiMAX ("World Interoperability for Microwave Access") was formed in June 2001 to
promote conformance and interoperability of the IEEE 802.16 standard and to provide wireless data over long
distances, in a variety of ways, from point-to-point links to full mobile cellular type access. See also 274 infra.
509 MobiTV, MobiTV Demonstrates First Ever Mobile WiMAX Broadcast TV Service (press release), Jan. 7, 2007.
510 Comcast Comments at 72-73.
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SpectrumCo won 137 licenses capable of serving 267 million people; the spectrum will allow Comcast to
cover 99 percent of its cable footprint with wireless capabilities.511
147.
Tower company Crown Castle has been running trials of mobile television services
through its Modeo subsidiary. After testing the service in Pittsburgh, Pennsylvania, for three years,
Modeo began offering a beta trial of its mobile television service in January 2007 for several hundred
users in New York City.512 Modeo's service uses the DVB-H (Digital Video BroadcastHandset) mobile
video technology standard and Crown Castle's spectrum license in the 1670-1675 MHz band.513 The
service allows subscribers to access linear television programming from several networks, including Fox
News and The Discovery Channel. While Modeo is managing the trial of its service in New York, the
company ultimately plans to offer its service wholesale to mobile telephone carriers, which will then sell
it to end users with DVB-H-compatible handsets. Like Qualcomm's MediaFLO service, Modeo relies on
mobile telephone carrier networks for any uplink communications.
148.
Aloha Partners, a major holder of spectrum in the 700 MHz band, is also planning to use
DVB-H technology in its mobile television venture, Hiwire.514 T-Mobile is reportedly testing Hiwire's
service.515
149.
In January 2007, Cingular Wireless and Apple Computer unveiled the iPhone device,
which the companies plan to begin selling in June 2007.516 The iPhone is a wireless phone and
multimedia device that runs on Cingular Wireless's EDGE network.517 Users can load music and video
content, available through Apple's iTunes software and online store, onto the iPhone; however, the music
and video content must be loaded onto the iPhone from a PC (as it must be to an iPod) and will not be
accessible for over-the-air downloads.518


511 Auction of Advanced Wireless Services Licenses Closes, 21 FCC Rcd 10521 (2006); Comcast Comments at 72-
73.
512 Modeo, Modeo Launches Live Mobile TV Beta Service in Nation's Largest Metro Area (press release), Jan. 8,
2007.
513 See 2005 Report, 21 FCC Rcd at 2606 230; Letter from Ari Q. Fitzgerald, Counsel to Crown Castle
International Corp., to Marlene H. Dortch, Secretary, FCC, Attachment (presentation to the FCC on the use of the
1670-1675 MHz Band) at 3 (Sept. 28, 2006).
514 Modeo Tests Live Cellular TV Service in New York City, AP, Jan. 9, 2007.
515 Joni Morse, Modeo Flips on Live TV in NYC, WIRELESS WEEK, Jan. 8, 2007.
516 Cingular, Apple Chooses Cingular as Exclusive U.S. Carrier for Its Revolutionary iPhone (press release), Jan. 9,
2007.
517 Cingular, Apple Chooses Cingular as Exclusive U.S. Carrier for Its Revolutionary iPhone (press release), Jan. 9,
2007; Li Yuan, iPhone Fans and Foes Clash Online, THE WALL STREET JOURNAL, Jan. 18, 2007, at B3.
518 Cingular, Apple Chooses Cingular as Exclusive U.S. Carrier for Its Revolutionary iPhone (press release), Jan. 9,
2007; Li Yuan, iPhone Fans and Foes Clash Online, THE WALL STREET JOURNAL, Jan. 18, 2007, at B3.
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G.

Other Entrants

1.

Web-Based Internet Video

150.
The amount of web-based video available over the Internet continues to increase
significantly each year.519 As we have reported in the past, many traditional broadcast and nonbroadcast
programmers, as well as many independent content producers, currently provide streaming and
downloadable video content on their Internet web pages.
151.
Streaming is a technique used for transferring data on the Internet such that it can be sent
and received as a steady and continuous stream.520 Streaming technologies are becoming increasingly
important with the growth of the Internet because many users do not have fast enough access to download
large multimedia files quickly, and do not want to wait for large multimedia files to download entirely
before viewing them. With streaming video, the end-user can connect to the video provider's server
through its web site, and then use streaming software (such as Real Player, Windows Media Player,
Apple's QuickTime or another proprietary application) to view the video in "real-time." With streaming
technology, the user can start displaying the video before the entire video file has been transmitted.
152.
As we reported last year, a large amount of video available through the web is
downloadable. Downloadable video continues to be available from the web sites of both traditional and
independent programmers. We expect that a large amount of video available through the web will
continue to be downloadable video. Numerous online services allow users to download content to a
computer hard drive for viewing on a personal computer, television, or mobile video device.
Downloadable content for viewing on a mobile video device also is becoming more widely available.521
In addition, some companies are using a high-speed Internet connection coupled with a television set-top
box that includes an on-screen guide to provide video directly to a television set.
153.
Several commenters observe that established models for the distribution of video
programming are being challenged by these technological advancements and consumers' ability to
receive video programming via alternative means, not just from traditional linear networks.522 Comcast
provides examples of the new models for offering video, such as the video iPod, which, it argues,
competes with cable for the time and attention of consumers.523
154.

Internet Usage

. Nearly 70 percent of all U. S. households subscribe to an Internet
service, and high-speed connections now constitute 60 percent of online subscriptions.524 In July 2006,
107 million Americans, three out of every five Internet users, viewed video online.525 In July 2006, about


519 See also Comcast Comments at 29; DIRECTV Comments at 12; NCTA Comments at 9-10; Comcast Reply at 6-
7, 14-15; NCTA Reply at 2-4.
520 See Webopedia, Streaming, at http://www.webopedia.com/TERM/s/streaming.html.
521 See Comcast Comments at 3; NCTA Comments at 22-26; Comcast Reply at 14-15, 20. See also Section II.F.3.
522 See Comcast Comments at 1-7, 62; CEA Comments at ii, 5-6; Comcast Reply at 2-4, 6-7; Viodi Reply at 2.
523 See Comcast Comments at 30, 34, 57-59; Comcast Reply at 20.
524 Comcast Comments at 30.
525 Id.
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60 percent of U.S. Internet users downloaded videos; collectively, they downloaded more than 7 billion
videos.526 Comcast observes that video web sites now draw users in numbers comparable to the
subscriber reach of cable and satellite companies.527
155.

Available Content on the Web

. YouTube is the country's most used online streaming
video web site, with more than 34 million visitors in August 2006.528 The second most visited video web
site in August 2006 was MySpace, which logged more than 17.9 million visitors.529 YouTube began as a
personal video sharing service where users could post videos they created themselves or watch videos
posted by others. Purchased by the Internet portal530 Google in 2006, it now offers mostly user-posted
original content and videos or video clips that users have recorded from traditional video media, such as
television.531 In addition, some broadcast networks have entered into agreements to provide their
traditional programming content through YouTube's web site.532 MySpace, like YouTube, also offers
original short video content posted by its web site's users.533 In addition, MySpace has entered into an
agreement with Fox to provide advertiser-supported episodes of its prime time shows; both Fox and
MySpace are owned by parent company News Corp.534
156.
Major Internet portals, such as Google, Yahoo, and AOL, continue to offer user-posted
content, but are increasingly entering into licensing agreements to offer pre-existing and original video


526 FTTH Council Comments at 6 (citing comScore).
527 Comcast Comments at 30.
528 YouTube, Inc., at http://www.youtube.com/t/about ("YouTube, Inc."); Comcast Comments at 30 n.119 citing
Nielsen.Net Ratings). See also Comcast Reply at 6; FTTH Council Comments at 6.
529 MySpace.com, at http://www.myspace.com/Modules/Common/Pages/AboutUs.aspx ("MySpace.com"); Comcast
Comments at 30 n.119 (citing Nielsen.Net Ratings). MySpace's video services provided 1.4 billion streams or 20.1
percent of all web-based streamed video in August 2006. Comcast Comments at 35; FTTH Council Comments at 6
(citing com.Score).
530 An "Internet portal," also known as a "web portal," is a web site that acts as a starting point for browsing the
web. Portals typically include search engines and large directories of websites. Some popular portals are Yahoo,
Google, Excite, Lycos, Netscape, AltaVista, MSN, and AOL.com. There also are many smaller portals, known as
"niche portals," for specific interests. These sites include Cnet (for computers and technology), Fool.com (for
investors), and Garden.com (for gardeners). See TechTerms.org, Portal, at
http://www.techterms.org/definition/portal (visited Feb. 21, 2007).
531 See YouTube, Inc. See also Comcast Comments at 3, 34-35; CEA Comments at 6; NCTA Comments at 22;
Comcast Reply at 6, 18; Viodi Reply at 2. You Tube was officially launched in December 2005, and in October
2006 was purchased by Google for $1.65 billion. See YouTube, Inc.; CEA Comments at 6; Comcast Comments at
35 n.143; NCTA Comments at 22; Comcast Reply at 18.
532 Comcast Comments at 34-35. Verizon is partnering with YouTube to bring the web site's videos to Verizon
wireless phones, and possibly to television sets as well. Comcast Comments at 28. See also Section II.F.3.
533 See MySpace.com. See also Comcast Comments at 30 n.119 (citing Nielsen.Net Ratings); CEA Comments at 6.
534 Comcast Comments at 35. See also CEA Comments at 6.
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content from traditional video providers.535 AOL provides both free and paid video programming,
including a library of television shows and movies from several major movie studios.536 Some of the
content offered by Google, Yahoo, and AOL is available for streaming, and some content is available for
downloading onto the user's computer. In fact, most web-based video providers offer combinations of
streaming and downloadable video.


535 Comcast Comments at 2, 33-34; Comcast Reply at 15; NCTA Comments at 23. Google Video, for example,
allows viewers to search, view, and purchase video content, and allows users to share opinions about video clips. In
May 2006, Google Video attracted almost 7 million viewers. Comcast Comments at 33-34. MTV is working with
Google to offer its video content on the web. Id at 2. Yahoo continues to be one of the most popular providers of
video on the Internet, attracting 16.6 million unique visitors in June 2006. The Yahoo portal includes local news
clips from CBS, ABC, and CNN. Id. See also FTTH Council Comments at 6.
536 Comcast Comments at 33-34; NCTA Comments at 25.
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157.
Other online video providers include Wi-FiTV,537 BrightCove,538 Virtual Digital Cable
("VDC"),539 and LX.TV Lifestyle Television,540 which mostly provide prepackaged programming offered
as "channels" of video to monthly subscribers. As we reported last year, CinemaNow541 and Movielink542
continue to offer downloadable video through their web sites.543 In addition, Microsoft continues to
experiment with video service offerings, including movie downloads through its Xbox360.544 Amazon
offers movie downloads through its service called Unbox.545
158.
Traditional broadcast and nonbroadcast networks continue to experiment with alternate
programming content options on their own web sites.546 After a successful online video streaming
experiment during the spring of 2006, ABC relaunched its video streaming service in September 2006,


537 Wi-FiTV, Inc., Wi-Fi TV Corporate, at http://www.wi-fitv.com/Corporate.php ("Wi-Fi TV Inc."). Wi-FiTV.com
offers classic movies for purchase and over 200 live TV channels from around the world. Id; Comcast Comments at
35; Comcast Reply at 16.
538 Brightcove.com, Corporate, at http://corp.brightcove.com/. Brightcove.com distributes user-posted videos and
videos from traditional cable channels, such as Bravo, Discovery, AMC, Oxygen, and TV Land. Id.; Comcast
Comments at 36; NCTA Comments at 25.
539 VDC Corporation, at http://www.vdc.com. VDC is an Internet-TV company that offers video programming from
channels, including ShopNBC, the Soundtrack Channel, the World Championship Sports Network, and some local
television stations. Id. See Comcast Comments at 36. See also note 670 infra (Program Access Complaint).
540 LX.TV, at http://code.tv and http://code.tv/#footdata; NCTA Comments at 25. LX.TV is a broadband television
network web site featuring original lifestyle and cultural programming free and on-demand. Id.
541 CinemaNow, Inc., Company Background, at http://www.cinemanow.com/Aboutus-Background.aspx; Comcast
Comments at 48; FTTH Council Comments at 6-7; NCTA Comments at 22-23; Comcast Reply at 17.
542 Movielink, LLC, About Us, at http://www.movielink.com/store/web/about/about.jsp; Comcast Comments at 36
n.151, 48; FTTH Council Comments at 6-7; NCTA Comments at 23.
543 2005 Report, 21 FCC Rcd at 2568 139.
544 Microsoft's Xbox 360 enables users to access a selection of movies and broadcast television programming from
various content providers, including CBS, MTV Networks, Paramount Pictures, Turner Broadcasting System Inc.,
Ultimate Fighting Championship, and Warner Brothers Home Entertainment. Microsoft Corporation, Microsoft
Integrates IPTV Software Platform with Xbox 360
(press release), Jan. 8, 2007, at http://www.xbox.com/en-
US/community/events/ces2007/microsoftintegratesiptvsoftwareplatform.htm; Microsoft Corporation, Xbox 360
Unveils First Wave of TV Shows and Movies on Xbox Live
(press release), Nov. 22, 2006, at
http://www.microsoft.com/presspass/press/2006/nov06/11-22LiveTVMoviesPR.mspx; Microsoft Corporation,
Watch Movies and TV on Your Xbox, at http://www.xbox.com/en-US/community/news/2006/1106-moviestv.htm;
CEA Comments at 6; DIRECTV Comments at 12. Microsoft is testing "Soapbox on MSN Video," which allows
Internet users to watch and post videos, rate and comment on videos, and share favorite videos with friends through
e-mail. Microsoft Corporation, at http://soapbox.msn.com. Comcast Comments at 2, 36.
545 Amazon.com, Inc., Amazon.com Unbox Video Downloads, at http://www.amazon.com/gp/video/help/faq.html/
ref=amb_link_3187542_2/102-9771533-6006548; FTTH Council Comments at 6-7; Comcast Comments at 2, 47-
49; NCTA Comments at 23; Comcast Reply at 19 n.80.
546 See also Comcast Comments at 3-5; CEA Comments at 5-6.
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offering seven of its most popular shows for streaming online.547 CBS offers three web-exclusive series,
news programming, and full episodes of many of its hit prime time shows on its web site.548 NBC is
introducing a video service that, in addition to offering its own content, will license the content of other
producers. It also has partnered with Intel so that the online service will stream programming on-demand
at a higher resolution than other Internet video providers.549 In addition, NBC Universal has built a digital
studio dedicated to producing original web content, and it has four web networks, gettrio.com,
brilliantbutcancelled.com, outzonetv.com, and televisionwithoutpity.com.550 As we reported in the past,
some broadcast networks are offering advanced viewing of their programming on the web prior to
distribution over-the-air television.551 For example, Fox debuted the fourth season opening episode of
The O.C. on its owned-and-operated stations' web sites and on MySpace.com a week before premiering
the episode on broadcast television.552 PBS now offers many episodes of Frontline, NOVA, and segments


547 ABC, Inc., at http://abc.go.com/fsp/index.html; Disney, Disney-ABC Television Group's Emmy Winning
ABC.com Brings Back Enhanced, Ad-Supported Broadband Player This Month
(press release), Sept. 13, 2006, at
http://corporate.disney.go.com/news/corporate/2006/2006_0913_abcbroadband.html; Comcast Comments at 40.
See also CEA Comments at 6; NCTA Comments at 19.
548 CBS.com, at http://www.cbs.com; CBS Corporation, Sling Media and CBS Announce Beta Test of New Delivery
System for Video
(press release), January 10, 2007; Comcast Comments at 40. See also CBS Corporation, CBS
Brand Channel Launches Today on YouTube
(press release), Oct. 18, 2006; CBS Corporation, Yahoo! News and
CBS Television Stations Form Exclusive Partnership to Deliver Local News Video
(press release), Oct. 16, 2006;
CBS Corporation, CBS and YouTube Strike Strategic Content and Advertising Partnership (press release), Oct. 9,
2006; CEA Comments at 6; NCTA Comments at 19.
549 NBC Universal, Inc., at http://www.nbc.com/Video/; Intel Corp., NBC Universal and Intel to Deliver Series
Premiers in Intel Viiv and Intel Centrino Platforms
(press release), Sept. 28, 2006; Comcast Comments at 2, 40;
DIRECTV Comments at 12; NCTA Comments at 18-19.
550 Comcast Comments at 32; NBC Universal Inc., Trio Pop Culture TV, at http://www.gettrio.com; NBC Universal
Inc., Brilliant But Cancelled.com, at http://www.brilliantbutcancelled.com; NBC Universal Inc., OutZone TV.com, at
http://outzonetv.com/; Television Without Pity, at http://www.televisionwithoutpity.com/ (visited Mar. 22, 2007);
Maria Aspan, A Division of NBC Buys Out One of Its Harshest Online Critics, NEW YORK TIMES, Mar. 19, 2007, at
C4.
551 2004 Report, 20 FCC Rcd at 2818-9 116.
552 Comcast Comments at 41. See also Fox, at http://www.fox.com; MySpace.com, The OC, at http://
http://creative.myspace.com/VOD/oc/index.html; CEA Comments at 6; NCTA Comments at 19. Fox has entered
into an agreement with Apple to offer episodes of its programming through Apple's iTunes service. See Apple, Inc.,
Hit Programming from Fox Entertainment Group's Fox, FX, Speed, Fuel, and 20th Century Fox Television Library
Now Available at iTunes
(press release), May 9, 2006, at http://www.apple.com/pr/library/2006/may/09fox.html;
NCTA Comments at 24.
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of The News Hour for free online,553 and Nature is available for free in podcast format.554 Furthermore,
ABC, CBS, and NBC, sell episodes of their TV programs for download on Apple's iTunes service.555
159.
Among the many nonbroadcast networks that provide video content directly on their web
sites are CSTV Networks,556 Nickelodeon,557 Comedy Central, 558 MTV,559 TV Land,560 the Food
Network,561 CMT,562 Discovery,563 and the Weather Channel.564 Starz Entertainment Group operates a


553 Comcast Comments at 41. See also Public Broadcasting Service, at http://www.pbs.org/.
554 Public Broadcasting Service, Available Podcasts, at http://www.pbs.org/podcasts/; Comcast Comments at 41.
Podcast refers to the application that enables portable video players, especially the Apple video iPod. See Apple,
Inc., iPod + iTunes, at http://www.apple.com/itunes/; Comcast Comments at 14, 30 n.120, 42, 49 n.200, 54, 59;
NCTA Comments at 19, 23-24; Comcast Reply at 17 n.69, 19.
555 Comcast Comments at 30 n.120; 42,54,58; NCTA Comments at 19, 23-24; CEA Comments at 5-6; NCTA
Comments at 23-24. See also Apple Inc., Stay Tuned to iTunes, at http://www.apple.com/itunes/store/tvshows.html
(visited Mar. 22, 2007).
556 CSTV Networks, Inc., CSTV, at http://www.cstv.com. CSTV provides hundreds of hours of streaming video
directly from its web site. Id.; Comcast Comments at 31.
557 Viacom International, Inc., TurboNick, at http://www.nick.com/turbonick/index.jhtml. Nickelodeon recently
upgraded its broadband video platform, "TurboNick," which allows users to create their own cartoons, create and
trade playlists, and send videos through e-mail links. Id.; Comcast Comments at 31.
558 Comedy Central, Show, at http://www.comedycentral.com/press/series/comedycentral-com.jhtml. Comedy
Central is developing twenty series especially for broadband, with another 40 under consideration. Id.; Comcast
Comments at 31. See also Comedy Central, Comedy Central.com to Premiere Two New Broadband Series (press
release), Oct. 25, 2006, at http://www.comedycentral.com/press/press_releases/2006/
102506_two_new_bband_series.jhtml.
559 MTV Networks, at http://www.mtv.com/overdrive/?. MTV's broadband site, "Overdrive," continues to offer
video and experiment with providing programming that complements the programs being aired on its linear channel.
Id.; Comcast Comments at 31. MTV Networks has launched a variety of exclusive Internet video programs through
its broadband portals Overdrive, Uber, TurboNick, Vspot, and Loaded. Comcast Comments at 32.
560 Viacom International, Inc., TV Land, at http://www.tvland.com/tvlhome.jhtml and http://www.tvland.com/video.
TV Land recently launched the TV Land video player that features full-length episodes of choice hit shows,
including Star Trek, as well as sneak peaks of originals. Id.; Comcast Comments at 31.
561 Scripps Networks, Inc., Food Network Video Center, at http://www.foodnetwork.com/food/video_guide/. The
Food Network is providing its second Internet series, Dave Does, after its first Internet offering Eat This, logged 1
million page views in its first two weeks. Id.; Comcast Comments at 32.
562 Country Music Television, Inc., CMT Loaded, at http://www.cmt.com/loaded/player.jhtml?launchedFrom=
loaded. CMT launched "CMT Loaded," an online portal offering more than 500 clips of performances, interviews,
and original video. The CMT video library is projected to total 300 clips per month. Id.; Comcast Comments at 32.
563 Discovery Communications, Inc., Discovery Communications Expands Content Offering on Google Earth (press
release), Sept. 18, 2006. Discovery Communications added a webcast feature to its online news service that offers
news clips about developments ranging from scientific discoveries to health information. Id., Comcast Comments at
32.
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video download service called Vongo.565 Newspapers also are increasingly adding video and other
multimedia content to their web sites. As a result of these new sources of video programming, the
National Academy of Television Arts and Sciences has created an Emmy award category to honor
"original news and documentary created specifically for non-traditional viewing platforms."566
160.
Internet video distribution also has become a means by which some new programming
networks are developing audience interest in their programming. VoyTV and BlueHighwaysTV are
among those using the Internet to distribute video absent an agreement for distribution as a linear network
with one of the major MVPDs.567
161.
Cable operators also are starting to experiment with online video offerings. Comcast
launched a new network, called FearNet, using only the Internet and video-on-demand.568 In addition,
Comcast uses its web portal, comcast.net, to provide subscribers with a variety of video content.569 For
example, Comcast has entered into an agreement with Jump TV to allow Comcast's Internet subscribers
to view 225 TV channels from around the world.570 In addition, Comcast recently launched Ziddio, a web
site that allows users to post original video content. Video clips that are highly rated by other users are
then offered on Comcast's cable video-on-demand service.571
162.

Downloadable Content for Portable Devices

. Downloading video from the Internet to
portable video players, especially the Apple video iPod, has gained popularity in the past year and
demonstrates consumer demand for the ability to watch video content on a portable device.572 Traditional
and new content producers alike are offering their programming for download onto mobile devices. In
(Continued from previous page)


564 The Weather Channel Interactive, Inc., Video-on-Demand, http://www.weather.com/multimedia/videoplayer
.html ?clip=1073&collection=topstory&nav=84&from=gn_six_welcome. The Weather Channel has introduced a
new broadband site, called One Degree, that features videos dedicated to the subject of global warming. The
Weather Channel Interactive, Inc., One Degree, at http://climate.weather.com/?from=footer; Comcast Comments at
32.
565 Vongo is an Internet video download service that provides a selection of titles on demand to personal computers
or portable media devices. Starz Entertainment, LLC, Our Channels, at http://www.starz.com/appmanager/seg/s?_
nfpb=true&_pageLabel=our_channels; Comcast Comments at 48; DIRECTV Comments at 12; NCTA Comments at
24.
566 National Academy of Television Arts & Sciences, Nominees for the First Emmy Award For Internet, Cellphones,
and iPods Announced
(press release), April 10, 2006; Comcast Comments at 58.
567 Voy, LLC., Voy TV, at http://www.voytv.com/#pagekeep::p,hot::b,HotContext::g,1; Network Creative Group,
LLC, BlueHighways.com: About, at http://www.bluehighwaystv.com/pgabout.cfm; Comcast Comments at 33.
568 Id. at 33.
569 Id. at 70-71.
570 Id. at 70.
571 Id. at 71; Comcast Corp., Ziddio, at http://www.ziddio.com/ui.zd?dispatch=homepage; FTTH Council Comments
at 6-7.
572 Apple, Inc., iPod + iTunes, at http://www.apple.com/itunes/; Comcast Comments at 14, 30 n 120, 42, 49 n.200,
54, 58. DIRECTV Comments at 12; NCTA Comments at 19, 23-24; Comcast Reply at 17 n.69, 19.
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addition to the increasing popularity of Apple's iTunes download service and its iPod video player, other
portable media devices, such as EchoStar's PocketDish, are becoming popular.573
163.

Internet Video for Viewing on a Television Set

. Several video services continue to
utilize a set-top box that accesses the Internet to receive video for viewing on a television set. As we
reported last year, Akimbo is one such Internet video-on-demand service that continues to attract
investment. It delivers more than 8,000 on-demand programs, including travel shows, documentaries,
music videos, full-length films, sporting events, television series, and HD content from the Internet to a
set top box connected to its subscribers' television sets.574 Apple currently offers a wireless device that
transmits movies from laptops to television set-top boxes for viewing on a television set.575 In addition,
TiVo offers a TiVo Cast, a free service that allows its subscribers to watch Internet video clips through a
broadband-connected TiVo device attached directly to their televisions.576
2.

Home Video Sales and Rentals

164.
In last year's Report, we observed that VOD services provided by cable, DBS, and
Internet providers have emerged as a competitive alternative to home video.577 Home video, such as
Netflix delivered to the home and retail-based options, offers some level of competition to broadcast
television, cable television, DBS, and other MVPDs because it offers services similar to premium and
pay-per-view offered by MVPDs.578
165.
For the first time in 2006, the number of DVD households surpassed the number of VHS
households. Nielsen research shows that 81.2 percent of households own a DVD player, compared to
79.2 percent that own a VCR.579 Consumers purchased 33 million DVD players in the last year,
contributing to a 6 percent increase in the rate of DVD penetration in the U.S.580 DVD rentals increased
by $1 billion to $7.5 billion over the last year.581 One study indicates that DVD households rent DVDs an


573 "PocketDish" is a mobile video device that EchoStar offers as a companion to its DBS service. NCTA
Comments at 23, 26. See also Section II.B supra.
574 Akimbo Systems, About, at http://www.akimbo.com/about.html; Comcast Comments at 36. See also Viodi
Reply at 2.
575 Apple, Inc., AppleTV, http://www.apple.com/appletv/; Comcast Comments at 2, 5, 48-49.
576 TiVo, Inc., TiVoCast, at https://www3.tivo.com/tivo-tco/cds/index.do; Comcast Comments at 42 n 174, 58;
FTTH Council Comments at 6-7.
577 2005 Report, 21 FCC Rcd at 2569 140.
578 2005 Report, 21 FCC Rcd at 2569 140. See also 2003 Report, 19 FCC Rcd at 1675 108.
579 Nielsen Media Research, at http://www.nielsenmedia.com/nc/portal/site/Public/
menuitem.55dc65b4a7d5adff3f65936147a062a0/?vgnextoid=4673a1bcb279f010VgnVCM100000ac0a260aRCRD
(visited Jan. 24, 2007).
580 Mike Snider, Home Video Spending Records Another Decline, USA TODAY, Jan. 8 2007 ("Snider Home
Video"), at D-1.
581 Id.
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average of twice per month, while VCR households rent only once per month.582 Further, DVD movie
sales rose, but at a slower pace, increasing by $300 million from $16.3 to $16.6 billion in 2006.583 In
terms of unit sales, DVD sales grew only 4 percent in the first half of 2006, half the growth rate
experienced in the first half of 2005.584 Consumer DVD sales and rentals have yet to compensate for lost
VHS sales and rentals. Since 2004, total home video revenues decreased by $300 million from $24.5 to
$24.2 billion.585 Whereas VHS spending topped $3 billion in 2004, last year's VHS spending accounted
for only $100 million.586 One factor contributing to the increase in DVD sales is the increased availability
of previously broadcast television programs.587 Television shows on DVD accounted for 9 percent of
home video sales last year, an increase of 2 percent over the previous year.588
166.
Consumers can now choose from more than 51,000 titles on DVD, compared to 47,000 a
year ago.589 Besides traditional video retailers, consumers are able to purchase or rent home video
products through an increasing number of outlets. DVDs and videocassettes can be purchased at mass
market chains (e.g., Target, Wal-Mart), specialty retailers (e.g., Bed Bath & Beyond, Starbucks), and over
the Internet from online retailers (e.g., Amazon).590 Rental options also continue to expand. For example,
Redbox now operates automated rental kiosks in grocery stores and at McDonalds restaurants.591 Netflix
maintains an online distribution with 6 million subscribers that accounted for 12 percent of the DVD
rental market and $1 billion in revenue in 2006.592 Netflix also introduced a new online service to rent
videos via streaming technology, as opposed to purchasing and download technology used by competitors
(e.g., iTunes, Vongo).593 As a result of these other sources of home videos, Blockbuster and other major
video retailers now compete on all levels by offering sales, rentals, and online services.594


582 Nielsen Media Research, at http://www.nielsenmedia.com/nc/portal/site/Public/
menuitem.55dc65b4a7d5adff3f65936147a062a0/?vgnextoid=4673a1bcb279f010VgnVCM100000ac0a260aRCRD
(visited Jan. 24, 2007).
583 Snider Home Video at D1.
584 NPD Group, Inc., The NPD Group: TV-DVDs Soften Video Sales Decline (press release), Oct. 24, 2006.
585 Snider Home Video at D1.
586 Id.
587 Comcast Comments at 46.
588 NPD Group, Inc., at http://www.npd.com/press/releases/press_061024.html (visited Jan. 24, 2007).
589 The Digital Entertainment Group, Study Shows DVD Has Moved beyond the Living Room into All Aspects of
Consumers' Lives; a Variety of Players Are Available to Fuel This Trend for the Holidays
(press release), Nov. 17,
2005. See also 2005 Report, FCC 21 Rcd at 2569 141.
590 See Comcast Comments at 47.
591 Id.
592 Miguel Helft, The Shifting Business of Renting Movies, By the Disc or the Click, NEW YORK TIMES, Jan. 16,
2007, at C-1.
593 Michael Liedtke, Netflix Offers Instant Access, USA TODAY, Jan. 16, 2007, at B-5.
594 Blockbuster, at http://www.blockbuster.com (visited Jan. 29, 2007).
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167.
The introduction of Sony's Blu-ray and Microsoft's HD DVD discs are bringing a new
generation of pre-recorded HD content into the home.595 These formats are not compatible with each
other. Sony's Blu-ray format, developed for use in the Playstation 3, is supported by Disney and 20th
Century Fox, among others. HD DVD was developed for use in the Microsoft Xbox 360, and is
supported, among others, by Toshiba and Universal.596 To address the noncompatibility issue, Warner
and LG Electronics have introduced a combination Blu-ray/HD disc and combination Blu-ray/HD player,
respectively.597 Termed "Total HD," the new dual format has attracted support from Amazon, Cinram,
and Warner-owned subsidiaries, such as HBO and New Line.598 One study indicates that consumers are
expected to purchase 9 million high-definition DVD devices by the end of 2007.599

III.

MARKET STRUCTURE AND CONDITIONS AFFECTING COMPETITION

A.

Market Structure and Ownership Issues

168.
The video programming marketplace is comprised of a retail market for the distribution
of multichannel video programming to consumers, and a program supply market for the purchase of video
programming by MVPDs.600 In this section, we first review changes in the marketplace for the
distribution of video programming, including changes in the level of competition in that market between
June 2005 and June 2006. We then review the marketplace 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 marketplace in the last year.
1.

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

169.
In the past year, incumbent cable operators' share of all MVPD subscribers continued to
decline. As of June 30, 2006, cable operators served 68.2 percent of MVPD subscribers, compared to
69.4 percent of MVPD subscribers a year earlier. DBS, the major wireless MVPD technology that is
available to subscribers nationwide, saw its share of MVPD subscribers increase between June 2005 and
June 2006, from 27.7 percent of the market to 29.2 percent. Relatively few consumers have a second
wireline alternative, such as an overbuild cable system, as indicated by the small number of subscribers to
BSPs and LECs.601 Several other MVPD technologies, such as private cable systems and wireless cable


595 CEA Comments at ii, 13.
596 Video Business Online, at http://www.videobusiness.com/index.asp?layout=articlePrint&articleID=CA6406192
(visited Jan. 24, 2007).
597 Id.
598 Id.
599 Id.
600 The market descriptions included in this Report are tentative in nature, and are subject to potential revisions by
the Commission in future proceedings, merger reviews, or reports. Any individual proceeding in which the
Commission defines relevant product and geographic markets, such as an application for approval of a license
transfer, may present facts pointing to narrower or broader markets than any used, suggested, or implied in this
Report.
601 See 101-102, 132-133 supra. See also Appendix B, Table B-1.
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systems, offer consumers alternatives to incumbent cable services, but only in limited areas. Incumbent
cable and DBS operators provide MVPD service to over 97 percent of all MVPD households. The
combined share of the other MVPD alternatives provide MVPD service to less than 3 percent of MVPD
households.
170.
In the Notice, we requested comment on the impact of the regulatory environment and
barriers to entry on competition in the MVPD marketplace, including the impact of the local franchise
process on new providers' entry into local markets.602 In comments submitted in response to the Notice,
franchising authorities argued that they have promoted competition and that their build-out requirements
balance the economic interests of the operator with the interests of the community.603 Cable operators
argued that franchise requirements have not impeded LEC entry into the video marketplace and
maintained that a level playing field must exist for all providers and across all services. 604 LMC/MACTA
contended that local government is the only entity that can adequately monitor and ensure rapid, safe, and
efficient deployment of cable services when they are installed on a community level utilizing local rights-
of-way.605 Because citizens' interest in PEG programming varies from place to place and over time, the
Maryland Counties state, it makes sense for local communities to establish PEG requirements through
periodic renegotiation of franchise agreements.606 They urge the Commission not to infringe upon local
communities' rights to determine, and require cable operators to meet, their needs and interests, including
the allocation of resources for PEG channels as well as new ways to deliver PEG programming, such as
"PEG-on-demand."607 NYC echoes the sentiments observing that because local needs and conditions
vary widely across the country, local governments are best equipped to handle such tasks as negotiating
for the allocation of cable capacity for PEG channels and for the provision of institutional networks.608
171.
During the pendency of this proceeding, the Commission adopted rules to implement
Section 621(a)(1) of the Communications Act, which prohibits local franchising authorities ("LFAs")
from unreasonably refusing to award competitive franchises for the provision of cable services and also


602 Notice, 21 FCC Rcd at 12233-34 9-12.
603 NATOA Comments at 2-3 and Reply at 2-4. See also Burnsville Comments at 1; St. Croix Comments at 1;
Champaign-Urbana Comments at 1; Champaign Comments at 1; Fort Worth Comments at 1-2; Green Spring
Comments at 1; Jenkins Comments at 1; Minneapolis Comments at 1; Wheaton Comments at 1; Forest Park
Comments at 1; Elk Grove Comments at 1; Evanston Comments at 1; GMTC/RCC Comments at 1; Hoffman
Estates Comments at 1; Lake Minnetonka Comments at 1; Mt. Hood Comments at 1; Northbrook Comments at 1;
NDC4 Comments at 1; NSCC Comments at 1; Queen Anne's Comments at 1; SMCTC Comments at 1; Skokie
Comments at 1; West Central Comments at 1; Sycamore Reply at 1 (supporting NATOA's comments). See also
Maryland Counties Comments at 1, 12-13, 14-16; Naperville Comments at 2-4; GMTC/RCC Comments at 2;
LMC/MACTA Comments at 3-4, 16-17; Consumers Union Reply at 1-2; NYC Comments at 1-3.
604 Comcast Comments at 22-27. See also NCTA Comments at 15-17; Cox Reply at 8-9; IMCC Reply at 5.
605 LMC/MACTA Comments at 3-4.
606 Maryland Counties Comments at 17-20.
607 Id. at 20-21.
608 NYC Comments at 3-4. An institutional network (also called an I-Net) is defined as a communication network
that is constructed or operated by the cable operator and that is generally available only to subscribers who are not
residential customers. See 47 U.S.C. 531(f).
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issued a Further Notice of Proposed Rulemaking seeking comment on certain related issues ("Franchise
Order and FNPRM
").609 The Franchise Order and FNPRM addresses several ways by which local
franchising authorities unreasonably refuse to award competitive franchises. These include drawn-out
local negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for
"in-kind" payments that attempt to subvert the 5 percent cap on franchise fees; and unreasonable demands
with respect to PEG Programming.610
172.
The Commission found that the current operation of the local franchising process in
many jurisdictions constitutes an unreasonable barrier to entry that impedes the achievement of the
interrelated federal goals of enhanced cable competition and accelerated broadband deployment.611 To
eliminate the unreasonable barriers to entry into the cable market, and to encourage investment in
broadband facilities, the Commission found that an LFA's failure to issue a decision on a competitive
application within specified time frames constitutes an unreasonable refusal to award a competitive
franchise within the meaning of Section 621(a)(1). The new rules generally require an LFA to act on a
competitive franchisee's application within 90 days if the applicant has existing authority to access public
rights-of-way in the area to be served, or 180 days otherwise.612 The Commission also recognized that a
new cable entrant cannot reasonably expect to capture more than a fraction of the total market and that
build-out requirements impose significant financial risks on competitive applicants, who must incur
substantial costs to deploy facilities within the franchise area. Accordingly, the Commission found that it
is unlawful for LFAs to refuse to grant a competitive franchise on the basis of unreasonable build-out
mandates.613 In addition, the Commission found that any refusal to award a competitive franchise
because of an applicant's refusal to accede to LFA demands to include certain specified costs, fees, and
other compensation in the calculation of the statutory 5 percent cap on franchise fees, would constitute an
unreasonable refusal to award a competitive franchise. The Commission specifically addressed the
franchise fee revenue base, limitations on charges incidental to the award or enforcement of a franchise,
the proper classification of in-kind payments unrelated to the provision of cable service; and whether
contributions in support of PEG services and equipment should be considered within the franchise fee
calculation.614 The Commission concluded that LFAs may not make unreasonable demands on
competitive applicants for PEG channels and institutional networks ("I-Nets") and that conditioning the
award of a competitive franchise on applicants agreeing to such unreasonable demands would constitute
an unreasonable refusal to award a franchise. We also found that it is unreasonable for an LFA to impose


609 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
, Report & Order and Further Notice of Proposed
Rulemaking, 22 FCC Rcd 5101 (2007) ("Franchise Order and FNPRM").
610 Franchise Order and FNPRM, 22 FCC Rcd at 5134-54 66-120.
611 Id. at 5102 1.
612 Id. at 5136-7 71, Appendix B; Section 76.41(d).
613 Id. at 5143-4 88-90. Some other practices that the Commission deemed likely to be unreasonable include:
requiring the new entrant to build out and provide service to buildings or developments to which the new entrant
cannot obtain access on reasonable terms; requiring the new entrant to build out to certain areas or customers that
the entrant cannot reach using standard technical solutions; and requiring the new entrant to build out and provide
service to areas where it cannot obtain reasonable access to and use of the public rights of way. Id.
614 Id. at 5144-51 94-109.
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on a new entrant more burdensome PEG carriage obligations than it has imposed upon the incumbent
cable operator.615 The Commission preempted local laws, regulations, and requirements, including level-
playing-field provisions, to the extent they permit LFAs to impose greater restrictions on market entry
than the rules adopted in the Franchise Order and FNPRM.616 The Commission also sought comment on
how the findings in the Franchise Order and FNPRM should affect existing franchisees. In addition, the
Commission sought comment on local consumer protection and customer service standardsas applied to
new entrants.617.
173.
In response to the Commission's Franchise Order and FNPRM, Maryland Counties in
this docket express disappointment and argue that the Commission has disregarded the efforts of local
governments in furthering competition.618 In contrast, AT&T commends the Commission for its
recognition that the legacy franchising process has deterred competitive entry and for its effort to redress
the obstacles that have impeded the development of competitive alternatives and the deployment of
broadband infrastructure.619
174.
In response to the Notice, commenters also assert that other factors also inhibit entry and
competition. For example, AT&T and APPA state that incumbent cable operators continue to preclude
new entrants from acquiring valuable programming, especially regional sports, through use of exclusive
contracts and the terrestrial exception to the program access rules which allows vertically integrated
MVPDs to restrict access to their affiliated programming when it is distributed to cable headends by
means other than satellite transmissions.620 BSPA states that its members are dependent on program
suppliers that are either partially or fully owned by the incumbent cable operators and that such suppliers
have incentives to discriminate against BSPs and other MVPD entrants.621 Noting that the exclusivity
prohibition in the Commission's program access rules will expire in October 2007 unless it is renewed,
APPA urges the Commission to take an active role in ensuring that electric utilities are able to compete
vigorously against incumbent operators.622 USTelecom contends that the sunset of the program access


615 Id. at 5103-4, 5151-4 5, 110-120.
616 Id. The Commission found the record regarding state franchising laws insufficient to make determinations
regarding those laws, and therefore did not address state laws or state-level franchising decisions. Id. at n.2.
617 Id. The Franchise Order and FNPRM have been challenged by local government groups. See Alliance for
Community Media v. FCC, No. 07-3391 (6th Cir. filed April 3, 2007); GMTC v. FCC, No. 07-9518 (10th Cir. filed
April 3, 2007); Larchmont v. FCC, No. 07-1350-ag (2d Cir. filed April 3, 2007); National Association of Counties v.
FCC, No. 07-1985 (3d Cir. filed April 3, 2007); National Association of Telecommunications Officers and Advisors
v. FCC, No. 07-1270 (4th Cir. filed April 3, 2007); Tampa v. FCC, No. 07-11464-D (11th Cir. filed April 3, 2007);
The challenges were consolidated in the 6th Circuit as Alliance for Community Media, et al. v. FCC, No. 07-3391
(6th Cir. filed April 3, 2007).
618 Maryland Counties Reply at 1. See also Burnsville Reply at 5.
619 AT&T Reply at 6. See also TDS Reply at 1-2.
620 AT&T Comments at 14-17. See also APPA Reply at 7-8; AT&T Reply at 7; IMCC Reply at 6; OPASTCO
Reply at 5-8; Viodi Reply at 2-7.
621 BSPA Comments at 11-14.
622 APPA Reply at 11. See also 47 C.F.R. 76.1000-76.1004. On February 20, 2007, the Commission issued a
Notice requesting comment on the sunset of the exclusive contracts for satellite cable programming and satellite
(continued....)
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rules would cripple the prospect of real competition in the video industry.623 APPA cites barriers to
competition that include exclusive agreements for regional sports programming and the "terrestrial
loophole" in Section 628 of the Act, which allows vertically integrated MVPDs to restrict access to their
affiliated programming when distributed to cable headends by other than satellite transmissions.624
175.
BSPA also states that access to MDUs is often denied through long-term exclusive
contracts.625 The FTTH Council maintains that many MDUs have exclusive arrangements that were
entered into before wireline competition was available; it urges the Commission to recognize that
deployments of advanced fiber networks to tenants are important to competition in the MVPD
marketplace.626 SureWest states that many MDUs already have copper or fiber voice facilities that could
provide MVPD service but that exclusive access contracts for MVPD service prevent competition.627
Verizon states that the impact of exclusive access agreements is large because 30 to 35 percent of the
population reside in MDUs.628 On March 22, 2007, the Commission initiated a rulemaking to evaluate
access to MDUs for video providers.629 According to IMCC, the most significant obstacles to PCOs'
competitive entry are state and local mandatory access laws, MDU managers' inheritance of perpetual
service agreements from a pre-competitive era, and cable incumbents' refusal to cooperate in applying the
Commission's inside wiring rules.630
176.
USTelecom argues that the Commission should ensure that technical standards do not
disadvantage new entrants using new technologies to provide MVPD service.631 Verizon also requests
that the Commission make sure that any technical standards are technology neutral and do not favor
incumbents over new entrants using different technologies.632
2.

