ANNUAL ASSESSMENT OF THE STATUS OF COMPETITION IN THE MARKET FOR THE DELIVERY OF VIDEO PROGRAMMING
Federal Communications Commission
Federal Communications Commission
Washington, D.C. 20554In the Matter of
Annual Assessment of the Status of Competition in
MB Docket No. 07-269
the Market for the Delivery of Video Programming
FURTHER NOTICE OF INQUIRY
Adopted: April 20, 2011
Released: April 21, 2011
Comment Date: June 8, 2011
Reply Comment Date: July 8, 2011
TABLE OF CONTENTSHeading
INTRODUCTION .................................................................................................................................. 1
A. Scope of the Report.......................................................................................................................... 1
B. Analytic Framework ........................................................................................................................ 5
C. Data .................................................................................................................................................. 6
II. PROVIDERS OF DELIVERED VIDEO PROGRAMMING................................................................ 9
A. Multichannel Video Programming Distributors............................................................................. 10
1. MVPD Structure...................................................................................................................... 10
2. MVPD Conduct ....................................................................................................................... 23
3. MVPD Performance ................................................................................................................ 31
B. Broadcast Television Stations........................................................................................................ 36
1. Broadcast Television Structure................................................................................................ 36
2. Broadcast Television Conduct................................................................................................. 41
3. Broadcast Television Performance.......................................................................................... 47
C. Online Video Distributors.............................................................................................................. 52
1. OVD Structure......................................................................................................................... 52
2. OVD Conduct.......................................................................................................................... 54
3. OVD Performance ................................................................................................................... 55
III. GEOGRAPHIC AVAILABILITY ....................................................................................................... 56
A. Rural Versus Urban........................................................................................................................ 56
B. Alaska and Hawaii ......................................................................................................................... 59
IV. KEY INDUSTRY INPUTS.................................................................................................................. 60
A. Video Content Creators.................................................................................................................. 60
B. Video Content Aggregators ........................................................................................................... 62
C. Consumer Premises Equipment ..................................................................................................... 64
V. CONSUMER BEHAVIOR .................................................................................................................. 68
VI. PROCEDURAL MATTERS................................................................................................................ 70
Federal Communications Commission
Scope of the Report1.
Section 19 of the Cable Television Consumer Protection and Competition Act of 1992
("1992 Cable Act") amended the Communications Act of 19341 and established regulations for the
purpose of increasing competition and diversity in multichannel video programming distribution,
increasing the availability of satellite delivered programming, and spurring the development of
communications technologies.2 To measure progress toward these goals, Congress required the
Commission to report annually on "the status of competition in the market for the delivery of video
programming." 3 This Further Notice of Inquiry ("Further Notice") solicits data, information, and
comment on the state of competition in the delivery of video programming for the Commission's
Fourteenth Report ("14th Report"). Using the information collected pursuant to this Further Notice, we
seek to enhance our analysis of competitive conditions, better understand the implications for the
American consumer, and provide a solid foundation for Commission policy making with respect to the
delivery of video programming to consumers.
In 1992, when Congress required the Commission to report annually on the status of
competition in the market for the delivery of video programming, most consumers had the limited choice
of receiving over-the-air broadcast television stations or subscribing to service from their local cable
provider.4 As the 1990s progressed, cable overbuilders and the introduction of direct broadcast satellite
("DBS") service provided additional alternatives for delivered video programming, introducing
competition into multichannel video programming distribution ("MVPD").5 Today, DBS provides video
programming to over 33 million subscribers, and cable offers video service to approximately 60 million
1 1992 Cable Act, Pub. L. No. 102-385, 106 Stat 1460, 1494 (Oct. 5, 1992) (stating that "[t]he purpose of this
section is to promote the public interest, convenience, and necessity by increasing competition and diversity in the
multichannel video programming market, to increase the availability of satellite cable programming and satellite
broadcast programming to persons in rural and other areas not currently able to receive such programming, and to
spur the development of communications technologies").
2 Video programming is defined as: "Programming provided by, or generally considered comparable to
programming provided by, a television broadcast station that is distributed and is exhibited for residential use." See
47 C.F.R. 79.1(a)(1).
3 See Communications Act of 1934, as amended 628(g), 47 U.S.C. 548(g). 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, 9 FCC Rcd 7442 (1994) ("First Report"); 11 FCC Rcd 2060 (1996)
("Second Report"); 12 FCC Rcd 4358 (1997) ("Third Report"); 13 FCC Rcd 1034 (1998) ("Fourth Report"); 13 FCC
Rcd 24284 (1998) ("Fifth Report"); 15 FCC Rcd 978 (2000) ("Sixth Report"); 16 FCC Rcd 6005 (2001) ("Seventh
Report"); 17 FCC Rcd 1244 (2002) ("Eighth Report"); 17 FCC Rcd 26901 (2002) ("Ninth Report"); 19 FCC Rcd
1606 (2004) ("Tenth Report"); 20 FCC Rcd 2755 (2005) ("11th Report"); 21 FCC Rcd 2503 (2006) ("12th Report);
and 24 FCC Rcd 542 (2007) ("13th Report").
4 In most areas, consumers had only one choice of cable provider, although cable overbuilders offered another
option in some areas. See Tenth Report, 19 FCC Rcd at 1659, 79.
5 Section 602 (13) of the Communications Act of 1934, as amended, defines a multichannel video programming
distributor ("MVPD") as a person such as, but not limited to, a cable operator, a multichannel multipoint distribution
service, a direct broadcast satellite service, or a television receive-only satellite program distributor, who makes
available for purchase, by subscribers or customers, multiple channels of video programming. MVPDs include, but
are not limited to, cable systems, direct broadcast satellite ("DBS") systems, and other entities that sell multiple
channels of video programming to consumers.