Competitive Issues in the Program Supply Market

177.
The market for buying and selling video programming tends to be regional or national
because programmers seek to reach a much broader audience than that represented by a local franchise
(Continued from previous page)


broadcast programming between vertically integrated programming vendors and cable operators. 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
, Notice of Proposed Rulemaking, 22 FCC Rcd 4252 (2007).
623 USTelecom Comments at 4-5. See also Verizon Comments at 29-30.
624 APPA Reply at 7. See also 1997 Report 13 FCC Rcd at 24380 171.
625 BSPA Comments at 15-17. See also USTelecom Comments at 16-19; Verizon Comments at 24-28. See also
Section III.C.2. infra.
626 FTTH Council Comments at 22-23.
627 SureWest Comments at 2-7.
628 Verizon Comments at 26-27 (citing Robert Curry, Vice Chairman, RCN Corporation, Prepared Statement Before
the Senate Subcommittee on antitrust, Business Rights, and Competition, Committee on the Judiciary, Cable and
Video: Competitive Choices
, 107th Cong., S. Hrg. 107-248, 2001 C.R. Vol. 147 at D315, Apr. 4, 2001).
629 Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate
Developments,
22 FCC Rcd 5935 (2007).
630 IMCC Reply Comments at 3.
631 USTelecom Comments at 22.
632 Verizon Comments at 31-32.
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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).
178.
Cable and DBS operators are the primary purchasers of multichannel video programming
targeted to a national audience. As shown in Table 11, in 2006, the four MVPDs with the largest
subscribership served approximately 63 percent of all MVPD subscribers,633 a figure unchanged from
2005.634 The share of subscribers served by the top 10 MVPDs decreased slightly from approximately 88
percent in 2005 to 87 percent in 2006.635

TABLE 11: MVPD Competition and Concentration

636

Percentage of MVPD Subscribers Served by Technology

2005
2006

Cable

69.4
68.2

DBS

27.7
29.2

Other

2.9
2.6

Percentage of MVPD Subscribers Served by Largest Providers

2005
2006

Top 4

63
63

Top 10

88
87

Top 25

94
93
179.
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


633 See Appendix B, Table B-4. Reported statistics for 2005 and 2006 are based on June data. They do not reflect
the acquisition of Adelphia cable systems by Comcast and Time Warner, which occurred in July 2006.
634 Id.
635 Id. See also Appendix B, Table B-3; 2005 Report, 21 FCC Rcd at 2620, Appendix B, Table B-3.
636 Data in Table 11 are based on June 2005 and June 2006 data. Subsequently, Adelphia's cable systems were
acquired by Comcast and Time Warner. See Applications for Consent to the Assignment and/or Transfer of Control
of Licenses from Adelphia Communications Corporation to Time Warner Cable Inc., and from Adelphia
Communications Corporation to Comcast Corporation
, 21 FCC Rcd 8203 (2006) ("Adelphia Order"). In this
Report, we do not double-count subscribers and, if a cable system is owned by more than one MSO, its subscribers
are assigned to the MSO with the largest ownership stake. Using this methodology, following the Adelphia
transactions, Time Warner became the third largest MVPD and EchoStar became the fourth. Data for year-end 2006
show that Comcast remains the largest MVPD with 24.16 million subscribers, DirecTV is ranked second with 15.95
million subscribers, Time Warner is ranked third with 13.40 million subscribers, and EchoStar is ranked fourth with
13.10 million subscribers. However, under our attribution rules, Time Warner is the second largest MVPD today
with 16.6 million subscribers when its attributable interest in the Bright House cable systems is factored in.
Comcast Corp., Comcast Reports 2006 Results and Outlook for 2007 (press release), Feb. 1, 2007; The DirecTV
Group, Inc., The DirecTV Group Announces Fourth Quarter and Full Year 2006 Results (press release), Feb. 7,
2007; Time Warner Inc., Time Warner Inc. Reports Results for 2006 Full Year and Fourth Quarter (press release),
Jan. 31, 2007; EchoStar Communications Corp., EchoStar Reports Fourth Quarter 2006 Financial Results (press
release), Mar. 1, 2007.
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concentration.637 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 2006, the HHI for the national market for the purchase of
programming was 1184. This represents a slight decrease from the March 2005 MVPD HHI of 1201.638
This decrease in the HHI is due to the slight decrease in the market share of the largest MVPD.
180.

Consolidation Among Cable Operators

. Cable operators continue to pursue a regional
strategy of "clustering" their systems.639 The effect of clustering was an issue in the Commission's
approval of the sale of Adelphia's systems to Comcast and Time Warner because the transaction resulted
in more clustering for Comcast and for Time Warner in numerous markets.640 In its decision, the
Commission noted that the potential benefits from clustering, including marketing efficiencies and the
deployment of facilities-based telephony and Internet access services, outweigh any potential
anticompetitive effects of clustering on competition in product markets such as local programming or
advertising. The Commission also noted that clustering can increase economies of scale and size, and
thus enable cable operators to offer an increased variety of broadband services at reduced prices to
customers in geographic areas that are larger than single cable franchise areas. Therefore, clustering can
make cable operators more effective competitors to LECs whose local service areas are usually much
larger than a single franchise area. The Commission also noted that clustering can provide a means of
improving efficiency, reducing costs, and attracting increased advertising. On the other hand, the
Commission noted that clustering can present a barrier to entry for the most likely potential overbuilder
(i.e., an adjacent cable operator). The Commission further noted that while clustering may help reduce
programming costs and other expenses, the Commission's findings reflect that these lower costs are not
being passed along to subscribers in the form of lower monthly rates.641
181.
With respect to the specific issues raised in the Adelphia transaction, the Commission
agreed with Comcast and Time Warner that clustering can lead to certain efficiencies and cost savings.
The Commission found, however, that the companies failed to provide sufficient supporting evidence for
the Commission to verify and quantify the claimed efficiencies and cost savings or to determine the extent


637 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 cable 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.
638 See Appendix B, Table B-4.
639 Appendix B, Table B-2 presents data on the number and subscriber size of major cable system clusters for 2002-
2005.
640 See Adelphia Order, 21 FCC Rcd at 8315-21 265-277.
641 Id. at 8318 271.
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to which they would flow through to consumers.642 Although the Commission found that the potential
public interest harms of the transactions, as conditioned, were outweighed by the potential public interest
benefits, the Commission was not persuaded that the transactions would lead to a more competitive
environment for the provision of the "triple play" of video, voice, and data services.643 Accordingly, the
Commission did not find that the increased clustering would result in an improved competitive
environment for video programming services.644 As for the deployment of telephony service, the
Commission reiterated its previous findings that clustering could better position cable operators as
potential service providers. To the extent that the transactions, through clustering or through the proposed
upgrades and deployment schedules, result in the addition of competitive, facilities-based telephony
service in Adelphia's former service areas or to unserved areas where Comcast or Time Warner currently
operate cable systems, the Commission found that consumers could benefit.645
182.
Between July 2005 and June 2006, a total of 28 MVPD transactions were announced,
valued at approximately $5.3 billion and affecting approximately 1.8 million subscribers. At the end of
2005, there were 113 clusters with approximately 50.8 million subscribers compared to 118 clusters and
approximately 51.5 million subscribers at the end of 2004.

B.

Vertical Integration and Other Programming Issues

1.

Status of Vertical Integration

183.
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.646 Our examination of vertical integration and affiliation in the MVPD
industry, therefore, focuses on ownership affiliations between video programming distributors and video
programming suppliers. Vertical relationships may have beneficial effects,647 or they may deter
competitive entry in the video marketplace and/or limit the diversity of programming.648
184.

Nationally Distributed Programming Networks

. In 2006, we identified 565 satellite-
delivered national programming networks, an increase of 34 networks over the 2005 total of 531
networks.649 Of the 565, 84 networks (14.9 percent) were affiliated with at least one cable operator in


642 Id. at 8318-19 271-3.
643 Id. at 8207 and 8319-20 5, 275.
644 Id. at 8319-20 275.
645 Id. at 8320 276.
646 See 47 U.S.C. 533, 548.
647 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).
648 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).
649 Appendix C, Table C-1 and Table C-2.
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2006.650 Last year, 116 of the 531 satellite-delivered national networks we identified, or 21.8 percent,
were affiliated with a cable operator.651 In addition, 23 national nonbroadcast networks without any
ownership interest by a cable operator, are affiliated with a DBS provider (e.g., News Corp. and
Dominion Video Satellite). Another 24 networks without any attributable cable ownership are affiliated
with a company that holds interests in a DBS provider (e.g., Liberty Media).
185.
This year, we report an increase in the total number of satellite-delivered national
networks, a decrease in the number of satellite-delivered national networks affiliated with a cable
operator, and a decrease in the percentage of satellite-delivered national networks affiliated with a cable
operator. We attribute these changes to updates to the Commission's prior estimates based on additional
data sources and changes in the number of multiplexed networks distributed by iN DEMAND, a
programming entity affiliated with several cable operators.652
186.
Five of the top seven cable operators Comcast, Time Warner, Cox, Cablevision, and
Advance/Newhouse hold ownership interests in satellite-delivered national programming networks. In
total, 84 satellite-delivered national programming networks are affiliated with one or more of these cable
operators.653 Time Warner has an ownership interest in 39 national networks; Cox has an ownership


650 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 Espaol. 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.61. See also 2000 Report, 16 FCC
Rcd at 6079, n.79. See also Appendix C, Table C-1 and Table C-2. 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 60 multiplexed iN DEMAND channels and two iN DEMAND HD channels. Based on
Comments submitted in this proceeding, we have identified 8 multiplexed iN DEMAND channels and one iN
DEMAND HD channel. See Letter from Michael Berman, Senior Vice President Business Affairs & General
Counsel, iN DEMAND Networks, to Marlene Dortch, Secretary, Federal Communications Commission (Feb. 2,
2007) ("iN DEMAND Ex Parte Letter").
651 2005 Report, 21 FCC Rcd at 2575 157. 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 specific application of the Commission's
attribution rules.
652 We continue to include information from programmers directly, and information from channel lineups of
MVPDs currently offering programming. See Appendix C, Tables C-1 and C-2 Sources. See iN DEMAND Ex
Parte Letter. See also Letter from John Goodman, President, CA2C, to Marlene Dortch, Secretary, Federal
Communications Commission, (Feb. 21, 2007) ("CA2C Ex Parte Letter").
653 See Appendix C, Table C-1. Traditionally, we counted each programming service of a multiplexed network
separately for purposes of reporting the networks in which the top MSOs hold ownership interests. In the 2003, we
recognized that there was an alternative methodology that counts each multiplexed network as a single network
(rather than counting based on the number of independent programming streams offered), and we reported MSO
ownership using that methodology in the last three Reports. See 2002 Report, 17 FCC Rcd at 26959-60 135; 2003
Report
, 19 FCC Rcd at 1691-2 143 and n.586; 2004 Report, 20 FCC Rcd at 2832 146; 2005 Report, 21 FCC Rcd
at 2576 159. For purposes of historical analysis, and in light of iN DEMAND's clarification in this proceeding
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interest in 26 national networks; Advance/Newhouse, owner of cable operator Bright House Networks,
has interests in 24 national networks; Comcast has an ownership interest in 18 national programming
networks; and Cablevision has an ownership interest in 26 national networks.654
187.
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 DBS operators, broadcast television networks, and broadcast television station owners.655 We have
identified 124 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.656 These 124 networks represent 21.9 percent of the 565 total
networks identified, and 25.8 percent of the 481 networks that are not affiliated a cable operator. Thus, of
the 565 national nonbroadcast networks we have identified, 84 networks are affiliated with a cable
operator, 124 of the remaining networks not affiliated with a cable operator are affiliated with a media
entity, and the remaining 357 networks, or 63.2 percent, are not affiliated with any cable operator, DBS
operator, or broadcast media entity.657
188.
As shown in Table 12 below, there are 124 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.658 Together, these 152 networks represent 26.9 percent of the 565
national nonbroadcast networks we have identified, and 31.6 percent of the 481 networks that are not
affiliated with a cable operator. For example, News Corporation, which holds a 38 percent interest in
both DBS operator DIRECTV and 100 percent interest in the Fox Entertainment Group, Inc., parent
company of the Fox Broadcasting Company, has ownership interests in 20 national nonbroadcast
networks not also owned by a cable MSO.659 Dominion Video Satellite, provider of DBS service Sky
(Continued from previous page)


(that it offers eight channels of programming), we again count each programming service of a multiplexed network
separately. See iN DEMAND Ex Parte Letter. Were we to treat iN DEMAND as a single network for purposes of
determining the number of networks in which each MSO has an ownership interest, we would find that 77 satellite-
delivered national programming networks are affiliated with one or more of these cable operators; Time Warner has
an ownership interest in 32 national networks; Cox has an ownership interest in 19 national networks;
Advance/Newhouse has interests in 17 national networks; Comcast has an ownership interest in 11 national
programming networks; and Cablevision has an ownership interest in 19 national networks. See Appendix C, Table
C-1.
654 See Appendix C, Table C-1.
655 Notice, 21 FCC Rcd at 12234-5 13-14.
656 See Appendix C, Table C-2.
657 See Appendix C, Tables C-1, C-2.
658 Id. The WB network, through its parent company Time Warner, has ownership interests in 32 national
nonbroadcast networks. See Appendix C, Table C-1. United Paramount Network ("UPN") through its parent CBS
Corporation, has ownership interests in 15 national nonbroadcast programming networks. See Viacom, Separation
Overview
, at http://www.viacom.com/separation_overview.jhtml (visited Feb. 22, 2007). EchoStar jointly owns
G4videogameTV with Comcast and the 15 Voom HD Networks also owned by Cablevision. See Appendix C, Table
C-1. PBS Kids Sprout is a joint venture between Comcast and PBS. Id.
659 News Corp., 2005 Annual Report, at http://www.newscorp.com/Report2006/AR2006.pdf (visited Feb. 23, 2007);
Application of News Corporation and The DIRECTV Group, Inc., Transferors, and Liberty Media Corporation,
Transferee, For Authority to Transfer Control
, Consolidated Application for Authority to Transfer Control, Jan. 29,
2007, at page 7-8, available at http://svartifoss2.fcc.gov/servlet/ib.page.FetchAttachment?attachment_key=-123654
(visited Feb. 23, 2007). See Appendix C, Table C-1.
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Angel, has interests in three networks. Broadcast network CBS Corporation has ownership interests in 15
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 25 national networks not also owned by a cable MSO. NBC-Universal, through its parent
company General Electric, has ownership interests in 22 nonbroadcast networks not also owned by a
cable MSO, including eight networks owned jointly with Disney and Hearst, one with Ion Media
(formerly known as Paxson Communications), and one with CBS Corporation. Univision, a Spanish
language network and station licensee, has ownership interests in eight 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 24 national
programming networks.660 Furthermore, Viacom, which is no longer the parent company of the CBS and
UPN broadcast networks, continues to hold ownership interests in 28 national nonbroadcast networks not
also owned by a cable MSO.661
189.
We also have identified programming networks affiliated with broadcast television
station licensees not also owned by a cable operator, also shown on Table 12. Hearst, in joint ventures
with Disney and NBC-Universal, has ownership interests in a total of 20 national nonbroadcast
programming networks not also owned by a cable MSO. Of these, 12 are owned jointly with Disney, and
eight are owned jointly with Disney and NBC-Universal. E.W. Scripps holds ownership interests in
seven national programming networks. The Trinity Broadcasting Network owns five programming
networks. Landmark Communications owns two networks. Tribune and Daystar Television Network
each have ownership interests in one programming network not also owned by a cable MSO, and Ion
Media has an interest in one network with NBC-Universal.662


660 See Appendix C, Table C-2.
661 Although Viacom is no longer the parent company of the CBS and UPN broadcast networks or a licensee of
broadcast stations, we include it because it continues to hold ownership interests in some of the most popular and
most widely distributed networks (e.g., MTV, Nickelodeon). Sumner Redstone remains the Chairman of the Board
at both Viacom and CBS Corporation. See Letter from Anne Lucey, Senior Vice President for Regulatory Policy,
CBS Corporation, to Marlene Dortch, Secretary, Federal Communications Commission, (Mar. 14, 2007) (CBS Ex
Parte Letter). In addition, CBS Corporation has merged its UPN network with Time Warner's WB network to form
a new network called The CW. CBS Corp., CBS Corp and Warner Bros. Entertainment Form New 5th Broadcast
Network
(press release), Jan. 24, 2007.
662 See Table 12 and Appendix C, Table C-2.
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Table 12: National Networks Affiliated with a DBS Operator, National Broadcast

Television Network, or Broadcast Television Licensee, not Affiliated with a Cable Operator

Network

Networks Wholly Owned or Owned in Part

Owner

Dominion Video
Angel One, Angel Two, KTV- Kids and Teens Television/SPIRIT TV
Satellite
Fox Movie Channel, Fox News Channel, Fox Reality, Fox Sports Net, FSN-HD,
Fox Soccer Channel, Fuel, FX, National Geographic Channel, NGC-HD, Speed
News Corp.
Channel, TV Guide Channel, TV Guide Interactive, Fox Sports en Espaol,
Phoenix Info News, Phoenix North American Chinese Channel, Star News, Star
One, Star Plus, Vijay
BET, BET Gospel , BET Hip Hop, BET on Jazz, Country Music Television
(CMT), CMT Pure Country, Comedy Central, Logo, MHD, MTV, MTV2, MTV
Viacom663
Chi, MTV Desi, MTV Hits, MTV Jams, MTV K, Nickelodeon/Nick at Nite,
Nick 2, Nick GAS, Nicktoons, Noggin/N, Spike TV, TV Land,VH1, VH1
Classic, VH1 Soul, MTV Tres, VH Uno
College Sports Television (CSTV), Flix, Showtime, Showtime HD, Showtime
Beyond, Showtime Extreme, Showtime Family, Showtime Next, Showtime
CBS Corporation
Showcase, Showtime Too, Showtime Women, Sundance, The Movie Channel
(TMC), TMC HD, TMC XTRA
CBS Corporation,
Sundance Channel
NBC-Universal
NBC-Universal,
Ion Media (formerly Paxson and i- Independent Television)
Ion Media (Paxson)
Bravo, CNBC, CNBC World, MSNBC, Sci-Fi Channel, Shop NBC, Sleuth,
NBC-Universal
Universal HD, USA Network, Mun2, Telemundo, Telemundo Puerto Rico
NBC-Universal,
A&E, A&E HD, Biography Channel, Crime & Investigation, History Channel,
Disney, Hearst
History International, Military History Channel, History Channel en Espaol
ABC Family, Disney Channel, SoapNet, Toon Disney/jetix, Toon Disney en
Disney
Espaol.
ESPN, ESPN2, ESPN2 HD, ESPN Classic, ESPN HD, ESPNews, ESPN PPV,
Disney, Hearst
ESPNU, ESPN Deportes, Lifetime Television, Lifetime Real Women, Lifetime
Movie Network
Bandamax, De Pelicula, De Pelicula Clasico, Galavision, Ritmoson Latino,
Univision
Univsion, Telefutura, Telehit
America's Store, Encore, Encore HD, Encore Action, Encore Drama, Encore
Love, Encore Mystery, Encore WAM!, Encore Westerns, Game Show Network,
Liberty Media
Hallmark Channel, Hallmark Movie Channel, Home Shopping Network,
IndiePlex, Movieplex, QVC, RetroPlex, Starz!, Starz! Cinema, Starz! Comedy,
Starz! Edge, Starz!HD, Starz! InBlack, Starz!Kids & Family
DIY (Do-it-Yourself Network), Fine Living, Food Network, Food Network HD,
EW Scripps
Great American Country, HGTV, HGTV HD
Church Channel, JCTV, Smile of a Child, Trinity Broadcasting, TBN Enlace
Trinity Broadcasting
USA
Daystar
Daystar Television Network
Landmark
Weather Channel, Weatherscan Local


663 See note 661 supra.
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Communications
Tribune Company
WGN Superstation
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190.

Top 20 National Nonbroadcast Programming Networks by Subscribership

. Currently,
six of the top 20 nonbroadcast video programming networks (ranked by subscribership) are affiliated with
a cable operator.664 Of the remaining networks, one is C-SPAN, which is funded, but not directly owned
or controlled, by MVPDs, and each of the other 15 ranked networks are affiliated with noncable media
entities. These figures remained relatively stable over last year.665
191.

National Nonbroadcast Programming Networks by Viewership

.
Of the 20 top-rated
prime time nonbroadcast programming networks, seven are affiliated with a cable operator: (1) Time
Warner owns 100 percent of TNT, Adult Swim, HBO, TBS, and Cartoon Network; (2) Cablevision owns
American Movie Classics; and (3) Cox and Advance/Newhouse each own 25 percent of The Discovery
Channel.666 The remaining 13 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, and
ESPN. Hearst has ownership interests in Lifetime and ESPN. NBC has ownership interests in the USA
Network. Viacom has ownership interests in Nickelodeon, Nick at Nite, SpikeTV, Comedy Central, and
MTV.
192.

Regional Programming Networks

. In 2006, we identified 101 regional networks, an
increase of six networks over last year.667 Many, but not all, regional networks are delivered via satellite
to MVPDs for distribution to their subscribers, a fact that has implications for the Commission's program
access rules. 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 101 regional networks we identified, 57 networks, or 56.4 percent, were affiliated
with at least one MSO. Comcast has ownership interests in 15, or 14.8 percent, of all regional networks.
Cablevision has ownership interests in 13, or 12.9 percent, of the regional networks. Time Warner has
ownership interests in 15, or 14.8 percent, of the regional networks. Cox has ownership interests in 12, or
11.9 percent, of the regional networks, Advance Newhouse through its Bright House subsidiary has
interests in two 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 19, or 18.8 percent, of the 101 regional networks.
193.

Planned Services

. This year, we identified 83 programming services that have been
planned but are not yet operational.668 The planned-services count includes some overlap from previous


664 See Appendix C, Table C-5. Because of ties in the rankings, there are 22 nonbroadcast networks on this list.
665 See 2005 Report, 21 FCC Rcd at 2578-9 163.
666 See Appendix C, Table C-6. For ratings purposes, Nielsen separates the 24-hour network that is comprised of
Nickelodeon and Nick at Nite, as well as the 24-hour network that is comprised of Cartoon Network and Adult
Swim, and reports their audiences separately. We count each 24-hour network once but follow Nielsen's method for
Table C-6.
667 2005 Report, 21 FCC Rcd at 2579-80 166.
668 See Appendix C, Table C-4. See also 2005 Report, 21 FCC Rcd at 2650, Appendix C, Table C-4.
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years because it can often take several years from the announcement of a new programming network to its
initiation of service.669
2.

Other Programming Issues

194.
In this section, we discuss comments we received about the effectiveness of our program
access, program carriage, and channel occupancy rules, as well as issues relating to the carriage of local
broadcast stations pursuant to must carry and retransmission consent. We also address other matters
related to programming, including leased access programming; significantly viewed programming; the
packaging of programming services; 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; and access to programming
by persons with disabilities.
a.

Regulatory Issues

195.

Program Access Rules

. The Commission initially adopted its rules concerning
competitive access to cable programming in 1993, as part of its implementation of the 1992 Cable Act.
These rules seek to promote competition and diversity in the multichannel video programming
marketplace 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.670
196.
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-delivered 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)."671


669 See 1995 Report, 11 FCC Rcd at 2202-5 Appendix H, Tables 3 and 4; 1996 Report, 12 FCC Rcd at 4517-20
Appendix G, Tables 3 and 4; 2004 Report 20 FCC Rcd at 2835 152; 2005 Report 21 FCC Rcd at 2580 167.
670 47 U.S.C. 548. See also U.S.C. 521(a)(5)-(6) nt. On January 18, 2007, VDC Corporation, a new entrant
which relies exclusively on the Internet for delivery of programming to subscribers, filed a program access
complaint against Turner Network Sales, Inc., Turner Broadcasting System, Inc., Time Warner Inc., and Time
Warner Cable to commence an adjudicatory proceeding at the Commission to obtain enforcement of the program
access rules. See VDC Corporation v. Turner Network Sales, Inc. (filed Jan. 18, 2007).
671 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). See also Implementation of the
Cable Television Consumer Protection and Competition Act of 1992, Development of Competition and Diversity in
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197.
On February 20, 2007, the Commission issued a Notice of Proposed Rulemaking to
determine whether the exclusivity prohibition continues to be necessary to preserve and protect
competition and diversity in the distribution of video programming and whether to extend the prohibition
beyond its current sunset date (i.e., October 5, 2007).672 In addition, as part of the review of the
exclusivity prohibition, the Commission seeks comment on whether and how the procedures for resolving
program access disputes under Section 628 should be modified.673 The notice seeks comment on whether
and how the procedures for resolving program access complaints should be modified; on the costs
associated with the complaint process; and on whether pre-filing notice, pleading requirements,
evidentiary standards, timing, and potential remedies are appropriate and effective. The notice also asks
commenters whether the Commission should adopt alternative procedures or remedies such as mandatory
standstill agreements and/or arbitration, and on the Commission's authority to adopt them.
198.
Commenters again address the statutory exemption for terrestrially delivered
programming in the existing program access rules. Several commenters cite problems accessing
terrestrially delivered programming in Philadelphia, Boston, and San Diego, and express their concerns
regarding incumbent cable operators' ability to restrict competing MVPDs' access to terrestrially
delivered programming.674 AT&T, USTelecom, Verizon, and other commenters urge the Commission to
ensure that all competitors have access to so-called "must have" programming, particularly regional
sports networks ("RSNs"), by eliminating the terrestrial exemption or by recommending that Congress do
so.675 AT&T states that the Commission has ample authority to address the anticompetitive practices of
cable operators by closing the "terrestrial loophole" without the need for further statutory change.676
Comcast counters that these concerns are unfounded. It states 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.677 Comcast adds that its newest sports networks are delivered by satellite.678
199.
Commenters raise various other concerns relating to access to programming. EchoStar
urges the Commission to extend, or make permanent, the ban on exclusive contracts between cable
(Continued from previous page)


Video Programming Distribution: Section 628 (c)(5) of the Communications Act, Sunset of Exclusive Contract
Prohibition,
22 FCC Rcd. 4252 (2007) ("Exclusive Contract Notice").
672 See Exclusive Contracts Notice supra note 670.
673 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,
22 FCC Rcd at 4259-60 13-15.
674 See, e.g., AT&T Comments at 16-17; DIRECTV Comments at 14; USTelecom Comments at 19-20; Verizon
Comments at 29-30.
675 Id. In the Adelphia Order, the Commission noted commenters' concerns that Comcast and Time Warner could
achieve exclusivity via terrestrial delivery and adopted a condition forbidding the use of exclusive contracts with
affiliated networks, regardless of the means of delivery. The Commission also adopted a condition permitting
MVPDs to use arbitration to resolve disputes about access to Comcast's and Time Warner's affiliated RSNs.
Adelphia Order, 21 FCC Rcd 8203, 8264-66, 8274-76 134, 156-57, 160, 162.
676 AT&T Comments at 17.
677 Comcast Reply at 27-33. See DIRECTV, Inc. v. Comcast Corp., 15 FCC Rcd at 22802, 22807-8 14 (2000),
aff'd, EchoStar v. FCC, 292 F.3d 749 (D.C. Cir. 2002).
678 Comcast Reply at 30.
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operators and vertically integrated cable networks.679 Verizon states that the ban on exclusive
programming contracts remains necessary, and suggests that the Commission extend the ban for a limited
period of years until competition can take hold.680 USTelecom argues that allowing the program access
rules to sunset would "cripple" the prospect of real competition in the video industry, and would be an
obstacle to broadband deployment.681 NCTA urges the Commission to reject these proposals stating that
competition is now flourishing in the multichannel video marketplace and that issues involving access to
programming should be resolved through commercial negotiations.682 Comcast states that the expansion
of competition over the past four years renders the exclusivity ban obsolete.683
200.
Commenters also discuss programmers' ability to secure distribution.684 TAC states that
new networks that are affiliated with cable operators or broadcasters are more likely to be carried than
independent programming networks. Specifically, TAC states that a cable-operator owned network is
62.3 percent more likely to be carried than an unaffiliated network. TAC urges the Commission to accept
the premise that discrimination against independent networks exists in the cable industry and that such
discrimination harms competition, diversity, and the public interest. TAC argues that the marketplace has
not corrected itself, and that remedial measures and greater enforcement are required to prevent
anticompetitive activity. TAC submits that unfair discrimination, not bandwidth constraints, underlie
independent networks' inability to gain carriage.685 CCVM argues that there is no level playing field in
the cable industry and characterizes the industry as "a small, highly exclusive private club made up of
cable MSOs and owners of broadcast networks." It adds that "new independent networks are
unwelcome." CCVM urges the Commission to establish safeguards so that a network's ownership or
affiliation does not determine whether it is carried by cable MSOs.686
201.
Comcast disagrees with TAC's allegation that independent programmers are subject to
discrimination. Comcast states that, although TAC has submitted dozens of pleadings in various
Commission proceedings over the past several years, it has yet to produce a single hour of
programming.687 Comcast notes that over the past four years it has entered into carriage agreements with
more than 50 independent programming networks, many of which have no common ownership with
major broadcasters, other cable programmers, or cable MSOs. Moreover, Comcast states that more than
90 percent of the networks it carries are not affiliated with it.688


679 EchoStar Reply at 2.
680 Verizon Comments at 30.
681 USTelecom Comments at 4-5.
682 NCTA Reply at 8.
683 Comcast Reply at 33.
684 See, e.g., TAC Comments at 5; BTN Comments at 2-4; CCVM Comments at 3-5.
685 TAC Comments at 5.
686 CCVM Comments at 3-5.
687 Comcast Reply at 40-41.
688 Comcast Comments at 60-61.
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202.

Program Carriage Rules.

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.
Section 616 of the 1992 Cable Act requires the Commission to establish regulations governing program
carriage agreements and related practices between cable operators or other multichannel video
programming distributors and video programming vendors.689 Congress enacted Section 616 based on
findings that some cable operators had required certain non-affiliated program vendors to grant exclusive
rights to programming, a financial interest in the programming, or some other additional consideration as
a condition of carriage on the cable system.690 Accordingly, the Commission's rules implementing
Section 616 prohibit all MVPDs from (1) demanding a financial interest in any program service as a
condition of carriage of the service on its system; (2) coercing any video programming vendor to provide
exclusive rights as a condition of carriage; and (3) unreasonably restraining the ability of a video
programming vendor to compete fairly by discriminating on the basis of affiliation or non-affiliation of
vendors in the selection, terms, or conditions of carriage.691 The program carriage rules also specify
complaint procedures and remedies for violations of these requirements. Complaints may be brought by
aggrieved video programmers or MVPDs.692
203.
In the Adelphia Order, the Commission addressed allegations of potential public interest
harm for nationally distributed programming. Commenters argued that Comcast's and Time Warner's
increased subscribership as a result of the transactions would allow them, either unilaterally or in concert
with each other, to determine which programmers survive in the video marketplace.693 The Commission
found that the transactions would be likely to increase Comcast's and Time Warner's incentive to deny
carriage to rival unaffiliated RSNs, with the intent of forcing the RSNs out of business or discouraging
potential rivals from entering the marketplace. To address this concern , the Commission imposed a
commercial arbitration condition for unaffiliated RSNs as an alternative to the existing program carriage
complaint procedures. Under this condition, for a period of six years from the adoption date of the
Adelphia Order (i.e., July 13, 2006), an RSN unaffiliated with any MVPD that has been denied carriage
by Comcast or Time Warner may submit its carriage claim to arbitration within 30 days after the denial of
carriage.694


689 47 U.S.C. 536(a).
690 Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of
1992
, 9 FCC Rcd 2642, 2643 2 (1993) ("Second Program Carriage Order"); see also 47 U.S.C. 536(a)(1)-(3).
691 See 47 C.F.R. 76.1301; see also Second Program Carriage Order, 9 FCC Rcd at 2649 16.
692 Section 76.1302 authorizes video programming vendors and MVPDs to file program carriage complaints with
the Commission. 47 C.F.R. 76.1302; see also Second Program Carriage Order, 9 FCC Rcd at 2652-57 23-36.
693 Adelphia Order, 21 FCC Rcd at 8250 100.
694 Adelphia Order, 21 FCC Rcd at 8287-8 190-191. The Commission adopted a condition that permits the use of
commercial arbitration to resolve disputes regarding commercial leased access. Id. at 8253-4 109. This condition
is in effect for six years from the date of adoption of the Adelphia Order (i.e., July 13, 2006). Pursuant to this
condition, programmers seeking to use commercial leased access may submit disputes about the terms of access to
an arbitrator for resolution. The arbitrator will be directed to settle disputes about pricing in accordance with the
formula set forth in the Commission's leased access rules. 47 C.F.R. 76.76.970. See also 218 (NPRM seeking
comment on commercial leased access and program carriage rules and procedures).
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204.

Must Carry and Retransmission Consent.