Federal Communications Commission
FCC 11-65subscribers.6 In 2005 and 2006, major telephony providers Verizon and AT&T introduced multichannel
video service, further expanding choices for consumers in some regions.7 Today, these entities provide
video programming to a total of approximately 6.5 million subscribers.8 The increased availability of
video programming over the Internet, made available by online video distributors ("OVDs"), offers the
potential to expand consumer choice further.9 With the entry of each new delivery technology, some
consumers have been provided additional choices for the delivery of video programming, and we
therefore seek to collect data that will shed light on topics such as the deployment of new technologies
and services, innovation, and investment.
Pursuant to its statutory mandate, in 2009 the Commission solicited 2007, 2008, and 2009
data, information, and comment for the 14th Report similar to that which had been requested for earlier
years.10 However, since that time, the Commission has initiated a comprehensive review of the way in
6 See DIRECTV Inc., DIRECTV Fourth Quarter Results Complete Another Record Setting Year for the Company
(press release), Feb. 23, 2011, where DIRECTV reports 19,223,000 subscribers at the end of Dec. 2010; DISH
Network Corp., DISH Network Reports Fourth Quarter and Year End 2010 Financial Results (press release), Feb.
24, 2011, where DISH Network reports 14,133,000 subscribers at the end of Dec. 2010; and SNL Interactive,
Industry Analysis, Media and Communications, U.S. Cable Subscriber Highlights, Basic Subscribers, Sept. 2010
(visited Feb. 25, 2011), where SNL reports 60,350,247 basic cable subscribers in Sept. 2010.
7 See Verizon Communications Inc., Verizon FiOS TV is Here! (press release), Sept. 22, 2005, where Verizon
unveiled its FiOS TV service in Keller, TX, its first market; and AT&T Inc., AT&T Delivers Strong Second-Quarter
Earnings Growth Driven by Merger Integration Progress, Solid Wireline Execution, Advances at Cingular Wireless
(press release) July 25, 2006, where AT&T announced expansion of its U-verse video service in San Antonio to
additional neighborhoods and plans to expand U-verse video service to additional markets late in 2006. We note
that in addition to Verizon FiOS and AT&T U-verse, some rural telephone companies (e.g., Oneida Telephone
Exchange in Illinois) also offer video services using their broadband infrastructure.
8 See Verizon Communications Inc., Verizon Reports Strong 4Q and Year-End 2010 Results, Highlighted by Cash
Flow, Wireless and FiOS Growth (press release), Jan. 25, 2011, where Verizon reports 3.5 million FiOS TV
customers; and AT&T Inc., AT&T Reports Record 2.8 Million Wireless Adds, Strong U-verse Sales, Continued
Revenue Gains in Fourth Quarter (press release), Jan. 27, 2011, where AT& T reports nearly 3 million U-verse
9 An "OVD" is any entity that provides video programming by means of the Internet or other Internet Protocol (IP)-
based transmission path provided by a person or entity other than the OVD. An OVD does not include an MVPD
inside its MVPD footprint or an MVPD to the extent it is offering online video programming as a component of an
MVPD subscription to customers whose homes are inside its MVPD footprint. See Application of Comcast
Corporation, General Electric Company and NBC Universal, Inc. for Consent to Assign Licenses and Transfer
Control of Licenses, MB Docket No. 10-56, Memorandum Opinion and Order, FCC 11-4, at Appendix A (rel. Jan.
20, 2011) ("Comcast-NBCU Order"). Consumers need a broadband connection to receive video programming from
OVDs. The issue of whether a certain type of OVD also qualifies as an MVPD under the Act and our regulations
has been raised in pending program access complaint proceedings. See, e.g., VDC Corp. v. Turner Network Sales,
Inc., et al., Program Access Complaint (Jan. 18, 2007); and Sky Angel U.S., LLC v. Discovery Communications LLC,
et al., Program Access Complaint (Mar. 24, 2010). Nothing in this Further Notice should be read to state or imply
our determination on this issue.
10 See Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, MB
Docket No. 07-269, Notice of Inquiry, 24 FCC Rcd 750 (2009) ("Notice of Inquiry") (requesting data as of June
2007). The Commission subsequently adopted a Supplemental Notice of Inquiry requesting data as of June 2008
and June 2009. See Annual Assessment of the Status of Competition in the Market for the Delivery of Video
Programming, MB Docket No. 07-269, Supplemental Notice of Inquiry, 24 FCC Rcd 4402 (2009) ("Supplemental
Notice of Inquiry"). See also Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming, MB Docket No. 07-269, Order, 24 FCC Rcd 2524 (2009) (announcing, inter alia, that the
Commission would issue a single report for 2007, 2008, and 2009 to bring its reporting up to date).
Federal Communications Commission
FCC 11-65which it uses data, including data used for its statutory competition reports.11 In the course of that review,
we determined that the data submitted in response to the notices of inquiry for the 14th Report are
insufficient to produce an adequate report. We are therefore requesting additional data for 2009 and for
the first time asking for data for 2010. In submitting additional data for 2009 and new data for 2010, to
the extent that it is not unduly burdensome, we encourage commenters to also submit comparable
historical data for 2007 and 2008, which will facilitate the Commission's analysis of trends.
As described below, we intend to adopt a number of changes to our analytic framework to
ensure that we are collecting and presenting the most useful information concerning competition in the
video programming market. Importantly, this new framework will also allow the Commission to present
competitive data in a uniform manner that is consistent in format with the recently revised Mobile
Wireless Competition Report.12 Of particular note, in the 14th Report, we plan to include OVDs for the
first time, in light of the growing importance of online video distribution to consumers.
11 See FCC Launches Data Innovation Initiative (news release) June 29, 2010, at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-299269A1.pdf (visited Dec. 29, 2010). The Data
Innovation Initiative was launched to modernize and streamline how the FCC collects, uses, and disseminates data.
As part of the Data Innovation Initiative, the Commission's Wireline, Wireless, and Media Bureaus released public
notices seeking input on what current data collections should be eliminated, what new ones should be added, and
how existing collections can be improved. See, e.g., Pleading Cycle Established for Comments on Review of Media
Bureau Data Practices, MB Docket No. 10-103, Public Notice, 25 FCC Rcd 8236 (2010). The public notices grew
out of a recent FCC-wide review of FCC systems and processes for data collection, analysis and dissemination led
by the Office of Strategic Planning and Policy Analysis. See FCC Agency Reform, presentation before the
Commission (July 22, 2009) at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-293108A1.pdf (visited Dec.
29, 2010); FCC Advances Data Innovation Initiative, presentation before the Commission (Feb. 8, 2011) at
12 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993 and Annual Report and
Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile
Services, WT Docket No. 09-66, Fourteenth Report, 25 FCC Rcd 11407 (2010) ("Fourteenth Mobile Wireless
Federal Communications Commission
Under our new analytic framework, we first will categorize entities that deliver video
programming into one of three groups:13 MVPDs,14 broadcast television stations,15 and OVDs.16 Second,
we will examine industry structure, conduct, and performance, considering factors such as:
Structure: The number and size of firms in each group, horizontal and vertical
integration, merger and acquisition activity, and conditions affecting entry and the ability to compete.
Conduct: The business models and competitive strategies used by firms that directly
compete as video programming distributors, including product differentiation, advertising and marketing,
Performance: The quantity and picture quality of programming, prices charged for
delivered video programming, financial indicators (e.g., revenue and profit margins), and investment and
Third, we will look upstream and downstream to examine the influence of industry inputs and
consumer behavior on the delivery of video programming. We expect to discuss three key upstream
industry inputs: video content creators, video content aggregators, and consumer premises equipment.17
Figure 1 below displays the proposed scope of the 14th Report. We seek comment on whether this
proposed analytic framework is a useful way for the Commission to assess and report on the status of
video programming competition.
13 Our plan to assign entities that deliver video programming into one of three groups is based on the "strategic
group" concept used in strategic management that groups companies within an industry that have similar business
models or similar combinations of strategies. See Michael E. Porter, COMPETITIVE STRATEGY: TECHNIQUES FOR
ANALYZING INDUSTRIES AND COMPETITORS (Free Press) (1980) at 129-155.
14 We recognize that we have not addressed the extent to which wireless providers of video programming other than
DBS, wireless cable system operators, home satellite dishes and private cable operators should be classified as
MVPDs under the Act. We do not intend to address that issue in this proceeding, but do seek comment in the
section on MVPDs below on the competitive impact that such providers have on MVPDs and the deliver of video
programming generally. See infra 15.
15 We expect to consider broadcast television stations separately for the 14th Report, as we have done in previous
reports. Although broadcasters have transitioned to digital transmission and have the capability to offer additional
linear channels, they still offer far fewer programs than are available from MVPDs and do not provide a subscription
service. The Commission has previously held that broadcast television alone is not sufficiently substitutable with
the services provided by MVPDs to constrain attempted MVPD price increases, and hence declined to broaden the
MVPD product market. Accordingly, we treat broadcasters as part of a separate group. See General Motors
Corporation and Hughes Electronics Corporation, Transferors, and The News Corporation Limited, Transferee,
Memorandum Opinion and Order, 19 FCC Rcd 473, 509 75 (2004) (citing Competition, Rate Deregulation, and
the Commission's Policies Relating to the Provision of Cable Television Services, Report, 5 FCC Rcd 4962, 5003,
69 (1990)); Application of EchoStar Communications Corporation, General Motors Corporation, and Hughes
Electronics Corporation (Transferors) and EchoStar Communications Corporation (Transferee), Hearing
Designation Order, 17 FCC Rcd 20559, 20607-09, 109-115 (2002) ("EchoStar-DIRECTV HDO").
16 We note that, in the past, we reported on web-based Internet video, focusing on the content available over the
Internet for downloading and streaming. In the 14th Report, we plan to treat OVDs as a separate group because we
have concluded that for most consumers they are not a substitute for MVPD service today, but rather an additional
method for viewing video programming. See Comcast-NBCU Order at 79-85.
17 As described more fully below in Section IV, content creators are firms that produce video programming and
content aggregators are entities that assemble packages of video programming for distribution by MVPDs,
broadcasters, and OVDs.
Federal Communications Commission
FCC 11-65Figure 1. Proposed Scope of 14th Report
The data reported in previous reports on the status of competition for the delivery of video
programming were derived from various sources, including data the Commission collects in other
contexts (e.g., FCC Form 477 and FCC Form 325),18 comments filed in response to notices of inquiry and
other Commission proceedings; publicly available information from industry associations; company
filings and news releases; Security and Exchange Commission filings; trade and industry publications;
research firms' publicly-available data; equity analysts' reports; scholarly publications; and vendor
product releases and white papers. We seek comment on whether there are additional data sources
available for our analysis. What other sources of data, especially quantitative data, should we use to
perform a comprehensive analysis of the delivery of video programming? Are there certain stakeholders
that should be reached out to in order to diversify the data and further supplement the record? We also
ask commenters to suggest how we can best use this information to report on competition for the delivery
of video programming.
In previous NOIs, we have requested data as of June 30 of the relevant year to monitor
trends on an annual basis.19 To continue our time-series analysis, we request data as of June 30, 2009,
and June 30, 2010. We also recognize that a significant amount of data and information are reported on a
18 FCC Form 477 collects information about broadband connections to end user locations, wired and wireless local
telephone services, and interconnected Voice over IP services, in individual states. FCC Form 325 is the Cable
Television System Report that collects information about cable television systems.
19 See, e.g., Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming,
MB Docket No. 06-189, Notice of Inquiry, 21 FCC Rcd 12229, 12230, 2 (2006); Annual Assessment of the Status
of Competition in the Market for the Delivery of Video Programming, MB Docket No. 05-255, Notice of Inquiry, 20
FCC Rcd 1117, 1118, 2 (2005).