In 1992, Congress enacted statutory
provisions concerning the carriage of local broadcast television stations by cable operators and
subsequently adopted a carriage regime for DBS providers in 1999. Among the reasons for enacting
broadcast carriage 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.695
205.
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. Cable
operators must set aside additional channels for noncommercial stations, depending on the system's
channel capacity.696 Pursuant to the SHVIA, DBS operators may provide local-into-local broadcast
television service.697 Unlike cable operators, which are required to carry local television stations in every
market they serve, a DBS operator need not carry any local TV signals, but where it chooses to carry local
television stations, it must carry all stations in that market ("carry one, carry all").698 In both the cable
and DBS contexts, commercial broadcasters may elect to be carried pursuant to must carry status or
retransmission consent.699 Where a station elects must carry, it is prohibited from receiving compensation
for carriage.700 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.701
The current must-carry rules generally apply to the carriage of analog television stations only.702
206.
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


695 47 U.S. C. 521(a)(19) note; Pub. L. No. 102-385, 106 Stat. 1460, Oct. 5, 1992. 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.
696 47 U.S.C. 534(b), 535(b). See also 47 C.F.R. 76.56.
697 Pub. L. No. 106-113, 113 Stat. 1501, 1501A-526 to 1501A-545 (Nov. 29, 1999).
698 47 C.F.R. 76.66.
699 47 C.F.R. 76.64.
700 47 C.F.R. 76.60.
701 See, e.g., 2004 Report, 20 FCC Rcd at 2805 79; 2005 Report, 21 FCC Rcd at 2503 177.
702 The Commission has determined that when a television station broadcasts only a digital signal, it is entitled to
carriage. See Carriage of Digital Television Broadcast Signals, Amendments to Part 76 of the Commission's Rules,
Implementation of the Satellite Home Viewer Improvement Act of 1999, Local Broadcast Signal Carriage Issues,
Application of Network Nonduplictation, Syndicated Exclusivity and Sports Blackout Rules to Satellite
Retransmission of Broadcast Signals,
16 FCC Rcd at 2598 (2001).
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retransmission consent, how they account for indirect compensation, and what marketplace changes are
taking place with regard to retransmission consent.703
207.
A number of commenters express concern about the ability of broadcasters to leverage
the existing retransmission consent, network nonduplication, and syndicated exclusivity rules to demand
exorbitant compensation for their programming.704 CRCR, for example, states that by threatening to
withhold local broadcast programming, the big four broadcast networks and other broadcast
conglomerates have used retransmission consent to gain leverage over smaller cable operators to launch
new affiliated networks, to obtain higher license fees and broader distribution for those new networks,
and to obtain higher license fees for their existing affiliated networks. It states that the use of
retransmission consent as a means of launching, and increasing the fees for, broadcaster-owned networks
has been a major factor in shaping the price and composition of the cable expanded basic tier.705 In
particular, CRCR asserts that retransmission consent disproportionally impacts expanded basic tiers,
noting that the most widely carried nonbroadcast networks added since retransmission consent are
affiliated with broadcast networks (e.g., ESPN2, Fox News).706 In addition, it argues that the use of
retransmission consent has substantially foreclosed the opportunities for programming networks that are
not affiliated with broadcasters to gain carriage on the expanded basic tier, thereby depriving consumers
of the benefits of programming quality and diversity, and the opportunity for lower prices. CRCR urges
the Commission to initiate an inquiry to review the retransmission consent issue and to consider the steps
that can be taken to protect consumers under Sections 325 and 543 of the Communications Act.707 CRCR
also urges the Commission to recommend to Congress that it review and reevaluate the impact of
retransmission consent on the video programming marketplace and on consumers.708
208.
CRCR also submits a study by William P. Rogerson that examines the evidence of both
the social benefits of providing broadcasters with an extra revenue stream and the social costs of
retransmission consent policy in the form of increased cable subscription fees.709 The study finds that
there is no evidence that retransmission consent policy has produced any significant social benefits. The
study also finds that the big four broadcast networks generally have chosen to tie retransmission consent
to the carriage of relatively new affiliated video programming networks and that, as a result, networks that
are not affiliated with the big four broadcast networks have difficulty gaining carriage on cable systems.
The paper also finds that broadcasters have used the threat of withdrawing retransmission consent to force
cable operators to pay higher prices for cable programming than they otherwise would be willing to pay
and/or to purchase programming that they otherwise would be unwilling to purchase, creating significant
social costs. The paper concludes that policy-makers should investigate whether there are any social


703 See Notice, 21 FCC Rcd at 12229 56.
704 See, e.g., CRCR Comments at 5-6; BSPA Comments at 19-20; PVT Comments at 2-3; ACA Comments at 3-4;
BendBroadband Reply at 6-7.
705 CRCR Comments at 5-10.
706 CRCR Supplemental Comments at 2-10 (filed Feb. 15, 2007).
707 47 U.S.C. 325 and 47 U.S.C. 543.
708 CRCR Comments at 4-12.
709 Id. at Attachment, The Social Cost of Retransmission Consent Regulations, Feb. 28, 2005.
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benefits resulting from this policy and that it should be changed unless benefits can be found that
outweigh the social costs.710
209.
BSPA expresses concern about the ability of broadcasters to leverage retransmission
consent to demand above-market compensation for programming and asks the Commission to monitor
this situation and take corrective action, if necessary.711 ACA contends that most independent cable
operators do not have the resources to contest with large media groups and, as a result, have no choice but
to pay a substantial premium for retransmission consent, and to pass that premium through to their rural
and small-market subscribers. ACA states that this puts independent cable operators at a significant
competitive disadvantage to their larger DBS competitors.712 PVT argues that broadcasters have the
power to impose unreasonable retransmission consent demands on small cable operators. Moreover,
broadcasters can use the existing network non-duplication rules to prevent cable operators from acquiring
substitute programming from neighboring markets.713 PVT requests that the Commission reform the
current retransmission consent and network nonduplication rules to make future retransmission consent
negotiations more equitable for rural cable operators and the customers they serve.714
210.
BendBroadband fears that in its next round of retransmission consent negotiations
broadcasters will use their market power to demand cash payments that would be prohibitively high for a
small cable operator, and to demand carriage of unwanted multicast or nonbroadcast programming as a
condition for carrying local broadcast programming. BendBroadband states that this may cause it severe
economic harm, and urges the Commission to act to insure that tying arrangements of any kind are
prohibited in retransmission consent agreements.715 EchoStar urges the Commission to enforce the good
faith requirement in retransmission consent negotiations to discourage program packaging and tying
requirements. It argues that DBS providers have even less negotiating leverage with broadcasters than do
dominant cable providers because they offer fewer viewers in each broadcaster's local market.716


710 Id.
711 BSPA Comments at 19-20.
712 ACA Comments at 3-4.
713 PVT Comments at 3.
714 Specifically, PVT requests that the Commission: (1) modify the retransmission consent rules to require
broadcasters to charge reasonably comparable consideration, on a per-subscriber basis, for retransmission consent to
all cable operators in a designated market area (DMA); (2) revise the network nonduplication rules to preclude a
broadcaster that refuses to give its retransmission consent to a cable operator from claiming network nonduplication
protection with respect to that cable operator; and (3) revise the network nonduplication rules to exempt small cable
systems (defined as integrated cable systems serving less than 25,000 subscribers) and rural cable systems (defined
as cable systems located outside urbanized areas) from network nonduplication requirements. See PVT Comments
at 4-5.
715 BendBroadband Reply at 2-5. Specifically, BendBroadband urges the Commission to adopt a Notice of Inquiry
proposing steps to protect cable customers from basic tier price hikes that would be forced by cash for carriage
arrangements (pursuant to authority under 47 U.S.C. 543) and to consider whether new regulations should be
imposed to prevent unlawful tying practices by broadcasters in retransmission consent negotiations (pursuant to
authority under 47 U.S.C. 325). See BendBroadband Reply at 6-7.
716 EchoStar Comments at 12-13.
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OPASTCO contends that the practice of demanding tying arrangements in return for retransmission
consent impedes rural LEC entry into the MVPD marketplace. In particular, it is concerned about the
availability of programming at affordable rates and under reasonable conditions. OPASTCO claims that
the practice of tying unwanted programming with content that is in high demand not only raises end-user
prices, but also reduces customers' choice of programming packages and prevents MVPDs from crafting
tiers that are aligned with consumer demand.717
211.
NAB states that the Commission should reject claims that retransmission consent harms
competition in the video marketplace. It contends that consolidation in the cable television marketplace
and increased regional clustering, combined with a decrease in the number of over-the-air television
viewers, have forced smaller, local broadcasters to negotiate with larger national and regionally clustered
cable companies and other large MVPDs to ensure their future viability. NAB urges the Commission to
reject arguments that higher cable prices are the result of retransmission consent. It states that few cable
companies have made cash payments to broadcast stations for use of their signal, instead making in-kind
payments for such use.718 NAB claims that broadcast programming increases the value of cable systems
to consumers. It states that the retransmission consent rules merely provide a suitable system for
broadcasters to be fairly compensated for supplying that increased value. In response to the CRCR's
claims that broadcasters' excessive cash demands force cable operators to place unaffiliated nonbroadcast
networks on higher, more expensive tiers, NAB states that broadcasters cannot be blamed for a cable
company's voluntary decision to move unaffiliated programming to higher tiers.719 NAB argues that
retransmission consent rules provide a level playing field on which broadcasters can compete with other
program providers.720
212.
The Joint Broadcasters maintain that the current retransmission consent process is
working as intended by Congress and provides benefits to consumers, broadcasters, and MVPDs alike.
Moreover, the process has strengthened local broadcasting and helped ensure a competitive video
marketplace, according to the Joint Broadcasters. They argue that they have submitted ample evidence in
previous proceedings over the past three years to demonstrate conclusively that the current retransmission
consent process is working well and that it serves the public interest.721 The Joint Broadcasters point out
that the Commission conducted an extensive review of the retransmission consent process last year, at the
direction of Congress, and that the Commission found that the system was working properly and that no


717 OPASTCO Reply Comments at 8-10.
718 Some broadcasters do, however, receive cash payments. Hearst Argyle Television Inc., for example, reported a
$2.1 million increase in retransmission revenues for the three-month period ending Sept. 30, 2006, compared with a
$2.3 million increase recorded for the same period in 2005. Hearst Argyle Television Inc., SEC 10-Q Filing for
Period Ending September 30, 2006
, at 19. Sinclair Broadcast Group reported a $2.8 million increase in revenue
from retransmission and other fees for the nine-month period ending Sept. 30, 2006. Sinclair Broadcast Group, SEC
10-Q Filing for Period Ending September 30, 2006
, at 35.
719 NAB Reply at 5-6.
720 Id.
721 Joint Broadcasters Reply at Exhibit A (attaching comments filed in the SHVERA Inquiry, MB Docket No. 05-
28, and for the 2003 Report).
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specific statutory amendments were needed.722 The Joint Broadcasters attach a report by Michael
Baumann and Kent Mikkelson of Economics Incorporated723 that responds to the study by William
Rogerson, which was submitted by the CRCR. According to the Joint Broadcasters, the Baumann and
Mikkelson Report makes clear that the retransmission consent process does not harm competition in the
MVPD programming marketplace. The report also concludes that retransmission consent has not been a
major factor contributing to the increase in cable rates. The Joint Broadcasters conclude that the
Commission should disregard the CRCR's pleas for government intervention.724
213.
One recentretransmission consent dispute between a cable operator and a local
broadcaster gained significant public attention. Through most of 2006, Sinclair Broadcasting and
Mediacom engaged in protracted retransmission consent negotiations concerning Mediacom systems that
serve 700,000 subscribers in various mid-sized and smaller markets. After Mediacom sought
Commission intervention, the Commission found no violation of the rule requiring good faith
retransmission consent negotiations.725 Based on the record, the Commission found that the dispute was a
disagreement over the appropriate valuation of Sinclair's broadcast stations.726 We observed that, absent
other factors, a disagreement over the rates, terms, and conditions of retransmission consent even
fundamental disagreement is not indicative of a lack of good faith. The Commission recommended, but
did not require, the use of binding arbitration.727 We recognized that we do not have the authority to
require the parties to submit to binding arbitration, but strongly encouraged the parties to submit to such
arbitration.728 After a month-long public dispute, the parties reached a multi-year retransmission consent


722 See Retransmission Consent and Exclusivity Rules: Report to Congress Pursuant to Section 208 of the Satellite
Home Viewer Extension and Reauthorization Act of 2004
(MB Sept. 8, 2005), available at
http//hraunfoss.fcc.gov/edocs_public/attachmatch/DA-05-2425A1.pdf.
723 Response to Comments Regarding Economic Consequences of Retransmission Consent, Michael Baumann and
Kent Mikkelson, Economics Incorporated, March 31, 2005. This report responds to a study by William Rogerson,
which was submitted by CRCR originally in the SHVERA Inquiry and again in this proceeding. The report
concludes that broadcasters do not have the type or degree of market power that leads to harm to competition or to
consumers. Moreover, according to the report, obtaining carriage for nonbroadcast programming in return for
retransmission consent does not harm competition in the MVPD programming market.
724 Joint Broadcasters Reply at 2-4.
725 47 C.F.R 76.65; Mediacom Communications Corporation v. Sinclair Broadcast Group, Inc., 22 FCC Rcd 35
(MB 2007).
726 Id. at 38 6.
727 Id. at 45 25. The Commission stated that both parties could agree to final binding arbitration by the Bureau.
We stated that if both parties agreed to final binding arbitration by the Media Bureau, we would require Sinclair to
authorize Mediacom's continued carriage of its stations' signals during the pendency of arbitration. In the
alternative, this arbitration could be conducted through the American Arbitration Association. Although the
Commission would not have authority to order continued carriage in this case, the Commission stated that it would
encourage the parties to prevent a disruption of service.
728 See also Mediacom Communications Corporation v. Sinclair Broadcast Group, Inc., 22 FCC Rcd 284 (MB
2007) at 36-7 3.
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agreement covering the analog and digital signals of 24 local broadcast stations owned or programmed by
Sinclair in 16 markets served by both Sinclair and Mediacom.729
214.

Leased Access Programming

. The statutory framework for commercial leased access
was established by the 1984 Cable Act and amended by the 1992 Cable Act.730 To implement these
amendments, the Commission's leased access rules require cable operators to set aside a certain number
of channels, depending on the size of the cable system, for leased access use by unaffiliated programmers.
The objective of this channel set-aside requirement is to increase the diversity of information sources
made available by cable operators. The Act gives the Commission the authority to: (1) determine the
maximum reasonable rate that a cable operator may establish for leased access use, (2) establish
reasonable terms and conditions for leased access, and (3) establish procedures for the expedited
resolution of leased access disputes. The methodology for determining the applicable leased access rate is
proscribed in the Commission's rules.731
215.
Several commenters express concerns regarding the cost and availability of leased
access programming. TAC argues that leased access is not a practical means for securing widespread
carriage. In support of this assertion, TAC provides its own calculations based on Time Warner's leased
access rates by cable system. Based on these calculations, TAC concludes that, if an independent
network were to use leased access as a means of gaining carriage on Time Warner's cable systems, it
would cost that network approximately $144 million a year to gain access to approximately 7 million
homes on digital tiers. TAC argues that such an arrangement would put an independent network at a
significant competitive disadvantage vis-a-vis affiliated networks with which it must compete, because
affiliated networks are able to gain carriage and receive payment from cable operators rather than having
to pay for carriage. Using Time Warner's leased access rates as an assumed industry average, to gain
access to 50 million homes, the number TAC believes required for long-term sustainability, an
independent network would have to pay cable operators approximately $1 billion per year for carriage.
Hence, TAC concludes that no network could survive under such a scenario and the leased access system
is not a viable means for gaining widespread carriage.732
216.
BTN shares TAC's concern and states that the Commission may be falsely led to assume
that affordable leased access is an effective means of increasing carriage opportunities for minority owned
and independently owned networks. BTN states that leased access is not a practical solution by which
such networks can gain widespread distribution. BTN contends that independent networks must receive
license fee payments, just as affiliated networks do, in order to be competitive in the marketplace. If
independent networks must bear the additional burden of paying cable operators for carriage, according to
BTN, they will not be able to compete with affiliated networks that receive payment from cable
operators.733 Island TV, a local cable channel in Gulf Shores, Alabama, contends that it faced many
difficulties and long delays in seeking to gain carriage on Mediacom's cable system, the local cable


729 MediaWeek, Sinclair, Mediacom Strike Retrans Deal, http://www.mediaweek.com/mw/news/recent_display.jsp?
vnu_content_id=1003541701 (visited Feb. 20, 2007).
730 1992 Cable Act, Section 612 (47 U.S.C. 532).
731 47 C.F.R. 76.970-977.
732 TAC Comments at 9.
733 BTN Comments at 3.
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operator, via leased access. After an almost four-year period of repeated delays and negotiations, Island
TV finally launched as a leased access channel on August 1, 2006.734 Similarly, Charlie Stogner asserts
that Congress' goal that leased access would be an outlet for local entities unaffiliated with the local cable
operator has never materialized. He also states that the lack of strict Commission rules and guidelines for
leased access has created obstacles for programmers trying to obtain leased access carriage.735
217.
Comcast notes that TAC and BTN question whether the Commission's leased access
rules can be used effectively by independent programming networks to secure carriage on cable systems.
Comcast contends that these issues are inappropriate for consideration in this proceeding, and states that
the Commission should reserve judgment on leased access issues until it has amassed a complete record
in a separate proceeding. In the meantime, Comcast states that its systems will continue to offer
independent programmers the opportunity to purchase time on local leased access channels at reasonable
rates that are set in accordance with the Commission's rules.736
218.
As noted in the Adelphia Order, the Commission determined that it would review its
commercial leased access rules.737 On March 2, 2007, the Commission adopted an NPRM seeking
comment on its commercial leased access and program carriage rules and procedures.738
219.

Significantly Viewed Programming.

In November 2005, pursuant to SHVERA, the
Commission established rules and regulations by which satellite carriers may offer Commission-
determined "significantly viewed" signals of distant broadcast stations to subscribers.739 DIRECTV
contends that the lack of DBS carriage of significantly viewed signals is largely attributable to the
Commission's overly restrictive interpretation of SHVERA's requirements.740 In particular, DIRECTV
states that the requirement that local and significantly viewed signals be afforded "equivalent
bandwidths" hampers DBS carriage of significantly viewed signals.741 DIRECTV asserts that it is not
technically feasible to perform the required "objective comparison" to match bit rates between network


734 Island TV Reply at 1-2. Island TV states that it is concerned that, when its leased access agreement is up for
renewal, it may not be renewed and it wants the Commission to take note of this concern.
735 See Letter from Charlie Stogner, CEO StogMedia, to the FCC (Dec. 26, 2006). Mr. Stogner also proposes that
the Commission require cable operators to submit information, including: copies of the agreements they provide
applicants for leased access channels; the number and placement of channels set aside for leased access;
identification of the leased access users of these channels; the programming distributed using leased access; and any
applications that entities seeking leased access carriage must complete.
736 Comcast Reply at 41. See also 47 C.F.R. 76.970-977.
737 See Adelphia Order, 21 FCC Rcd at 8277 165. See also 47 C.F.R. 76.970-76.977.
738 Leased Commercial Access: Development of Competition and Diversity in Video Programming
Distribution and Carriage
, MB Docket No. 07-42, FCC 07-18 (adopted Mar. 2, 2007).
739 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). See also 47 C.F.R. 76.54.
740 DIRECTV Comments at 17-19. See also Petition for Reconsideration of DIRECTV, Inc. and EchoStar Satellite
LLC, MB Docket No. 05-49 (filed Jan. 26, 2006); Consolidated Reply to Oppositions of DIRECTV, Inc. and
EchoStar Satellite LLC, MB Docket No. 05-49 (filed Mar. 15, 2006).
741 47 C.F.R. 76.54(h).
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station pairs in real time. Similarly, DIRECTV asserts that the Commission's narrow interpretation of the
SHVERA requirement that a DBS subscriber receive the analog signals of a local network station as a
pre-condition to receiving the analog signals of significantly viewed network stations also has deterred
DBS carriage of significantly viewed signals because the local affiliates can condition or withhold
retransmission consent unless the DBS carrier agrees not to import significantly viewed signals.742
b.

Packaging of Programming Services

220.
In the Notice, we sought information on how video programming distributors package
and market their programming. We also sought comment concerning the extent to which MVPDs offer or
plan to offer consumers more choice in channel selection, for example, by offering themed tiers,
subscriber-selected tiers, or more channels sold individually, rather than relying on the traditional tiering
practice for selling programming services.743 The commenters indicate that MVPDs generally continue to
offer large packages or tiers of service that include a variety of programming services selected by the
MVPD.744 Generally, subscribers cannot select the programming that is included in the packages offered
to them or subscribe to programming networks on an individual basis.
221.

Marketplace Developments.

A number of cable operators launched family-friendly
programming tiers early in 2006.745 Comcast, for example, reports that its subscribers now can purchase a
family tier package that, along with the basic tier, contains an average of 35-40 channels.746 According to
Comcast, its family tier package in a typical community (Arlington, Virginia, in this example) costs
around $33.45 per month, which reflects the cost of basic service at $14.85, a 16-channel family tier for
$14.95, and a digital set-top box and remote at $3.65.747 Cox now offers a family tier in many of the
communities it serves, consisting of an average of 40 channels of programming, including the basic tier
plus selected general entertainment, news, and sports programming.748 Cox's Family Tier is offered at a
national average price of $32 per month for the programming package, set-top box with
electronic/interactive program guide capability and parental controls for specific programs and channels.
Time Warner offers a tier of service that it calls "Family Choice." This package offers 15 family-friendly
channels that can be ordered by any customer who subscribes to the minimum basic service tier. As of
early 2006, Time Warner's Family Choice package was priced at $12.99 in addition to the cost for basic


742 DIRECTV Comments at 18. See also 47 C.F.R. 76.54(g).
743 Notice, 21 FCC Rcd at 12236 17.
744 See, e.g., Comcast Comments at 60-62; NCTA Comments at 33-34.
745 2005 Report, 21 FCC Rcd at 2591-2 196; Notice, 21 FCC Rcd at 12236 17.
746 Comcast Comments at 61. Comcast reports that its family tier package includes the basic tier plus selected
additional channels such as PBS Kids Sprout, Disney Channel, Toon Disney, Nickelodeon, and Discovery Kids.
747 Comcast Comments at Exhibit 2.
748 Cox Communications, Inc., Cox Communications Announces Family Friendly Package (press release), Jan. 10,
2006. The 40 channels include the basic tier plus selected additional channels such as 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/or Spanish-
language programming.
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service, which it says varies among systems, but for which the average monthly charge is approximately
$12.749 Insight Communications' family-friendly tier, with 15 channels of programming, is available to
customers for $13 as an add-on to their basic service, which includes approximately 21 channels. A
digital set-top box is also required to access the tier. These MSOs have announced that they intend to
offer family-friendly programming to most if not all of their subscribers although it appears that they are
still in the process of rolling out their family tiers.750 DIRECTV began offering a new family-friendly
programming package in April 2006 that provides more than 40 channels and includes local broadcast
stations at a price of $29.99 per month.751 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.752 In addition, Dominion Video Satellite, Inc., through its Sky Angel DBS
service, provides faith-based programming and family-oriented entertainment networks.753


749 Time Warner, Time Warner Cable Launches Family Choice Tier (press release), Dec. 15, 2005.
750 Comcast Corp., Comcast Announces Family Tier (press release), Dec. 22, 2005; Time Warner, Time Warner
Cable Launches Family Choice Tier
(press release), Dec. 15, 2005; Cox Communications, Inc., Cox
communications Announces Family Friendly Package
(press release), Jan. 10, 2006; Insight Communications
Company, Insight Communication Announces Plans for Family-Friendly Tier of Programming (press release), Jan.
17, 2006.
751 DIRECTV Comments at 6. DIRECTV's family-friendly programming package includes: 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.
752 EchoStar Comments at 22. EchoStar's family-friendly 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, Nicktoons, Outdoor
Channel, RFDTV, Shop at Home, ShopNBC, The Science Channel, The Weather Channel, TBN, TV Land, and
QVC. See http://www.dishnetwork.com/content/programming/packages/index.shtml.
753 E-mail from Nancy Christopher, Vice President, Public Relations, Dominion Sky Angel DBS Television and
Radio System, March 26, 2007.
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c.

Sports Programming

222.
We continue to monitor the availability of sports programming, which many MVPDs
believe they must have to compete effectively in the video marketplace. Several commenters state that
access to regional sports programming is essential to their ability to compete against incumbent cable
operators. They indicate that that they have experienced difficulties in obtaining regional sports
programming as a result of the affiliation between regional sports and cable operators.754 NTCA asserts
that incumbent cable operators have entered into exclusive arrangements with regional sports
programmers, making it difficult for competitors to obtain such programming.755 Verizon argues that
access to programming remains an issue for new entrants, particularly with respect to regional sports
networks ("RSNs").756
223.
There are 43 regional networks devoted to sports programming, an increase from the 37
we identified last year.757 Regional sports networks now represent approximately 42.6 percent of the 101
regional networks.758 Of the 43 regional sports networks, 19, or 44.2 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 19, or 44.2 percent, of all regional sports networks.759


754 AT&T Comments at 3, 14-15; DIRECTV Comments at 13-14; TDS Reply at 5-7; USTA Reply at 12; APPA
Reply at 7-8; IMCC Reply at 6.
755 NTCA Comments at 17-18.
756 Verizon Comments at 29-30.
757 See Appendix C, Table C-3. For purposes of this report, we count both Comcast Local (Detroit) and
Comcast/Charter Sports Southeast as sports programming networks even though neither provides professional sports
programming, except for professional women's basketball. See http://www.comcastlocal.com/ and
http://www.comcastlocal.com/ (visited Mar. 22, 2007). See also Applications for Consent to the Assignment and/or
Transfer of Control of Licenses, Adelphia Communications Corporation, Assignors to Time Warner Cable, Inc.,
Assignees, et al
., 21 FCC Rcd 8203, 8209 (2006) n.32.
758 See Appendix C, Table C-3.
759 We note that 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 General Motors Corporation and Hughes
Electronics Corporation, Transferors And The News Corporation Limited, Transferee, For Authority to Transfer
Control,
19 FCC Rcd 473, 531-2, 543, 552-555, 626, 127, 147-48,172-79, 366 (2004) ("News-Hughes Order").
In addition, News Corporation, The DIRECTV Group, Inc. and Liberty Media Corporation are currently seeking
approval to transfer control of various Commission licenses and authorizations in connection with Liberty Media's
acquisition of News Corp.'s interest in DIRECTV. As part of the proposed transaction, Liberty Media would
acquire a 100 percent ownership interest in three RSNs: Fox Sports Net Northwest, LLC, Seattle; Fox Sports Net
Pittsburgh, LLC; and Fox Sports Net Rocky Mountain; Denver. See News Corporation, The DIRECTV Group, Inc.
and Liberty Media Corporation Seek Approval to Transfer Control of FCC Authorizations and Licenses: Pleading
Cycle Established
, Public Notice, 22 FCC Rcd 3493 (MB 2007). See also Application of News Corporation and
The DIRECTV Group, Inc., Transferors, and Liberty Media Corporation, Transferee, For Authority to Transfer
Control
, Consolidated Application for Authority to Transfer Control, Jan. 29, 2007 ("Consolidated Application").
In the Consolidated Application, Liberty states that it would agree to adopt the conditions mandated by the
(continued....)
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224.
We report the emergence of several additional regional sports networks this year,
including Channel 4 San Diego, MountainWest Sports Net, SportsNet New York, and SportTime Ohio.760
We also note that TurnerSouth changed its name to SportsSouth.761
225.
A dispute over carriage of sports programming arose following the Commission's
approval of the Adelphia transaction. On August 1, 2006, NFL Enterprises filed a petition alleging that
Time Warner violated Section 76.103 of the rules by dropping the NFL Network from cable systems that
it had recently acquired from Adelphia and Comcast without the requisite 30-days' notice.762 On August
3, 2006, the Commission instructed Time Warner to reinstate carriage of the NFL Network on all of its
newly acquired systems, on a temporary basis, until the NFL's petition could be resolved on its merits.763
Subsequently, the Media Bureau approved a Consent Decree with Time Warner and terminated the
proceeding.764
226.
In addition, on January 17, 2007, The America Channel filed a notice with Comcast of its
intent to pursue arbitration under the RSN carriage condition of the Adelphia Order, in lieu of filing a
program carriage complaint against Comcast. On January 24, 2007, Comcast filed a Petition for
Declaratory Ruling with the Commission seeking a declaration that TAC is not a RSN as that term is
defined in the Adelphia Order.765 In its Response, TAC requests that the Commission find that TAC does
meet the definition of RSN and direct Comcast to participate in arbitration to resolve TAC's program
carriage complaint against Comcast.766
d.

News and Public Affairs Programming

227.
We requested comment on the extent to which MVPDs provide local news and
(Continued from previous page)


Commission in the News-Hughes Order regarding access to the RSN programming controlled by Liberty Media.
See Consolidated Application at 17-18.
760 See Appendix C, Table C-3.
761 Id.
762 NFL Enterprises LLC, Emergency Petition for Declaratory Ruling and Enforcement Order, or in the Alternative,
for Immediate Injunctive Relief (filed Aug. 1, 2006).
763 Time Warner Cable, A Division of Time Warner Entertainment Company, L.P., 21 FCC Rcd 8808 (MB 2006);
recon. denied, 21 FCC Rcd 9016 (MB 2006).
764 See Time Warner Cable, A Division of Time Warner Entertainment Company, L.P., 21 FCC Rcd 8808 (MB
2006). In the absence of material new evidence relating to this matter, based on the record before us, in particular
Time Warner's acknowledgement that its discontinuation of its carriage of the NFL Network without notification of
its subscribers violated Section 76.1603, the Media Bureau concluded that there were no substantial or material
questions of fact as to whether Time Warner possessed the basic qualifications to be or remain a Commission
licensee.
765 See Comcast, For Declaratory Ruling That The America Channel is Not a Regional Sports Network as That Term
Is Defined in the Commission's Adelphia Order, CSR-7108 (filed Jan. 24, 2007). In the Adelphia Order, an RSN is
defined as "any non-broadcast video programming service that (1) provides live or same-day distribution within a
limited geographic region of sporting events of a sports team that is a member of Major League Baseball, the
National Basketball Association, the National Football League, the National Hockey League, NASCAR, NCAA
Division I Football, NCAA Division I Basketball and (2) in any year, carries a minimum of either 100 hours of
programming that meets the criteria of subheading 1, or 10% of the regular season games of at least one sports team
that meets the criteria of subheading 1." See Adelphia Order, 21 FCC Rcd at 8287 190-91 and Appendix B.
766 TAC Response, Exhibit D of Exhibit B.
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community affairs programming because such programming allows MVPDs to provide a unique service
that meets the interests and needs of their communities.767 This year, of the 102 regional programming
networks identified, 51, or 50 percent, are regional news networks.768 A regional news network 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 the latter model. We also note that several regional news
networks offer Spanish versions of their programming, including New York 1 News, which offers NY1
Noticias; Bay News 9, which offers Bay 9 News en Espaol; and Arizona News Channel, which offers
Mas! Arizona.769 News 8 Austin has added several 24-hour channels dedicated to such news events as
weather, traffic, and sports.770
e.

Other Programming

228.
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, and children's programming. MVPDs use these types
of programming to compete more effectively and to serve specific groups in their local communities.771
229.

PEG Programming.

Many cable operators set aside one or more channels on a cable
system for public, educational, and governmental ("PEG") programming. Generally, these channels
provide programming produced by local government entities, community groups, and individuals. 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.772 These channels may be heavily used in
some communities, while other communities may not seek PEG channels. In Minnesota, for example,
LMC/MACTA explains that some LFAs require significant capacity for PEG channels or institutional
networks, and others may seek little or none.
230.
PEG channels are the pre-eminent examples of local programming, according to the
Maryland Counties. They state that the allocation of resources for PEG channels is based on local needs
and interests. NYC advocates the importance of PEG access channels and institutional networks, stating
that public access channels bring residents borough-specific information and local programming that
might not otherwise be available. Its educational and governmental channels are used for programming
by the City University of New York and for C-SPAN-type coverage of city council and other local
governmental proceedings.773


767 See Notice, 21 FCC Rcd at 12235 15.
768 See Appendix C, Table C-3.
769 Id.
770 Id.
771 See Notice, 21 FCC Rcd at 12229 15.
772 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).
773 Id.
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231.

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."774
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.775 EchoStar
reports that it provides 21 channels of public interest programming.776 DIRECTV provides 14 channels
of public interest programming.777
232.

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
offers more than 125 international channels in more than 25 languages, including Arabic, Chinese,
French, Hindi, Polish, Japanese, and Russian. EchoStar also now offers five DishLATINO packages
ranging from a basic package offering 35 channels for $24.99 to an Everything Pak that offers over 175
channels for $79.99.778 DIRECTV offers a wide variety of foreign language programming packages. Its
WorldDirect platform consists of 45 channels that include programming in multiple languages, such as
Russian, Hindi, Tamil, Telugu, Gujarati, Bengali, Cantonese, Vietnamese, Tagalog, Italian, and
Ukrainian. During 2006, DIRECTV launched Polish, Arabic, Mandarin Chinese, and Korean language
programming packages, and it continues to expand its international programming platform to reach more
ethnic audiences. Prices for DIRECTV's foreign language packages range from $4.99 to $39.99 per
month, and certain foreign language channels are available on an a la carte basis for $4.99 per month.779


774 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).
775 See 47 U.S.C. 25.701.
776 EchoStar currently carries the following public interest channels: Brigham Young University, Classic Arts
Showcase, Colours TV, C-SPAN, Eternal World Network, Florida Educational Channel, Free Speech TV, Good
Samaritan Network, Hispanic Information & Telecommunications Network, Holistic Television Network, KBS
World, NASA TV, Northern Arizona University, Pentagon Research Channel, The Documentary Channel, Trinity
Broadcasting network, University of California, University of Washington, and Worldlink TV. EchoStar Comments
at 19. See also http://www.dishnetwork.com/content/whats_on_dish/programming_packages (visited May 9, 2007).
Following the Commission's ruling that RFD-TV does not qualify as public interest programming for purposes of
the Commission's public interest requirements for DBS operators, EchoStar and DIRECTV, no longer count this
network towards their public interest set aside. See Farm Journal, Inc. Petition For Declaratory Ruling, 21 FCC
Rcd 14265 (2006) (finding that RFD-TV fails to qualify for carriage by DBS operators in fulfillment of their public
interest obligations).
777 DIRECTV currently carries the following public interest channels: World Harvest Television, C-SPAN 1,
Daystar, Trinity Broadcasting Network, the WORD Network, BYU TV, Link TV, NASA TV, TCT, Once Mexico,
EWTN, HITN, and NRB. See DIRECTV Comments at 7; http://www.directv.com/DTVAPP/global/secondary
Index.jsp?assetId+900012 (visited May 9, 2007). See also n.776 supra.
778 EchoStar Comments at 23.
779 DIRECTV Comments at 7.
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233.
Comcast reports that it offers a broad selection of Hispanic programming networks,
including Discovery en Espaol, CNN en Espaol, and Toon Disney Espaol. It also states that in the
past year it has launched several services catering to multicultural audiences and that, in total, Comcast
carries more than 50 multicultural channels and plans to add several more in English or other
languages.780 On January 24, 2007, Cablevision launched iO International, a group of nine international
language packages, which can be sent to viewers upon their request. This new technique, called switched
video, allows operators to expand channel capacity by sending digital programming only when called for
by subscribers.781 These new packages range in cost from $4.95 to $29.95 per month, and are available to
Cablevision's 2.3 million digital subscribers.782 Comcast is testing a similar programming option and
plans to deploy its switched video service in the second half of 2007, indicating that switched video will
allow it to deliver more high-definition channels.783
234.

Locally Originated and Community-Oriented Programming.

APTS states that the
nation's 361 local public television stations provide programming of interest to their communities.
These stations, according to APTS, are owned and operated by local community foundations, colleges,
universities and school districts, as well as locally responsive state commissions. APTS points out that
one-quarter of public television stations' funding comes from individual donations and 15 percent is
funded by the federal government. The remaining 60 percent is donated by businesses, state and local
governments, local colleges and universities, and foundations. APTS further states that the programming
that public television stations provide is responsive to the communities they serve because of the
inherently local nature of these stations. Locally owned and controlled public broadcasting stations are
models of local service to their communities, according to APTS, because they control their own
programming content and schedules and tailor them to the interests of their communities.784
235.
CBA states that Class A and LPTV station owners are a diverse group, and that these
stations are often licensed to small communities or to serve niche audiences in larger communities. It
notes that they are the only class of broadcast service required by statute to provide a minimal amount of
locally produced programming. CBA states that these stations provide locally pinpointed information,
including emergency information. CBA notes that almost all viewers of Class A and LPTV stations rely
on over-the-air reception in the absence of must-carry rights.785 To facilitate access to these stations, it
urges the Commission to: (1) recommend that Congress repeal Section 614(e) of the Act, which required


780 Comcast Comments at 61.
781 See Section IV, at 276.
782 Cablevision Systems Corp., iO Goes International with Launch of Diverse International Programming Services
Across New York Metropolitan Area
(press release), Jan. 24, 2007.
783 Todd Spanger, Switching On Digital Video: Cablevision Does Big SDV Rollout; Test for Comcast,
MULTICHANNEL NEWS, Jan. 29, 2007, at 4; MULTICHANNEL NEWSWIRE, Comcast Sets Switched Video Rollout, at
http://www.multichannel.com/article/CA6410009 (visited Mar. 14, 2007).
784 APTS Comments at 3-4.
785 CBA Comments at 4-7.
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the withdrawal of the A/B switch rule;786 (2) recommend that Congress amend Section 325(b)(7)(B) of
the Act that currently exempts Class A and LPTV stations from the reciprocal good faith retransmission
consent bargaining requirements;787 and (3) act on the petition filed by Venture Technologies Group
proposing to apply the network nonduplication and syndicated exclusivity rules to Class A and LPTV
stations.788
236.
NAB states that broadcast stations remain a leading source of vital public safety
information and local programming even for those households that subscribe to an MVPD service. It
urges the Commission not to discount the important role that broadcasters play in the provision of local,
diverse programming, as well as vital emergency information and alerts, to all television households,
whether or not they subscribe to an MVPD service.789
237.
Comcast reports using its VOD service to provide local content, including local public
affairs programming and newscasts from local broadcast stations, in addition to providing movies and
other entertainment offerings. In the Denver area, for example, Comcast is collaborating with 26 local
municipalities to explore potential uses of new cable technology for their PEG access channels, including
VOD, designed specifically to meet the needs of local communities and increase the value of community
programming to television viewers. The resulting product, called MetroBeat TV, consists of viewer
designed programming. Comcast also makes time available on its VOD service for local political
candidates. During the 2006 election cycle, candidates in 70 of Comcast's local markets had an
opportunity to use the service to reach Comcast subscribers with video messages ranging in length from
two minutes to 30 minutes.790
238.

Children's Programming.

Cable television viewing continues to attract a growing
audience among children and families. Total day viewing of cable television by children (ages 2-11)
increased from a 33 share in 1993/1994 to a 73 share during the 2005/2006 television season.791 Viacom
reports that its networks serve a range of consumer interests, including Nickelodeon and Noggin for
children.792 In addition to providing traditional television content, Nickelodeon recently introduced
Nicktropolis.com for children ages 6 to 14. It introduced this new web site with games and videos based
on its original children's programming as a result of finding that more than 51 percent of children ages 8


786 47 U.S.C. 614(e). Previously, the Commission's rules required cable operators to make available input selector
(A/B) switches to allow consumers to readily change between over-the-air reception and cable-delivered
programming.
787 47 U.S.C. 325(7)(B).
788 See Venture Technologies Group, LLC, Petition for Rulemaking to Amend the Commission's Rules to Extend its
Network and Non-Network Territorial Exclusivity, Syndicated Exclusivity, and Network Non-duplication Protection
Rules to Low-power, Class A, and Noncommercial Broadcast Stations, RM 10335, filed Oct. 23, 2001.
789 NAB Comments at 3-4.
790 Comcast Comments at 64-65.
791 Nielsen Media Research, Share of Audience Report - Broadcast Calendar (TV Season), Dec. 31, 2006.
792 Viacom, Inc., http://www.viacom.com/view_brand.jhtml?inID=6&sectionid=2 (visited Jan. 31, 2007).
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to 14 watch TV and videos online.793 Noggin provides 12 hours daily (from 6 a.m. to 6 p.m.) of
commercial-free educational programming designed to appeal to families with pre-school age children.
Noggin also provides interactive programming for users with a special remote. At night, Noggin is
replaced by The N, an ad-supported channel for teenagers.794 Similarly, Nickelodeon shows
programming originally shown on the broadcast networks intended for general audiences under the Nick-
at-Nite name.795 EchoStar reports that it offers BabyFirstTV, the nation's first and only channel dedicated
to babies and toddlers, on an a la carte basis at a rate of $9.99 per month.796
f.

Access to Programming by Persons with Disabilities

239.
We invited comment and information regarding the accessibility of closed captioning and
video description to persons with disabilities.797 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 caption 100 percent of all new English-language programming
on each channel.798 In addition, a video programming distributor must include captioning in 30 percent of
its "pre-rule" English-language programming on each channel during each calendar quarter.799 The
phase-in schedule for "new" Spanish language programming currently requires distributors to caption at
least 1350 hours of Spanish-language programming or all of its new non-exempt Spanish language


793 Geraldine Fabrikant, Nickelodeon Begins a Web Site Focusing on Interactive Play, NEW YORK TIMES, Jan. 30,
2007, at C-10.
794 Viacom Reply at 2, 10; Viacom, Inc., at http://www.viacom.com/view_brand.jhtml?inID=5000003&sectionid=2
(visited Jan. 31, 2007).
795 Nick-at-Nite, http://www.nick-at-nite.com (visited Jan. 31, 2007). Examples of Nick-at-Nite programming
include Full House, Roseanne, and the Cosby Show.
796 EchoStar Comments at 6. EchoStar Satellite L.L.C. (DISH Network),
http://www.dishnetwork.com/content/programming/alacarte/index.shtml (visited Jan. 31, 2007). Other
programming networks offered by EchoStar on an a la carte basis are The Outdoor Channel, Lime, and Bloomberg
television, which are sold at monthly rates of $1.99, $1.99, and $1.50, respectively.
797 Notice, 21 FCC Rcd at 12229 25. 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).
The Commission has a pending proceeding addressing the current status of closed captioning and seeking comment
on whether revisions should be made to the rules. See Closed Captioning of Video Programming,
Telecommunications for the Deaf, Inc. Petition for Rulemaking
, 20 FCC Rcd 13211 (2005).
798 47 C.F.R. 79.1(b)(1) (phase-in schedule for captioning "new" English language 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, Closed Captioning and Video Description of Video Programming,
Implementation of Section 305 of the Telecommunications Act of 1996, Video Programming Accessibility
, 15 FCC
Rcd 16788, 16808-09 60 (2000) ("Digital Captioning Order").
799 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).
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programming per channel per quarter, whichever is less.800 The rules also currently require each video
programming distributor to caption 30 percent of its pre-rule non-exempt Spanish-language programming
on each channel during each calendar quarter.801 The rules exempt several specific classes of
programming from the closed captioning requirements.802 Video programming providers also may
petition the Commission for an exemption from the closed captioning rules if the requirements would
impose an undue burden.803 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.804
240.
The Commission also has rules that specifically address the accessibility of emergency
information shown on television. There are no exemptions to these rules.805 In the case of persons who
are deaf or hard of hearing, Commission rules require that emergency information provided in the audio
portion of the programming must be made accessible using closed captioning806 or other methods of
visual presentation, such as open captioning, crawls, scrolls, or appropriate signage807 that appear(s) on
the screen. In the case of persons with vision disabilities, emergency information that is provided in the
video portion of a regularly scheduled newscast, in a newscast that interrupts regular programming, or in
"crawls" or "scrolls" during regular programming must be made aurally accessible. The Commission has
released Public Notices recently reminding the public of these rules, and explaining and clarifying the
overlap these rules have with the closed captioning rules for some video programming distributors as of
January 1, 2006.808


800 47 C.F.R 79.1(b)(3)(iii).
801 47 C.F. R. 79.1(b)(4)(i).
802 47 C.F.R 79.1(d).
803 47 C.F.R 79.1(f).
804 47 C.F.R 79.1(g).
805 47 C.F.R. 79.2.
806 As of January 1, 2006, the date upon which 100 percent of new nonexempt English language programming must
be closed captioned, the major national broadcast television networks (i.e., ABC, CBS, Fox and NBC), affiliates of
these networks in the top 25 television markets, and national nonbroadcast networks serving at least 50 percent of all
homes subscribing to multichannel video programming services must close caption (or open caption) the emergency
information they air.
807 See, e.g., Waterman Broadcasting Corp. of Florida, Inc., Licensee of WBBH-TV, Fort Myers-Naples, FL,
Montclair Communications, Inc., Licensee of WZVN-TV, Fort Myers-Naples, FL,
20 FCC Rcd 13534 (EB 2005);
ACC Licensee, Inc., Licensee of WJLA-TV, Washington, D.C., 20 FCC Rcd 9832 (EB 2005).
808 Reminder to Video Programming Distributors of Obligation to Make Emergency Information Accessible to
Persons with Hearing or Vision Disabilities,
21 FCC Rcd 7994 (CGB 2006); see also Clarification of Obligation of
Video Programming Distributors to Make Emergency Information Accessible to Persons with Hearing Disabilities
Using Closed Captioning,
21 FCC Rcd 9066 (CGB 2006); see also Obligation of Video Programming Distributors
to Make Emergency Information Accessible to Persons with Hearing Disabilities Using Closed Captioning,
21 FCC
Rcd 15084 (CGB 2006).
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241.
We also requested comment on the availability of video description currently provided by
programmers on a voluntary basis.809 Specifically, we requested information regarding the amount and
types of video programming that includes video description and whether MVPDs generally carry video
descriptions inserted by programmers.
242.
APTS comments that public television stations have been instrumental in working with
the disability community to ensure full access to educational programming. It states that public television
was at the forefront of the development of captioning technology when it established the WGBH National
Center for Accessible Media ("NCAM") in 1971.810 Today, nearly 100 percent of the PBS national
programming service is closed captioned. APTS also comments that the descriptive video service
("DVS") was first developed by public broadcasting through WGBH. According to APTS, NCAM's
DVS has described thousands of PBS programs as well as a variety of regular programming, special
programs, and cinematic productions.811
243.
DIRECTV again reports that it passes through all the analog closed captioning
information. It states that its receivers have been tested for capability to receive HD programming with
closed captions. With respect to video description, DIRECTV states that it carries the secondary audio
program ("SAP") channels of 99 nonbroadcast networks and 175 broadcast stations, although the use of
these channels is determined by the programmer and it is not sure how much of what it passes through to
viewers contains video descriptions.812 EchoStar offers similar closed captioning and video description
capabilities, although with some variation across receiver models.813
244.
Panasonic states that it manufactures many products which provide enhanced
accessibility features for persons with disabilities. These products include DTVs with a separate button
on the remote control for accessing the SAP so that people with vision disabilities can navigate the video
description without the use of a visual menu.814 Panasonic also has announced that all of its digital cable-
ready products will support closed captioning by using caption decoders compliant with the CEA-708
standard (i.e., the technical standards for closed captioning of digital programming). Panasonic states that


809 In August 2000, the Commission adopted rules requiring certain larger broadcasters and video programming
distributors to include "video descriptions" with a small amount of their programming to increase their accessibility
to persons with visual disabilities. See Implementation of Video Description of Video Programming, 15 FCC Rcd
15230 (2000), on recon., 16 FCC Rcd 1251 (2001). On November 8, 2002, the U.S. Court of Appeals for the D.C.
Circuit vacated the Commission's video description rules, finding that they exceeded the Commission's authority.
See Motion Picture Association of America v. FCC, 309 F.3d 796 (D.C. Cir. 2002).
810 APTS Comments at 12. It also notes that public television was instrumental in establishing the National
Captioning Institute.
811 APTS Comments at 13.
812 DIRECTV Comments at 5 n.17.
813 See EchoStar, http://tech.dishnetwork.com/departmental_content/TechPortal/content/tech/receiverhome.shtml
(visited Feb. 21, 2007).
814 Panasonic Comments at 12.
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its recording products, such as DVD recorders, would support recording and playback of captioned
content no later than March 1, 2007.815

C.