Federal Communications Commission
FCC 11-65calendar year basis, and, as such, we ask commenters to provide year-end 2009 and year-end 2010, when
readily available and relevant.
We invite all interested parties to provide input for the 14th Report. We request data,
information, and comment from entities that provide delivered video programming directly to consumers.
These entities include MVPDs, broadcast television stations, and OVDs. We also seek data, information,
and comment from entities that provide key inputs into video programming distribution. These include
content creators, content aggregators, and manufacturers of consumer premises equipment, including
equipment that enables consumers to view programming on their television sets as well as on other
devices (e.g., smartphones and tablets). In addition, we request data, information, and comment from
consumers and consumer groups. The accuracy and usefulness of the 14th Report will depend on the
quality of the data and information we receive from commenters in response to this Further Notice, and
so we encourage thorough and substantive submissions from industry participants, as well as state and
local regulators, with knowledge of the issues raised. When possible, we will augment reported
information with submissions in other Commission proceedings and from publicly available sources.
PROVIDERS OF DELIVERED VIDEO PROGRAMMING9.
In this section, we seek information and comment that will allow us to analyze the
structure, conduct, and performance of MVPDs, broadcast television stations, and OVDs. To improve
our description and analysis of the video products within each group, we seek specific and granular
quantitative and qualitative data and information from companies in each group. In addition, we request
comment on whether and to what extent, each group considers the other groups' offerings to be
complements and/or substitutes: Do MVPDs consider broadcast televisions stations and/or OVDs
competitors? Likewise, we seek comment on whether broadcaster television stations consider MVPDs
and/or OVDs competitors, and whether OVDs consider MVPDs and/or broadcast television stations
Multichannel Video Programming Distributors1.
MVPDs include all entities that make available for purchase multiple channels of video
programming.20 The distinctions between one type of MVPD and another type of MVPD are based on
the technology used (e.g., coaxial cable, fiber, spectrum) or the original business of the parent company
(e.g., telephone company, electric company) or a regulatory classification (e.g., open video systems).
Previously, we reported separately on many types of competitors in the market for the delivery of video
programming including: incumbent cable operators, DBS, home satellite dishes ("HSD"), broadband
20 See supra n.5 (definition of an MVPD).
Federal Communications Commission
FCC 11-65service providers ("BSPs"),21 local exchange carriers ("LECs"),22 open video systems ("OVS"),23 electric
and gas utilities, wireless cable systems, private cable operator ("PCO") systems, also known as satellite
master antenna ("SMATV") systems, commercial mobile radio service ("CMRS") and other wireless
providers.24 We request comment on whether this list includes all of the entities that we should consider
MVPDs in today's market for the delivery of video programming.25 Are we including some entities that
should not be considered MVPDs or excluding some entities that should be considered MVPDs?
For each type of MVPD,26 we seek data on the number of MVPD providers, the number of
households passed, the number of subscribers for delivered video programming, and the number of linear
channels offered.27 For each type of MVPD, we seek comment on the geographic area in which
individual providers offer service. In addition, we seek comment on the most appropriate unit of
measurement for assessing geographic coverage. We note that different types of MVPDs may report data
regarding availability and use that is not standardized to a common geographic unit. This greatly hinders
our ability to assess the competitive alternatives available to households and to identify where MVPDs
are engaged in head-to-head competition. Should we use zip codes, census tracts, or some other
21 In previous reports, we defined 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. Most BSPs were overbuilders of incumbent cable
systems. See 13th Report, 24 FCC Rcd at 591, 100. In 2010, the Broadband Service Providers Association
members joined the American Cable Association and asked that its members be considered cable operators along
with other wireline providers of video, voice, and data services for purposes of our statistical reports. Thus, we do
not plan to treat broadband service providers as a separate type of MVPD going forward. See Letter from Barbara S.
Esbin, counsel for the American Cable Association, to Marlene Dortch, Secretary, FCC, July 2, 2010.
22 In 1996, Congress amended Section 651 of the Communications Act to permit common carriers to provide video
services in their telephone service areas. The statute permitted common carriers to: (1) provide video programming
to subscribers through radio communications under Title III of the Act; (2) provide transmission of video
programming on a common carrier basis under Title II of the Act; (3) provide video programming as a cable system
under Title VI of the Act; or (4) provide video programming by means of an open video system. 47 U.S.C. 571(a)
23 In 1996, Congress established the OVS framework, one of four statutorily recognized options for the provision of
video programming services by LECs. In previous reports, we have treated OVS providers in a separate section to
highlight the separate regulatory classification that Congress created. 47 U.S.C. 571(a)(3)-(4). 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. Among the
rules that apply to open video 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.
24 For a discussion of each of these types of MVPDs, see 13th Report 24 FCC Rcd at 552-593 and 604-612, 26-
25 See infra 15. See also supra n.14.
26 We ask that commenters also address the questions below in the context of non-MVPD wireless providers of
video programming, to the extent applicable.
27 A linear channel is one that distributes programming at a scheduled time. Non-linear programming, such as
video-on-demand ("VOD"), is available at a time of the viewer's choosing.