Other Competitive Issues

1.

Competitive Developments in Small and Rural Markets

245.
In the Notice, we requested information and comment regarding issues specific to video
programming distribution in rural and smaller markets.816 Small cable operators and telephone companies
have video subscribership ranging from 50 subscribers up to approximately 100,000 subscribers. In the
aggregate, however, small cable operators and telephone companies serve a significant segment of the
MVPD marketplace. For example, the ACA reports that its 1,100 members serve approximately 8
million subscribers. ACA notes that more than half of those members serve markets of fewer than 1,000
subscribers.817 While their principal competitors remain DBS operators DIRECTV and EchoStar,818 small
cable operators and telephone companies often compete with each other in small and rural markets.819
According to ACA, small MVPDs serve as a competitive check on larger MVPDs and, in some
communities, as the only high-speed Internet access provider,820 although they face growing competition
from satellite broadband providers.821 Small cable and telephone companies' chief competitive
distinction from DBS operators is their origination of local content.822
246.
MVPDs in small and rural markets consider access to must-have programming, including
major national nonbroadcast networks and regional sports networks, on a timely basis and at competitive
rates an important competitive issue. Small and rural cable operators and LECs that plan to offer video
programming complain that securing access to programming is cumbersome and expensive.823 Both


815 Id.
816 Notice, 21 FCC Rcd at 12229 21-22.
817 ACA Comments at 3.
818 Id. at 2.
819 Michael Hopkins, Small Cable: Looking for New Wave of Competition? Looking for a Level Playing Field, THE
BRIDGE, July 28, 2006, at 3-5. According to a survey conducted by OPATSCO, 49 percent of rural LECs reported
competition with a cable operator, 67 percent with a DBS operator, and 12 percent with another telecommunications
company. OPASTCO Reply at 4. See also NTCA Comments at 18.
820 ACA Comments at 2-3. According to one small MVPD, Mediacom charges approximately $12 less in its
community than in nearby DMAs without competition. Hotchkiss Comments at 1.
821 Ken Belson, With a Dish, Broadband Goes Rural, NEW YORK TIMES, Nov. 14, 2006, at C1.
822 ACA Comments at 2-3; Viodi Reply at 7; OPASTCO Reply at 4 (noting that over 80 percent of rural telephone
companies surveyed produce local content).
823 Michael Hopkins, Small Cable: Looking for New Wave of Competition? Looking for a Level Playing Field, THE
BRIDGE, July 28, 2006, at 8. According to a January 2006 ACA survey, independent MSOs' monthly programming
costs range from thirty to eighty-five cents per subscriber, per station for retransmission consent fees. Staying in
Business: Typical Expenses for a Small MSO
, THE BRIDGE, July 28, 2006, at 6. Two respondents complained that
their programming rates had increased as much as 70 and 84 percent over the last five years. Programming, Retrans
Costs...Ouch! Monthly Programming Costs per Home for Two Independent MSOs
, THE BRIDGE, July 28, 2006, at 1.
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ACA and NTCA, a trade association representing more than 570 rural telecommunications providers,
report that small providers' relatively small consumer bases translate into a lack of leverage in
negotiations with video programmers. NTCA asserts that because lack of carriage on small systems has
little negative impact on programmers' revenue streams, they can demand that small and rural video
providers pay higher fees to carry broadcast stations.824 NTCA 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.825 APTS notes that it continues to negotiate with ACA
regarding the digital carriage of local public broadcast stations on smaller cable systems.826
247.
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.827
Small MVPDs are further stymied by nondisclosure clauses in programmers' agreements with large
MVPDs, which hinder access to market rate information,828 and tying arrangements, by which a network
requires an operator to carry as many as 12 additional networks in order to obtain a flagship network.829
As a result, small and rural MVPDs report that they must charge more for their basic and expanded basic
tiers and cannot offer programming packages tailored to their communities.830 According to NTCA, large


824 NTCA Comments at 3-5, 10-11. See also BendBroadband Reply at 2, 5-6 (claiming that the full-power NBC
affiliate in Bend, which uses one of its multicast streams for the CW Television Network and plans to use
multicasting for Telemundo and a local news channel, is in the process of acquiring the local low-power stations
affiliated with Fox and My Network TV. BendBroadband argues that this will give one station control of six of
seven local commercial network affiliates through ownership of stations, and that it will use "its ability to control all
of these networks and to tie them together in retransmission negotiations [to] extract virtually any price it wants,
including per-subscriber cash payments that could be prohibitively high for a small market cable operator").
825 NTCA Comments at 10. The general manager of one small MVPD states that he must spend approximately 55
percent of gross revenue on programming. Hotchkiss Comments at 1. We note that, in the 2005 Cable Price Survey
Report, the Commission found that increases in programming expenses were equivalent to more than half of the
overall increase in prices for the basic and expanded basic tiers. See 2005 Cable Price Survey Report, 21 FCC Rcd
at 15088 2.
826 APTS Comments at 2. APTS reports that it already has an agreement with NCTA for such carriage on cable
systems serving the vast majority of subscribers.
827 NTCA Comments at 14-15. NTCA reports that one of its members provides analog cable television service to
only 50 subscribers, and 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. at 15.
828 Id. at 11-12.
829 Id. at 12. See also BendBroadband Reply at 2, 5-6.
830 ACA Comments at 5. See also Hotchkiss Comments at 1. BendBroadband, a small-market cable operator in
Oregon, states that as a result of higher programming charges and tying arrangements, "(1) [i]t would be forced to
pass on these increased programming costs to its subscribers; (2) the quality of programming would diminish as
BendBroadband is forced to replace more desirable cable programming with less appealing multicast programming
streams demanded as a condition of carrying NBC and Fox; and (3) this would ultimately lead to a loss of
subscribers as they decide that satellite or other alternative programming is both more desirable and more
economical." BendBroadband Reply at 3.
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MVPDs' ability to distribute costs allows them to drop their service charges below cost in an attempt to
drive out competition from smaller market entrants,831 and their larger subscriber bases afford them
sufficient leverage to negotiate exclusive retransmission agreements with content providers.832
248.
Many small cable operators purchase video programming through buying cooperatives,
such as the National Cable Television Cooperative ("NCTC"), which represents approximately 1,100
independent cable operators serving approximately 10 million subscribers nationwide.833 NCTC
negotiates master agreements with programming networks, cable hardware and equipment manufacturers,
and other service providers on behalf of its membership. Through NCTC, small cable operators receive
volume discounts to which they would not be entitled on their own, although one NCTC member reports
that their per-subscriber programming rates are still higher than those of MSOs of comparable size to
NCTC.834 On the other hand, small telephone companies that provide video service complain that they
cannot benefit from participating in NCTC's master affiliation agreement, because the organization limits
membership to companies that provide video service "primarily by means of a cable television system."835
249.
Finally, small operators are concerned about difficulties in obtaining local franchises.
According to OPASTCO, 68 percent of rural LECs provide video under a local franchise, but those that
operate in multiple jurisdictions may face disparately high fees and resistance from large, incumbent
cable operators.836 At the same time, it notes that some states have eased access to statewide video
franchises for new entrants, such as LECs, to the exclusion of incumbent cable operators, who therefore
must continue to seek a video franchise from each local market.837
2.

Competitive Developments in the MDU Market

250.
Multiple dwelling units ("MDUs") comprise a separate segment of the MVPD
marketplace because alternative video providers frequently have difficulty offering service in MDUs in
competition with an incumbent provider, especially where the incumbent has a long-term exclusive
contract with the building owner that prevents competitive entry.838 Exclusive contracts are those that


831 NTCA Comments at 15-17.
832 Id. at 17.
833 NCTC, at http://www.cabletvcoop.org.
834 PVT Comments at 2.
835 NTCA Comments at 18 (citing NCTC's membership requirements).
836 OPASTCO Reply at 3-4.
837 Michael Hopkins, Small Cable: Looking for New Wave of Competition? Looking for a Level Playing Field, THE
BRIDGE, July 28, 2006, at 7. One such state is Texas, which passed its video franchise reform bill in 2005; other
states have applied their new rules equally to incumbents and new entrants. Id.
838 The incumbent provider is not necessarily the incumbent cable operator. Private cable operators are the
incumbent video provider for many MDUs. See PCO Section supra; see also Telecommunications Services Inside
Wiring, Customer Premises Equipment,
22 FCC Rcd 10640 (2007). We note that a Commission proceeding
regarding certain issues of inside and home run wiring is still pending. See Exclusive Service Contracts for
Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments
, 22 FCC Rcd 5935
(2007) ("MDU Notice"). See also 2004 Report, 20 FCC Rcd at 2816-17 111-112.
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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). Several new
entrants into the MVPD marketplace have raised concerns this year with these kinds of contracts, as they
have for the past several years.839
251.
These commenters identify long-term exclusive MDU access contracts as a barrier to
entry. BSPA, for example, contends that long-term exclusive contracts are used as an "anticompetitive
weapon" to prevent new entrants from competing with incumbents. This is particularly troublesome, it
points out, where franchise conditions require the new entrant to build out to match the incumbent's
footprint, and the new entrant therefore is required to pass a number of MDUs, but cannot serve
customers in those buildings due to the incumbent's long-term exclusive contracts with the MDU
owners.840
252.
BSPA also states that the economics of system installation are such that BSPs cannot
afford to provide service to MDUs unless they can offer three services: high-speed Internet access,
telephony, and multichannel video services. APPA makes a similar point stating that many of today's
new broadband networks are being constructed based on a triple-play business model, i.e., the sale of
voice, video, and data services as a package; therefore, it is not cost effective to remove the video
component from the mix because of an exclusive MDU agreement that prevents the new provider from
offering video services. SureWest explains that these exclusive agreements lead to significant economic
inefficiencies. As an example, SureWest provides broadband service as both a competitive local
exchange carrier ("CLEC") and an incumbent local exchange carrier ("ILEC"). In the ILEC case, its
broadband service is provided over the same copper or fiber facilities as its legacy voice service. The
voice service, however, is typically not subject to exclusive agreements. If a SureWest voice service
subscriber resides in a building covered by an exclusive MVPD access agreement, then SureWest cannot
use its existing facilities to provide video services to that customer, even though doing so would promote
the efficient use of the network already in place, and SureWest would be willing to pass along the
resulting economic efficiencies to its customers in the form of lower prices.841
253.
BSPA states that, from the consumers' perspective, an MDU resident may be locked into
taking service from an older network with very limited capacity and no commitment to upgrade, while a
fully upgraded service provider is available at the property boundary. SureWest states that exclusive
MDU agreements are used primarily by incumbent cable operators to "lock up" large groups of customers
and to prevent them from being able to choose their preferred MVPD. Although this foreclosure of
choice clearly affects the options for video service available to consumers, it also affects the availability
of high-speed Internet service and competitive telephone service that are provided by the same network.
Verizon states that large numbers of consumers will be denied the benefits of competition if incumbent
cable operators are able to preclude competitive entry into MDUs through exclusive agreements. Verizon


839 See, e.g., BSPA Comments at 15-17; Verizon Comments at 24-28; USTelecom Comments at 3, 16-18; SureWest
Comments at 2-8; APPA Reply at 11. See also 2005 Report, 21 FCC Rcd at 2597 208.
840 BSPA Comments at 15. See also Verizon Comments at 24-25.
841 BSPA Comments at 16; APPA Reply at 11; SureWest Comments at 4-5.
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points out that approximately 30-35 percent of the U.S. population resides in MDUs, and that the adverse
impact of widespread use of these agreements is "dramatic."842
254.
SureWest states that there have been several important changes in technology and in the
marketplace since the Commission last looked at this issue. These changes include: (1) the advent of IP
technology that makes possible a whole range of new services, if only the providers are allowed access;
(2) more widespread packaging of video services together with high-speed Internet access and voice
services, resulting in greater potential savings for consumers; and (3) the presence of an increased number
of new competitors, as a result of changes in technology and new state-wide franchising laws in many
states.843 In view of these recent changes in the marketplace and in technology, as well as the significant
adverse impact of long-term exclusive contracts on consumers and competitive providers alike, these
commenters urge the Commission to revisit the MDU issue and consider adopting new rules that would
prohibit MVPDs from executing new, or enforcing existing, MDU exclusive access agreements.844
255.
In this regard, Comcast argues that the Commission is being asked to "overturn" its prior
decision on this issue based "solely on anecdotes of isolated incidents." Comcast states that the
Commission has recognized that there are legitimate competitive benefits to exclusive access
arrangements, and there is no evidence in this proceeding to suggest that the Commission should
reconsider its previous findings.845 NCTA asserts that the Commission has only recently conducted a
lengthy rulemaking proceeding on the subject, and that the Commission ultimately concluded in that
proceeding that the record did not support a prohibition on exclusive contracts for video services in
MDUs.846 In the absence of any new evidence of anticompetitive problems, NCTA concludes, the
banning of MDU exclusive agreements would impair, not promote, fair marketplace competition.847
256.
On March 27, 2007, the Commission released a Notice of Proposed Rulemaking seeking
comment on the use of exclusive contracts for the provision of video service to MDU and other real estate
developments in response to allegations that the use of exclusive contracts serves as a barrier to entry.848
In the MDU Notice, we observed that greater competition in the marketplace for the delivery of video
programming is one of the primary goals of federal communications policy. We also noted that, for many
participants in the marketplace, the ability to offer video services to consumers and the ability to deploy
broadband networks are linked intrinsically. Thus, the MDU Notice is designed to solicit comment on
whether the use of exclusive contracts unreasonably impedes the achievement of the interrelated federal


842 BSPA Comments at 16; SureWest Comments at 6; Verizon Comments at 27.
843 SureWest Comments at 6.
844 BSPA Comments at 15-17; SureWest Comments at 7-8; Verizon Comments at 28; APPA Reply at 11;
USTelecom Comments at 17.
845 Comcast Reply at 40.
846 See Implementation of the Cable Television Consumer Protection and Competition Act of 1992: Cable Home
Wiring
, 18 FCC Rcd 1342, 1367-68, 1370 (2003); Letter from Daniel L. Brenner, Senior Vice President, Law and
Regulatory Policy, NCTA, to Marlene H. Dortch, Secretary, FCC, MB Docket No. 05-311 (Sept. 8, 2006)
(regarding access arrangements with owners of MDUs) ("NCTA Sept. 8, 2006 Ex Parte Letter").
847 NCTA Sept. 8, 2006 Ex Parte Letter at 4.
848 See MDU Notice supra note 838.
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goals of enhanced MVPD competition and accelerated broadband deployment, and, if so, how the
Commission should act to address that problem.849 Specifically, the MDU Notice seeks comment on: (1)
the current environment for service providers attempting to obtain access to MDUs or other real estate
developments, including the use of exclusive contracts; (2) the impact of exclusive contracts on consumer
choice and video competition, and whether the use of exclusive contracts reduces the likelihood of
competitive entry; (3) a tentative conclusion that the Commission has authority to regulate exclusive
contracts for the provision of video services to MDUs and other real estate developments where it finds
that such contracts may impede competition and impair deployment of those services; and (4) what
specific steps the Commission should take to ensure that exclusive contracts do not unreasonably impede
competitive video entry .
3.

Competitive Developments in Alaska and Hawaii

257.
We sought comment on cable, DBS, and alternative MVPD services offered in Alaska
and Hawaii, and information on the extent to which services differ from those provided in the 48
contiguous states. We also requested information on each type of MVPD, including pricing,
programming, necessary equipment, and market share.850 The State of Hawaii reports that DBS services
provide the primary competition to incumbent cable networks in Hawaii, as they do in most other
states.851 Although it does not have data on the number of DBS subscribers in Hawaii, the State of
Hawaii suggests that DBS penetration is lower in Hawaii than in the rest of the country.852 We concur
with the State of Hawaii, and observe that DBS penetration in that state is 4.65 percent and in Alaska it is
10.33 percent, compared to an average DBS penetration of 24.83 percent in the 48 contiguous states.853
258.
The State of Hawaii contends that DIRECTV's subscriber levels are particularly low for
a number of reasons. It indicates that distribution of DIRECTV's service is limited to independent
retailers that are not as highly accessible as national retail chains used in other states.854 Moreover,
according to the State of Hawaii, an informal survey of the DIRECTV retailers indicates that consumers
are more likely to purchase EchoStar's service.855 The State of Hawaii attributes DIRECTV's difficulties


849 See 47 U.S.C. 521(6) (stating that one of the purposes of Title Vi is "to promote competition in cable
communications") and 47 U.S.C. 157, nt. (incorporating section 706 of the Telecommunications Act of 1996,
Pub.Law No. 104-104, 110 Stat. 56 (1996) (stating that the Commission shall promote competition in the local
telecommunications market and shall remove barriers to infrastructure investment).
850 Notice, 21 FCC Rcd at 12238 23.
851 State of Hawaii Comments at 1.
852 Id. at 1-2.
853 CentrisBRIDGE at http://online.centrisplus.com (visited Mar. 27, 2007). As of June 30, 2006, the average cable
penetration was 56.77 percent in the 48 contiguous states compared to 81.38 percent in Hawaii and 45.06 percent in
Alaska.
854 State of Hawaii Comments at 2. See also State of Hawaii Petition for Administrative Sanctions of the State
against DIRECTV Holdings, LLC, DIRECTV Enterprises, Inc., and USSB II, Inc., MB Docket No. 03-83 (filed
Feb. 6, 2003); Request for Comment on Petitions Regarding DIRECTV's DBS Service to the States of Alaska and
Hawaii
, 18 FCC Rcd 5501(MB 2003).
855 State of Hawaii Comments at 2.
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in marketing its service in the state to the reception equipment that must be used. It states that subscribers
in Hawaii must install a 1.2 meter antenna to receive basic DIRECTV packages that may include local
channels and a second 1.2 meter antenna for HDTV or foreign language channels. State of Hawaii claims
that installation of the equipment may be unattractive and burdensome for single family homeowners. It
also notes that about half of the state's population lives in multi-family housing, where installation of a
1.2 meter antenna may be physically difficult or prohibited because the over-the-air reception device
("OTARD") regulations do not protect antennas greater than 1.0 meters in diameter.856 The State of
Hawaii concludes that in order for its residents to enjoy true MVPD competition, both major DBS
licensees must make an effort to provide comparable service to that offered on the mainland, in terms of
the necessary equipment and the marketing of the service through major retail outlets.857
259.
We note that EchoStar's reception equipment may be even larger than DIRECTV's,
requiring a 1.5 meter dish in some locations, although independent retailers may provide equipment as
small as 24 inches when appropriate.858 In large cities in Alaska and Hawaii, retailers provide a 30- or 36-
inch antenna; however, subscribers in Alaska must use an additional 1.2 meter dish for HD services.859
EchoStar also requires a second receiver for extended channels, and is unable to carry some public
interest and international channels.860 We note that EchoStar also relies on independent retailers for
equipment and installation, but offers unique services tailored to both Alaska and Hawaii that may also
include high-speed Internet access.861 In addition, EchoStar reports that it continues to expand its service,
most recently by launching a new HD Pak in the Alaska and Hawaii markets.862
260.
DIRECTV states that it offers the same national and local-into-local programming in
Alaska and Hawaii that is available in the rest of the country.863 However, it asserts that regulatory
obstacles create competitive disadvantage in the Alaska and Hawaii markets. It maintains the SHVERA
requirement that DBS operators must carry the multicast and HD signals of broadcast stations in Alaska


856 State of Hawaii, Comments at 3. We note that elsewhere in the United States, DIRECTV offers a standard 0.5
meter (18 inches) dish for DBS services. See DIRECTV, http://directv.com/DTVAPP/customer/
faqPage.jsp?assetId=1100116#category5 (visited Jan. 22, 2007). The OTARD rule prohibits governmental and
nongovernmental restrictions on viewers' ability to receive video programming signals from DBS service, BRS
providers, and television broadcast stations. The rule applies to direct-to-home satellite dishes that are less than one
meter in diameter (or of any size in Alaska), TV antennas, and wireless cable antennas. It, however, allows local
governments, community associations, and landlords to enforce restrictions that do not impair the installation,
maintenance, or use of antennas as well as restrictions needed for safety and historic preservation. See 47 C.F.R.
1.4000.
857 State of Hawaii Comments at 4-5.
858 DISH Network, http://www.dishnetwork.com/content/faq/search/about/ (visited Jan. 23, 2007).
859 Jack Walda Electronics, Lihue Hawaii, 808-245-3321 (accessed Jan. 30, 2007). See Also Microcom, Anchorage
Alaska, 907-2643474 (visited Jan. 30, 2007).
860 DISH Network, at http://www.dishnetwork.com/content/programming/packages/alaska/index2.shtml (visited Jan.
23, 2007).
861 DISH Network, at http://www.dishnetwork.com/content/getdish/index.shtml (visited Jan. 23, 2007).
862 EchoStar Comments at 20.
863 DIRECTV Comments at 20.
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and Hawaii unduly burdens DBS as compared to other MVPDs, and it urges the Commission to
reconsider this requirement.864 DIRECTV claims that must-carry regulation in Alaska and Hawaii results
in a sixfold increase in used capacity, and requires the elimination of some national channels, or the
curtailment of local-into-local service.865 NAB disagrees and states that DBS systems are not
disadvantaged by carrying the required number of digital signals into Alaska and Hawaii. It notes that it
has demonstrated that such carriage uses only 2.34 percent of DIRECTV's current capacity for the two
states and that the Spaceway satellites were designed with the capacity to serve both states without
diverting capacity that would be used for other national or local service.866

IV.

TECHNICAL ISSUES

261.
Technological developments are integral to 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 technological, regulatory, and marketplace developments that have affected, and will affect,
competition in the future.

A.

Navigation and Reception Devices

262.

Tuner Mandate

. In 2002, the Commission initiated a requirement that televisions with
analog tuners also must contain DTV tuners, with a phase-in period based on screen size.867 In 2005, the
Commission accelerated and expanded the DTV tuner mandate. As a result, beginning March 1, 2007, all
broadcast television receivers, regardless of size, as well as television reception devices (e.g. VCRs and
DVRs) had to include a DTV tuner.868 The Commission made these changes to increase DTV tuner
penetration, ensure greater commercial availability, and ensure that consumers' expectations are met.
263.

CableCARDs

. In 2003, the Commission adopted rules that allow 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.869 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. Consumers need a set-top box to receive two-way services
(e.g., video-on-demand). The cable and consumer electronics industries continue to work on an


864 Id. at 19-20.
865 Id. at 19-20.
866 NAB Reply Comments at 9-10. See also Opposition of NAB to Petition for Reconsideration, MB Docket No.
05-181 (filed Dec. 8, 2005) at 4-6.
867 Review of the Commission's Rules and Policies Affecting the Conversion to Digital Television, 17 FCC Rcd
15978 (2002).
868 Requirements for Digital Television Receiving Capability, 20 FCC Rcd 11196 (2005).
869 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).
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agreement for two-way "plug-and-play" functionality.870 Recent work on downloadable security systems
may serve as an alternative to CableCARDs.871
264.
CableCARD development and deployment increased in 2006. CableCARDs currently
permit the reception of one-way digital cable programming via commercially available devices (i.e.,
without using a cable operator-supplied set-top box). As of March 26, 2007, more than 259,000
CableCARDs had been deployed by cable operators, up from 90,000 the previous year.872 As of March
15, 2007, 548 models of Unidirectional Digital Cable Ready Products ("UDCPs") had been verified for
use with CableCARDs.873 By June 2006, both major conditional access vendors, Motorola and Scientific
Atlanta, had qualified multi-stream CableCARDs with CableLabs.874 Testing procedures were
established for multi-stream CableCARDs and CableLabs began testing of UDCPs in January 2007.875
CEA has expressed concerns that the deployment of switched digital video876 reduces the value of
UDCPs, accelerating the need to achieve an agreement on two-way CableCARD use.877
265.

Integration Ban.

In order to promote a competitive market for set-top boxes, the
Commission in 1998 required MVPDs to separate security in their leased devices and rely on the same
conditional access mechanism that consumer electronics manufacturers use (commonly referred to as
"common reliance").878 The integration ban originally was set to go into effect on January 1, 2005, but
was extended twice, first to July 1, 2006, and ultimately to July 1, 2007, at the urging of cable


870 For a description of the progress of negotiations between the consumer electronics and cable industries, see
Consumer Electronics Association, CS Docket No. 97-80: Joint Status Report of the Consumer Electronics
Association and the National Cable & Telecommunications Association
, May 31, 2006, at
http://gullfoss2.fcc.gov/prod/ecfs/ retrieve.cgi?native_or_pdf=pdf&id_document=6518353757 (visited Jan. 25,
2007). See also CableLabs, 2007 CES Featured Cable's Two-Way Future; High Definition Cable Content Now
Available on PCs
(press release), Jan. 24, 2007.
871 See Ted Hearn, Set-Top-Box Vendor Claims Downloadable MediaCipher Will Satisfy FCC Rules,
MULTICHANNEL NEWS, Mar. 23, 2007.
872 NCTA Comments, CS Docket No. 97-80, filed Mar. 26, 2007 ("Q1 2007 CableCARD Status Report"); NCTA
Comments, CS Docket No. 97-80, filed Dec. 29, 2005.
873 Q1 2007 CableCARD Status Report.
874 Id.
875 Id.
876 Switched digital video is a two-way service that allows cable operators to conserve bandwidth by providing less
popular channels only on demand. To consumers using a leased set-top box, the channel appears like any other
linear channel, but it cannot be received on a UDCP.
877 See, e.g., Letter from Julie Kearney, Senior Director and Regulatory Counsel for Consumer Electronics
Association, to Marlene H. Dortch, Secretary, FCC, CS Docket 97-80 (Nov. 30, 2005).
878 Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices
, 13 FCC Rcd 14775, 14808 80 (1998); 47 C.F.R. 76.1204(a)(1) ("First Navigation Report and Order").
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operators.879 In 2006, the D.C. Circuit Court of Appeals upheld the integration ban against a challenge by
the cable industry.880
266.
In the 2005 Deferral Order, the Commission stated that it would entertain waivers of the
integration ban for low-cost, limited-capability devices.881 A number of requests for waiver of the
deadline for complying with the integration ban have been filed with the Commission.882 On January 10,
2007, the Media Bureau ruled on three of these requests.883 The Bureau granted Cablevision's request for
a limited waiver of the integration ban for their set-top boxes, which rely on a different security card a
SmartCard for separated security instead of the CableCARD.884 The Bureau also granted a waiver
request filed by Bend Broadband, seeking waiver of the ban on integrated set-top boxes, conditioned on
Bend's migration to an all-digital network by 2008 885 Finally, the Bureau denied Comcast's request for
a permanent waiver from the integration ban for certain boxes that the Bureau found not to be the type of
low-cost, limited capability boxes envisioned by the Commission in the 2005 Deferral Order.886 The
Commission upheld the Bureau's decision in denying Comcast's application for review of the Bureau's
decision.887
267.

Downloadable Conditional Access

. In the 2005 Deferral Order, the Commission stated
that one of the reasons for extending the deadline for compliance with the integration ban until July 1,
2007, was to provide cable with additional time to determine whether downloadable conditional access
was feasible as an alternative to CableCARD, and if so, to provide a timeline for deployment.888 In 2005,
Comcast hosted two demonstrations of downloadable conditional access involving Motorola, Comcast,


879 Implementation of Section 304 of the Telecommunications Act of 1996: Commercial Availability of Navigation
Devices
, 18 FCC Rcd 7924, 7926 4 (2003); Implementation of Section 304 of the Telecommunications Act of 1996:
Commercial Availability of Navigation Devices
, 20 FCC Rcd 6794, 6802-03 13 (2005) ("2005 Deferral Order").
880 Charter Communications Inc. v. FCC, 460 F.3d 31 (D.C. Cir. 2006). Comcast and other cable operators
continue to assert that the integration ban "will result in substantial public harms with no countervailing public
benefit." Comcast Comments at 38.
881 2005 Deferral Order, 20 FCC Rcd at 6814 31..
882 To date, the Commission has received 40 such requests.
883 See Federal Communications Commission, Media Bureau Acts on Requests for Waiver of Rules on Integrated
Set-Top Boxes and Clarifies Compliance of Downloadable Conditional Access Security Solution
(press release), Jan.
10, 2007.
884 See Cablevision Systems Corporation's Request for Waiver of Section 76.1204(a)(1) of the Commission's Rules,
22 FCC Rcd 220 (MB 2007).
885 See Bend Cable Communications, LLC d/b/a BendBroadband Request for Waiver of Section 76.1204(a)(1) of the
Commission's Rules
, 22 FCC Rcd 209 (MB 2007).
886 See Comcast Corporation Request for Waiver of Section 76.1204(a)(1) of the Commission's Rules, 22 FCC Rcd
228 (MB 2007).
887 See Comcast Corporation Request for Waiver of Section 76.1204(a)(1) of the Commission's Rules, 22 FCC Rcd
17113 (MB 2007).
888 2005 Deferral Order, 20 FCC Rcd at 6795 3.
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Nagravision, and Samsung.889 On November 30, 2005, NCTA submitted its report on downloadable
security, containing a detailed timeline for its development and deployment.890 At least two major efforts
to promote downloadable security are underway. The first involves Comcast, Time Warner, and Cox,
which have started a joint venture to develop downloadable security called PolyCipher.891 The second
concerns Beyond Broadband Technology ("BBT"), which was formed by three smaller cable operators to
develop a downloadable security solution.892 BBT reports that an open standard low-cost solution for
separated security will be available in time to comply with the July 1, 2007 ban on integrated security
devices. On January 10, 2007, the Commission noted that, "consistent with the Commission's goal of
`common reliance,' BBT is offering its technology on an `open standard' basis . . . to all CE and set-top
box manufacturers."893
268.

Two-Way Plug-and-Play

. Although the cable and consumer electronics industries
continue to negotiate an agreement to provide two-way (i.e., interactive) cable functionality in consumer
electronics devices,894 no major new developments were announced in the last year.895 CableLabs has
established a private negotiation process by which individual consumer electronics manufacturers may
develop devices that include two-way functionality using the OpenCable Applications Platform
("OCAP").896 Several manufacturers have signed the requisite agreements to do so, with Comcast and
Time Warner committing to begin deployment of OCAP on their systems.897 In May 2007, four cable


889 Letter from James L. Casserly, Counsel for Comcast, to Marlene H. Dortch, Secretary, FCC, CS Docket 97-80
(July 18, 2005); Letter from James L. Casserly, Counsel for Comcast, to Marlene H. Dortch, Secretary, FCC, CS
Docket 97-80, (Nov. 30, 2005).
890 Letter from Daniel L. Brenner, Senior Vice President for NCTA, to Marlene H. Dortch, Secretary, FCC, CS
Docket 97-80 (Nov. 30, 2005). We note that while this timeline anticipated nationwide deployment by July 1, 2008,
in its request for waiver of the deadline for compliance with the integration ban, NCTA stated that it needed until
December 31, 2009, to deploy its downloadable conditional access system. NCTA, Request for Waiver of 47 C.F.R.
76.1204(a)(1), CSR-7056-Z (filed Aug. 16, 2006).
891 Jeff Baumgartner, PolyCipher Key to Cable's Downloadable Conditional Access Effort, CED BROADBAND
DIRECT, Aug. 17, 2006, at http://www.cedmagazine.com/article/CA6363598.html (visited Feb. 2, 2007).
892 Letter from Seth A. Davidson, Counsel for Beyond Broadband Technology LLC, to Marlene H. Dortch,
Secretary, FCC, CS Docket 97-80 (Dec. 22, 2006).
893 Commission Reiterates That Downloadable Security Technology Satisfies the Commission's Rules on Set-Top
Boxes and Notes Beyond Broadband Technology's Development of Downloadable Security Solution
, Public Notice,
22 FCC Rcd 244 (MB 2007).
894 47 U.S.C 544a, 47 U.S.C. 549. See also First Navigation Report and Order.
895 Letter from Neal M. Goldberg, General Counsel, National Cable and Telecommunications Association and Julie
M. Kearney, Senior Director and Regulatory Counsel, Consumer Electronics Association, to Marlene H. Dortch,
Secretary, FCC, CS Docket 97-80 (Nov. 29, 2006). See also 2005 Report, 21 FCC Rcd at 2600-01 215-18.
896 Amended and Restated Nonexclusive CableCARD-Host Interface License Agreement (Apr. 18, 2006), at
http://www.opencable.com/downloads/CHILA.pdf.
897 See CableLabs, CableLabs Certifies LG Electronics' OCAP-Based, Two-Way Digital Television (press release),
Jan. 9, 2007; See also, CableLabs, Cable Television Industry Voices Support for OCAP and Two-Way Digital Cable-
Ready Product Deployments
(press release), Jan. 5, 2006.
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operators (Comcast, Time Warner, Cox, and Bright House) announced that they will be upgrading system
headends to support digital boxes embedded with OCAP middleware and expect to start shipping OCAP-
enabled digital set-tops to their cable systems for deployment during summer 2007.898
269.
While OCAP enables two-way functionality and other advanced interactive
functionality, some manufacturers are reluctant to implement OCAP. This is so for a variety of reasons,
including their desire to maintain control over the user interface and experience and issues regarding the
sharing of resources within devices.899 In November 2006, CEA presented an alternative means of
achieving limited interactivity to provide support for video-on-demand, interactive program guides, and
switched digital broadcast called DCR+.900 DCR+ proposes to use standard protocols to send messages
between the host device and CableCARD and uses the CableCARD to translate standard commands to
proprietary cable operator protocols. Verizon also has voiced concern with the cable two-way plug-and-
play solution because of the difference between the architectures of Verizon and other cable operators; it
advocates instead an open standards approach.901

B.

Emerging Technologies

270.

Distributed Transmission Systems for Digital Television ("DTS").

A DTV station
employing a distributed transmission system uses multiple synchronized transmitters, each on the same
channel, spread around its service area. DTV receivers contain "adaptive equalizer" circuitry that
combines the signals from the multiple transmitters plus any reflected signals to produce a single signal.
DTS operation is similar to analog TV booster stations, a secondary, low-power service using the parent
station's channel to "fill in" gaps in its coverage area, but DTS technology may enable this type of
operation more efficiently than analog TV boosters.902 In the Second DTV Periodic Report and Order,
the Commission approved, in principle, the use of DTS.903 The Commission issued a Notice of Proposed
Rulemaking
in November 2005 to examine several policy issues related to the use of DTS.904 The
Commission proposed rules that would permit an existing authorized broadcast DTV station to use DTS
to expand its service area after the establishment of a post-transition DTV Table of Allotments and the
lifting of the current freeze on the filing of most applications. In addition, the Commission issued a
Clarification Order with respect to the authorization of interim DTS operations as permitted in the


898 Four Top Cable MSOs Say They Plan to Launch OCAP, COMM. DAILY, May 8, 2007, at 8.
899 See CEA Comments at 12.
900 Letter from Michael T. Williams, Executive Vice President, Secretary, and General Counsel, Sony Electronics,
Inc., et al., to Kevin J. Martin, Chairman, FCC, CS Docket 97-08 (Nov. 7, 2006).
901 Letter from Paul Brigner, Executive Director, Federal Regulatory, Verizon, to Marlene H. Dortch, Secretary,
FCC, CS Docket 97-80 (July 10, 2006). See also Verizon Reply at 6.
902 The Commission's Spectrum Policy Task Force recommended that DTV broadcasters be permitted to operate
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.
903 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").
904 Digital Television Distributed Transmission System Technologies, 20 FCC Rcd 17797 (2005).
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Second DTV Periodic Report and Order.905 Those interim authorizations continue to be available for
DTV stations prior to the completion of the DTS rulemaking proceeding.
271.

Advancements in Digital Broadcasting.

Broadcasters continue to improve their service
and offerings through enhancements to digital Vestigial Sideband Broadcasting ("VSB"), called
Enhanced VSB ("E-VSB") and Advanced VSB ("A-VSB"). E-VSB was approved by the ATSC
(American Television Standards Committee) in July 2004, as an amendment to the standard that allows
broadcasters to choose between bit rates and added robustness without impeding HDTV.906 Possible uses
of the technology include applications such as robust data broadcasting to desktops or transmissions of
file-based information to handheld receivers, and "fallback" audio.907 However, E-VSB adoption has
been slow due to a lack of demand and a lack of E-VSB enabled receivers.908 A-VSB is another
amendment being proposed to the ATSC for mobile video applications. ATSC has accepted the proposal
of A-VSB but it has not yet reached the "candidate standard" stage, 909 which involves more exacting
technical review.910 The A-VSB system, proposed by Rohde & Schwartz, allows for signals to be
distributed with a single high-power transmitter or via a network of smaller transmitters surrounding a
coverage area and will not interfere with the current ATSC signals.911 Samsung is working closely with
Rohde & Schwartz and has agreed to make the necessary receiving devices available by December
2007.912
272.