Federal Communications Commission
FCC 11-65geographic unit to analyze competition?28 What data are available for each measure? What are the
specific benefits and costs of each measure? For purposes of determining whether the 70/70 benchmark
specified in Section 612(g) of the Act has been met, in the 13th Report, the Commission determined that
delivered video subscriber data should be collected on a zip code basis.29 Is it appropriate to use zip code
level data to evaluate the structure of MVPD markets? Is there a significant difference in the data
collected if a 5-digit versus a 9-digit zip code is used? We note that we collect data from broadband
providers using census tracts.30 Since many of the firms providing high-speed Internet access use the
same delivery technology and infrastructure to provide MVPD service, we seek comment on the
feasibility of collecting MVPD data on a census tract basis. For those MVPDs that already use census
tracts to report broadband data, what additional steps would be involved in using census tracts to report
Wireline MVPDs. Previously we made distinctions between wireline MVPDs and
wireless MVPDs and noted that some wireline MVPDs compete in the same geographic areas as existing
cable operators. Specifically, we reported on cable overbuilders31 and LECs that have overbuilt
incumbent cable systems.32 We seek data and information on the number of households that are passed
by one wireline MVPD, two wireline MVPDs, and three or more wireline MVPDs. We wish to identify
markets and geographic areas where head-to-head wireline competition exists, where wireline entry is
likely in the near future, and where wireline competition once existed but failed. We are particularly
interested in identifying areas that have access to either Verizon FiOS and AT&T U-verse. Although
incumbent cable operators and LECs (especially Verizon FiOS and AT&T U-verse) serve the bulk of
wireline MVPD subscribers, we seek comment on whether there are other wireline MVPDs that are also
relevant for purposes of our report. For example, we note that in past reports we considered OVS,
broadband over powerline, and utility-provided video. Are these technologies still relevant today?33 If
so, explain how and to what extent they are available.
28 See Reform of the FCC Form 477 Data Program, Development of Nationwide Broadband Data to Evaluate
Reasonable and Timely Deployment of Advanced Services to All Americans, Improvement of Wireless Broadband
Subscription Data, and Development of Data on Interconnected Voice over Internet Protocol (VoIIP)
Subscribership, Service Quality, Customer Satisfaction, Infrastructure and Operating Data Gatherin, Review of
Wireline Competition Bureau Data Practices, WC Docket No. 11-10, 26 FCC Rcd 1508, 1528-31, 53-54, 56-58
(2011) ("Form 477 Modernization NPRM").
29 13th Report, 24 FCC Rcd at 560-61, 43. 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." See 47 U.S.C. 532(g). In the 13th
Report, the Commission adopted a reporting requirement for cable operators that would allow us to determine
whether the so-called 70/70 benchmark has been met. The Commission's survey of cable operators for this purpose
30 See Development of Nationwide Broadband Data to Evaluate Reasonable and Timely Deployment of Advance
Services to All Americans, Improvement of Wireless Broadband Subscriber-Ship Data, and Development of Data on
Interconnected Voice Over Internet Protocol (VOIP) Subscribership, WC Docket No. 07-38, Report and Order and
Further Notice of Proposed Rulemaking, 23 FCC Rcd 9691, 9695, 10 (2008).
31 By overbuilder, we mean a facilities-based wireline MVPD offering delivered video programming to households
in the same geographic area as an incumbent cable operator. See 13th Report, 24 FCC Rcd at 546, n.9.
32 Nothing in this Further Notice should be read to state or imply whether certain overbuilders meet the statutory
definition of a cable system.
33 In the 13th Report, the Commission reported that few overbuilders offer service under the OVS model. It also
observed that municipal electric and gas utilities were moving forward with MVPD service using fiber-optic
Federal Communications Commission
Wireless MVPDs. Certain wireless providers DBS, wireless cable systems, HSDs and
PCOs are included within the statutory definition of MVPDs to the extent that they make available for
purchase multiple channels of video programming.34 DBS has become a significant competitor in the
delivery of video programming via satellite signal transmission to small parabolic "dish" antennas located
at the individual residences of consumers, businesses, and educational organizations.35 We seek data and
information that explain the principal factors contributing to DBS's growth in the market for delivery of
video programming. What factors influence cable subscribers' decisions to switch to DBS and vice
versa? We request information identifying differences between DBS subscribers and cable subscribers
(e.g., are DBS subscribers more likely to reside in rural areas or areas not served by cable systems?). We
seek updated information on the geographic characteristics of DBS subscribership. What percentage of
households cannot receive DBS service because they are not within the line-of-site of the satellite signal?
We request updated information on the number of markets where DBS operators provide local-into-local
broadcast service. Is DBS penetration higher in areas where local-into-local service is available?36 What
effect, if any, does the inability of DBS operators to directly provide broadband and voice service along
with their video service have on competition among MVPDs?
In addition, several operators of wireless cable systems in the 2.5 GHz band continue to
provide multiple channels of video programming under the Commission's rules for opting out of the
transition of this band.37 We seek comment on how and to what extent these wireless cable systems are
competing with other MVPDs. Finally, we seek comment on other wireless MVPDs such as home
(...continued from previous page)
networks. We also noted developments to provide video using broadband over power line technology. See 13th
Report, 24 FCC Rcd at 606-609, 135-138.
34 See supra n.5 (definition of an MVPD).
35 See supra 2.
36 For purposes of the 14th Report, household penetration is the number of households that subscribe divided by the
number of households passed. Subscriber penetration usually refers to mobile services and is the number of
subscribers divided by the number of people in the geographic area where service is available.
37 See Amendment of Parts 1, 21, 73, 74 and 101 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,
Report and Order and Further Notice of Proposed Rulemaking, WT Docket No. 03-66, 19 FCC Rcd 14165, 14199-
14200, 77 (2004); Amendment of Parts 1, 21, 73, 74 and 101 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, Third Memorandum Opinion and Order and Second Report and Order, WT Docket No. 03-66, 21 FCC
Rcd 5606, 5645, 72 (2006).
Federal Communications Commission
FCC 11-65satellite dishes ("HSD")38 and private cable operators ("PCOs").39 Are these technologies still relevant
today? If so, explain how and to what extent they are available.
Other Wireless Providers of Video Programming. The Commission has not addressed the
extent to which wireless providers offering video programming to mobile phones and other wireless
devices should be classified as MVPDs under the Act, and we do not intend to do so within this
proceeding. We note that, in past reports, the Commission considered certain of these providers in its
analysis of video competition.40 For the 14th Report, we seek comment on the competitive impact that
other wireless providers have on MVPDs and on competition in the provision of video programming
generally.41 How and to what extent are wireless technologies being used to provide video programming
today, and what trends should we anticipate for the future? To what extent do these services compete
with the video programming services offered by MVPDs and by other providers of video programming?