Networking and Content Mobility

. The concept of interactive television continues to
hold great promise for video programming providers. In 2006, the advancement of technology continued
to bring the potential of interactive television to consumers through a variety of media. Home networking
allows consumers to connect multiple devices in the home (e.g., set-top boxes, television sets, personal


905 Id.
906 Broadcast Engineering, Real-world Test Detail Reliable E-VSB Performance, May 1 2006, at
http://broadcastengineering.com/news/evsb-performance-test-20060501/ (visited Jan. 29, 2007). A higher bit rate
enables the broadcaster to transmit more data but limits the receivable range of the signal. Lowering the bit rate
reduces the amount of data that can be sent, but increases the distance at which the data can be received.
907 "Fallback audio" is a more robust audio stream used if the primary audio stream is unavailable due to signal
degradation or other circumstances. Advanced Television Systems Committee, ATSC Approves Enhancements to
DTV Standard
(press release), July 20, 2004.
908 Claudia Kienzle, E-VSB in Search of a Market, TV TECHNOLOGY, Apr. 24, 2006, at
http://www.tvtechnology.com/features/news/2006.04.24-n_E_VSB_in_search.shtml (visited Jan. 29, 2007).
909 A Candidate Standard is a document that has received significant review within a specialist group. Advancement
of a document to Candidate Standard is an explicit call to those outside of the related specialist group for
implementation and technical feedback. See The Advanced Television Systems Committee, Candidate Standards,
http://www.atsc.org/standards/candidate_standards.html (visited Feb 7. 2007).
910 Doug Lung, NAB RF Reflections: A-VSB and DTx, TV TECHNOLOGY, June 14, 2006 at
http://www.tvtechnology.com/features/On-RF/2006.06.14-f_Doug_Lung.shtml (visited Jan. 29, 2007).
911 Broadcast Engineering, Mobile Video is on the Way, May 1 2006, at
http://broadcastengineering.com/news/Mobile-video-here-20060501 (visited Jan. 29, 2007).
912 Id.
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computers, video game consoles) with each other and to the Internet. Companies such as Verizon913 and
AT&T914 are looking to technologies from standards groups such as the Multimedia over Coax Alliance
(`MoCA"),915 Home Phoneline Networking Alliance ("HomePNA"),916 and HomePlug917 to utilize
existing wires in the home to carry networking signals. Current wireless networks, using the 802.11b/g
technical standard, typically have lower throughput than wired networks and are subject to interference
from other wireless devices.918 These networks can have difficulty carrying a single HD video stream. A
new wireless standard under development intended to address the throughput issue is IEEE 802.11n.919
The 802.11n standard has not been finalized, but devices have been built based on draft versions of this
standard and are currently available at retail (e.g., the Linksys WRT300N Wireless-N Broadband Router).
The standard is targeted to have an estimated maximum throughput of 600 Mbps and should be capable of
carrying multiple HD video streams simultaneously, allowing a wireless network to be a practical solution
for moving video content around the home.
273.
Multi-room DVR service, which allows programming recorded by one DVR to be
accessed by other set-top boxes in the home, continues to be provided by cable operators. TivoToGo
performs a similar function with Tivo Series 2 DVRs, and also allows programming to be sent to a
personal computer or portable media player.920 The new Tivo Series 3 DVR, featuring high definition
and CableCARD support, does not yet support the TivoToGo service while content protection issues are
being worked out with CableLabs.921 Slingbox922 and Sony's LocationFree923 digitally encode a signal
source, such as the video output of a set-top box, and stream the video over the home network or over the
Internet to a personal computer or mobile device, allowing users to effectively take their multichannel


913 Craig Matsumoto, Entropic, Verizon Serve Up MOCA, LIGHT READING, Jan. 5, 2006, at
http://www.lightreading.com/document.asp?doc_id=86434 (visited Jan. 30, 2007).
914 AT&T Says 'Yes' to HomePNA, 'No' to MoCA, THE ONLINE REPORTER, Sept. 2, 2006, at
http://www.onlinereporter.com/article.php?article_id=7568 (visited Jan. 30, 2007).
915 Multimedia over Coax Alliance, at http://mocalliance.org (visited Jan. 30, 2007).
916 Home Phoneline Networking Alliance, at http://www.homepna.org (visited Jan. 30, 2007).
917 HomePlug Powerline Alliance, at http://www.homeplug.org (visited Jan. 30, 2007).
918 Throughput is defined as the data-carrying capacity of a network, a result of the number of data bits transferred at
one time and the rate at which they are transferred. The 802.11g standard estimates a maximum throughput of 54
million bits per second ("Mbps"), but real-world performance usually results in a maximum throughput of less than
24 Mbps shared among all devices on the network. An Ethernet home network usually has a reliable throughput of
100 Mbps for each device. A high definition video stream requires a constant 12-20 Mbps for reliable live playback.
919 IEEE, IEEE 802.11n Report, at http://grouper.ieee.org/groups/802/11/Reports/tgn_update.htm (visited Jan. 30,
2007).
920 TiVo Inc., TiVo Desktop, at http://www.tivo.com/4.9.4.1.asp (visited Jan. 30, 2007).
921 TiVo Inc., Buy TiVo, at http://www.tivo.com/2.0.3hdDvr.faq.asp#8 (visited Jan. 30, 2007).
922 Swing Media, at http://www.slingmedia.com/indexa.php (visited Jan. 30, 2007).
923 Sony, Locationfree Living, at http://www.learningcenter.sony.us/assets/itpd/locationfreetv/index.html (visited
Jan. 30, 2007).
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video service with them to wherever they can access the Internet. Microsoft's Windows Media Center
can turn a user's personal computer into a home media server. A Media Center Extender (extender), such
as the Microsoft Xbox 360,924 can connect to the Media Center PC to stream multimedia files and display
them on a TV elsewhere in the home. The extender can also connect through the PC to services like
Movielink925 to purchase and download video from the Internet. As home network-enabled devices such
as these become more prevalent, some predict that future consumers may choose not to subscribe to a
traditional multichannel video service and instead acquire video content from an Internet download
service. Such content could be downloaded on a PC then streamed to another device, such as an extender,
to display on a user's TV.
274.

WiMax and Municipal Wi-Fi

. Development of WiMAX continues in standards groups
to create a last-mile solution for delivery of video, voice, and data.926 The wireless technology, embodied
in IEEE Standard 802.16, 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.927 Mobile WiMAX, IEEE Standard 802.16,
provides peak downstream data rates of up to 63 Mbps per sector and upstream data rates of up to 28
Mbps per sector in a 10 MHz channel.928 Sprint Nextel announced that it would build a mobile WiMAX
fourth-generation wireless network and plans to launch the service in trial markets by the end of 2007.929
Additional efforts to create metropolitan wireless broadband access also are underway, including high-
speed mesh networks, IEEE Standard 802.20, and municipal Wi-Fi.930 Municipal wireless networks
offering widespread coverage and high bandwidth could become an alternative video delivery platform.
While WiMax continues in development, deployments of municipal Wi-Fi progressed and expanded
during the last year. The opposition to municipal Wi-Fi noted in previous years has subsided and major


924 Microsoft Inc., Media Center Extender, http://www.microsoft.com/windowsxp/mediacenter/extender/
default.mspx (visited Jan. 30, 2007).
925 Movielink, at http://www.movielink.com (visited Jan. 30, 2007).
926 World Interoperability for Microwave Access ("WiMAX") is based on the IEEE 802.16 standard and offers
higher speeds and greater distances than IEEE 802.11 based Wi-Fi. WiMAX is being developed as a solution to
providing Metropolitan Area Networks ("MANs"). See, e.g. Intel Corporation, What is WiMAX, at
http://www.intel.com/netcomms/technologies/wimax/index.htm (visited Mar. 27, 2007), The IEEE 802.16 Working
Group on Broadband Wireless Access Standards, at http://www.ieee802.org/16/ (visited Mar. 27, 2007), WiMAX
Forum, at http://www.wimaxforum.org/home/ (visited Mar. 27, 2007).
927 Intel Corporation, Understanding Wi-Fi and WiMAX as Metro-Access Solutions 3, at
http://www.intel.com/netcomms/technologies/wimax/304471.pdf (visited Feb. 5, 2007).
928 WiMAX Forum, Mobile WiMAX Part 1: A Technical Overview and Performance Evaluation 10, Aug. 2006, at
http://www.wimaxforum.org/technology/downloads/Mobile_WiMAX_Part1_Overview_and_Performance.pdf
(visited Feb. 5, 2007).
929 Sprint Nextel, Sprint Nextel Announces 4G Wireless Broadband Initiative with Intel, Motorola, and Samsung
(press release), Aug. 8, 2006.
930 Wi-Fi is a brand coined by the Wi-Fi alliance to indicate compatibility with the IEEE 802.11 wireless local area
network ("WLAN") specifications. IEEE 802.11 is specified to work in either 2.4 GHz or 5 GHz spectrum bands
and at speeds of either up to 11 Mbps or up to 54 Mbps. IEEE 802.11 and the term Wi-Fi have become synonymous
with wireless networking provided for computers, laptops, and numerous other devices. See Wi-Fi Alliance, at
http://wi-fi-org; see also IEEE, 802.11, at http://www.ieee802.org/11/.
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content providers, LECs, and cable operators have begun taking advantage of the technology as a way to
reach consumers.931
275.

Next Generation Network Architecture

. Cable's Next Generation Network Architecture
("NGNA") refers to the ongoing efforts by major MSOs to advance cable operators' transition to all-
digital networks and provide an alternative software-based downloadable conditional access ("DCAS")
system that supports the cable operators' existing security. The non-profit company Polycipher, backed
by Comcast, Cox Communications, and Time Warner, intends to continue the work NGNA LLC had
begun on development of this technology.932 The NGNA architecture would unify cable's IP and MPEG
video infrastructures in an effort to drive down equipment costs, reclaim valuable hybrid fiber coaxial
("HFC") spectrum, and enable high-value digital services. Fulfilling the NGNA vision requires a new
class of digital IP-based cable edge devices that integrate the functionality of high-density edge QAM
platforms, DOCSIS CMTS, and video processing.933 The ultimate goal is for IP traffic (data, voice, and
video) and MPEG traffic (broadcast and on-demand standard and high-definition video) to flow over a
common Gigabit Ethernet backbone to the cable network edge. There, the NGNA edge platform would
dynamically route services to the appropriate customer premise devices, whether an MPEG set-top box,
IP set-top box, cable modem, or PacketCable E-MTA.934
276.
Cable operators also see Switched Digital Video ("SDV") as a solution for major near-
term capacity problems. However, they view it as only a first step in a long-term migration to a new
NGNA architecture.935 Rather than transmitting all available channels to viewers at once, SDV combines
the bandwidth efficiencies of compressed digital content with switching technology to enable content to


931 See, e.g., deployments by Google in Mountain View, California; deployment by Time Warner in Cedarburg,
Wisconsin; and plans by AT&T in Illinois. MuniWireless, December 2006 Update of Wireless Cities and Counties,
at http://www.muniwireless.com/reports/docs/Dec-29-2006summary.pdf (visited Feb. 5, 2007).
932 Jeff Baumgartner, Polycipher Key to Cable's Downloadable Conditional Access Effort, CED MAGAZINE, August
17, 2006. See additional discussion of DCAS and Polycipher in Cable and Navigation Devices in Section IV. A.
supra.
933 The NGNA architecture requires several broadly defined compenents. The high density edge quadrature
amplitude modulator ("QAM") packages digital video into 6 MHz streams to be delivered to consumer set-top
boxes. The cable modem termination service ("CMTS"), operating using the DOCSIS standard, provides a central
"hub" for the cable modems on the operators network to communicate with. The video processing aspect of NGNA
will enable MPEG video stream processing immediately before the QAM device, permitting the insertion of streams
(to enable pay-per-view and video-on-demand) as well as more advanced graphics services such as gaming or
commercial insertion. See PDS Consulting, NGNA Project, at http://www.pdsconsulting.net/NGNAProject.pdf
(visited Mar. 27, 2007).
934 Next-Generation Network Architecture (NGNA), LIGHT READING'S CABLE DIGITAL NEWS, Oct. 30, 2006, at
http://www.lightreading.com/document.asp?doc_id=109381&site=cdn (visited Jan. 29, 2006).
935 MSO's Fight IPTV with IPTV, LIGHTREADING, Mar. 31, 2006, at
http://www.lightreading.com/document.asp?doc_id=91833 (visited Jan. 29, 2007).
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be streamed to viewers only upon request.936 The availability of open, IP-based architecture has catalyzed
the development of reliable, cost-effective, and scalable solutions to this inefficiency.
277.

Digital Content Protection

. As high-value digital video content is being made available
to consumers, the Motion Picture Association of America ("MPAA") and other content creators are
increasingly concerned about unauthorized copying and the use of such content. According to an MPAA
study, the industry lost $6.1 billion to piracy in 2005.937 MPAA stresses the need to implement content
protection measures such as digital rights management ("DRM") in hardware, software, or both, to reduce
these losses.938 Several of the DRM measures widely used to protect video have recently been
compromised. Advanced Access Content System ("AACS"), the copy protection system used for HD-
DVD and Blu-Ray Disc, was reportedly compromised in January 2007.939 The DRM included in the new
Microsoft Windows Vista operating system also has reportedly been attacked.940 Despite these setbacks,
content protection remains a part of digital video distribution systems, including digital cable-ready
receivers.941
278.

DOCSIS 3.0.

CableLab's Data Over Cable Service Interface Specification ("DOCSIS")
continues to be the dominant standard used to provide high-speed Internet service for cable operators. As
the throughput available to operators increases, their ability to deliver additional and more complex
services, including video over IP, increases.942 On August 7, 2006, CableLabs announced the approval of
the new DOCSIS 3.0 specifications that enable cable operators to offer significantly higher data rates to
their broadband customers. DOCSIS 3.0 describes downstream data rates of 160 Mbps or higher and
upstream data rates of 120 Mbps or higher,943 thereby significantly increasing cable operators' position
relative to LEC competitors. DOCSIS 3.0 also incorporates support for the Internet Protocol version 6
("IPv6"). IPv6 is the next generation of the Internet Protocol and greatly expands the number of Internet
addresses that cable operators may use, allowing them to provide consumers with more IP-based
services.944 The new DOCSIS specification promises secure delivery of advanced interactive video that
would otherwise require complex engineering in the networks and substantial upgrades to the plant. To


936 In a traditional cable plant, all video services are delivered to all subscribers at all times. Thus, even though at
any given moment no customers are viewing a particular video stream, that stream still consumes bandwidth across
the entire network.
937 MPAA, MPAA Releases Data From Piracy Study (press release), May 3, 2006.
938 MPAA, Glickman Stresses Need For Content Protection in Digital Age (press release), June 21, 2006.
939 AACS Confirms Hacks on High-Definition DVD Players, EWEEK, Jan. 25, 2007 at
http://www.eweek.com/article2/0,1895,2087631,00.asp (visited Feb. 2, 2007).
940 David Berlind, Vista DRM: How Fools and Their Copy Protection Investments Are Always Separated, ZDNET,
Jan. 30, 2007, at http://blogs.zdnet.com/Berlind/?p=321 (visited Feb. 2, 2007).
941 Letter from Neal M. Goldberg, General Counsel, NCTA, to Marlene H. Dortch, Secretary, FCC, CS-Docket 97-
80 (Dec. 11, 2006) at 7, Exhibit A.
942 "Throughput" is the actual amount of useful and non-redundant information which is transmitted or processed.
See Harry Newton, NEWTON'S TELECOM DICTIONARY (CMP Books, 17th ed., 2001), at 697.
943 CableLabs, CableLabs Issues DOCSIS 3.0 Specification Enabling 160 Mbps (press release), Aug. 7, 2006.
944 Id.
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achieve these higher data rates, DOCSIS 3.0 specifies a methodology called "channel bonding"945 in both
the upstream and downstream directions. DOCSIS 3.0 has fully replaced the widely anticipated 2.0b
specification, which was never formalized and was identified only as an interim solution. While DOCSIS
2.0b was designed to produce significant gains in downstream data rates, it only provided an upstream
rate of up to 30Mbps and was deemed insufficient in today's marketplace.946
279.
The transition to DOCSIS 3.0 will take place in two phases. Cable Modem Termination
System ("CMTS") equipment in the network must be replaced before the service can be offered. Later,
partly by a process of natural replacement over time, the cable modems and set-top boxes in consumers'
homes also will change to DOCSIS 3.0-compatible equipment, often residential gateways supporting
triple-play services.947 Many major cable modem vendors, including BigBand Networks, Arris, and
Cisco, participated in a week-long interoperability test in July of 2006, and all companies' downstream
channel bonding products were able to interoperate with each other with data successfully being
transferred over the bonded channels.948 In addition, developers successfully performed limited IPv6
testing.949 The first volume shipments of DOCSIS 3.0-compliant network equipment are expected to
occur in 2007. Speculation is that the penetration of DOCSIS 3.0 will reach nearly 60 percent for in-use
CMTS by 2011. Penetration will be slower for the larger installed base of customer premise equipment,
predicted to reach just under 40 percent in 2011.950
280.

PacketCable.

CableLabs' PacketCable project continued standards development and
certifications for delivering advanced IP services over broadband cable networks in 2006. While cable
operators are deploying PacketCable 1.0 and 1.5 architecture for VoIP services within their cable
networks, PacketCable 2.0 promises even greater flexibility and new services. PacketCable 2.0 is an
application-agnostic architecture based on a common network core of standard protocols to register
clients and establish sessions for voice, video, and text. PacketCable has the potential to allow the rapid
introduction of new services, such as the integration of the cable network with wireless networks and
cross platform feature integration (e.g., set-top box applications that integrate with the voice service for


945 Channel bonding is a load-sharing technique for combining multiple DOCSIS channels. DOCSIS 3.0 defines
channel bonding for both the upstream and downstream directions. Downstream channel bonding is possible for a
minimum of four channels, approximately 38Mbps each, for a total of about 152 Mbps shared throughput.
Upstream channel bonding is possible for a minimum of four channels, 10 to 30 Mbps each, for a total of 40 to 120
Mbps of shared throughput. Motorola, White Paper: Scaling Bandwidth Through Channel Bonding, May 1, 2005,
at http://broadband.motorola.com/ips/pdf/Scaling_Bandwidth.pdf.
946 Jeff Baumgartner, Channel Bonding DOCSIS 2.0b, COMMUNICATIONS TECHNOLOGY, June 1, 2006.
947 ABIResearch, DOCSIS 3.0 Penetration to Reach 60% by 2011 (press release), Aug. 23, 2006.
948 Bonding DOCSIS channels is a process by which separate channels of data are coordinated to work together and
provide data to a single point faster than any single channel would be capable of. CableLabs, CableLabls Issues
DOCSIS 3.0 Specifications Enabling 160 Mbps,
SPECS NEWS & TECHNOLOGY FROM CABLELABS, Vol. 18, No. 3,
July 2006.
949 CableLabs, CableLabs Issues DOCSIS 3.0 Specifications Enabling 160 Mbps (press release), Aug. 7, 2006).
950 Id.
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features including caller ID display on the TV and the ability to forward incoming calls to voicemail or
other telephone numbers).951
281.
The Third Generation Partnership ("3GPP") IP Multimedia Subsystem ("IMS")952 is the
underlying technical foundation for PacketCable 2.0. IMS has become the Session Initiation Protocol
("SIP") service delivery method for many wireless, DSL, and cable service providers. Even though IMS
does not meet all of cable's needs, it accelerates the development and availability of products without
reinventing the SIP service platform.953 New CableLabs specifications define in detail the
communication interface requirements necessary for equipment manufacturers to develop interoperable
products.954 Using widely accepted standards based protocols, cable operators expect to see a migration
of business and residential services onto the new IMS based PacketCable architecture.955

V.

FOREIGN MARKETS

282.
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.956 In last year's report, we reviewed several countries' experiences with IPTV over
DSL.957 This year, we focus on developments in digital tiers and a la carte services abroad.
283.
MVPDs in many foreign markets offer programming on an a la carte basis or in mixed
bundles, themed tiers, and subscriber-selected tiers. In Hong Kong, subscribers to PCCW's
NETVIGATOR broadband service receive PCCW's IPTV service, "now TV," as a free additional
service. The basic free package of 21 channels includes traffic, weather, local news, and the Hong Kong
Disneyland channel. Customers also can subscribe to more programming on additional charge-per-
channel basis.958 Subscribers may opt to pay for these additional channels on a per channel basis for a
month, six months, or a year at a time. Main categories of premium channels include movies, music,


951 Kevin Johns, Eric Rosenfeld, PacketCable 2.0- Design Goals, Strategic Drivers and Architecture, CED WEB
EXTRA, Dec.1, 2006, at http://www.cedmagazine.com/article/CA6398269.html (visited Jan. 30, 2006).
952 Third Generation Partnership, at http://www.3gpp.org (visited Feb. 5, 2007).
953 Kevin Johns, Eric Rosenfeld, PacketCable 2.0- Design Goals, Strategic Drivers and Architecture, CED WEB
EXTRA, Dec. 1, 2006, at http://www.cedmagazine.com/article/CA6398269.html (visited Jan. 30, 2006).
954 CableLabs, CableLabs Issues Specifications for Advanced IP Services Platform (press release), Apr. 6, 2006.
955 Jonathan Rosenberg, Migrating to IMS and PacketCable 2.0, NCTA-The National Show 2006, April 9-11, 2006,
at http://www.cisco.com/application/pdf/en/us/guest/netsol/ns633/c664/cdccont_0900aecd80458e2a.pdf (visited Jan.
30, 2006).
956 Notice, 21 FCC Rcd at 12261 90.
957 See 2005 Report, 21 FCC Rcd at 2609-13 236-242.
958 PCCW Interim Report 2006, at http://www.pccw.com/NASApp/cs/BlobServer/
20060928_interim_eng.pdf?blobtable=FinancialUpload&blobclo=urlfile&blobkey=id&blobwhere=1159123225195
&blobheard=application/octet-stream&wtsection=investors. Initially, now TV only operated 23 channels, most of
which were in English. At present, NOW TV offers 21 free channels and 109 pay channels, including 15 audio
channels, and the total number of channels has exceeded 140. See also http://www.now-tv.com/eng/ (visited May 9,
2007).
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news, sports, and children's programming. For a one-year commitment, HBO costs U.S. $5.12, CNN
International costs U.S. $1.53, and ESPN STAR Sports Cricket Live costs U.S. $21.52. According to the
annual reports issued by PCCW, by the end of June 2006, the number of installed now TV services
reached 608,000, of which 73 percent were subscribing to pay channels. By the end of August 2006, the
number of installed services had reached 654,000.959 We note that according to media reports, revenue
per subscriber increased 8.5 percent, from U.S. $13.44 to U.S. $14.59.960 PCCW hopes to raise revenue
by providing customers with a small number of free channels and offering discounts to subscribers who
buy packages of channels on an a la carte basis.961 In spite of slow revenue growth, by offering customers
freedom of choice, PCCW has proved to be an innovator in the IPTV marketplace.962
284.
In 2005, there were 9.1 million subscription TV subscribers in Canada. Of these, 6.6
million were cable subscribers, and 2.5 million were DTH subscribers.963 The top four operators
Rogers, Shaw, Cogeco, and Videotron provide service to 72 percent of Canadian homes served by
cable.964 Videotron offers a la carte packages, providing consumers with 40 basic channels and allowing
consumers a choice of 20 or 30 additional channels plus movies from over 100 channels.965 Similarly,
Rogers Communications, Canada's largest cable operator, provides a la carte offerings, but the company
first requires customers to subscribe to a monthly basic package (approximately U.S. $20.00) and lease a
digital set-top box for U.S. $7.60. Customers can then purchase channels a la carte starting at U.S. $2.11
per month.966
285.
In India, as of January 1, 2007, consumers in Mumbai, Delhi and Kolkata have a la carte
choices with the implementation of the government-mandated Conditional Access System ("CAS"). The
city of Chennai has been under CAS since 2003. CAS is a mode of transmitting encrypted cable
channels. Consumers need to buy a set-top box to receive and decrypt the signal. Without a set-top box,
a cable customer can only receive 30 basic channels for a subscription fee of Rs. 77 (US$1.88) a month, a
price fixed by the Telecom Regulatory Authority of India (TRAI). Broadcast-to-air channels also can be


959 Id. See PCCW Interim Report 2006. See also Matt Stump, High Interest, Little Payoff in Hong Kong,
MULTICHANNEL NEWS, May 1, 2006. ("This [a la carte] proved to be a major selling point against the traditional
cable TV proposition of basic and premium-tiered packages.").
960 Id.
961 Id.
962 See Mary Lennighan, All Eyes on Asian IPTV Rollouts, TOTAL TELECOM, Mar. 31, 2006 ("To successfully launch
IPTV services, the lesson we learned is content . . . The company needs to differentiate itself from the cable
operators."). In addition, PCCW produces its own business news channel, employing 100 people. Craig Stephen,
Asian Operators Caution on IPTV Expectations, TOTAL TELECOM, May 19, 2006. In response to NOW TV's growth,
Hong Kong's market leader, i-Cable, has recently adopted an alternative pricing model for its subscribers. i-Cable
allows subscribers to choose and pay for their own channels.
963 See CRTC, at http://www.crtc.gc.ca (visited Mar. 14, 2007).
964 Id.
965 See Videotron, at http://www.videotron.com/services/en/television/illico-a-la-carte.jsp (visited May 9, 2007) ("A
la Carte 30" is currently priced at U.S. $30.00).
966 See Rogers Communications, at http://www.rogers.com. See also Viacom Reply at 11.
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viewed without a set-top box. With a set-top box, consumers can subscribe to "premium" channels.967
Those subscribing to premium channels pay Rs. 5 (US$0.12) per channel also set by TRAI in addition
to the basic subscription fee. There are nearly 30 premium channels available, including National
Geographic Channel, Disney Channel, Animal Planet, Discovery Channel, Cartoon Network, CNN, and
HBO. The set-top boxes are available at prices fixed by TRAI. The first option is to rent the set-top box
for Rs. 30 (US$0.73) per month plus a refundable deposit of Rs. 999 (US$24.43). The second alternative
is to rent the set-top box for Rs. 45 (US$1.10) and a refundable deposit of Rs. 250 (US$6.12) per box
where Rs. 3 (US$0.07) per month of use of the box is deducted.968 Besides the a la carte offerings,
consumers also may subscribe to bundles of channels distributed by a broadcaster and/or cable operator.
However, the prices of those packages are subject to TRAI approval.969 In non-CAS areas, prices are
frozen at December 2003 levels plus a 7 percent increase.970
286.
MVPDs in Europe provide perhaps the most interesting a la carte offerings. Among
European Union member states, the United Kingdom ("UK") has one of the most competitive pay-TV
markets. British communications law requires digital cable and satellite TV services to offer a low-cost
service that approximates the analog over-the-air service currently available to 99.4 percent of the
population.971 The UK does not have any specific rules that mandate the provision of a la carte pricing on
pay TV.
287.
In launching BT Vision, its new pay-TV service in December 2006, British Telecom
("BT") is pioneering a technology that may dramatically affect the pay-TV marketplace, both for viewers
and advertisers. BT is positioning the service as a supplement to Freeview, the UK's free-to-air digital
terrestrial television ("DTT") platform, rather than as a standalone pay-TV service.972 BT's TV service
has no mandatory subscription fee; rather, users may opt to pay a one time equipment, installation, and
connection fee and then select content on a pay-as-you-go basis.973 Specifically, BT Vision requires an
installation fee of 60 (approximately U.S. $120.00) and connection fee of 30 (approximately U.S.
$60.00). It provides a la carte offerings such as films from 1.99 (approximately U.S. $4.00); music


967 In India, the term "premium channels" refers to networks typically included on the expanded basic tier in the
United States.
968 Shuchi Bansal, CAS vs DTH: Which is Better?, REDIFF INDIA ABROAD. Dec. 29, 2006.
http://www.rediff.com/money/2006/dec/29cas1.htm. See also Telecom Regulatory Authority of India, Details of
Maximum Retail Prices of the Pay Channels Declared by the Broadcasters for CAS Notified Areas in Terms of
Clause 7 (ii) of the Telecom Regulatory Authority of India's Tariff Order dated 31.08.2006,
Apr. 30, 2007.
969 Rahul Kumar, Indian News: Nimbus Communications Ltd Vs TRAI. ASIA PULSE PTE LTD, May 1, 2007.
970 E-mail from Rajendra Singh, former Principal Secretary, Telecom Regulatory Authority of India, May 9, 2007.
971 United Kingdom Communications Act 2003, Elizabeth II; Chapter 21, (Part 3, Chapter 6, Section 361).
972 The system allows access to about 40 television channels which are already available via Freeview using a tuner
in the set-top box.
973 See BT Vision, at http://www.btvision.bt.com/btvision. Ken Wieland, What Role for IPTV?,
TELECOMMUNICATIONS INTERNATIONAL, Sept. 1, 2006 ("[BT Vision] will give customers the option of pay-per-view
and other interactive services, but they won't have to buy into a package of channels first...there is a large number
of UK subscribers who are `subscription averse' to monthly packages but who still want broader TV choice and
would pay for occasional video-on-demand and interactive services.").
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videos from 29p (approximately U.S. $0.58); television shows from 79p (approximately U.S. $1.58); and,
children's programming starting at 49p (approximately U.S. $.98). The company also offers subscription
packs on a month by month basis with no long-term tie-in. Thus, it appears that BT Vision is providing
an a la carte system where consumers may select any programming services they want and do not have to
first subscribe to a monthly basic tier package.
288.
BT Vision will compete with Sky TV, owned by BSkyB, which is currently the UK's top
MVPD, with more than 8 million subscribers.974 Sky TV offers both free-to-air and subscription services.
Without a subscription, 160 channels are available. For additional fees, subscribers may choose from a
menu of themed packages, each called a "mix." There are six mixes and two premium mixes, one for
sports and one for movies. The tiers that are offered include: a variety mix with dramas, old classics and
top comedy; a knowledge mix of documentaries and educational programs; a music mix with pop, dance,
and classical; and a kids mix with educational programs including a parental control feature.975
289.
Viacom cites two examples, Canada and Hong Kong, of how digital tiers and a la carte
services are not economically viable and do not provide consumers with significant benefits. For
example, Viacom claims that in Hong Kong, a la carte service is offered as a "loss leader" by the
incumbent telephone company.976 We note, though, that PCCW's revenues from its TV and Content
segment rose more than 70 percent in 2006 and subscribership to it's a la carte service increased by more
than 38 percent.977 In addition, Rogers Communications' Cable and Internet segment reported year-end
2006 operating profits of CA$833 million as compared with 2005 operating profits of CA$723 million
for the same segment, an increase of 15.2 percent.978

VI.

ADMINISTRATIVE MATTERS

290.
This 2006 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).
291.
It is ORDERED that the Office of Legislative Affairs shall send copies of the 2006
Report to the appropriate committees and subcommittees of the United States House of Representatives
and the United States Senate.
292.
It is FURTHER ORDERED that the proceeding in MB Docket No. 06-189 IS
TERMINATED.


974 See BSkyB Ltd., Results for Six months Ended December 31, 2006, BSkyB Announces Record Sales and 20%
Increase in Interim Dividend; On Track for our Targets
(press release), Jan. 31, 2007.
975 Id.
976 See Viacom Reply 11-13.
977 PCCW Annual Report 2006, at 4 and 103 (noting that revenues from PCCW's TV and Content Segment totaled
HK$739 million in 2006, as opposed to HK$431 million in 2005, and noting that the number of subscribers to
PCCW's NOW TV service rose from 549,000 on December 31, 2005 to 758,000 on December 31, 2006).
978 Rogers Communications Inc., Management's Discussion and Analysis of Financial Condition and Results of
Operations: Summarized Cable and Telecom Financial Results
, 2006 Annual Report, at 36.
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293.

Accessible Formats

. To request materials in accessible formations for people with
disabilities (Braille, large print, electronic files, audio format), send and e-mail to fcc504@fcc.gov or call
the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A

List of Commenters

Initial Comments

The America Channel ("TAC")
American Cable Association ("ACA")
Anne Arundel County and Montgomery County, Maryland ("Maryland Counties")
Association of Public Television Station ("APTS")
AT&T Inc. ("AT&T")
BellSouth Corporation and BellSouth Entertainment, LLC ("BellSouth")
Black Television News Network ("BTN")
Broadband Service Providers Association, Champion Broadband, Everest Connections, Hiawatha
Broadband, Knology, PrairieWave Communications, RCN, Sigecom, SureWest Communications,
and WOW! Internet, Cable & Phone ("BSPA")
Burnsville/Eagan Telecommunications Commission ("Burnsville")
Center for Creative Voices in Media ("CCVM")
Central St. Croix Valley Joint Cable Communications Commission ("St. Croix")
Champaign-Urbana (Illinois) Cable Television and Telecommunications Commission
("Champaign-Urbana")
City of Champaign, Illinois ("Champaign")
City of Fort Worth, Texas ("Fort Worth")
City of Green Spring, Kentucky ("Green Spring")
City of Jenkins, Kentucky ("Jenkins")
City of Minneapolis, Minnesota ("Minnesota")
City of Naperville, Illinois ("Naperville")
City of New York ("NYC")
City of Wheaton, Illinois ("Wheaton")
Clarity Media Systems, LLC ("Clarity")
Coalition for Retransmission Consent Reform ("CRCR")
Comcast Corporation ("Comcast")
Community Broadcasters Association ("CBA")
Community Programming Board of Forest Park, Greenhills, and Springfield Township, Ohio
("Forest Park")
Consumer Electronics Association ("CEA")
DIRECTV, Inc. ("DIRECTV")
EchoStar Satellite L.L.C. ("EchoStar")
Elk Grove Village, Illinois ("Elk Grove")
Evanston, Illinois ("Evanston")
Fiber-to-the-Home Council ("FTTH Council")
Greater Metro Telecommunications Consortium and the Rainier Communications Commission
("GMTC/RCC")
Hispanic Information and Telecommunications Network ("HITN")
Hoffman Estates, Illinois ("Hoffman Estates")
Bill Hotchkiss, General Manager, Huxley Communications ("Hotchkiss")
Lake Minnetonka Communications Commission ("Lake Minnetonka")
League of Minnesota Cities and the Minnesota Association of Community Telecommunications
Administrators ("Minnesota Cities")
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Mt. Hood Cable Regulatory Commission ("Mt. Hood")
National Association of Broadcasters ("NAB")
National Association of Telecommunications Officers and Advisors, the National League of Cities, the
National Association of Counties, and the U.S. Conference of Mayors ("NATOA")
National Cable & Telecommunications Association ("NCTA")
National Telecommunications Cooperative Association ("NTCA")
Northbrook, Illinois ("Northbrook")
Northern Dakota County Cable Communications Commission ("NDC4")
Northern Suburban Communications Commission ("NSCC")
Panasonic Corporation of North America ("Panasonic")
PVT NetWorks Inc. ("PVT")
Queen Anne's County, Maryland ("Queen Anne's")
Sacramento Metropolitan Cable Television Commission ("SMCTC")
State of Hawaii ("Hawaii")
SureWest Communications ("SureWest")
United States Telecom Association ("USTelecom")
Verizon Communications Inc. ("Verizon")
Village of Skokie, Illinois ("Skokie")
West Central Cable Agency, Cook County, Illinois ("West Central")

Reply Comments

American Public Power Association ("APPA")
Anne Arundel County and Montgomery County, Maryland ("Maryland Counties")
AT&T Inc. ("AT&T")
Bend Cable Communications, LLC ("BendBroadband")
Burnsville/Eagen Telecommunications Commission, the North Metro Telecommunications Commission,
the North Suburban Communications Commission, the City of Oklahoma City, Oklahoma, the
City of Renton, Washington, and the South Washington County Telecommunications
Commission ("Burnsville")
CBS Corporation, Fox Entertainment Group; Inc. and Fox Television Stations, Inc., NBC-Universal, Inc
and NBC Telemundo License Co., and The Walt Disney Company ("Joint Broadcasters")
City of Milwaukee ("Milwaukee")
City of Sycamore in Louisville, Kentucky ("Sycamore")
Comcast Corporation ("Comcast")
Consumers Union, Free Press and Consumer Federation of America ("Consumers Union")
Cox Communications, Inc. ("Cox")
EchoStar Satellite L.L.C. ("EchoStar")
Fairfax County, Virginia ("Fairfax")
Fiber-to-the-Home Council ("FTTH Council")
Independent Multi-Family Communications Council ("IMCC")
Island Television Network, LLC ("Island TV")
National Association of Broadcasters ("NAB")
National Association of Telecommunications Officers and Advisors, the National League of Cities, the
National Association of Counties, and the U.S. Conference of Mayors ("NATOA")
National Cable & Telecommunications Association ("NCTA")
Organization for the Promotion and Advancement of Small Telecommunications Companies
("OPATSCO")
People of the State of California and California Public Utilities Commission of the State of California
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("California")
Sinclair Broadcast Group, Inc. ("Sinclair")
Society of Broadcast Engineers, Inc. ("SBE")
TDS Telecommunications Corp. ("TDS")
United States Telecom Association ("USTelecom")
Verizon Communications Inc. ("Verizon")
Viacom Inc, MTV Networks, and Black Entertainment Television, LLC ("Viacom")
Viodi, LLC ("Viodi")
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APPENDIX B

TABLE B-1

Assessment of Competing Technologies

Technology Used

June 02

June 03

June 04

June 05

June 06

(1) TV Households(i)
105,444,330
106,641,910
108,410,160
109,590,170
110,213,910
Percent Change
3.19%
1.14%
1.66%
1.09%
0.57%
(2) MVPD Households(ii)
87,562,641
88,312,191
92,295,766
94,226,357
95,784,478
Percent Change
1.74%
0.86%
4.51%
2.09%
1.65%
Percent of TV Households
83.04%
84.18%
85.14%
85.98%
86.91%
(3) Cable Subscribers
66,472,000
66,050,000
66,100,000
65,400,000
65,300,000
Percent Change
-0.39%
-0.63%
0.08%
-1.06%
-0.15%
Percent of MVPD Total
75.91%
73.58%
71.62%
69.41%
68.17%
(4) Wireless Cable Subscribers
490,000
200,000
200,000
100,000
100,000
Percent Change
-30.00%
-59.18%
0.00%
-50.00%
0.00%
Percent of MVPD Total
0.56%
0.22%
0.22%
0.11%
0.10%
(5) PCO Subscribers
1,600,000
1,200,000
1,100,000
1,000,000
900,000
Percent Change
6.67%
-25.00%
-8.33%
-9.09%
-10.00%
Percent of MVPD Total
1.83%
1.34%
1.19%
1.06%
0.94%
(6) HSD Subscribers
700,641
502,191
335,766
206,358
111,478
Percent Change
-29.94%
-28.32%
-33.14%
-38.54%
-45.98%
Percent of MVPD Total
0.80%
0.56%
0.36%
0.22%
0.12%
(7) DBS Subscribers
18,240,000
20,360,000
23,160,000
26,120,000
27,973,000
Percent Change
13.50%
11.62%
13.75%
12.78%
7.09%
Percent of MVPD Total
20.83%
22.68%
25.09%
27.72%
29.20%
(8) OVS Subscribers(iii)
60,000
Percent Change
0.00%
Percent of MVPD Total
0.07%
(9) BSP Subscribers(iv)
1,460,000
1,400,000
1,400,000
1,400,000
Percent Change
N/A
-4.11%
0.00%
0.00%
Percent of MVPD Total
1.63%
1.52%
1.49%
1.46%

Notes:

(i)
Figures are estimates for January.
(ii)
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.
(iii)
Beginning in 2003, we combined OVS subscribers with BSP subscribers. We are no longer, therefore,
reporting a separate number for OVS subscribers.
(iv)
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 in 2003, and thus we do not have
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subscribers for 2002.