Horizontal Concentration. In previous reports, we did not directly measure horizontal
concentration for video distribution. Rather, we examined concentration for cable programming networks
by calculating a national Herfindahl-Hirshman Index ("HHI").42 In merger reviews, the Commission
routinely examines horizontal concentration and has determined that MVPD service is a distinct product
market, that individual households are the appropriate focus regarding competitive choices, and that we
38 In HSD, subscribers use a large dish and receive signals transmitted by satellites operating in the C- and Ku-band
frequencies. HSD channels may be transmitted either as clear channels, available for free reception, or as scrambled
signals. To receive scrambled channels, a household must purchase an integrated receiver-decoder and pay a
subscription fee. 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. See 13th Report,
24 FCC Rcd at 588-589, 93. The status of home satellite delivery service via C-Band is in flux. While Motorola
has discontinued its C-band service, Skyvision has developed procedures to enable consumers to continue receiving
subscription programming on Motorola receivers. See Skyvision, Inc., http://www.skyvision.com/ (visited Jan. 13,
2011); National Programming Service, http://www.callnps.com/ (visited Jan. 13, 2011); No Zombie Watch: C-Band
and Intelsat, The Morning Bridge, Jan. 3, 2011, at http://www.mediabiz.com/news/articles/?edit_id=15333 (visited
Jan. 13, 2011).
39 PCOs collect video signals using satellite master antenna systems and distribute programming via wiring in
apartments, condominiums, hotels, and office buildings. PCOs do not use any public rights-of-way. 1996 Act, sec.
301(a)(2), 47 U.S.C. 522(7). In addition, PCOs 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. Fourth
Report, 13 FCC Rcd at 1085, n.296.
40 In the past, mobile wireless service providers offered a range of video programming services to their customers.
13th Report, 24 FCC Rcd at 610-612, 142-149; 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, Thirteenth Report, 24 FCC Rcd 6185, 6203-4 24-26 (2009). For instance, between
2007 and 2010, Verizon Wireless and AT&T offered video programming based on Qualcomm's FLO TV service
under the respective brand names of VCAST Mobile TV and AT&T Mobile TV. Id. However, Qualcomm
announced in late 2010 that it will shut down the FLO TV service in March 2011. Shara Tibken, AT&T to Pay
$1.93B for Qualcomm Spectrum; FLO TV to Fold, Dow Jones Newswires, Dec. 20, 2010, at
41 We also note that some OVDs may be providing video programming over wireless broadband technologies. See
42 See, e.g., 13th Report, 24 FCC Rcd at 626-628, 177-179.
Federal Communications Commission
FCC 11-65can examine choices available to individual households with reference to choices available in franchise
areas.43 In the 14th Mobile Wireless Report, the Commission applied the HHI to shares of subscribers held
by facilities-based wireless providers at the level of Economic Areas, calculating shares of subscribers
from the providers' number of subscribers.44
For purposes of the 14th Report, we seek comment on the appropriate methodology for
calculating concentration in delivered video services. Should we continue to consider MVPDs a separate
product market, or are there narrower or broader product segments we should consider? What are the
appropriate geographic markets associated with these product markets (e.g., individual households, zip
codes, census tracts, cable franchise areas, or metropolitan areas)? Instead of assessing concentration on a
national level as we have done in the past, should we instead follow the methodology used in 14th Mobile
Wireless Report to assess horizontal concentration at a finer level of granularity? In the 14th Report, we
also propose to identify the geographic areas and number of households having a choice of no MVPDs,
one MVPD, two MVPDs, three MVPDs, four MVPDs, and five or more MVPDs to assess consumer
choice at the local level. We seek comment on the value of our proposed approach and request data or
recommendations for data we can acquire, that will enable us to perform this analysis. We invite analysis
regarding the relationship between horizontal concentration and competition. To what extent does
horizontal concentration affect price or quality?
Vertical Integration. In 1992, Congress enacted provisions related to common ownership
between cable operators and video programming networks.45 In previous reports, we have discussed
vertical integration in terms of ownership affiliations between cable programming networks and cable
operators.46 Specifically, we have identified the number of satellite-delivered national programming
networks affiliated with cable operators.47 More recently, we have also looked at the number of satellite-
delivered national programming networks affiliated with DBS operators, broadcasters and other media
firms.48 In addition, we have reported on regional programming networks, both satellite-delivered and
terrestrially delivered, and identified those affiliated with providers of MVPD service.49 In the past, we
used information provided either by commenters or publicly available data listing the ownership of each
programming network, not necessarily referencing the Commission's attribution rules.50 Using the
available data, we were not always consistent in the manner in which we counted standard definition
43 See Comcast-NBCU Order at 40, 42; Application for Consent to the Assignment and/or Transfer of Control of
Licenses, Adelphia Communications Corporation, (and subsidiaries, debtors-in-possession), Assignors, to Time
Warner Cable Inc. (subsidiaries), Assignees; Adelphia Communications Corporation, (and subsidiaries, debtors-in-
possession), Assignors and Transferors, to Comcast Corporation (subsidiaries), Assignees and Transferees;
Comcast Corporation, Transferor, to Time Warner Inc., Transferee; Time Warner Inc., Transferor, to Comcast
Corporation, Transferee, MB Docket No. 05-192, Memorandum Opinion and Order, 21 FCC Rcd 8203, 8235,
44 See 14th Mobile Wireless Report, 25 FCC Rcd at 11423, 11452, 4, 50.
45 See 47 U.S.C. 533.
46 See 13th Report, 24 FCC Rcd at 629-631, 723-730, 184-186, Appendix C, Tables C1, C3.
47 Id. at 629-631, 183-186.
48 Id. at 631-634, 187-189 and Table 12.
49 Id. at 635, 192.
50 In most contexts, the Commission determines ownership based on the attribution rules. See 47 C.F.R. 73.3555
n.2 (broadcast attribution rules); 47 C.F.R. 76.501 n.2 (cable attribution rules).