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 (ii) above.
(3) Cable subscribers: Data for 2003 through 2005 were taken from Reports, 2003-2005; 2006 from Kagan
Research, LLC, Kagan's 10-Year Cable TV Industry Projections, Broadband Cable Financial Databook 2006 at
11.
(4) BRS subscribers: 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; 2006 from NCTA Comments for the 2006 Report at 9.
(5) PCO (SMATV) subscribers: 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; 2006 from Kagan Media Research, Media
Trends 2006, at 64.
(6) HSD subscribers: 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 2005 Report,
21 FCC Rcd at 2617; 2006 from C-Band Numbers Keep Dwindling, Satellite Business News FAXUpdate, July
7, 2005.
(7) DBS subscribers: 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 2005 Report,
21 FCC Rcd at 2617; 2006 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, 2006
, at 19, 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, 2006
, at 28.
(8) OVS: Beginning in 2003, we combined OVS subscribers with BSP subscribers. We are no longer, therefore,
reporting a separate number for OVS subscribers. See note (iii) above.
(9) 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 from 2005 Report, 21 FCC Rcd at
2617; 2006 subscribers from BSPA Comments at 6 and Commission estimates.
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TABLE B-2

Number and Subscriber Size of Major Cable System Clusters

(Cumulative Figures)

Range of

2002
2003
2004
2005

Clustered

Clusters
Subscribers
Clusters
Subscribers Clusters
Subscribers( Clusters
Subscribers(

Subscribers

(millions)
(millions)
(millions)
(millions)
(thousands)
100-199
31
4.5
34
4.9
46
5.4
34
4.4
200-299
18
4.4
18
4.4
18
6.3
22
5.5
300-399
21
7.1
17
5.7
17
6.6
20
7.0
400-499
10
4.4
10
4.4
8
3.5
8
3.5
>500
29
31.0
29
34.3
29
29.7
29
29.8

Total

109
51.3
108
53.6
118
51.5
113
50.8

Sources:

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; 2004 from Kagan Research, LLC, Major Cable TV Systems/Clusters, Broadband Cable Financial
Databook 2005, at 39-40; and 2005 from Kagan Research, LLC, Major Cable TV Systems/Clusters, Broadband
Cable Financial Databook 2006, at 37-38. Figures for 2005 include the system swaps and additions due to the
Comcast and Time Warner acquisition of Adelphia which was announced in 2005 and finalized in 2006. Since
2004, Kagan World Media's methodology for counting clusters has changed, leading to difficulties in directly
comparing years before and after 2004, which causes year-to-year comparisons to be uninformative. Prior to 2004,
all of Comcast's subscribers in the Northeast and Mid-Atlantic were counted as part of one "supercluster."
Beginning in 2004, 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.
.
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TABLE B-3

2006 Concentration in the National Market for Purchase of Video Programming(1)
Rank
Company

Percent of Subscribers(2)

1
Comcast
22.44%
2
DIRECTV
16.20%
3
EchoStar
13.01%
4
Time Warner
11.52%

Top 4

63.17%
5
Charter
6.17%
6
Cox
5.64%
7
Adelphia(3)
5.09%
8
Cablevision
3.20%

Top 8

83.27%
9
Bright House
2.38%
10
Mediacom
1.48%

Top 10

87.13%

Top 25

93.46%

Top 50

95.05%

HHI

1187 (4)

Notes:

(1) MSO subscriber totals as reported in Top Cable System Operators as of June 2006, Kagan World
Media, Cable TV Investor: Deals & Finance, June 30, 2006, at 10-11. 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 MSO with the largest ownership stake. Subscribers for DIRECTV and EchoStar are
based on the company's SEC 10-Q filings. These rankings pre-date the acquisition of Adelphia's
cable systems by Comcast and Time Warner in July 2006. Data for year-end 2006 show that
Comcast remains the largest MVPD with 24.16 million subscribers; DIRECTV is ranked second with
15.95 million subscribers; Time Warner is ranked third with 13.40 million subscribers; and EchoStar
is ranked fourth with 13.10 million subscribers. Comcast Corp., Comcast Reports 2006 Results and
Outlook for 2007
(press release), Feb. 1, 2007; The DirecTV Group, Inc., The DirecTV Group
Announces Fourth Quarter and Full Year 2006 Results
(press release), Feb. 7, 2007; Time Warner
Inc., Time Warner Inc. Reports Results for 2006 Full Year and Fourth Quarter (press release), Jan.
31, 2007; EchoStar Communications Corp., EchoStar Reports Fourth Quarter 2006 Financial
Results
(press release), Mar. 1, 2007. These rankings do not take account of Time Warner's
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attributable interest in Bright House Networks. When this attributable interest is factored in, Time
Warner is the second largest MVPD.
(2) The total number of MVPD subscribers used to calculate the HHI is 95,784,478 from Table B-1.
(3) Adelphia is listed because these data are from June 2006, prior to Comcast's and Time Warner's
acquisition of its systems. See note 1, supra.
(4) The HHI is calculated on the basis of market shares for the top 73 companies. Because all of the
remaining MVPDs have very small shares of the market, an HHI calculation that included all MVPDs
would only be slightly higher (no more than 2-3 points) than the reported HHI.
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TABLE B-4

Concentration in the National Market for the Purchase of Video Programming

2003-2006

Market Share

Percent of MVPD Subscribers

2003
2004
2005
2006
Top Share
22.69
23.37
22.99
22.44%
Top 2
35.01
35.47
38.71
38.64%
Top 3
46.63
47.34
50.99
51.65%
Top 4
55.98
57.97
62.67
63.17%
Top 10
81.95
84.72
88.39
87.13%
Top 25
87.45
90.41
94.00
93.46%
Top 50
89.29
92.32
95.73
95.05%
HHI
1134
1097
1201
1187

Sources:

Data for 2003 through 2005 were taken from Reports, 2004-2005. Data for 2006 are from Table B-3.
148

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APPENDIX C

TABLE C-1

National Video Programming Services

Affiliated with One or More Cable MSO

Programming Service
Launch
MSO Ownership (%)
Ownership by
Date
Other Media Entity

Rainbow Media

American Movie Classics (AMC)
Oct. 84
Cablevision (100)
Fuse
Jul. 94
Cablevision (100)
Independent Film Channel
Sep. 94
Cablevision (100)
WE: Women's Entertainment
Jan. 97
Cablevision (100)
Voom HD Networks
Animania HD
2005
Cablevision (80)
EchoStar
Equator HD
2005
Cablevision (80)
EchoStar
Family Room HD
2005
Cablevision (80)
EchoStar
Film Fest HD
2005
Cablevision (80)
EchoStar
Gallery HD
2005
Cablevision (80)
EchoStar
Gameplay HD
2005
Cablevision (80)
EchoStar
HD News
2005
Cablevision (80)
EchoStar
Kung Fu HD
2005
Cablevision (80)
EchoStar
Monsters HD
2005
Cablevision (80)
EchoStar
Rave HD
2005
Cablevision (80)
EchoStar
Rush HD
2005
Cablevision (80)
EchoStar
Treasure HD
2005
Cablevision (80)
EchoStar
Ultra HD
2005
Cablevision (80)
EchoStar
World Cinema HD
2005
Cablevision (80)
EchoStar
World Sport HD
2005
Cablevision (80)
EchoStar

Turner Broadcasting System

Boomerang
Apr. 00
Time Warner (100)
Cartoon Network/Adult Swim
Oct. 92
Time Warner (100)
CNN
Jun. 80
Time Warner (100)
CNN En Espaol
Mar. 97
Time Warner (100)
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CNN Headline News
Jan. 82
Time Warner (100)
CNN International
Jan. 95
Time Warner (100)
TBS (Turner Broadcasting System)
Dec. 76
Time Warner (100)
Turner Classic Movies (TCM)
Apr. 94
Time Warner (100)
Turner Network Television (TNT)
Oct. 88
Time Warner (100)
TNT HD
May 04
Time Warner (100)
Court TV
Jul. 91
Time Warner (100)
Hispanic Television (HTV) (2)
Aug. 95
Time Warner (100)
Infinito (Spanish-language) (2)
Time Warner (100)

HBO Group

Home Box Office (HBO)
Nov. 72
Time Warner (100)
HBO 2
Oct. 98
Time Warner (100)
HBO Comedy
May 99
Time Warner (100)
HBO Family
Oct. 98
Time Warner (100)
HBO Latino
Nov. 00
Time Warner (100)
HBO Signature
Oct. 98
Time Warner (100)
HBO Zone
May 99
Time Warner (100)
HBO HD
Mar. 99
Time Warner (100)
Cinemax
Jun. 98
Time Warner (100)
Cinemax HD
Nov. 03
Time Warner (100)
Action Max
Aug. 80
Time Warner (100)
(Cinemax multiplex)
@Max
May 01
Time Warner (100)
(Cinemax multiplex)
5StarMax
May 02
Time Warner (100)
(Cinemax multiplex)
MoreMAX
Jun. 98
Time Warner (100)
(Cinemax multiplex)
OuterMax
May 01
Time Warner (100)
(Cinemax multiplex)
Thriller Max
Jun. 98
Time Warner (100)
(Cinemax multiplex)
WMAX (Cinemax multiplex)
May 01
Time Warner (100)
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Comcast Corp. Networks

AZN Television
Jul. 90
Comcast (100)
E! Entertainment
Jun. 90
Comcast (100)
G4 (formerly G4 VideogameTV)
Jun. 02
Comcast (84.8)
EchoStar
Golf Channel
Jan. 95
Comcast (99.9)
MountainWest SportsNet -The Mtn
2006
Comcast (50)
CBS Corporation
PBS Kids Sprout
Oct. 05
Comcast (40)
PBS
Style
Oct. 98
Comcast (100)
TV One
Jan. 04
Comcast (33.2)
News Corporation
VERSUS
Sep. 06
Comcast (100)
(formerly Outdoor Life Network)

Discovery Communications, Inc.

Discovery Channel
Jun. 85
Cox (25), Advance Newhouse (25)
Discovery Holding Co
(1)
(2)
Discovery En Espaol
Oct. 98
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Discovery Health
Jul. 98
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Discovery HD Theatre
Jun. 02
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Discovery Home
Oct. 96
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Discovery Kids
Oct. 96
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Discovery Times
Oct. 96
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Animal Planet
Oct. 96
Cox (5), Advance Newhouse (25)
Discovery Holding Co
BBC America
Mar. 98
Cox (25), Advance Newhouse (25)
Discovery Holding Co
BBC World News
Jul. 06
Cox (25), Advance Newhouse (25)
Discovery Holding Co
FiT TV
Jan. 04
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Military Channel
Jul. 98
Cox (25), Advance Newhouse (25)
Discovery Holding Co
The Learning Channel (TLC)
Nov. 80
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Travel Channel
Feb. 87
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Science Channel
Oct. 96
Cox (25), Advance Newhouse (25)
Discovery Holding Co
Discovery Travel and Living
2006
Cox (25), Advance Newhouse (25)
Discovery Holding Co
(Viajar y Vivir en Espaol)
Discovery Kids en Espaol
2006
Cox (25), Advance Newhouse (25)
Discovery Holding Co
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Joint Ventures and Other
Vertically Integrated Networks

iN DEMAND
Nov. 85
Comcast (54.1), Time Warner
(8 multiplexed channels)
(30.3), Cox (15.6)
iN DEMAND HD1
Sep. 03
Comcast (54.1), Time Warner
(also called iNHD)
(30.3), Cox (15.6)

Notes:

(1) In 2006, Liberty Media spun off the Discovery Holding Company ("DHC"). However, John Malone, Chairman
of Liberty Media, is also Chairman and CEO of Discovery Holding Company. Liberty Media no longer has any
ownership interest in DHC and DHC is currently an independent publicly-traded company.
(2) On December 14, 2006, Time Warner announced that it would acquire certain networks from Claxson. While the
deal has not officially closed yet, we list them here because the announcement occurred in 2006. Time Warner, Inc.,
Turner Broadcasting System, Inc. To Acquire Claxson Interactive Pay Television Networks in Latin America (press
release), Dec. 14, 2006.

Sources:

2005 Report, 21 FCC Rcd at 2622-2625, Table C-1.
Cablevision Systems Corp., Corporate Information, Programming, Rainbow Media, at http://www.cablevision.com
/index.jhtml?pageType=rainbow (visited Jan. 28, 2007).
Cablevision Systems Corp., SEC Form 10-K/A For the Year-Ended Dec. 31, 2005, at 37 and 66.
Cablevision Systems Corp., iO Goes International With Launch of Diverse International Programming Services
Across New York Metropolitan Area
(press release), Jan. 24, 2007.
Rainbow Media Holdings, LLC, About Rainbow: Company Structure, at http://www.rainbow-
media.com/about/company_struc_index.html (visited Jan. 28, 2007); http://www.rainbow-
media.com/rainbow/index.jsp (visited Feb. 2, 2007).
Voom HD Networks, About Voom Networks, at http://www.voom.tv/voom/about_us/index.html (visited Feb. 2,
2007).
Time Warner, Inc., Businesses, Turner Broadcasting System, at http://www/timewarner.com/corp/ businesses/detail/
turner_broadcasting/index.html (visited Jan. 28, 2007).
Time Warner, Inc., Time Warner Acquires Liberty Media's 50% Stake in Court TV for $735 Million (press release),
May 12, 2006.
Time Warner, Inc., Turner Broadcasting System, Inc. To Acquire Claxson Interactive Pay Television Networks in
Latin America
(press release), Dec. 14, 2006.
Time Warner, Inc., Businesses, HBO, at http://www.timewarner.com/corp/businesses/detail/hbo/index.html (visited
Jan. 29, 2007).
Turner, About Networks and Businesses, at http://turner.com/about/networks_and_businesses.html (Feb. 1, 2007).
Comcast Corp., Comcast Cable Networks, at http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-
comcastcablenetworks (visited Jan. 29, 2007).
Comcast Corp., SEC Filing 10-K for the Year-Ended Dec. 31, 2005, at 9.
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Comcast Corp., Comcast and The Walt Disney Company Announce Long-Term Comprehensive Distribution
Agreements Securing Carriage for Disney Media Networks' Products and Services, Comcast Acquires Disney's
Minority Interest in E! Networks
(press release), Nov. 21, 2006.
Comcast Corp., Comcast Completes Acquisition of TechTV (press release), May 10, 2004.
Discovery Communications, Inc., Corporate Homepage, at http://corporate.discovery.com/ (visited Feb. 2, 2007).
Discovery Holding Co., Overview, at http://www.discoveryholding.com/overview/default.htm (visited Feb. 1, 2007).
Discovery Communications, Inc., Discovery Networks US Hispanic Group Offers Advertisers 12 Unique
Programming Genres to Reach US Hispanic Viewers
(press release), May 18, 2006.
New York Times Company, New York Times Company Reports 2006 4th Quarter and Full Year Results (press
release), Jan. 31, 2007.
Application of News Corporation and The DIRECTV Group, Inc., Transferors, and Liberty Media Corporation,
Transferee, For Authority to Transfer Control,
Consolidated Application For Authority to Transfer Control, Jan. 29,
2007, at 10-11.
iNDEMAND Comments, passim.
iNDemand, Inc., Company Background, at www.indemand.comhttp://www.indemand.com/about/who.jsp (visited
Jan. 29, 2007).
Aryeh Bourkoff, Philip Olesen, Robert C. Hopper, Ann Marie Greene, Leah Pilla, The 2006 Telecom, Cable, Media
& Tech Organizational Structure Chart Book
, UBS, April 2006.

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TABLE C-2

National Video Programming Services

Not Affiliated with a Cable MSO

(By Affiliation)
Programming Service
Launch
Ownership by
Date
"Other" Media Entity (1)
A&E (Arts & Entertainment)
Feb. 84
Disney, NBC-Universal, Hearst
A&E HD
Sep. 06
Disney, NBC-Universal, Hearst
ABC Family
Apr. 77
Disney
The Africa Channel
Sep. 05
America's Store (2)
Sep. 86
Liberty Media
American Life
Feb. 85
Angel One
Dominion Video Satellite
Angel Two
Dominion Video Satellite
Anime Network
Dec. 02
BabyFirst TV
2006
Beauty & Fashion Channel
Jan. 05
BET - Black Entertainment Television
Jan. 80
Viacom
BET Gospel
Jul. 02
Viacom
BET Hip Hop
Jul. 02
Viacom
BET J (formerly BET on Jazz)
Jan. 96
Viacom
Biography Channel
Nov. 98
Disney, NBC-Universal, Hearst
BlackBelt TV
Black Family Channel(3)
Nov. 99
Bloomberg Television
Jan. 95
Bravo
Dec. 80
NBC-Universal
BYUTV
Jan. 00
Church Channel
Jan. 02
Trinity Broadcasting Network
Classic Arts Showcase
May 94
Club Jenna (formerly The Hot Network)
Mar. 99
CMT - Country Music Television
Mar. 83
Viacom
CMT - Pure Country (formerly VH1 Country)
Aug. 98
Viacom
CNBC
Jul. 89
NBC-Universal
CNBC World
Apr. 89
NBC-Universal
CoLours TV
Dec. 01
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Comedy Central
Apr. 91
Viacom
Cornerstone Television
Apr. 79
Crime & Investigation Network
Feb. 2007
Disney, NBC-Universal, Hearst
C-SPAN
Mar. 79
(4)
C-SPAN2
Jun. 86
(4)
C-SPAN3
Sep. 97
(4)
CSTV (College Sports Television)
Apr. 03
CBS Corporation
Current TV
Aug. 05
Daystar Television Network
Dec. 98
Daystar Television Network
Deep Dish TV
Jan. 86
Disney Channel
Apr. 83
Disney
DIY (Do-It-Yourself Network)
Dec. 94
EW Scripps
Documentary Channel
Jan. 06
Encore
Apr. 91
Liberty Media
Encore HD
Mar. 04
Liberty Media
Encore Action
Sep. 94
Liberty Media
Encore Drama
1994
Liberty Media
Encore Love (also called Encore Love Stories)
Jul. 94
Liberty Media
Encore Mystery (also called Encore Mysteries)
Jul. 94
Liberty Media
Encore WAM!
Sep. 94
Liberty Media
Encore Westerns
Jul. 94
Liberty Media
ESPN
Sep. 79
Disney, Hearst
ESPN2
Oct. 93
Disney, Hearst
ESPN2 HD
Disney, Hearst
ESPN Classic
May 95
Disney, Hearst
ESPN HD
Mar. 03
Disney, Hearst
ESPNews
Nov. 96
Disney, Hearst
ESPN PPV
Disney, Hearst
ESPNU
Mar. 05
Disney, Hearst
EWTN: Global Catholic Network
Aug. 81
(also known as Eternal Word Television Network)
Faith Television Network
Jul. 02
Familyland Television Network
Nov. 99
Family Net
May 00
FEC/PAEC
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Fine Living
Mar. 02
EW Scripps
Flix (a Showtime Network)
Aug. 92
CBS Corporation
Food Network
Nov. 93
EW Scripps
Food Network HD
2006
EW Scripps
Fox Movie Channel
Nov. 94
News Corp.
Fox News Channel
Oct. 96
News Corp.
Fox Reality
May 05
News Corp.
Fox Sports Net
Nov. 97
News Corp.
FSN HD
News Corp.
Fox Soccer Channel (formerly Fox Sports World)
Nov. 97
News Corp.
Free Speech TV (FSTV)
Jun. 95
Fresh! (formerly Spice Network)
May 89
Fuel
Jul. 03
News Corp.
Funimation Channel
Jun. 06
FX
Jun. 94
News Corp.
Game Show Network (GSN)
Dec. 94
Liberty Media
Gems TV
God TV
Oct. 06
Good Samaritan Network
2000
Gospel Music Channel
Oct. 04
Great American Country
Dec. 95
EW Scripps
Guardian Television Network
1976
Hallmark Channel
Sep. 98
Liberty Media
Hallmark Movie Channel
Jan. 04
Liberty Media
HDNET
Sep. 01
HDNET Movies
Jan. 03
Health & Human Services Television
Healthy Living Channel
Jan. 04
here! TV
Oct. 04
HGTV - Home & Garden Television
Dec. 94
EW Scripps
HGTV HD
Apr. 06
EW Scripps
History Channel
Jan. 95
Disney, NBC-Universal, Hearst
History International
Nov. 98
Disney, NBC-Universal, Hearst
(also called History Channel International)
Home Preview Channel
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Home Shopping Network (HSN)
Jul. 85
Liberty Media
Horse Racing TV
Dec. 02
Hustler TV
Apr. 04
iDrive TV
Apr. 06
ImaginAsian TV
Aug. 04
IndiePlex (a MoviePlex Network)
Apr. 06
Liberty Media
Inspirational Life Television (I-LIFETV)
Jun. 98
Inspirational Network (INSP)
Apr. 90
Ion Television (formerly i-Independent Television)
Aug. 98
NBC-Universal,
Ion Media (formerly Paxson)
i-Shop TV
Feb. 01
JCTV
Nov. 02
Trinity Broadcasting Network
Jewelry Television
Oct. 93
Kids Sports News Network
Oct. 05
KTV Kids and Teens Television/Spirit Television
Dominion Video Satellite
Liberty Channel
Sep. 01
Lifetime Movie Network
Jul. 98
Disney, Hearst
Lifetime Real Women
Aug. 01
Disney, Hearst
Lifetime Television
Feb. 84
Disney, Hearst
Lime (5)
Link TV
Nov. 96
Logo
Jun. 05
Viacom
Mav TV Mav'rick Entertainment Network
Oct. 04
Mens2 Shopping Network
Men's Outdoors and Recreation Channel
2006
MHD (an MTV Network)
Nov. 05
Viacom
Military History Channel
Apr. 05
Disney, NBC-Universal, Hearst
Movie Mania (formerly B Mania)
Nov. 00
Movieola The Short Film Network
Sep. 01
MoviePlex
Oct. 94
Liberty Media
MSNBC
Jul. 96
NBC-Universal
MTV
Aug. 81
Viacom
MTV 2
Dec. 98
Viacom
MTV Chi
Dec. 05
Viacom
MTV Desi
Jul. 05
Viacom
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MTV Hits
May 02
Viacom
MTV Jams
May 02
Viacom
MTV K
Viacom
NASA Television
Jul. 91
National Geographic Channel
Jan. 01
News Corp.
National Geographic Channel HD
News Corp.
NBA TV
Nov. 99
NBA TV HD
NFL Network
Nov. 03
NFL Network HD
Nick 2 (also called Nick Too)
May 98
Viacom
Nickelodeon-Games & Sports (also called GAS)
Mar. 99
Viacom
Nickelodeon/Nick at Nite
Apr. 79
Viacom
Nicktoons
Jan. 99
Viacom
Noggin/The N
Feb. 99
Viacom
Northern Arizona University / University House
Jan. 00
NTN Buzztime (formerly Buzztime Entertainment)
1994
NRB Network
Outdoor Channel
Apr. 93
Outdoor Channel 2HD
Ovation: The Arts Network
Apr. 96
(6)
Oxygen
Feb. 00
(7)
Pentagon Channel
May 04
PIN (Product Information Network)
Apr. 94
Playboy TV
Nov. 82
Playboy HD
Pleasure Channel (a TeN Network)
The Prayer Channel
QVC
Nov. 86
Liberty Media
Reelz
Research Channel
2000
Resorts & Residence TV
RetroPlex (a MoviePlex Network)
Apr. 06
Liberty Media
RFD TV
Dec. 00
Safe TV
158

Federal Communications Commission

FCC 07-206

Sci-Fi Channel
Sep. 92
NBC-Universal
Shop at Home
Jun. 86
Shop NBC
Oct. 91
NBC-Universal
Shorteez (formerly Spice 2)
1999
Showtime
Jul. 76
CBS Corporation
Showtime Beyond
Sep. 99
CBS Corporation
Showtime Extreme
1998
CBS Corporation
Showtime Family (also called Showtime Family Zone)
Mar. 01
CBS Corporation
Showtime HD
CBS Corporation
Showtime Next
Mar. 01
CBS Corporation
Showtime Showcase
Jul. 01
CBS Corporation
Showtime Too
2001
CBS Corporation
Showtime Women
Mar. 01
CBS Corporation
Sleuth
Jan. 06
NBC-Universal
Smile of a Child TV
Dec. 05
Trinity Broadcasting Network
SOAPNet
Jan. 00
Disney
Soundtrack Channel
Mar. 02
Speed Channel
Jan. 96
News Corp.
Spice HD
Spice: Xcess (formerly Hot Zone)
Mar. 99
Spike TV
Mar. 83
Viacom
Sportsman Channel
Apr. 03
Starz!
Mar. 94
Liberty Media
Starz! Cinema
May 99
Liberty Media
Starz! Comedy
Mar. 94
Liberty Media
Starz! Edge
Mar. 96
Liberty Media
Starz! HD
Dec. 03
Liberty Media
Starz! In Black (formerly Black Starz!)
Feb. 97
Liberty Media
Starz! Kids & Family
May 99
Liberty Media
Sundance Channel
Feb. 96
CBS Corporation, NBC-Universal
TBN - Trinity Broadcasting Network
May 73
Trinity Broadcasting Network
TCT Network
TeN: The Erotic Network
Sep. 98
TeN Blox
Jan. 03
TeN Blue
Jan. 03
159

Federal Communications Commission

FCC 07-206

TeN Clips
May 00
TeN Xtsy
The Tennis Channel
May 03
Three Angels Broadcasting Network
Nov. 86
TMC: The Movie Channel
Dec. 79
CBS Corporation
TMC HD
Dec. 03
CBS Corporation
TMC XTRA
1997
CBS Corporation
Toon Disney/jetix
Apr. 98
Disney
Total Living Network
TV Games Network TVG Interactive Horse Racing
Jul. 94
TV Guide Channel
Jan. 88
News Corp.
TV Guide Interactive
Oct. 96
News Corp.
TV Land
Apr. 96
Viacom
TVN Entertainment PPV
Feb. 98
TVU/TVU Live
Universal HD (formerly Bravo HD+)
Dec. 04
NBC-Universal
UCTV Channel (University of California)
Jan. 00
USA Network
Apr. 80
NBC-Universal
VH1
Jan. 85
Viacom
VH1 Classic
May 00
Viacom
VH1 Soul
Aug. 98
Viacom
VTV: Varsity Television
Jan. 03
The Water Channel
Wealth TV
Wealth TV HD
Weather Channel
May 82
Landmark Communications
Weatherscan Local
Oct. 99
Landmark Communications
WGN Superstation
Nov. 78
Tribune Company
World Harvest Television
Aug. 92
The Word Network
Feb. 00
The Worship Network
1992
160

Federal Communications Commission

FCC 07-206

Spanish Language
Spanish/Latin American Cultures

AYM Sports
Nov. 03
Azteca America
Aug. 04
Bandamax
May 03
Univision
Canal Uno Internacional (also called Canal 1)
Canal 24 Horas
Jun. 99
Canal 52
Caracol TV
Casa Club TV
Jul. 97
CCTV-E&F
Cine Latino
Jun. 94
Cine Mexicano
Nov. 04
De Pelcula
May 03
Univision
De Pelicula Clasico
May 03
Univision
DOCU TVE
1989
Ecuavisa Internacional
ESPN Deportes
Jan. 04
Disney, Hearst
EWTN en Espaol
Fox Sports en Espaol
Nov. 96
News Corp.
Galavision
Oct. 79
Univision
Gol TV
Mar. 03
Grandes Documentales
1996
History Channel en Espaol
May 04
Disney, NBC-Universal, Hearst
HITN
Jul. 87
La Familia
May 02
Latele Novella Network
Latinoamerica TV (Latin TV)
Maria Vision
Mexicanal
Aug. 05
Mexico 22
Momentum TV
MTV Tres (formerly MTV Espaol)
Aug. 98
Viacom
Mun2
Oct. 01
NBC-Universal
NDTV Color Vision
161

Federal Communications Commission

FCC 07-206

Once Mexico
Playboy en Espaol
Nov. 96
Puma TV
1997
Ritmoson Latino
May 03
Univision
SiTV
Feb. 04
(8)
Sorpressa!
Mar. 03
Super Canal
Super Canal Caribe
Sur
Aug. 91
Sur Mexico
Sur Peru
TBN Enlace USA
May 02
Trinity Broadcasting Network
Television Espaola Internacional (TVE Internacional)
Telefe Internacional
Apr. 90
Telefutura
Jan. 02
Univision
Telehit
May 03
Univision
Telemundo
Jan. 87
NBC-Universal
Telemundo Puerto Rico
Mar. 00
NBC-Universal
Toon Disney en Espaol
Disney
TV Chile
TV Colombia
TV Venezuela
TyC Sports
Univision
Sep. 96
Univision
Utilisima Satelital / Ultisima
Mar. 96
Vene Movies
VH Uno
Nov. 99
Viacom
Video Rola
1998
WAPA America

Chinese

ATV Home Channel America
Beijing TV (BTV)
CCTV-4 (China Central Television)
1995
CCTV-9
CCTV Entertainment
162

Federal Communications Commission

FCC 07-206

CCTV Opera
China Movie Channel (CMC)
Chinese Cinema
Chinese Channel
Dec. 04
Chinese Movie Channel
Chinese Prime
CTS
CTV
CTI Zhong Tian Channel
1995
CYRTV
Dragon TV
Oct. 03
ET China
ET Drama
ET Global
ET News
Fujian Southeast TV
Guandog Southern TV
Hunan Satellite TV
ICable
The Jade Channel
JET TV International
Jiangsu International Channel
Pacvia TV
Phoenix Info News
News Corp.
Phoenix North American Chinese Channel
News Corp.
SETI
Sky Link TV
Sky Link 2
TTV
TVBS
YoYo TV
163

Federal Communications Commission

FCC 07-206

Korean

Arirang TV
BTN WOW-TV
CTS (Korean Christian Television)
JSTV
KBS World
Korean Channel
MBC America (Munhwa Broadcasting Corp.)
2002
Media Korea
MKTV
Ongamenet
SBS/SBS Plus
tvK 24
Sep. 04
YTN

Tagalog-Filipino

ABS-CBN The Filipino Channel
Feb. 98
(formerly known as the Filipino Channel)
ABS-CBN News Channel
Cinema One Global
GMA Pinoy
NBN America
The Mabuahy Channel
Pinoy Central TV
RPN USA
Viva TV

South Asian

AAJTAK
AASTHA Broadcasting Network
Alpha ETC Punjabi
2005
ATN Bangla
B4U Movies
B4U Music
Bangladesh Channel
Channel-I
DD India
164

Federal Communications Commission

FCC 07-206

ETV Gujarati
ETV Telegu
ETV Bangla
Filmy
Gemini TV
Headlines Today
ITV / ITV Gold
Apr. 86
Kairali TV
KTV
NDTV
NTV Bangla
Ravi Panjabi Network
Saigon Broadcasting Television Network
Feb. 02
Sahara One
Sahara Samay
Set Max
Sony Entertainment Television Asia
Star News
News Corp.
Star Plus
News Corp.
Star One
News Corp.
Sun TV
Surya TV
Teja TV
TV Asia
Jul. 91
Udaya TV
Vijay
News Corp.
VHN (Vietnamese)
Zee Gold (formerly called Zee Cinema)
1999
Zee Gujarati
2005
ZEE TV
1998

Japanese

Nippon Golden Network
Jan. 82
TV Japan
Jul. 91

Urdu

Ary Digital
165

Federal Communications Commission

FCC 07-206

Ary One World
GeoTV
Indus Music
Indus Vision
PTV Prime
QTV
The Musik

Middle Eastern Language and Culture

Abu Dhabi
Al Arabiaya
Al Jazeera
Al Zikr
The Arabic Channel
Apr. 91
ART America (Arab Radio & Television America)
1999
ART Movies
ART Music
Bridges TV
Nov. 04
Dandana TV
Dubai Satellite Channel
Dubai Sports
ESC-1
Future TV
IQRAA
LBC
Mazzika Zoom
Melody Arabia
Middle East Broadcasting Company
NBN
New TV
Nile Drama
Noursat
Rang-a-Rang (Iranian)
2003
Rotana Cinema
Rotana Moossika
Rotana Zaman
166

Federal Communications Commission

FCC 07-206

Orbit Al-Yawm
Orbit Seen

Farsi

Tapesh
T2

Hebrew

The Israeli Network

Polish

ITVN
Kino Polska
Polsatz 2 International
Tele 5
TV Polonia
2003
TVP 3
TVN 24

Armenian

Armenia TV

Russian

Channel One Russia Worldwide Network
2003
Dom Kino
ITN Russian Family Network
Muzika Pervogo
NTV America
Oct. 02
RTR Planeta
RTVI
RTVI Plus
Russian TV Network of America (RTN)
Aug. 00
TVCI
Vreyma: The Retro Channel

Ukrainian

Inter+

Italian

Leonardo World
RAI International
1999
Sky TG24
167

Federal Communications Commission

FCC 07-206

Video Italia

French/African

3A Telesud
African Independent Television (AIT)
2004
RFI
Trace TV
TV5 (French)
Jan. 98

German

Deutsche Welle (DW-TV)
Prosiebensal.1 Welt

Greek

Alter Globe
Antenna Gold
Antenna Satellite
Blue
ERT-SAT
Mega Cosmos
Greek Channel/National Greek Television (NGT)
Dec. 87

Portuguese

PFC
Record International
RPTI
Sic Noticias
SPT
TV Globo Internacional

Caribbean

Hype TV
168

Federal Communications Commission

FCC 07-206

Multinational

Euro News
SCOLA
Aug. 87
MHz Worldview
Dec. 06

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. Although
Viacom is no longer the parent company of the CBS and UPN broadcast networks, we list it because it continues to
hold ownership interests in some of the most popular and most widely distributed networks (e.g., MTV,
Nickelodeon).
(2) On Friday, January 5, 2007, HSN revealed that America's Store will cease all broadcasting on April 3, 2007.
Wikipedia, America's Store, at http://en.wikipedia.org/wiki/America%27s_Store (visited Feb. 12, 2007).
(3) As of April 30, 2007, the Black Family Channel will cease operations. See R. Thomas Umstead, Black Family
Channel to Close its Doors
, MULTICHANNEL NEWS, Apr. 24, 2007.
(4) C-SPAN is a private, non-profit company, created in 1979 by the cable television industry to provide public
access to the political process. C-SPAN receives no government funding; operations are funded by fees paid by
cable and satellite affiliates who carry C-SPAN programming. The C-SPAN Board of Directors is comprised of
executives from large and small cable television operating companies. While the board establishes network policy
and provides financial oversight, it is not involved in C-SPAN's editorial decision-making. See C-SPAN, About Us:
Corporate Information
, at http://www.c-span.org/about/index.asp?code=About (visited Feb. 20, 2007).
(5) Lime TV (formerly called Wisdom Television) will cease operations by the end of February 2007. See Kent
Gibbons, Lime TV Going Dark, MULTICHANNEL NEWS ONLINE, Jan. 29, 2007, at
http://www.multichannel.com/article/CA6410842.html (visited Feb. 20, 2007). (See also http://www.lime.com/).
(6) Time Warner currently holds less than 5 percent equity in Ovation, and thus is listed as an unaffiliated network
this year. See Ovation, at http://www.ovationtv.com/newsdetails.aspx?release=artnetwork.mht&r=4&l=1
(7) Both Charter Communications' parent company Vulcan Ventures and Time Warner, Inc. subsidiary AOL have
equity interests in Oxygen Media. AOL, a wholly owned subsidiary of Time Warner, currently 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, at http://capital.vulcan.com/Template.aspx?contentId=7 (visited Feb. 16, 2007); AOL Time Warner, at
http://www.timewarner.com/corp/newsroom/pr/0,20812,668625,00.html (visited Feb. 16, 2007); Oxygen, About
Oxygen, at http://www.oxygen.com/basics/about.aspx (visited Feb. 15, 2007); Top Tech News, Oxygen Media
Draws $100M Breath, Dec. 4, 2000, at http://www.toptechnews.com/story.xhtml?story_ id=5685 (visited Feb. 16,
2007).
(8) Time Warner Investments currently holds more than a 5 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); see also Time Warner Inc., http://www.timewarner.com/corp/businesses/detail/tw_investments/index.html
(visited Feb. 20, 2007).

Sources:

2005 Report, 21 FCC Rcd at 2626, Table C-1.
NCTA, Cable Networks, at http://www.ncta.com/Organizations.aspx?type=orgtyp2 (visited Feb. 12, 2007).
Walt Disney Company, Company Overview, at http://corporate.ddisney.go.com/corporate/overview.html (visited
Jan. 30, 2007).
169

Federal Communications Commission

FCC 07-206

A&E Television Networks, About AETN, at http://www.aetn.com/about.html (visited Jan. 31, 2007).
Walt Disney Company, SEC Filing 10-K For the Year-Ended Sept. 30, 2006, at 3.
ESPN, Inc., ESPN Media Kit, Properties, at http://www.espncms.com/index.aspx?id=113 (visited Jan. 30, 2007).
ESPN, Inc., ESPN Corporate Information, at http://www.espnmediazone.com/corp_info/corp_fact_sheet.html
(visited Jan. 30, 2007).
ESPN International, FactSheet, http://intltv.espn.com/company_information/Print_ESPN_FactSheetB.pdf (visited
Feb. 2, 2007).
Lifetime Entertainment Services, Lifetimetv.com About Lifetime, at http://www.lifetimetv.com/about/index.html
(visited Jan. 30, 2007).
E! Entertainment Television, Inc., E! Networks, http://www.eentertainment.com (visited Jan. 30, 2007).
Comcast Corp., Comcast and The Walt Disney Company Announce Long-Term Comprehensive Distribution
Agreements Securing Carriage for Disney Media Networks' Products and Services, Comcast Acquires Disney's
Minority Interest in E! Networks
(press release), Nov. 21, 2006.
NBC Universal, Company Overview, at
http://www.nbcuni.com/About_NBC_Universal/Company_Overview/overview02.shtml (visited Feb. 1, 2007).
NBC-Universal Cable, NBC-Universal Cable Networks, at http://www.nbcunicable.com/insidenbccable/home.html
(visited Feb. 6, 2007).
MSNBC, NBC Universal Demotes Trio Channel to Web, HOLLYWOOD REPORTER, Nov. 21, 2005, at
http://www.msnbc.msn.com/id/10142136/ (visited Feb. 6, 2007).
NBC Universal, Inc., NBC Universal Media Village, Fact Sheet, at
http://www.nbcumv.com/corporate/corporate_factsheet.nbc (Feb. 6, 2007).
Hearst Corporation, A&E Networks, at http://www.hearst.com/entertainment/property/ent_cable_ae.html (visited
Feb. 6, 2007).
Hearst Corporation, ESPN Inc., at http://www.hearst.com/entertainment/property/ent_espn.html (visited Feb. 6,
2007).
Hearst Corporation, Lifetime Television, at http://www.hearst.com/entertainment/property/ent_lifetime.html (visited
Feb. 6, 2007).
E.W. Scripps Company, Scripps Networks, at http://www.scripps.com/networks/networks-network.html (visited
Feb. 6, 2007).
Shop At Home, LLC, Company Facts at Shop at Home, at
http://www.shopathometv.com/custserv/custserv.jsp?help=company (visited Feb. 6, 2007).
Liberty Media Corporation, 2005 Annual Report, Apr. 2006.
Liberty Media Corporation, Asset List, at http://www.libertymedia.com/ir/asset_list.htm (visited Feb. 6, 2007).
170

Federal Communications Commission

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Starz Entertainment, LLC, About Us, at http://www.starz.com/appmanager/seg/s?_nfpb=true&_pageLabel=about_us
(visited Feb. 6, 2007).
Starz Entertainment, LLC, Our Channels, at
http://www.starz.com/appmanager/seg/s?_nfpb=true&_pageLabel=our_channels (visited Feb. 6, 2007).
Encore TV, at http://www.encoretv.com/appmanager/seg/e (visited Feb. 16, 2007).
America's Store.com, at http://www.hsn.com/cnt/sf/default.aspx?sf=AS&prev=hp&cm_mmc=&rdr=1 (visited Feb.
12, 2007).
HSN Interactive, LLC, HSN Company Information, at
http://www.hsn.com/corp/info/default.aspx?o=!BNCI0&cm_sp=Global*BN*CompanyInfo (visited Feb. 12, 2007).
Game Show Network, at http://www.gsn.com/corporate (visited Feb. 16, 2007).
Hallmark Channel, at
http://www.hallmarkchannel.com/us_framework.jsp?BODY=usCorporateInfo.jsp&CONTENT=DAM_GTEXT_91
2824 (visited Feb. 16, 2007).
Hallmark Movie Channel, at http://www.hallmarkmoviechannel.com (visited Feb. 16, 2007).
QVC, at http://www.qvc.com (visited Feb. 16, 2007).
Application of News Corporation and The DIRECTV Group, Inc., Transferors, and Liberty Media Corporation,
Transferee, For Authority to Transfer Control,
Consolidated Application For Authority to Transfer Control, Jan. 29,
2007, at 8-12.
Viacom International, Inc., FactSheet, at
http://www.viacom.com/2006/pdf/ViacomFactSheet%20_915_%20without_contacts.pdf (visited Feb. 6, 2007).
Viacom International, Inc., Separation Overview, at http://www.viacom.com/separation_overview.jhtml (visited
Feb. 7, 2006).
Viacom, Inc., SEC Filing 10-K for the Year Ended Dec. 31, 2005, at I4-I12.
CBS Corporation, SEC Filing 10-K for the Year Ended Dec. 31, 2005, at I5.
Black Entertainment Television, Inc., BET Corporate, About BET, at
http://www.bet.com/BETCorporate/AboutBET.htm?wbc_purpose=Basic&WBCMODE=PresentationUnpublished&;
Referrer=%7BA12D4659-8E81-407F-8DDC-82F4A4A057C7%7D (visited Feb. 6, 2007).
Black Entertainment Television, Inc., BETJ Overview, at
http://www.bet.com/BETJ/betjoverview.htm?wbc_purpose=Basic&WBCMODE=PresentationUnpublished (visited
Feb. 6, 2007).
Liberty Media Corporation, Viacom to Acquire BET Holdings (news release), Nov. 3, 2006.
Christian Lewis, Serious Business: Comedy's Ganeless Builds The Brand, MULTICHANNEL NEWS, Jan. 29, 2007, at
http://www.multichannel.com/article/CA6410655.html?display=Search+Results&text=ganeless (visited Feb. 7,
2007).
CSTV Networks, Inc., CBS Closes on Acquisition of CSTV (press release), Jan. 6, 2006.
171

Federal Communications Commission

FCC 07-206

CSTV Networks, Inc., CSTV Announces Launch of CSTV 2 to Go, (press release), Oct. 25, 2006.
Mountain West Sports Network, About The MTN, at http://themtn.cstv.com/about/ (visited Feb. 7, 2007).
Showtime Networks, Inc., About Showtime, at http://www.sho.com/site/util/about.do?source=shocom_footer (visited
Feb. 7, 2007).
Viacom, Inc., Pulse: Newsletter, Aug. 9, 2006, at http://www.viacom.com/2006/pulse/Viacom_Newsletter_
Round7c.pdf;jsessionid =QLO4BAIYM5DIMCQBAFLQ4CY (visited Feb. 6, 2007).
Comcast Corp, Comcast and MTV Networks Announce the Launch of MHD, Music High-Definition (press release),
Aug. 29, 2006.
Viacom, MTV to Super-Serve U.S. Latino Youth Market with MTV Tr3s (press release), Apr. 3, 2006.
VH1 Country Channel to Become CMT Pure Country, NASHVILLE BUSINESS JOURNAL, Mar. 27, 29006.
News Corporation, Annual Report 2006, Aug. 22, 2006.
News Corp., News Corporation, Cable, at htt://www.newscorp.com/operations/cable.html (visited Feb. 7, 2007).
Star Group Limited, Star Company Report, 2005-2006.
TV One, LLC, TV One Adds More Than One Million Subscribers in December 2006 (press release), Jan. 10, 2007.
Time Warner Inc., Fox Cable Networks to Acquire Turner South (press release), Feb. 23, 2006.
New York Times Company, SEC Filing 10-K for the Year Ended Dec. 25, 2005, at 2, 8.
New York Times Company, Company Milestones, at http://www.nytco.com/company-milestones-2001.html (visited
Feb. 7, 2007).
Ovation, Ovation, the Arts Network, Acquired by Hubbard Media and Investment Group (press release), Aug. 29,
2006.
Linda Moss, Ovation: We'll Double Distribution, MULTICHANNEL NEWS, Aug. 29, 2006, at
http://www.lazardai.com/Assets/multichannel%20newswire%20article.pdf (visited Feb. 8, 2007).
NCTA Comments at 29 n.66.
Sky Angel, Channel Guide, at http://www.skyangel.com/Programming/Index.asp?Reference=ChannelLineup&;~=
(visited Feb. 7, 2007).
Spirit Television Network, About Us, at http://www.spirit-television.com/aboutus.htm (visited Feb. 7, 2007).
Trinity Broadcasting Network, TBN Networks, at http://www.tbn.org/index.php/4.html (visited Feb. 7, 2007).
TBN Networks, Networks, Affiliates, at http://www.tbnnetworks.com/ (visited Feb. 7, 2007).
Smile of a Child, About Us, at http://www.smileofachildtv.org/aboutUs.htm (visited Feb. 7, 2007).
Daystar Television Network, Our Network, at http://ww2.daystar.com/links/about_us/about_daystar.htm (visited
Feb. 7, 2007).
172

Federal Communications Commission

FCC 07-206

Paxson Communications Corporation, SEC Filing 10-K for the Year Ended Dec. 31, 2005, at 3-9.
Ion Media Network, About Us, at http://www.ionmedia.tv/about/ (visited Feb. 7, 2007).
Ion Media Networks, Ion Media Networks Revamps Television Network On-Air Brand to "ION Television" (press
release), Jan. 24, 2007.
Landmark Communications, Inc. The Weather Channel Companies, at
http://www.landmarkcom.com/businesses/weather.php (visited Feb. 7, 2007).
The Weather Channel, Weatherscan, at http://www.weather.com/aboutus/television/weatherscan/ (visited Feb. 7,
2007).
Tribune Company, SEC Filing 10-K for the Year Ended Dec. 25, 2005, at 12.
WGN Superstation, About the Station, at http://wgnsuperstation.trb.com/about/station/?track=subnav (visited Feb.
16, 2007)
Univision Communications, SEC Filing 10-K for the Year Ended Dec. 31, 2005, at 5-7.
Univision, Media Properties, at http://www.univision.net/corp/en/mp.jsp (visited Feb. 7, 2007).
Univision, Company Overview, at http://www.univision.net/corp/en/overview.jsp (visited Feb. 7, 2007).
Cablevision, Channel Lineups, at http://www.optimum.com/support/channel_lineups.jsp (visited Feb. 26, 2007).
Cablevision, iO en Espaol, at http://www.optimum.com/io/international/espanol.jsp#30 (visited Mar. 7, 2007).
Cablevision Systems Corp., iO Goes International With Launch of Diverse International Programming Services
Across New York Metropolitan Area
(press release), Jan. 24, 2007.
Charter Communications, St. Louis, Channel Lineup, at
http://charter.com/Visitors/PrintChannels.aspx?addr1=6505+Wydown&addr2=&zip=63105
(visited Feb. 17, 20007).
Comcast Corp., Washington D.C. - My Channel Lineup, at
http://www.comcast.com/customers/clu/channelLineup.ashx (visited Feb 17, 2007).
Cox, Channel Lineup Tucson, at http://www.cox.com/Arizona/digitalcable/lineup-Tucson-Green_Valley.pdf
(visited Mar. 7, 2007).
DIRECTV, Channel Lineup, at http://www.directv.com/see/pdf/chnllineup.pdf (visited Feb. 17, 2007).
DIRECTV, International Services, at
http://www.directv.com/DTVAPP/global/secondaryIndex.jsp?assetId=1200007 (visited Mar. 7, 2007).
EchoStar Communications Corp., Package Comparison, at
http://www.dishnetwork.com/content/whats_on_dish/programming_packages/comparison/default.aspx (visited Feb.
17, 2007).
EchoStar Communications Corp., Dish HD Programming, at
http://www.dishnetwork.com/content/our_products/dish_hd/programming/index.shtml (visited Feb. 17, 2007).
173

Federal Communications Commission

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EchoStar Communications Corp., Dish Network Latino Packages, at
http://www.dishnetwork.com/content/dishlatino/packages/dish_latino/index.shtml
(visited Feb. 17, 2007).
EchoStar Communications Corp., Dish Network International Packages, at
http://www.dishnetwork.com/content/whats_on_dish/international/index.shtml (visited Feb. 16, 2007).
RCN, Channel Line-ups, at http://www.rcn.com/cabletv/lineupMain.php (visited Mar. 7, 2007).
RCN, MiVision, at http://www.rcn.com/cabletv/mivision/en/variedad.php (visited Mar. 7, 2007).
Time Warner Cable, Manhattan Channel Lineup, at
http://www.timewarnercable.com/CustomerService/CLU/TWCCLUs.ashx (visited Feb. 17, 2007).
Qwest, Arizona Channel Lineup, at http://www.qwest.com/residential/products/tv/PHOENIXchannels.pdf (visited
Mar. 7, 2007).
Verizon FiOS, Channel Lineup, at http://www22.verizon.com/content/fiostv/channel+lineup/channel+lineup.htm
(visited Feb. 17, 2007).
Verizon Communications, Inc., Verizon Signs Spanish Language Programming Deals for FiOS TV: Spanish-
Speaking Viewers Get 12 Channels Devoted to Their Interests
(press release), Oct. 24, 2005.
International Networks, 24 Hour Pay Channels, at
http://www.internationalnetworks.com/24hourpaychannels/default.aspx (visited Feb. 16, 2007).
The Africa Channel, About Us, http://www.theafricachannel.com/aboutus.php (visited Feb. 13, 2007).
Comcast Corp., Comcast and The Africa Channel Reach New Affiliation Agreement (press release), Feb. 22, 2006.
American Life TV Network, About, at http://www.americanlifetv.com/about.php (visited Feb. 13, 2007).
The Nostalgia Network, Inc., American Life TV Network, http://www.goodtv.com/about.php (visited Feb. 12, 2007).
Anime Network, About Us, at http://www.theanimenetwork.com/aboutus.php (visited Feb. 12, 2007).
BabyFirst TV, About Us, at http://www.babyfirsttv.com/content.asp (visited Mar. 6, 2007)
Beauty & Fashion Channel, at http://www.beautyfashiontv.com/home.php (visited Feb. 12, 2007).
The Media Group, The Networks Group, at http://www.themediagroup.com/mainIndex.html (visited Feb. 12, 2007).
Black Belt TV, at http://www.blackbelttv.com/ (visited Mar. 6, 2007)
Black Family Channel, About Us, at http://www.blackfamilychannel.com/about.htm (visited Feb. 12, 2007).
Bloomberg TV, at http://www.bloomberg.com/media/tv/ (visited Feb. 14, 2007).
Bloomberg L.P., Bloomberg Television, at http://www.bloomberg.com/tvradio/tv/ (visited Feb. 12, 2007).
BYU Television, About BYU Television, at http://www.byutv.org/about/ (visited Feb. 14, 2007).
Classic Arts Showcase, at http://www.classicartsshowcase.org/index.html (visited Feb. 16, 2007).
174

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Spice Entertainment, Inc., Spice Digital Networks, http://www.pbtvnetworks.com/sdn/toolkit/t_transition.htm (Feb.
16, 2007)
CoLours TV, About Us, at http://www.colourstv.org (visited Feb. 14, 2007).
Cornerstone TeleVision, About Us, at http://www.ctvn.org/about/ (visited Feb. 15, 2007).
Current TV, About, at http://www.current.tv/about (visited Feb. 14, 2007).
Comcast Corp., Current TV Leaps Forward With Expanded Distribution on Comcast's Digital Cable Service (press
release), Mar. 27, 2006.
C-SPAN, at http://www.cspan.org/about/index.asp?code=About (visited Feb. 16, 2007).
Deep Dish TV Network, About Us, at http://www.deepdishtv.org/aboutus.htm (visited Feb. 16, 2007);
http://www.deepdishtv.org/history_formula.htm (visited Mar. 7, 2007).
The Documentary Channel, About The Documentary Channel, at
http://www.documentarychannel.com/main/content/view/1/2 (visited Mar. 6, 2007).
EWTN, Television, at http://www.ewtn.com/tv/index.asp (visited Feb. 15, 2007).
Faith Television Network, About Us, at http://www.faithtv.com/management.html (visited Feb. 15, 2007).
Familyland Television, About FL-TV, at http://www.familyland.org/content/Content.aspx?CategoryID=73 (visited
Feb. 15, 2007).
Family Net, About FamilyNet, at http://www.familynet.com/site/c.ikITLaMXJvE/b.551707/k.D2EC/About_Us.htm
(visited Feb. 15, 2007).
The Florida Education Channel, at http://www.paec.org/fec/ (visited Mar. 6, 2007).
Free Speech TV, About Us, at http://www.freespeech.org/html/aboutus.shtml
(visited Feb. 15, 2007).
Funimation Channel, at http://www.funimationchannel.com/ (visited Feb. 15, 2007).
Gems TV, at
https://www.gemstv.com/home.htm;jsessionid=FCD62F3ABBC250BEB5E463EF875DA067.jvm1?menutab=tv-
games (visited Mar. 6, 2007).
GodTV, at http://www.god.tv/US/ (visited Mar. 6, 2007).
Good Samaritan Network, at http://www.good-sam.com/ (visited Feb. 16, 2007).
Gospel Music Channel, About, at http://www.gospelmusicchannel.com/index.php?content=about
(visited Feb. 15, 2007).
Comcast Corp., Gospel Music Channel Reaches Carriage Agreement with Comcast (press release), Mar. 28, 2006,
at http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-newsArticle&ID=856593&highlight= (visited Mar. 6,
2007).
Guardian Television Network, About, at http://www.gtn.tv/detailpage.php?body=aboutgtn.inc.php (visited Feb. 15,
2007).
175

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HD Net, at About Us, Facts, http://www.hd.net/factsheet.html (visited Feb. 15, 2007).
Health and Human Services Television, at
http://www.dishnetwork.com/content/whats_on_dish/programming_packages/channels/index.asp?NetwID=52107
(visited Mar. 6, 2007).
Healthy Living Channel, About The Healthy Living Channel, at http://www.healthylivingtv.com/aboutus.php
(visited Feb. 15, 2007).
here! TV, About Us, at http://www.heretv.com/AAboutPage.php (visited Feb. 15, 2007).
Home Preview Channel, What's Home Preview Channel and Carriage, at http://www.hpctv.com/hpc_info.html
(visited Feb. 16, 2007).
Horse Racing TV, About Us, at http://www.horseracingtv.com/aboutus.aspx (visited Feb. 15, 2007).
HustlerTV, Pay Per View, at http://www.hustlertv.com/ppv.php (visited Feb. 16, 2007).
iDriveTV, About Us, at http://www.idrivechannel.com/aboutus.php (visited Feb. 16, 2007).
ImaginAsian TV, at http://www.iatv.tv/ (visited Feb. 15, 2007).
ILIFETV, at http://www.ilifetv.com/about.asp (visited Feb. 16, 2007).
INSP The Inspiration Network, About, at http://www.insp.com/about.asp (Feb. 16, 2007).
The Inspiration Networks, at
http://www.inspnets.com/index.php?option=com_content&task=view&id=39&Itemid=38 (visited Feb. 15, 2007).
i-Shop TV, at http://www.i-shoptv.com/ (visited Feb. 16, 2007).
Jewelry Television, About Us, at http://www.jewelrytelevision.com/about (visited Feb. 15, 2007).
Kids Sports News Network, at http://www.ksnn.net/home.html (visited Feb. 15, 2007).
Liberty Channel, at http://liberty-channel.tv/About.html (visited Feb. 16, 2007).
Lime TV, at http://www.lime.com/ (visited Mar. 6, 2007).
Kent Gibbons, Lime TV Going Dark, MULTICHANNEL NEWS, Jan. 29, 2007, at
http://www.broadcastingcable.com/article/CA6410842.html (visited Mar. 6, 2007).
Link TV, at http://www.worldlinktv.org/about/mission.php3 (visited Feb. 16, 2007).
MavTV, at http://www.mavtv.com/pages/public_about.asp (visited Feb. 16, 2007).
Mens2 Shopping Network, http://www.dishnetwork.com/content/whats_on_dish/programming_packages/channels
/index.asp?NetwID=51006 (visited Feb. 17, 2007).
Men's Outdoors and Recreation Channel, Carriage, at http://watchmor.com/home.php (visited Feb. 17, 2007).
176

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Movie Mania, Movie Mania, at http://www.bmaniatv.com/ and http://www.bmaniatv.com/schedule.asp (visited Feb.
12, 2007).
City of Poplar Bluff Municipal Utilities and City Cable, at http://www.pbutilities.com/channel_desc.html#BMANI
(visited Mar. 6, 2007).
Movieola TV, About Us, at http://www.movieola.ca/about.php (visited Feb. 15, 2007).
Cogeco, Channel Lineup, at
http://24.226.1.233/channel_lineup_wse.cfm?region=on&lang=en&civic=175&pc=L8N+2K2&image.x=13&image.
y=1 (visited Mar. 6, 2007).
NASA Television, at http://www.nasa.gov/multimedia/nasatv/index.html (visited Feb. 15, 2007).
NBA TV, at http://www.nba.com/nba_tv/ (visited Feb. 15, 2007).
NBA TV HD, at http://www.nba.com/schedules/national_tv_schedule/NBATVHighDef/ (visited Feb. 15, 2007).
NFL Network, at http://www.nfl.com/nflnetwork/about (visited Feb. 16, 2007).
University House, at http://www.universityhouse.nau.edu/ (visited Mar. 6, 2007).
Buzztime Entertainment, Cable TV, at http://www.buzztime.com/platforms/cable/index.htm (visited Feb. 15, 2007).
NRB Network, Who We Are, at http://www.nrb.org/whoweare (visited Mar. 6. 2007).
The Outdoor Channel, About, at http://www.outdoorchannel.com/index2.cfm?ss=146&site=1
(visited Feb. 15, 2007).
Outdoor Channel 2 HD, Affiliates, at http://www.outdoorchannel.com/index2.cfm?ss=206&site=2 (visited Feb. 15,
2007).
Ovation, Ovation Info, at http://www.ovationtv.com/about/index.asp (visited Feb. 15, 2007).
Oxygen, About Oxygen, at http://www.oxygen.com/basics/about.aspx (visited Feb. 15, 2007).
Vulcan Capital, at http://capital.vulcan.com/Template.aspx?contentId=7 (visited Feb. 16, 2007).
AOL Time Warner, at http://www.timewarner.com/corp/newsroom/pr/0,20812,668625,00.html (visited Feb. 16,
2007).
Top Tech News, Oxygen Media Draws $100M Breath, Dec. 4, 2000, at
http://www.toptechnews.com/story.xhtml?story_id=5685 (visited Feb. 16, 2007).
Pentagon Channel, About the Pentagon Channel, at http://www.pentagonchannel.mil/about.aspx (visited Feb. 16,
2007).
Product Information Network, at http://www.pinnet.com (visited Feb. 16, 2007).
Playboy TV, at http://www.playboy.com/playboytv/ (visited Feb. 15, 2007).
New Frontier Media, Corporate Website, Business, Pay TV, at http://www.noof.com/business/broadcast.html
(visited Feb. 15, 2007).
177

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The Prayer Channel, at http://www.pastcomm.org/prayerchannel/index.html (visited Mar. 7, 2007).
Reelz Channel, About Us, at http://www.reelzchannel.com/content.aspx?nid=3 (visited Mar. 6, 2007).
The Research Channel, Where to Watch, at http://www.researchchannel.org/prog/where.asp (Feb. 16, 2007).
Resorts & Residence TV, at http://www.resortandresidencechannel.com/ (visited Feb. 16, 2007).
RFD Communications, About Us, at http://www.rfdtv.com/about.asp (visited Feb. 15, 2007).
Safe TV, About Us, at http://www.safetv.org/AboutUs.htm (visited Feb. 15, 2007).
Shop At Home, LLC, Company Facts at Shop at Home, at
http://www.shopathometv.com/custserv/custserv.jsp?help=company (visited Feb. 6, 2007).
STC, About, at http://www.soundtrackchannel.com/about.html (visited Feb. 14, 2007).
The Sportsman Channel, About, at http://www.thesportsmanchannel.com/utility/abouttsc/overview/index.php
(visited Feb. 14, 2007).
TCT TV, at http://www.tct.tv/ (visited Feb. 16, 2007).
Chesnee Communications, Channel Lineup, at http://www.chesnet.net/cable_lineup.html (visited Mar. 6, 2007).
The Tennis Channel, About Us, at http://www.thetennischannel.com/aboutus/ (visited Feb. 16, 2007).
3ABN, About 3 ABN, at http://www.3abn.org/about_3abn.cfm (visited Feb. 16, 2007).
Total Living Network, at http://www.tln.com (visited Feb. 16, 2007).
TVG: Interactive Horseracing, at http://www.tvg.com/ (visited Feb. 16, 2007).
TVN Entertainment, About TVN, at http://www.tvn.com/highlight.asp?x=1&y=2&z=2 (visited Feb. 16, 2007).
TVU Music Television, About TVU Music Television, at http://tvulive.com/about.htm (visited Feb. 16, 2007).
University of California Television, at http://www.uctv.tv/ (visited Mar. 6, 2007).
Varsity Media Group, Inc., About Us, at http://www.varsityworld.com/corporate/index.aspx?pageid=1 (Feb. 16,
2007).
The Water Channel, at http://www.waterchannel.com/index.php (visited Mar. 6, 2007).
Wealth TV, at http://www.wealthtv.net/about.html (visited Feb. 16, 2007).
World Harvest Television Network, at http://www.lesea.com/index.cfm/fa/wht (visited Feb. 16, 2007).
The Word Network, at http://www.thewordnetwork.org/ (visited Feb. 16, 2007).
The Worship Network, About The Worship Network, at http://www.worship.net/about (visited Feb. 16, 2007).
AYM Sports TV, at http://www.aymsports.tv/ (visited Feb. 14, 2007).
Azteca America, http://www.aztecaamerica.com/ (visited Mar. 6, 2007).
178

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Bandamax TV, at http://www.esmas.com/bandamax/ (visited Mar. 7, 2007).
Canal Uno, at http://www.canal1tv.com/index2.php (visited Mar. 6, 2007).
Canal Uno, at http://www.canal1tv.com/internacional/acerca_canal1internacional.php (visited Mar. 7, 2007).
Canal 24 Horas, at
http://www.rtve.es/FRONT_PROGRAMAS?go=111b735a516af85ccdc4135d9df82c2e123009d61eb00f778b60af79
3b191c31cbdf8b1c5d960a48bcaf26ee6dd52c6a42e46f32b893f295214aa83ab616d9e2edbdb7040c4f625c34fed7886
33ffa34b252bc31603f9078 (visited Feb. 14, 2007).
Canal 52 MX, at http://www.canal52.com.mx/site/home.php (visited Mar. 7, 2007).
Sur Corporation, Canal Sur, at http://www.canalsur.com/surtv/index.html (visited Mar. 7, 2007).
Canal Caracol, at http://www.canalcaracol.com/ (visited Mar. 6, 2007).
Casa Club TV, at http://www.casaclubtv.com/esp/index.asp (visited Mar. 6, 2007).
CCTV E&F, at http://www.cctv.com/homepage/profile/17/index.shtml#e (visited Mar. 6, 2007).
Cine Latino, at http://www.cinelatino.com.mx/ (visited Mar. 7, 2007).
Cine Mexicano, at http://www.cinemexicano.tv/ (visited Mar. 7, 2007).
DOCU TVE, at
http://www.rtve.es/FRONT_PROGRAMAS?go=111b735a516af85ccdc4135d9df82c2e123009d61eb00f778b60af79
3b191c31cbdf8b1c5d960a48bcaf26ee6dd52c6aa7c665ebdbc4557e94e41a5ed065c0a10f0afd801f9626ba57d0650a1
bfd448cac34cfe1aa449187 (visited Feb. 14, 2007).
EWTN, at http://www.ewtn.com/tv/PAS9grid2.asp (visited Mar. 7, 2007).
Gol TV, at http://www.goltv.tv/ (visited Feb. 15, 2007).
Galavision, at
http://www.univision.com/content/channel.jhtml;jsessionid=34YWL2SRQB30OCWIABTCFFAKZAABUIWC?chi
d=6&schid=1514 (visited Mar. 7, 2007).
Grandes Documentales, at http://www.rtve.es/canales/hispavi.html; http://www.rtve.es/temat/hispavi.htm (visited
Mar. 7, 2007).
HITN, About HITN, at http://www.hitn.org/about_hitn_en.php (visited Feb. 15, 2007).
La Familia Network, at http://www.lafamiliatv.com/ (visited Mar. 7, 2007).
Latele Novella Network, at http://www.latelenovela.com/ (visited Mar. 7, 2007).
Latin Television, at http://www.ltvtv.com/ (visited Mar. 7, 2007).
Maria Vision, at http://www.mariavision.com.mx/ (visited Mar. 7, 2007).
Mexicanal, at http://www.mexicanal.com/ (visited Feb. 15, 2007).
179

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Momentum TV, at http://www.momentum.tv/ (visited Mar. 7, 2007).
Puma TV, at http://www.pumatv.net/ (visited Mar. 7, 2007).
Ritmoson Latino, at http://www.esmas.com/ritmosonlatino/ (visited Mar. 7, 2007).
S TV, About, at http://www.sitv.com/about-us.php (visited Feb. 14, 2007).
Time Warner, Inc., Time Warner Investments, at
http://www.timewarner.com/corp/businesses/detail/tw_investments/index.html (visited Feb. 16, 2007).
Sorpressa, at http://www.sorpresatv.com/ (visited Feb. 13, 2007).
Supercanal, at http://www.supercanal33.net/ (visited Mar. 7, 2007).
Supercanal, at http://www.supercanalcaribe.net/ (visited Mar. 7, 2007).
TV Chile, at http://www.tvchile.cl/ (visited Feb. 16, 2007).
TV Colombia, at http://www.tvcolombia.com/ (visited Mar. 7, 2007).
TVE Internacional at
http://www.rtve.es/?go=111b735a516af85c803e604f4546adce4c9885a8e53805c69ad49e29577ac993aa2a0658da48
1224df52a23e96de896a230fec74bf1672931c5bd440331610d8f0352b74f5d349ee (visited Feb. 16, 2007).
Utilisima Television, at http://www.utilisima.com/principal.php?CP=TV (visited Mar. 7, 2007).
Venemovies, at http://www.venemovies.com/ (visited Mar. 7, 2007).
Video Rola, http://www.videorola.com/ (visited Feb. 16, 2007).
Reach Media, Inc., Packages, at http://www.reachmediatv.com/packages.htm (visited Feb. 14, 2007).
MBC America, at http://www.mbcamerica.tv/ko/ (visited Feb. 15, 2007).
TVK24, at http://www.tvk24.com/ (visited Feb. 16, 2007).
TV Japan, at http://www.tvjapan.net/ (visited Feb. 16, 2007).
The Arabic Channel, at http://www.ethnicnet.com/cgi-bin/go.cgi?channel=arabic&page=ar/index
(visited Feb. 13, 2007).
BridgesTV, American Muslim Television Network, at http://www.bridgestv.com/home.asp and
http://www.globecastworldtv.com/ch_bridgestv.htm (visited Feb. 12, 2007).
Bridges TV, at http://www.bridgestv.com/mediakit_new.asp (visited Feb. 14, 2007).
National Iranian Television, at http://www.nitv.tv/ (visited Feb. 15, 2007).
Rang-A-Rang, at http://www.rangarangtv.com/ (visited Feb. 15, 2007).
TV Polonia, at http://www.tvpolonia.com/ (visited Feb. 16, 2007).
Channel One Russia Worldwide Network, at http://www.channelonerussia.com/ (visited Feb. 14, 2007).
180

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NTV America, at http://www.ntvamerica.com/ (visited Feb. 15, 2007).
Russian World, at http://www.rusmirtv.com/ (visited Feb. 15, 2007).
AIT, About The Company, http://www.aittv.com/aboutAIT.asp (visited Feb. 13, 2007).
TV 5, at http://www.tv5.org/TV5Site/programmes/accueil_continent.php (visited Feb. 16, 2007).
German TV, at http://www.germantv.info/GermTVstart_en.html (visited Feb. 15, 2007).
MHz Worldview, at http://www.mhzworldview.org/aboutmhz/ (visited Mar. 7, 2007).
SCOLA, About, at http://www.scola.org/eoneCommerce/Portal?Dsp=10&PCR=1:10 (visited Feb. 14, 2007).
181

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TABLE C-3

Regional Video Programming Services

By Affiliation

Programming Services
Launch
MSO Ownership (%)
Other Media Entity
Date
Ownership
Altitude Sports & Entertainment
Sep. 04
Arizona News Channel
Nov. 96
Cox (50) (1)
Belo Corp.
Bay News 9
Sep. 97
Bright House
(Advance Newhouse) (100)
Bay News 9 en Espaol
Bright House
(Advance Newhouse) (100)
Bravesvision (Atlanta) (2)
Jul. 03
Comcast (100)
California Channel
Feb. 91
Capital News 9-Albany New York
Oct. 02
Time Warner (100)
Central Florida News 13 (CFN 13)
Oct. 97
Bright House
(Advance Newhouse) (100)
CFN13 - News 13 Weather Now
Bright House
(Advance Newhouse) (100)
Channel 4 San Diego
1997
Cox (100)
ChicagoLand Television News (CLTV)
Jan. 93
CN8-The Comcast Network
Oct. 97
Comcast (100)
Comcast Entertainment TV (Denver)
Jun. 04
Comcast (100)
Comcast Local (Detroit) (3)
Aug. 04
Comcast (100)
Comcast SportsNet Philadelphia
Oct. 97
Comcast (85.1)
Comcast SportsNet Chicago
Oct. 04
Comcast (30)
Comcast SportsNet Mid-Atlantic
Apr. 84
Comcast (100)
(also called CSN Baltimore-Washington)
Comcast SportsNet West
Nov. 04
Comcast (100)
(also called CSN Sacramento)
Comcast / Charter Sports Southeast (CSS) (3)
Apr. 84
Comcast (73.8),
Charter (26)
County Television Network San Diego
Jul. 96
Cowboys TV (Dallas) (4)
Sep. 04
Comcast (100)
Cox Sports Television
Oct. 02
Cox (100)
Denver Channel 207
Ecumenical Television Channel
1983
Falconvision (Atlanta) (4)
Sep. 04
Comcast (100)
Fox College Sports Atlantic
News Corp.
Fox College Sports Central
News Corp.
182

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FCC 07-206

Fox College Sports Pacific
News Corp.
Fox Sports Net Arizona
Sep. 96
News Corp.
Fox Sports Net Bay Area
Apr. 90
Cablevision (60)
News Corp.
Fox Sports Net Detroit
Sep. 97
News Corp.
Fox Sports Net Florida
1989
News Corp.
Fox Sports Net Midwest
Sep. 97
News Corp.
Fox Sports Net New England
Jan. 88
Cablevision (50)
Comcast (50)
Fox Sports Net New York
1989
Cablevision (100)
Fox Sports Net North
Mar. 89
News Corp.
Fox Sports Net Northwest
Nov. 88
News Corp.
Fox Sports Net Ohio
Feb. 89
News Corp.
Fox Sports Net Pittsburgh
Apr. 86
News Corp.
Fox Sports Net Rocky Mountain
Nov. 88
News Corp.
Fox Sports Net South
Aug. 90
News Corp.
Fox Sports Net Southwest
Jan. 83
News Corp.
Fox Sports Net West
Oct. 85
News Corp.
Fox Sports Net West 2
Jan. 97
News Corp.
(also called FSN Prime Ticket)
Kansas 22 Now (Kansas Newschannel)
Cox (50) (1)
Las Vegas One News
Apr. 98
Cox (33.3) (1)
Local News on Cable (LNC) Hampton
Feb. 97
Cox (33.3) (1)
Belo Corp.
Madison Square Garden Network (MSG)
Oct. 69
Cablevision (100)
MSG HD
Cablevision (100)
Mas! Arizona
Cox (50) (1)
Belo Corp.
MetroSports Kansas City, Mo.
Feb. 04
Time Warner (100)
Michigan Government Television
Jul. 96
Mid-Atlantic Sports Network (MASN)
New England Cable News (NECN)
Mar. 92
Comcast (50)
Hearst
New England Sports Network (NESN)
Mar. 84
New York Times (5)
News 8 Austin
Sep. 99
Time Warner (100)
News 8 Radar Now (6)
2006
Time Warner (100)
News 8 Traffic Now (6)
2006
Time Warner (100)
News 8 Non-Stop Weather (6)
2006
Time Warner (100)
News 8 Non-Stop Weather en Espaol
2006
Time Warner (100)
News 8 Non-Stop Sports (6)
2006
Time Warner (100)
183

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News 10 Now Syracuse, N. Y.
Nov. 03
Time Warner (100)
News 12 Connecticut
Jun. 95
Cablevision (100)
News 12 Bronx
Jun. 97
Cablevision (100)
News 12 Brooklyn
2005
Cablevision (100)
News 12 Hudson Valley
2005
Cablevision (100)
News 12 Long Island
Dec. 86
Cablevision (100)
News 12 New Jersey
Mar. 96
Cablevision (100)
News 12 Traffic & Weather
2005
Cablevision (100)
(formerly Metro Traffic & Weather)
News 12 Westchester
Nov. 95
Cablevision (100)
News 14 Carolina (Charlotte)
Mar. 02
Time Warner (100)
News 14 Carolina (Raleigh)
Mar. 02
Time Warner (100)
News Channel 3 Anytime
News Channel 5+ (Nashville)
Sep. 96
Landmark
Communications
News Channel 8 (Washington, DC)
Oct. 91
Allbritton
Communications
News Now 53 (Oklahoma City)
Jun. 97
Cox (50) (1)
News Now 53 (Tulsa)
Jun. 97
Cox (50) (1)
News on One (Omaha)
Oct. 97
Newswatch 15 (New Orleans)
Oct. 99
Cox (50) (1)
Belo Corp.
NorthWest Cable News (NWCN)
Dec. 95
Belo Corp.
NY 1 News
Sep. 92
Time Warner (100)
NY 1 Noticias
Jun. 03
Time Warner (100)
Ohio News Network (ONN)
May 97
Pennsylvania Cable Network (PCN)
Sep. 79
Pittsburgh Cable News Channel (PCNC)
Jan. 94
Comcast (30)
Regional News Network (RNN)
Dec. 95
Rhode Island News Channel
Sep. 98
Cox (65) (1)
R News Rochester, NY
Jul. 95
Time Warner (100)
San Diego's News Channel 15
Jan. 97
Cox (50) (1)
McGraw-Hill
Broadcasting Group
Six News Now (Sarasota)
Jul. 95
New York Times
SportsNet New York
2006
Comcast (8.2),
Time Warner (26.83)
SportSouth (formerly Turner South)
Oct. 06
News Corp.
SportsTime Ohio
Apr. 06
SunSports (formerly Sunshine Network)
Mar. 88
News Corp.
184

Federal Communications Commission

FCC 07-206

10 News 2 (Knoxville)
Texas Cable News
Jan. 99
Belo Corp.
TV33 Cleveland Headline News
Dec. 95
24/7 News Channel
Belo Corp.
Washington Korean TV (WKTV)
1985
Yankee Entertainment Sports Network (YES)
Mar. 02
YES-HD

Notes:

(1) Cox news channel partnerships are partnerships between Cox local cable systems and local broadcasters that
program each channel. Cox local system partnerships between Mas! Arizona and Newswatch 15 were be dissolved
on March 31, 2007.
(2) Bravesvision ceased operation at the end of the 2006 baseball season.
(3) Both Comcast Local Detroit and Comcast/Charter Sports Southeast provide sports programming, neither provide
professional sports programming, except for women's professional basketball.
(4) Cowboys TV and Falconsvision ceased operations at the end of the 2006-2007 football season.
(5) The Boston Red Sox are a co-founder and the majority owner (80 percent) of NESN. NESN is considered a unit
of the New York Times Company's group of TV stations because it is part of the Red Sox ownership group.
(6) Three of News 8 Austin's news services (News 8 Radar Now, Traffic Now and Non-stop Weather) are
noncommercial displays with audio feeds added by the News 8 Austin newsroom. News 8 Non-stop Sports is a
noncommercial 24/7 local and national sports headline and highlight service with feeds from other sports news
providers.

Sources:

2005 Report, 21 FCC Rcd at 2644-2649 Appendix C, Table C-3.
Application of News Corporation and The DIRECTV Group, Inc., Transferors, and Liberty Media Corporation,
Transferee, For Authority to Transfer Control,
Consolidated Application For Authority to Transfer Control, Jan. 29,
2007, at 8, 17 (DIRECTV-Liberty Application).
General Motors Corporation and Hughes Electronics Corporation, Transferors And The News Corporation
Limited, Transferee, For Authority to Transfer Control
, 19 FCC Rcd 473, 499-500 49 n. 172 (2004).
Allbritton Communications, at http://www.allbritton.com/ (visited Mar. 2, 2007).
Altitude Sports & Entertainment, at http://www.altitude.tv/AboutUs/FAQ.aspx (visited Feb. 21, 2007).
Association of Regional News Channels, at http://newschannels.org/Members.html (visited Feb. 21, 2007).
Bay News 9, at http://www.baynews9.com/Home.html (visited Feb. 14, 2007).
Belo Corp., Cable News, at http://www.belo.com/companies/cablenews.x2 (visited Feb. 21, 2007).
Bright House Networks Corporate, Company Overview, at
http://www.mybrighthouse.com/about_us/company_overview.aspx (visited Feb. 23, 2007).
Cablevision Systems Corp., Cablevision News 12 Networks, at http://www.cablevision.com/index.jhtml?pageType-
news12 (visited Jan. 28, 2007); Cablevision Systems Corp., 10-K for the Year-Ended 2005, at 37.
The California Channel, at http://www.calchannel.com/ (visited Feb. 21, 2007).
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Capital 9 News, at http://www.capitalnews9.com/content/top_stories/?SecID=1 (visited Feb. 23, 2007).
Central Florida News 13, at http://www.cfnews13.com/ (visited Feb. 21, 2007).
Channel 4 San Diego, at http://www.4sd.com/ (visited Feb. 21, 2007); http://www.4sd.com/faq.php (visited Feb. 23,
2007).
CLTV, Chicagoland's Television, at http://cltv.trb.com/ (visited Feb. 14, 2007).
Comcast Corp., Metro Atlanta Channel Lineup, at
http://www.comcast.com/Customers/clu/ChannelLineup.ashx?print=1&CGID=4096 (visited Feb. 21, 2007); What is
CET?
, at http://www.comcast.com/cet/ (visited Feb. 21, 2007); Comcast Local, at http://www.comcastlocal.com/
(visited Feb. 21, 2007); Comcast Sports Nets, at http://www.comcastsportsnet.com/ (visited Feb. 21, 2007); CSTV
and Comcast Team Up to Launch 'The mtn.,' MountainWest Sports Network
(press release)
July 19, 2006; Comcast and MASN Announce Carriage Agreement (press release), Aug. 4, 2006;
Comcast Networks, at http://www.cmcsk.com/phoenix.zhtml?c=147565&p=irol-comcastcablenetworks
(visited Feb. 21 2007); Comcast-Charter Sports Southeast, at http://www.csssports.com/about_us.cfm
(visited Feb. 21, 2007); CN8 The Comcast Network, at http://www.cn8.tv/ (visited Feb. 21, 2007).
Cox Communications, Inc., Cox Sports Television, at
http://www.coxsportstv.com/WebSite/PageContent.aspx?page=About&menu=Overview (visited Feb. 14, 2007);
Cox Sports Television, Overview, at http://www.cox-sports.com/aboutUs.cfm?id=8 (visited Mar. 1, 2007); Cox
Communications Inc., SEC Form 10-K, for the Period Ending Dec. 31, 2005
, Subsidiaries of Cox Communications,
Inc
.; Cox Communications Inc., SEC Filing SC TO I EX-99.C.8, Nov. 3, 2004, Appraisal of Cox Communications,
Inc.;
http://www.cox.com/gocox/DigitalCable/ (visited Feb. 21, 2007).
The Denver Channel, at http://www.thedenverchannel.com/index.html (visited Feb. 21, 2007).
Diocese of Youngstown, The Ecumenical Television Network, at http://www.doy.org/ctny_history.asp (visited Feb.
21, 2007).
Fox College Sports, at http://msn.foxsports.com/id/1991727 (visited Feb. 21, 2007).
Fox Cable Networks, Fox Cable Networks to Acquire Turner South (press release), Feb. 23, 2006.
FSN Arizona, at http://msn.foxsports.com/regional/arizona?workingCategory=269 (visited Mar. 1, 2007).
FSN Bay Area, at http://www.fsnbayarea.com/ (visited Mar. 1, 2007).
FSN Chicago (closed), at http://www.fsnchicago.com/ (visited Mar. 1, 2007).
FSN Detroit, at http://msn.foxsports.com/regional/detroit?workingCategoryId=272 (visited Mar. 1, 2007).
FSN Florida, at http://www.fsnflorida.com/ (visited Mar. 1, 2007).
FSN Midwest, at http://msn.foxsports.com/regional/midwest?workingCategory=277 (visited Mar. 1, 2007).
FSN New England, About, at http://fsnnewengland.com/About.jsp (visited Mar. 1, 2007).
FSN North-MN, at http://msn.foxsports.com/regional/Minnesota (visited Mar. 1, 2007).
FSN Northwest, at http://msn.foxsports.com/northwest (visited Mar. 1, 2007).
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FSN Ohio, http://msn.foxsports.com/regional/ohio?workingCategory=286 (visited Mar. 1, 2007).
FSN Pittsburgh, at http://msn.foxsports.com/regional?categoryId=271 (visited Mar. 1, 2007).
FSN Rocky Mountain, at http://msn.foxsports.com/regional?categoryId=276 (visited Mar. 1, 2007).
FSN Southwest, at http://msn.foxsports.com/regional/southwest?workingCategoryId=274 (visited Mar. 1, 2007).
FSN South, at http://msn.foxsports.com/regional/south (visited Mar. 1, 2007).
FSN West and West2, at http://msn.foxsports.com/regional/west?workingCategory=267 (visited Mar. 1, 2007).
Griffin Communications, News Now 53, at http://www.griffincommunications.net/properties/partnerships (visited
Feb. 21, 2007).
Hearst Corporation, New England Cable News, at
http://www.hearst.com/entertainment/property/ent_cable_newengland.html (visited Feb. 6, 2007).
KC Metro Sports, at http://kcmetrosports.com/ (visited Mar. 1, 2007).
Landmark Communcations, http://www.landmarkcom.com/businesses/index.php (visited Feb. 21, 2007).
Las Vegas Now, at http://www.lasvegasnow.com/Global/category.asp?C=37943&nav=menu102_9_6 (visited Feb.
21, 2007).
Las Vegas One, Las Vegas One Personalities, at http://www.klas-
tv.com/Global/category.asp?C=37943&nav=menu102_9_6 (visited Mar. 1, 2007).
Mas! Arizona, at http://www.azfamily.com/mas/ (visited Feb. 21, 2007).
McGraw-Hill, 10 News Launches "10 To Go:" Your News On Your Cell Phone (press release). July 15, 2005, at
http://www.mcgraw-hill.com/releases/broadcasting/20050801.shtml (visited Feb. 21, 2007).
Michigan Government Television, at http://www.mgtv.org/ (visited Feb. 21, 2007).
Mid-Atlantic Sports Network, at http://www.masn.tv/aboutmasn/ (visited Feb. 21, 2007).
Mike Malone, Cox and ABC6 Ink Retrans Deal, BROADCASTING & CABLE.COM, Feb. 2, 2007, at
http://www.broadcastingcable.com/article/CA6412900.html (visited Mar. 2, 2007).
Mountain West Sports Network, at http://themtn.cstv.com/ (visited Mar. 1, 2007).
MSG Network, Home, at http://www.msgnetwork.com/index.jsp (Mar. 1, 2007).
NCTA, Cable Networks, at http://www.ncta.com/Organizations.aspx?type=orgtyp2 (visited Feb. 12,
2007); NCTA, Dallas Cowboys Channel, at http://www.ncta.com/
ContentView.aspx?hidenavlink=true&type=orgtyp2&contentId=1848 (visited Feb. 14, 2007).
NCTA Comments at 29 n.66.
New England Cable News Network, at http://www.boston.com/news/necn/ (visited Mar. 1, 2007).
New England Sports Network, at http://www.boston.com/sports/nesn/aboutus/FAQ/ (visited Feb. 20, 2007).
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News 8 Austin, About Us, at http://www.news8austin.com/content/contact_us/contact_news_8/ (visited Feb. 21,
2007).
News 10 Now, at http://www.news10now.com/content/top_stories/?SecID=1 (visited Mar. 1, 2007).
News12.com, News 12 Interactive, at http://www.news12.com/Home (visited Jan. 28, 2007).
News 14 Carolina, at http://rdu.news14.com/content/contact_us/ (visited Mar. 1, 2007).
News Channel 3, Anytime, at http://www.wreg.com/Global/story.asp?S=378308&nav=menu93_9_2 (visited Feb.
21, 2007).
NewsChannel 5 Network, at http://www.newschannel5.com/content/ (visited Feb. 20, 2007).
News Channel 8, About News Channel 8, at http://www.news8.net/inside.hrb (visited Feb. 21, 2007).
News Corp., Cablevision and News Corporation to Restructure Ownership of Sports and Entertainment Assets
(press release), Feb. 22, 2005; 2006 Annual Report, at http://www.newscorp.com/Report2006/AR2006.pdf (visited
Feb. 23, 2007).
Northwest Cable News at, http://www.nwcn.com/ (visited Feb. 15, 2007).
NY 1 News, at http://www.ny1.com/ny1/index.jsp (visited Mar. 1, 2007).
NY 1 Noticias, at http://www.ny1.com/ny1/Noticias/index.jsp (visited Mar. 1, 2007).
Ohio News Now, Where to Find ONN, at
http://www.ohionewsnow.com/?sec=viewerservices&story=ONN/content/pool/200603/265679352.html
(visited Feb. 21, 2007).
Pennsylvania Cable Network, About PCN, at http://www.pcntv.com/about.htm (visited Feb. 15, 2007).
Pittsburgh Cable News Channel, at http://www.wpxi.com/pcnc/index.html (visited Feb. 21, 2007).
Phoenix News, at http://www.azfamily.com/ (visited Feb. 14, 2007).
Radio-Television News Director's Association & Foundation, San Diego's Newschannel 15, at
http://www.rtnda.org/resources/nonstopnews/sandiego15.html (visited Feb. 21, 2007).
Rainbow Media Holdings, LLC, About Rainbow: Company Structure, at http://www.rainbow-
media.com/about/company_struc_index.html (visited Jan. 28, 2007).
Regional News Network, at http://www.rnntv.com/NewsChooser/pages/multi_column/demo.cfm (visited Feb. 15,
2007).
Rhode Island News Channel, at http://www.abc6.com/ (visited Feb. 15, 2007).
R News, at http://www.rnews.com/ (visited Mar. 1, 2007).
RTNDA, The Arizona News Channel, at http://www.rtnda.org/resources/nonstopnews/arizonanews.html (visited
Feb. 23, 2007).
RTNDA, Las Vegas One, at http://www.rtnda.org/resources/nonstopnews/lasvegasone.html (visited Feb. 23, 2007).
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San Diego News Channel 15, at http://www.10news.com/index.html (visited Feb. 21, 2007).
San Diego County Television Network, at http://www.co.san-diego.ca.us/ctn/ (visited Feb. 14, 2007).
Six News Now, at http://www.heraldtribune.com/apps/pbcs.dll/section?CATEGORY=HELP11&template=ovr3
(visited Feb. 21, 2007).
SportsNet New York, About SNY, http://www.sny.tv/about/index.jsp (visited Feb. 21 2007).
SportsTime Ohio, About SportsTime Ohio, at http://www.sportstimeohio.com/about_sto411.php (visited Feb. 21,
2007).
Sun Sports TV, at http://www.sunsportstv.com/about.jsp (visited Feb. 16, 2007).
Time Warner Cable, Local News Channels, at
http://www.timewarner.com/corp/businesses/detail/time_warner_cable/index.html (visited Feb. 21, 2007).
Time Warner Inc., Fox Cable Networks to Acquire Turner South (press release), Feb. 23, 2006.
10 News 2, About 10 News 2, at http://www.wbir.com/life/programming/local/10news2/default.aspx (visited Feb.
21, 2007).
Texas Cable News, at http://www.txcn.com/ (visited Feb. 16, 2007).
TV 33, About Us, at http://www.cable33.com/About%20Us.htm (visited Feb. 21, 2007).
24/7, at http://www.ktvb.com/247/ (visited Feb. 23, 2007).
Washington-Korean TV, About Us, at http://www.wktvusa.com/about.html (visited Feb. 21, 2007).
WOWT, at http://www.wowt.com/ (visited Feb. 21, 2007).
WWLTV, at http://www.wwltv.com/ (visited Mar. 1, 2007).
YES Network, About YES, at http://www.yesnetwork.com/about/index.jsp (visited Feb. 21, 2007).
189