Federal Communications Commission
FCC 11-65("SD") and high definition ("HD") versions of the same network or multiplexed networks, sometimes
differentiating between the networks and sometimes not doing so.
We expect to report improved information in our 14th Report, and request data,
information, and comment on vertical integration between MVPDs and video programming networks.
Thus, we request information on satellite and terrestrially delivered national and regional networks.51
How should we measure such vertical integration? For purposes of analyzing vertical integration, how
should we determine affiliation? Should we use a minimum ownership share or apply the attribution
rules? Should we simply note which MVPDs are integrated with program networks, or should we also
measure the fraction of programming revenues accounted for by firms affiliated with an MVPD? What
data should we collect to analyze affiliation and revenue? To measure the extent to which MVPDs and
cable networks are vertically integrated, we seek comment on whether to count an SD and an HD version
of the same programming network as one or more networks. We also seek comment on how to evaluate
multiplexed programming networks.
Conditions Affecting Entry and Rivalry.52 Underlying regulatory, technological, and
market conditions affect market structure and influence the total number of firms that can compete
successfully in the market. We invite comments and information regarding the conditions that affect the
entry into MVPD markets, or other markets we define, and rivalry among MVPDs.
Regulations Affecting Entry and Rivalry. A number of provisions of the Communications
Act and the Commission's rules affect MVPD operators in the market for the delivery of video
programming. These include, for example, regulations governing program access,53 program carriage,54
must carry,55 retransmission consent,56 franchising,57 access to multiple dwelling units,58 inside wiring,59
customer service,60 leased access,61 ownership,62 and public interest programming.63 We seek comment
on the impact of these regulations and other Commission rules on MVPD entry and rivalry among
51 See Review of Commission's Program Access Rules and Examination of Programming Tying Arrangements, MB
Docket No. 07-198, First Report and Order, 25 FCC Rcd 746 (2010).
52 By rivalry, we mean competition among participants in the same product and geographic market. Although a
consumer typically selects one MVPD, the rivalry among MVPD firms for that consumer does not end because the
consumer can switch MVPDs where more than one is available.
53 See 47 C.F.R. 76.1000-1004.
54 See 47 C.F.R. 76.1300-1302.
55 See 47 C.F.R. 76.56.
56 See 47 C.F.R. 76.64.
57 See 47 U.S.C. 541; 47 C.F.R. 76.41.
58 See 47 C.F.R. 76.2000.
59 See 47 C.F.R. 76.801-806.
60 See 47 C.F.R. 76.1602.
61 See 47 C.F.R. 76.701.
62 See 47 C.F.R. 76.501, 47 C.F.R. 76.503.
63 A franchising authority may require a cable operator to use channel capacity for public, educational, or
governmental (PEG) use. 47 U.S.C. 531. DBS operators are required to reserve 4 percent of their channel
capacity for noncommercial programming of an educational or informational nature. 47 C.F.R. 25.701.
Federal Communications Commission
FCC 11-65MVPDs in markets for the delivery of video programming. We recognize that the regulations applicable
to cable operators may differ from the regulations applicable to DBS systems and other MVPD operators
and seek comment on how regulatory disparities affect their rivalry. We also seek comment on specific
actions the Commission could take to facilitate MVPD entry and rivalry among MVPDs and thereby to
increase consumer choice in the delivery of video programming. In addition, we seek comment on any
state or local regulations that affect MVPD entry and rivalry among MVPDs.
Non-Regulatory Conditions Affecting Entry and Rivalry. We seek information and
comment on non-regulatory conditions affecting MVPD entry and rivalry. Do these conditions include
supply-side economies of scale, where large MVPDs can spread fixed costs over more subscribers or
negotiate lower prices for video content? Do these conditions also include expected retaliation, where
potential MVPD entrants believe incumbents will lower prices to any household considering switching to
the new MVPD entrant? Does bundling MVPD services with broadband, and bundling channels into tiers
rather than selling channels la carte, affect entry and rivalry? Do long-term contracts with penalties for
early termination affect entry and rivalry? What other non-regulatory conditions affect MVPD entry and
Business Models and Competitive Strategies. MVPDs may choose from a variety of
business models and competitive strategies to attract and retain subscribers and viewers. MVPDs decide,
for example, the type of delivered video services they will offer and how they are packaged (i.e., the
number of tiers of video programming and the specific programming carried on each tier); the
complementary product features they will offer (e.g., HD, DVR (formerly called digital video recorder),
VOD, online video programming, and bundled services where telephony and/or broadband is packaged
with video service). MVPDs also decide the level of advertising, the degree of vertical integration with
suppliers of video programming, whether to initiate or respond to price discounting, and their approach to
What is the capacity being used for public, educational, and governmental ("PEG")
channels by MVPDs? What tier are these channels on and is extra equipment required to view them?
Are there more or fewer PEG channels carried on your systems than last year? To what do you attribute
any changes? What data sources are available to track the availability of PEG programming, and changes
to PEG availability?
We seek descriptions of the varied business models and strategies used by MVPDs for the
delivery of video programming. What are key differences among the business models and strategies in
terms of services offered to consumers? How do providers distinguish their delivered video services from
their rivals? Are cable and DBS comparable services? Is there a discernable distinction between the type
of service that is delivered at a local level or at a national level? Does DBS "local-into-local" delivery of
broadcast television signals make it a closer substitute for cable than it would be otherwise? What
significance, if any, do distinctions between cable and DBS operators have for Commission precedent
concluding that the two transmission technologies compete in the same MVPD product market?64 To
what extent do MVPDs offer unique services (e.g., multi-room DVR service), more channels, more HD,
or a variety of bundles to consumers? How do MVPDs advertise their services to existing and potential
subscribers? What delivered video services do they feature in their advertising?