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TABLE C-4

Planned Programming Services

Programming Service
Planned Launch Date, If Announced
29HD Network
2Hearts TV
Africast Television Network
Available for carriage
The America Channel
Available for carriage
America National Network
AMC's American Pop
American David
Auto Channel
Bingo TV
Black Television News Channel
Blue Highways TV
Currently carried as VOD
Boating Channel
BOB VOD South Asian TV
Currently carried as VOD
Book Shopping TV
Box TV The Boxing Network
Career Entertainment Television
Casino & Gaming Television
Channel Zero
Chiller Network
NBC-Universal
Classified Channel TV
Concert
The Crime Channel
CSN-Cable Science Network
(also known as The Science Network)
Destiny Channel
Edge TV
Election Channel
Employment Channel
Fad TV (Fashion & Design Television)
Epic Sports Channel
Eurocinema
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ExpoTV
FAD TV: Fashion and Design Television
Fangoria
Film Festival Channel
Gambling Channel
Golden Eagle Broadcasting
Was previously carried by Sky Angel
H2O Hip Hop on Demand
Currently carried as VOD
Harmony Channel
Havoc Television
Currently carried as VOD
Home Improvement Channel
The Horror Channel
ION Life
JTV (Jewish TV)
The Men's Channel
The Motorcycle Channel
Music Plus TV
Nano TV
Currently carried as VOD
No Good Television
Oasis TV
Currently carried as VOD
Orb TV
Playgirl TV
Currently carried as VOD
Puppy Channel
Qubo
Real Estate Channel
The Real Hip Hop Network
S Arts [Sovereign Media]
Available for carriage
S Caribbean Net
Available for carriage
S Comedy
Available for carriage
191

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S Glory
Available for carriage
S Music
Available for carriage
S Sports
Available for carriage
S Worldcast
Available for carriage
Senior Citizens Television Network
Available for carriage
Shalom TV
Available for carriage
Short TV
Available on mobile phones
Southern Entertainment Television (SET 1)
Available for carriage
SET 2: Bluegrass Music
Available for carriage
SET 3: Classic Black Gospel
Available for carriage
Studio 4 Fitness
Currently carried as VOD
Studio 4 Kids
Currently carried as VOD
Studio 4 Learning
Currently carried as VOD
Tempo (An MTV Network)
Theater Channel
Tickets On Demand (The Ticket Channel)
U.S. Military Television Network
Urban Broadcasting Company (UBC-TV)
Voy Network
Currently carried as VOD
Wedding TV
Wheels TV
Currently carried as VOD
Wicked TV
Currently carried as VOD
Wine Network TV
Available for carriage
XY.TV
Your Music Network

Sources:

NCTA, Cable Networks, at http://www.ncta.com/Organizations.aspx?type=orgtyp2 (visited Feb. 12, 2007).
29HD Network, About Us, at http://www.29hdnetwork.com/about.html (visited Feb. 13, 2007).
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2 Hearts Entertainment, 2 HeartsTV, at http://www.2heartstv.com/ (visited Feb. 13, 2007).
Africast Global Media Inc., Africast Global Africa Network, About Africast, at
http://www.africast.com/africast/aboutus.html (visited Feb. 13, 2007).
The America Channel, FAQ, at http://www.americachannel.us/faq.php (visited Feb. 13, 2007); Channel Overview,
at http://www.americachannel.us/overview.php (visited Feb. 13, 2007).
Sentinel-America Corporation, America National Network, at http://www.sentinel-america.com/ANN-Home-
Page.htm (visited Feb. 13, 2007).
AMC's American Pop Network, http://www.ampop.com/page?CID=31 (visited Apr. 5, 2007).
American David Television Network, at http://www.americandavid.com/ (visited Feb. 13, 2007).
The Auto Channel, at http://www.theautochannel.com/ (visited Feb. 14, 2007).
Black Television News Channel, at http://www.btnc.tv/ (visited Feb. 14, 2007).
BlueHighwaysTV, About Us, at http://www.bluehighwaystv.com/pgabout.cfm
(visited Feb. 14, 2007).
The Boating Channel, About Us, at http://www.boatingchannel.com/cgi-bin/start.cgi/articles/about_tbc.html (visited
Feb. 14, 2007).
BOBVOD, at http://www.bodvod.com/home.do (visited Feb. 14, 2007).
Book Shopping TV, at http://www.bookshoppingtv.com/ (visited Apr. 5, 2007).
BOX TV The Boxing Network, at http://www.boxtv.org (visited Apr. 6, 2007).
Career Entertainment Television, About CETV, at http://www.ce.tv/article.php?story=20040702201312200 (visited
Feb. 14, 2007).
Casino & Gaming Television, at http://www.cgtv.com/ (visited Feb. 14, 2007).
Channel Zero.com, at http://www.tvchannelzero.com/ (visited Feb. 14, 2007).
(visited Feb. 14, 2007).
NBC-Universal, Chiller Network, at http://www.chillernetwork.com/ (visited Apr. 9, 2007).
The Classified Channel, About Us, at http://www.classifiedchannel.com/index.php?a=28&b=142 (visited Apr. 5,
2007).
The Concert Network.com, at http://www.theconcertnetwork.com/ (visited Feb. 14, 2007).
The Science Network, About Us, at http://www.csntv.org/about/ (visited Apr. 6, 2007).
Destiny Channel, About, at http://www.destinychannel.com/about.htm (visited Feb. 14, 2007).
Edge TV, About Us, http://www.theedgetv.com/ (visited Feb. 14, 2007).
The Election Channel, at http://www.electionchannel.com/ (visited Apr. 6, 2007).
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The Employment Channel, About Us, at http://www.employ.com/aboutUs/ (visited Feb. 14, 2007).
Epic Sports Channel, at http://www.epicsportschannel.com/index2.html (visited Feb. 14, 2007).
Eurocinema, About, at http://www.eurocinema.com/about.php (visited Feb. 15, 2007).
ExpoTV, About Expo, at http://www.expotv.com/about_expo/background/ (visited Feb. 15, 2007).
Fangoria, at http://www.fangoria.tv/ (visited Feb. 15, 2007).
Film Festival Channel, at http://www.filmfestivalchannel.com/ (visited Feb. 15, 2007).
The Gambling Channel, at http://bfcgroup.com/helluvatough/gambling_channel.htm (visited Apr. 6, 2007).
Golden Eagle Broadcasting, About Us, at http://www.goldeneagle.tv/about.html (visited Feb. 15, 2007).
H2O Hip Hop on Demand, at http://www.h2opresents.com/ (visited Apr. 6, 2007).
Harmony Channel, at http://harmonychannel.com/about-the-harmony-channel.html (visited Feb. 15, 2007).
Havoc Televison, About Havoc, at http://www.havoctv.com/page.asp?id=11757 (visited Feb. 15, 2007).
Home Improvement Channel, at http://www.homeimprovementchannel.com/ (visited Feb. 15, 2007).
Horror Channel, About Us, at
http://www.horrorchannel.com/index.php?name=Sections&req=viewarticle&artid=3&page=1
(visited Feb. 15, 2007).
Ion Life, Ion Media Launches 24-hour Broadcast Digitnet Branded ION Life (press release), Feb. 21, 2007, at
http://www.ionmedia.tv/press/press.cfm?id=30.
JTV, at http://www.jtelevision.com/ (visited Apr. 6, 2007).
The Media Group, The Networks Group, at http://www.themediagroup.com/ (visited Feb. 17, 2007)
Men's Channel TV, at http://www.menschanneltv.com/ (visited Feb. 17, 2007).
The Motorcycle Channel, at http://www.motorcyclechannel.tv/5.html (visited Feb. 15, 2007).
(visited Feb. 15, 2007).
Music Plus TV, at http://musicplustv.com/ (visited Feb. 15, 2007).
Nano Network, Inc., About Nano, at http://watchnano.com/aboutnano/index.htm (visited Feb. 15, 2007).
No Good Television, http://www.ngtv.com/ (visited Apr. 9, 2007).
Oasis TV, About Us, at http://www.oasistv.com/about/index.html (visited Feb. 15, 2007).
Orb TV, at http://www.orb.com/en/about (visited Apr. 9, 2007).
Playgirl TV, at http://www.tdmllc.com/Playgirl_Overview.pdf (visited Feb. 15, 2007).
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The Puppy Channel, About The Puppy Channel, at http://www.thepuppychannel.com/tvframe.htm (visited Feb. 15,
2007).
Qubo, About Qubo, at http://www.qubo.com/about.asp (visited Feb. 15, 2007).
Real Estate Channel, About Us, at http://www.realestatechannel.com/about.html (visited Feb. 15, 2007).
The Real Hip Hop Network, About Us, at http://www.rhn.tv/ (visited Feb 15. 2007); http://www.ssm-media.com/
(visited Feb. 15, 2007).
S Networks, at http://www.snetworks.tv/home.html (visited Feb. 15, 2007).
SCNTV, About, at http://www.scntv.com/ (visited Feb. 14, 2007).
ShalomTV, About, at http://www.shalomtv.com/ (visited Feb. 14, 2007).
Short TV, Company Info, at http://www.shorttv.com/companyinfo.htm (visited Feb. 14, 2007).
The SET, Channels, at http://www.theset.net/channels.html (visited Feb. 14, 2007); About,
http://www.theset.net/about.html (visited Feb. 14, 2007).
Studio 4 Networks, Channels, at http://www.studio4networks.com/ (visited Feb. 16, 2007).
Tempo, About Us, at http://www.gottempo.com/about_us.php (visited Feb. 17, 2007).
The Gaming Channel, About Us, at http://www.thegamingchannel.tv/ (visited Apr. 9, 2007).
The Theatre Channel, at http://www.theatrechannel.com/ (visited Apr. 9, 2007).
Ticket Channel TV, at http://www.theticketchannel.tv/ (visited Feb. 16, 2007).
US Military TV Network, at http://www.usmilitary.tv/1.html (visited Feb. 16, 2007).
UBC, Mission, at http://www.urbanbroadcasting.tv/mission.html (visited Feb. 16, 2007).
Voy Network, at http://www.voy.tv/what_is_voy/index.html (visited Feb. 16, 2007).
Wedding TV, at http://www.tvwed.com (visited Feb. 16, 2007).
Wheels TV, at http://www.wheelstv.net/about/ (visited Feb. 16, 2007).
Wicked On Demand, at http://www.tdmllc.com/wicked/about.html (visited Feb. 16, 2007).
Wine Network, Inc., at http://www.winetv.tv/ (visited Feb. 16, 2007).
XYTV, Watch, at http://www.xy.tv/watch.asp?mode=page (visited Feb. 16, 2007).
Your Music, at http://www.yourmusicnetwork.net/ (visited Feb. 16, 2007).
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TABLE C-5

Top 20 Programming Services by Subscribership

Programming

Number of

Ownership Interest in Network

Rank

Network

Subscribers (Mil.)(1)

1
Discovery Channel
91.2
Cox, Advance/Newhouse,
Discovery Holding Co.
2
ESPN
91.0
Disney, Hearst
3
CNN
90.9
Time Warner
4
USA Network
90.8
NBC-Universal
4
TNT
90.8
Time Warner
6
C-SPAN
90.7
National Cable Satellite Corporation (2)
7
Lifetime Television
90.6
Disney, Hearst
8
ESPN2
90.5
Disney, Hearst
8
The Weather Channel
90.5
Landmark
8
Nickelodeon
90.5
Viacom
8
TBS
90.5
Time Warner
12
Spike TV
90.4
Viacom
12
A&E
90.4
Disney, Hearst, NBC-Universal
14
QVC
90.3
Liberty Media
14
TLC
90.3
Cox, Advance Newhouse,
Discovery Holding Company
16
Headline News
90.1
Time Warner
17
MTV
89.9
Viacom
17
Home & Garden TV
89.9
EW Scripps
17
ABC Family Channel
89.8
Disney
20
History Channel
89.7
Disney, Hearst, NBC-Universal
20
Toon Disney
89.7
Disney
20
VH1
89.7
Viacom

Notes:

(1) In addition to cable systems, other MVPDs such as DBS (direct broadcast satellite) systems, wireless cable (or BRS) 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 MVPD services.
(2) C-SPAN is a private, non-profit company, created in 1979 by the cable television industry to provide public access to the
political process. C-SPAN receives no government funding; operations are funded by fees paid by cable and satellite affiliates
who carry C-SPAN programming. The C-SPAN Board of Directors is comprised of executives from large and small cable
television operating companies. While the board establishes network policy and provides financial oversight, it is not involved in
C-SPAN's editorial decision-making. See C-SPAN, About Us: Corporate Information, at http://www.c-
span.org/about/index.asp?code=About (visited Feb. 20, 2007).

Source:

Kagan Research, LLC, Network Census: June 30, Cable Program Investor, July 28, 2006, at 11.
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TABLE C-6

Top 20 Programming Services by Prime Time Rating

Rank
Programming Service
Ownership Interest in Network
1
USA Network
NBC-Universal
2
Disney
Disney
3
TNT
Time Warner
4
Nickelodeon
Viacom
5
Adult Swim(1)
Time Warner
6
HBO(2)
Time Warner
7
Lifetime
Disney, Hearst
8
TBS
Time Warner
9
Nick at Nite(1)
Viacom
10
American Movie Classics
Cablevision
11
Cartoon Network
Time Warner
12
Fox News Channel
News Corp.
13
ESPN
Disney, Hearst
14
Spike TV
Viacom
15
FX
News Corp.
16
Discovery Channel
Cox, Advance Newhouse,
Discovery Holding Company
17
Comedy Central
Viacom
18
HGTV
EW Scripps
19
Hallmark Channel
Liberty Media
20
MTV
Viacom

Notes:

(1) For ratings purposes, Nielsen separates the 24-hour network that is comprised of Nickelodeon and Nick at Nite, as
well as the 24-hour network that is comprised of Cartoon Network and Adult Swim. We count each 24-hour
network once, but follow Nielsen's method for this table.
(2) In the past this chart has included basic cable networks only. This year, we are using data directly from Nielsen
that includes premium networks when calculating ratings by ranking.

Source:


Nielsen Media Research, Top 50 Cable Networks Primetime, June 2006.
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STATEMENT OF

CHAIRMAN KEVIN J. MARTIN

Re:
Annual Assessment of the Status of Competition in the Market for Delivery of Video
Programming
, MB Docket No. 06-189
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 continuing to see wired competitors to cable operators enter
the market. The Commission has been working consistently to facilitate this type of competitive entry
into the video market. Such competition is not only good for consumers of video services (as it is the
only form of competition that checks cable prices), but it promotes the deployment of the broadband
networks over which the video services are provided. It is my hope that the policies that we have recently
put in place such as prohibiting exclusive contracts between cable operators and owners of multiple
dwelling units will only serve to encourage additional competitive entry. We intend to closely monitor
the progress of new entrants and address any issues that we find impede such progress.
As we have in our last reports, this year's Report looks at the evidence regarding whether we
have met the statutory test in section 612(g) of the Act. Specifically, the Commission is to determine
when (1) "at such time as cable systems with 36 or more activated channels are available to 70 percent of
households within the United States" and (2) "are subscribed to by 70 percent of the households to which
such systems are available. Several commenters, including CFA, MAP, and AT&T, argued that the test
has been met. Others, primarily the cable industry, argue it has not been met. For the first time this year,
however, the Commission received data from one of the sources the industry itself relies on, Warren
Communications News, that results in finding that the test has been met. Specifically, its data shows that
71.4% of households passed by cable systems offering 36 or more channels subscribe to these systems.
The Commission has used Warren's data for its 70/70 calculations since we started reporting on
these benchmarks in the Tenth Annual Report. In both the Tenth and the Eleventh Annual Reports, the
Commission reported that data from Warren showed that the second prong of the 70/70 test was 68.9
percent; in the Twelfth Annual Report, the Warren data showed that the second prong was 67.8 percent.
We rely on Warren data because it provides information on subscribers and homes passed for cable
systems with 36 or more channels as specified in the statute. In addition, Warren collects its data directly
from cable television operators or individual cable systems to create a large database of cable industry
information. Warren states that it is the only research entity that directly surveys every cable system at
least once every year, providing the most complete source of cable data. In fact, the cable systems
represented in Warren's database serve 96% of all subscribers nationwide.
Certain parties have urged us to look at Kagan or Nielsen, and we appropriately include those
numbers in our Report today. However, these companies, unlike Warren, do not report data for cable
systems with 36 or more channels. Thus, neither Kagan nor Nielsen provide the precise data we need to
perform the calculation specified by the statute. Moreover, the Kagan estimate regarding the number of
households passed by cable, 113,600,000, is greater than the U.S. Census Bureau estimate of 109,450,000
total households. As a result, while the Commission has cited Kagan data in previous Video Competition
reports, it has always been clear that it should be used merely as a trend indicator, rather than as a precise
estimate for any particular year.
Our Report today also references data from the Commission's price survey data and Form 325, as
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we have in years past. However, it is also important to understand that these two sources represent
extremely small samples and therefore cannot be relied upon for this purpose. The Commission currently
sends questionnaires to only 781 cable systems for its Price Survey (representing only 10.2% of the total
7,634 systems in our database) and collects Form 325 data from approximately 1,100 cable systems
(representing only 14.4% of the total 7,634 systems in our database). In contrast, Warren sends
questionnaires to all 7,090 cable systems, and states that it has data representing more than 96% of all
cable subscribers. Indeed, as NCTA itself argued to the Commission in years past, "Warren's TV
Factbook and online database, not the Commission's Form 325 data, is relied upon by businesses and
researchers for system-specific information about the cable industry."979
While I would have been comfortable relying on the data submitted by Warren, I am pleased that
we have determined to avoid the debate in the future about which sources of data are the most accurate
and will now receive data from the companies themselves. This will have the added benefit of including
the data from sources that even Warren doesn't include: subscribers to incumbent telephone companies
that are providing service as a cable operator. For example, had Warren included data from Verizon, the
second prong of the 70/70 test would have been 72%.


979 NCTA Comments at 7, CS Docket 98-61 (filed June 30, 1998).
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STATEMENT OF

COMMISSIONER MICHAEL J. COPPS

Re:
Annual Assessment of the Status of Competition in the Market for Delivery of Video
Programming
, MB Docket No. 06-189
Ever since I arrived at the Commission six years ago, I have been deeply concerned about
increasing concentration in the cable industry. I simply can't see how American consumers benefit when
a handful of vertically-integrated media giants have so much control over so much content. This industry
structure provides precious little space for the creative genius of independent content producers and
artists. And it has led to prices that continue to rise far faster than inflation.
For years, I have also been troubled by the approach of the FCC's annual video competition
report, which I think has unreasonably minimized the harm that increased consolidation has visited upon
the American consumer. In particular, I have expressed serious doubts about our reliance on industry-
supplied video customer data. Indeed, one of my top priorities here at the Commission has been to
improve our data-gathering for all the industries we regulate and to ensure that all our decisions are
grounded in the best available data and analysis.
Now, we have new evidence placed in the record by public interest advocates and at least one
industry source that casts real doubt on the validity of existing industry-supplied customer counts. This
new evidence indicates that the cable industry may very well have met the 70/70 threshold established by
Congress. In light of these facts, I think that the most responsible course of action at this point is for the
Commission to act swiftly to compel the industry to open up its books to put this question to rest once and
for all.
I want to emphasize that word "swiftly." Today's decision must not be an open-ended invitation
to delay. Getting data in to the Commission within 60 days doesn't always translate into getting an
answer out. Accordingly, I would have preferred that the Commission commit in today's item to
reaching a 70/70 determination within 45 days of receiving the industry's data.
The lack of programming diversity and competition in the American video services market is a
serious problem and must not be left to languish. I sincerely hope that my colleagues and I can move past
debates about data and on to the far more important issue of how to ensure a more diverse, democratic,
and vigorously competitive American media environment.
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STATEMENT OF

COMMISSIONER JONATHAN S. ADELSTEIN

Re:
Annual Assessment of the Status of Competition in the Market for Delivery of Video
Programming
, MB Docket No. 06-189
I support the Commission's Thirteenth Annual Report on the state of competition in the video
programming marketplace. Every year, the purpose of this report is to provide Congress and the
American people with the Commission's best and honest assessment of competition in the evolving video
marketplace. I support this year's report, but I write separately to address the important issue of whether
the 70/70 benchmark in section 612(g) of the Communication Act has been reached.
The Commission's determination regarding the 70/70 benchmark has critical policy implications
but, at the same time, is a question of fact. I would have no hesitation to invoke our authority if the
evidence clearly justified that the standard had been breached. Many positive initiatives to promote
diversity, such as a national baseline PEG requirement, could result. Yet, it's our job to follow the facts,
to find the truth wherever it may lead. Congress did not ask us to impose the outcome we might prefer
solely based on policy goals, no matter how admirable they may be. Congress asked for an honest
assessment. So, I am pleased that the revised version of this Report seeks further comment on this
important question and compels all cable providers to provide their data under penalty of law within 60
days.
In order to base our decision on the facts, Commissioners need access to all the facts.
Unfortunately, the most important data we have the FCC's own numbers were suppressed from the
Commissioners until the last minute. I did not learn until after 7:00 pm last night that the FCC's own
2006 survey found that only 54 percent of homes passed subscribe to cable. Similarly, the FCC's cable
price survey came in at 55.2 percent penetration.
Based on these newly unearthed facts and the conflicting evidence on the record, I am unable to
support a finding that 70 percent of homes passed subscribe to cable at this time. The data is
inconclusive. If we were truly searching for the truth, it is inconceivable that our own data would be cast
aside without mention. It was just last year that I called for more rigorous data collection by the FCC. To
find that this years' FCC data was suppressed casts a long shadow over this endeavor. They tried to hide
the ball from their own team.
In every previous year, the Video Competition Report included data from the FCC's "Annual
Report of Cable Television Systems," which solicits from the operators the very data needed to determine
if 70/70 is met, including subscribership, penetration rates and number of channels available. Yet, it
wasn't until yesterday that it became apparent that the data from this year's survey was mysteriously
redacted from the draft report we were reviewing.
The draft attempted to rely solely on data from Warren Communications, while disregarding a
multitude of other sources included in previous reports. This was especially troubling with respect to our
own data from our Annual Report's FCC Form 325. In fact, in the "Supporting Statement" to FCC Form
325, the Commission justifies its request for this information by stating explicitly that it is a more
appropriate tool to rely upon than Warren data, acknowledging:
"Basic information concerning cable television system operation is available from commercial
sources such as A.C. Nielson and Warren Publishing; however, because this information is not subject to
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the accuracy and specificity requirements applicable to a governmental reporting system, the Commission
continues to need the information that FCC Form 325 provides."
While there are always issues with the figures reported to the FCC, we certainly should not ignore
it. Cable operators who report to us on Form 325 must certify that their data is true.980 Cable systems that
comprise over 50 million subscribers report to us, or over 75 percent of the total number of subscribers
who report subscriber data to Warren or Nielsen. This is a large sample by any measure.
Moreover, the Commission's attempt to rely solely on data from Warren Communications, while
disregarding a multitude of other sources, is troubling. A thorough and transparent analysis of the
available data both from the FCC and independent sources on cable penetration rates was sorely
missing from the initial draft of this item. The Commission has in its possession at least four sources of
cable penetration rates that were cited in previous reports: Warren, Nielsen, Kagan and FCC Form 325.
In blatant contrast to previous reports, no source but Warren was cited in the initial draft, and it took a
majority vote to fix that deficiency. While not determinative, it is noteworthy that all of these sources,
except Warren, concluded that current cable penetration rates are less than 70 percent. We also must give
careful consideration to new data, added at the last minute to the report, supplied by leading consumer
advocates finding that penetration rates exceed 70 percent. I appreciate the efforts of these advocates to
advance our understanding of the marketplace.
Our job of ascertaining the facts was made more difficult because the draft cherry-picked only the
data that justified the outcome desired, while suppressing other data. I believe that it is our obligation to
ensure that our decisions are objective and based on the facts, not outcome-driven for political
expediency. Much like our media ownership studies, which are outcome-driven to support the media
consolidation agenda, there was an attempt to cook the books on this report.
Just like what occurred in the media ownership proceeding, where studies were suppressed, and
others were structured and conducted with the goal of facilitating consolidation, a lack of transparency
will undermine the Commission's credibility and public confidence in the work we do. I fully support
the effort to quickly ask all cable operators for their actual numbers. We should have done that already.
Of course, we already have data from the vast bulk of cable operators, but if more data would shed light
on this, I think we should pursue it aggressively. If the data comes back that the 70/70 test has been met,
I would not hesitate to invoke our authority to take positive measures to enhance diversity.
One of the reasons for the embarrassing delay of today's meeting, and the general disarray in
working through these issues, was the effort to push through such an aggressive number of controversial
items today without sufficient notice to all Commissioners. Short-circuiting Commission procedures
short-changes the American public in the end. This is particularly true given that nothing we are
considering today requires immediate action. There are numerous items that would have benefited
greatly from more deliberation and care.


980
The operator must certify: "I HAVE EXAMINED THIS REPORT, AND THAT ALL STATEMENTS OF
FACT CONTAINED THEREIN ARE TRUE, COMPLETE AND CORRECT TO THE BEST OF MY
KNOWLEDGE, INFORMATION AND BELIEF, AND ARE MADE IN GOOD FAITH." False statement can
result in imprisonment for up to 5 years.
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This is set against a backdrop of unwinding processes here at the Commission. For example, the
lack of notice to Commissioners about open meeting dates and items to be considered at these meetings
hinders our ability to consider the substantive proposals and to solicit and reflect on public input.
Traditionally, going back many years, items are white copied, or identified to Commissioners three weeks
in advance so we can prepare, hold proper meetings with affected parties and deliberate among ourselves.
Not only were we not white copied for this meeting the meeting itself was called with less than three
weeks notice. The two and a half weeks notice was even far less time than even that, because it included
both the Veterans Day and Thanksgiving holidays. It was also truncated by the day we spent on travel for
a field hearing in Seattle, which was called with inadequate notice to Commissioners and the public. The
problems with the items we consider today were further compounded because massive changes in some
items were attempted to be inserted at the last minute.
It may be said that we have a host of issues pending before the Commission and that there is a
need to drive our work forward. The Chairman certainly has the right to set the agenda and push us. But
given that very volume, and the prodigious work which nobody denies we do given our vast jurisdiction,
we need to know in advance which items to focus upon during the short window before open meetings.
This is especially true when items are large, complex, and controversial.
Some of the policy goals today are admirable, and I share many of the concerns, for example
about cable's market power, that prompted them. But why the rush? Why the effort to steamroll the
Commission and the public in order to wrap up a number of items that aren't even time sensitive?
Everything could have been done under regular order, with proper notice or on circulation. The only
plausible explanation appears to be an obsessive drive to complete the media consolidation agenda by the
end of the year, come hell or high water.
But the cover on diversity and localism is a false front. The agenda that was pushed for today
was just a fig leaf, it does not provide real answers to the very real problems that permeate the media
landscape. And very troubling is the attempt to punish major American companies in the process of
dismantling the newspaper-broadcast cross ownership ban. Tribune, long a respected and influential
institution of American journalism, has been used as a human shield to provide cover for broader rule
changes, even at risk to the life of the hostage itself. Some may ask whether the entire cable industry is a
foil today to show we are tough on some big media companies, even as we are forgiving to others.
Were these issues not so important, it might be tempting to admire the improvisational
willingness on display here -- using every tool available, abandoning precedent and doing whatever is
expedient. But that doesn't mean that there is no alternative.
I came here to be part of the expert agency -- to follow the facts wherever they lead. We cannot
cook the books to pursue a political agenda without dismantling our very institution. We simply must act
like the expert agency Congress intended, and not squander our precious legacy.
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STATEMENT OF

COMMISSIONER DEBORAH TAYLOR TATE

APPROVING IN PART, DISSENTING IN PART

*
Re:
Annual Assessment of the Status of Competition in the Market for Delivery of Video
Programming
, MB Docket No. 06-189
Since arriving at the FCC, I have been pleased to support policies that have facilitated commercial
negotiations, provided incentives for investment, and encouraged competition; all of which hopefully
results in real world benefits for consumers, whether through quality, choice, or new advances in
technology.
The Annual Video Competition Report is one of the most important that this agency produces for
Congress. It is the goal of this Commission to encourage competition, especially in the video
marketplace. We have taken a number of steps to encourage new entrants, and consumers now have more
options for video than ever before.
Our deregulatory decisions in the U.S. communications industry have resulted in significant investment--
likely more than $70 billion by the telecommunications industry in 2007 alone. We have seen
unparalleled investment in new fiber deployment and new entrants offering video and broadband.
Consumers are reaping the benefits with triple and even quadruple plays.
Competition can benefit consumers in terms of lower prices, a broader panoply of products, improved
fidelity and quality, and even totally new tools to enhance the consumer experience. It also leads to
investment, which advances both technology and innovation. With this in mind, the findings of the
Annual Video Competition Report serve as a foundation for much of our policymaking. Therefore, the
accuracy and transparency of the information is of paramount import.
Reasonable minds may differ in drawing conclusions from data. However, that data must be available for
review and able to withstand scrutiny. Data should be complete and viable. That is why it is crucial that
we set in motion a process for future competition reports as soon as possible, and that we ensure
reliability and completeness prior to making an analysis of the underlying data, and then drawing a final
conclusion.
This year's Report focuses heavily on the findings of one source, rather than the numerous sources our
reports have included in the past. I believe we must consider a broader universe of information sources
when we are considering so broad a change in policy. One option would be to supplement our analysis by
requesting that Form 325 Survey information be provided by all cable operators. Just as our sister
agency, the Securities and Exchange Commission, relies upon information it receives from cable
companies, we should also be able to rely on the trustworthiness of the industry's own information.
Finally, there should be no reason that this Commission cannot aptly analyze all relevant data, from all
appropriate sources, as we do for other competition reports.


* This statement was provided while Commissioner Tate was in office.
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I am now able to approve this item concluding that the 70/70 test has not been met for the 2006 Report.
However, I do not agree that we should postpone its delivery to Congress or to the public. I believe the
information contained in the current draft supports the Report's conclusion that this data does not
demonstrate with certainty that the second prong of the 70/70 test has been met. Therefore, I would like
to see us move expeditiously to send this already-delayed Report to Congress now.
I look forward to working with the Chairman and my colleagues to resolve the questions that have been
raised regarding the underlying data in this Report in order to provide our 2007 Report in a more timely,
thorough manner. We cannot debate philosophy and substance until we all have access to full and
complete information upon which to base our respective positions. And I hope that we can work together
to finalize our 2007 Report to Congress expeditiously.
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Federal Communications Commission

FCC 07-206

STATEMENT OF

COMMISSIONER ROBERT M. MCDOWELL

APPROVING IN PART, DISSENTING IN PART

Re:
Annual Assessment of the Status of Competition in the Market for Delivery of Video
Programming
, MB Docket No. 06-189
Today's Report has taken an interesting journey in the past few weeks. For starters, it is about
nine months overdue to Congress. Then it appeared that the Commission was going to ignore a mountain
of evidence from independent analysts and prior Commission findings to favor a solitary study.
According to press accounts, sometime in October, this lonely study was solicited over the phone from
Warren Communications by a FCC staffer. A day or two later, the draft Report was circulated and
arrived at a conclusion that was a radical departure for the FCC: that the cable industry had surged past
the 70/70 threshold outlined in Section 612(g) of the Act in just one short year.
To reach this previously unattainable figure, the Commission was prepared to omit, or as some
have said suppress, the FCC's own data as gathered from cable operators on Form 325 in favor of a study
that was inserted into the record just last month without the benefit of public notice, scrutiny or comment.
The author of this suddenly-dispositive analysis says that it should not be used for the 70/70 test due to
large gaps in its evidentiary foundation. But the Commission was prepared to do so anyway because this
flawed anomaly was the only fig leaf that could be found in an attempt to trigger an avalanche of
unnecessary regulation to cascade down upon an otherwise competitive industry.
Let's compare some recent FCC reports to put this statistical prestidigitation in context. In the
past, the FCC has used a variety of data sources, including our own numbers, to estimate cable
subscribership. In a transparent fashion that allowed for ample public comment, our Video Competition
Report historically has found that subscribership hovers at around 60 percent, falling well short of the
second prong of the 70/70 test. The Commission arrived at this conclusion by using and analyzing
information from several different sources and seeking public comment on them. For instance, in our
Twelfth Annual Report, covering 2005:

Using data from the FCC's 2005 Cable Price Survey, our staff estimated that 56.3
percent of houses passed subscribed to cable.

Using data from the FCC's Form 325, our staff estimated 54 percent.

Relying upon Nielsen and Kagan data, we cited 63.3 and 53.1 percent, respectively.

The Warren Communications 2005 numbers determined that 67.8 percent of homes
passed subscribed to cable.
Moreover, in the Eleventh Annual Report, which examined 2004 data, we similarly cited Kagan, Nielsen,
Warren and our own Cable Price Survey sample data and Form 325 sample data in finding that the second
prong of the 70/70 test had not been met.
Similarly, numerous independent analyses and studies have corroborated the conclusion that
cable subscribership is well below the 70 percent threshold. In fact, incumbent cable operators are losing
video subscribers. I do note that the Media Access Project and AT&T filed opinions late in this process
claiming penetration above 70 percent, and those filings should be given appropriate consideration. But,
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even so, the great weight of the evidence strongly indicates otherwise for 2006 and all years prior.
Interestingly, this year, in a disturbing development, the FCC's most recent Form 325 data was
not made available to commissioners for review until 7:09 p.m. last night. It was only made available
once it was obvious that a majority of the Commission would not support the initial draft of this Report
because it was such a dramatic departure based on mysterious statistical manipulation. But why was this
data omitted or suppressed to begin with? Was it because it concluded cable penetration was only at 54
percent, just like last year? Similarly, only once it became public that this year's Report was generating
controversy, third parties, such as AT&T and MAP, filed fresh ex parte opinions and analyses. I value
their participation and I'd like to see the Commission encourage such debate during a brightly lit and
transparent public comment period before we arrive at our conclusions. Hopefully, today's Report,
coupled with our Notice of Inquiry, will allow us to move forward in our quest for the most accurate data
we can find.
In the meantime, all indicators point to the conclusion that the video marketplace is more
competitive now than ever through the rise of cable over-builders, traditional phone companies offering
video, two vibrant DBS providers, free content on the Internet, and, once the digital TV transition is
complete, a multitude of free HD and multicast video streams from broadcasters. This Report
underscores that cable subscribership has declined over the past year, while the two satellite companies,
DirecTV and EchoStar, gained 1.8 million customers and are now the second and third largest MVPDs.
America's telecommunications companies are now competing vigorously for video customers, with
Verizon alone serving nearly one million video subscribers.
Today, virtually every American enjoys multiple options for the delivery of video programming
and more choices in content and services than ever before. I look forward to this trend continuing so that
consumers can enjoy even more of the benefits of competition. In fact, one has to wonder whether
Section 612(g) is relevant anymore. The provision was enacted in 1984 at a time when only one
incumbent cable provider served a local franchise. The legislative history shows us that Congress was
concerned that such companies could dominate the video market as the only game in town. But, as the
result of responsible de-regulatory policies that have encouraged investment and new entry, the average
consumer has a choice of at least three video providers with over-builders and phone companies
increasing that menu of options for millions more consumers. When competition flourishes, the need for
regulation diminishes. The Report we adopt today underscores this fundamental point.
Lastly, I am puzzled as to why the majority now want to seek both 2006 and 2007 data in the
context of this Report covering only 2006. As always, I fully support seeking any relevant data, provided
we give adequate opportunity for public comment. The more data, analysis and public comment, the
better. However, we already have the 2006 data from our Form 325 with the exception that smaller
cable operators do not file that form. But it is precisely the smaller operators that do not keep data in the
form the Commission is now requesting from them. Smaller operators especially do not have the data
from eighteen months ago that the majority wants. So the Commission is requesting data that simply
cannot be provided in many circumstances. Will this resulting "gap" in data later be used as a basis to
concoct projections that the 70/70 threshold has been met? Stay tuned.
The second most puzzling request is requiring 2007 data to be submitted into a proceeding
pertaining to the 2006 video market. Shouldn't 2007 data be included in our 2007 report proceeding?
What relevance does 2007 data have to the 2006 video market? Now that all of the 2006 data has finally
been brought to light, as of twenty-seven hours ago, we should close the book on 2006. After all,
Congress is waiting. At the end of the day, the great weight of the 2006 evidence makes clear that cable
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penetration falls far short of the 70/70 threshold. Because I find this last-minute maneuver to be illogical,
and dubious, I dissent from this portion of today's Report.
I support all other portions of this Report. I thank the team in the Media Bureau for their hard
work.
208

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