For each type of MVPD, we seek data on the prices charged for delivered video
programming. What prices are subscribers paying for MVPD service? To what extent do MVPDs use
promotional or reduced pricing as a competitive strategy? Can consumers easily find the prices of MVPD
64 See Comcast-NBCU Order at 3; EchoStar-DIRECTV HDO, 17 FCC Rcd at 20609, 115.
Federal Communications Commission
FCC 11-65video packages and services on their monthly bill and/or MVPDs' web sites and other promotional
materials? To what extent do providers of MVPD service use a strategy of reducing prices to attract and
retain subscribers? To what extent do MVPDs offer new subscribers price discounts for an introductory
period? Do prices change at the end of the introductory period, and, if so, how? Are introductory and
long-term prices listed and fixed, or do providers negotiate with individual subscribers over prices before
and after introductory periods? Do households that subscribe to the same delivered video services, from
the same provider, in the same geographic area, pay different prices? How do bundles of service (i.e.,
double- or triple-play offerings) change the price of delivered video services? To what extent have
MVPDs been adding linear channels and non-linear VOD programming and raising prices as a result?
Are there any providers of delivered video programming with a business strategy of offering fewer
channels of programming and lowering prices as a result?65 Are MVPDs packaging programming by
offering tiers of programming by genre (e.g., family tiers, sports tiers)? If so, how are they priced? We
also seek information on the competitive strategies of MVPDs in providing VOD programming.
Specifically, we are interested in learning about any competitive issues MVPDs encounter when acquiring
VOD content from video content aggregators.
We are particularly interested in learning whether an increase in the number of MVPD
rivals affects pricing strategies. For example, do DBS firms price uniformly across large regions or do
they, for example, charge lower prices (or use different pricing strategies) for households that have access
to a cable provider than for households that do not have access to a cable provider? Do DBS and cable
firms charge lower prices (or use different pricing strategies) for households that have access to more than
one wireline MVPD? For its Annual Cable Price Survey, the Commission collects price data from a
sample of cable systems, but does not collect price data for other types of MVPDs (e.g., DBS and AT&T
U-verse).66 We seek price data for DBS, AT&T U-verse and other MVPDs not included in the Annual
Cable Price Survey. What additional data sources on MVPD prices are available for our 14th Report?
In addition to offering bundles of video with voice and/or high-speed Internet, some
MVPDs tie video products.67 We seek data, information, and comment on trends regarding the tying of
access to some online programming to a subscription to an MVPD. For example, online programming
available through TV Everywhere is available only to subscribers of specific MVPDs.68 In addition, some
65 MVPDs are experimenting with low-cost programming packages in a limited number of markets. For example, in
November 2010, Time Warner Cable introduced a "TV Essentials" package with promotional rates of $30 to $40
per month in northeast Ohio and New York City. See Jeff Simmerman, Director Digital Communications, Time
Warner Cable, Untangled, We're Testing a New Slimmer Package: Time Warner Cable TV Essentials,
(visited Jan. 20, 2011). See also Brian McNeill, Report: Charter Experiments With Cut-Rate Package, SNL Kagan,
Jan. 14, 2011.
66 Section 623(k) of the Communications Act, as amended by the Cable Television Consumer Protection and
Competition Act of 1992 requires the Commission to publish a statistical report on average rates charged for the
basic cable service and cable programming service tiers, and cable equipment. See 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, MM Docket No. 92-266, Report on Cable Industry
Prices, 26 FCC Rcd 769 (MB, 2011).
67 In bundling two products A and B, consumers may purchase separately A or B, or purchase a bundle that includes
both A and B. In tying two products A and B, consumers do not have the choice to purchase separately A or B.
Consumers are given one choice only and must purchase both A and B.
68 For example, Comcast offers proprietary online video on its XfinityTV.com website exclusively for its MVPD
subscribers as part of the industry wide "TV Everywhere" initiative. See Comcast Corp., Time Warner Inc.
Announces Widespread Distribution of Cable TV Content Online, Comcast and Time Warner Develop Principles for
Federal Communications Commission
FCC 11-65MVPDs, such as AT&T and Comcast, make video programming available on mobile wireless networks
and mobile devices.69 We seek comment on these and other developments in tying arrangements for
video programming delivered over different delivery technologies.
We seek data and comment on the provision of local news by MVPDs as a competitive
strategy in the delivery of video programming and the extent to which local news programming is
available. What other types of local programming do MVPDs offer? What data sources are available to
help in our analysis of MVPD provision of local news and other local programming?
Conduct Resulting from Horizontal and Vertical Mergers. As discussed earlier, we seek
data, information, and comment on trends in horizontal and vertical mergers and acquisitions.70
Cablevision's merger with Bresnan represents a recent horizontal merger and Comcast's merger with
NBC Universal represents a recent vertical merger.71 Have these and other horizontal and/or vertical
mergers contributed to, or provided incentives for, the possible exercise of market power by incumbent
MVPDs, both downstream to subscribers and upstream to creators and aggregators of video content?72
Has any MVPD acquired sufficient market power to impair competition? Has the possible exercise of
market power by an MVPD adversely affected consumers of video programming, such as by increasing
price or restricting quantity of service available to consumers? Has the possible exercise of market power
by an MVPD adversely affected creators and aggregators of video programming, such as by decreasing
the price paid for video programming? In addition, we invite comment on any other issues concerning
MVPD conduct that will assist our analysis of competition in the delivery of video programming by
We seek comment on the information and time-series data we should collect for the
analysis of various MVPD performance metrics, including quantity and quality; subscribership and
penetration rates; financial performance; and investment and innovation. Are there any other quantitative
or qualitative metrics that would enhance our analysis of MVPD performance? To the extent commenters
can provide such data, we request that it be submitted for use in preparation of the 14th Report.
(...continued from previous page)
"TV Everywhere Model", Comcast to Begin National Technical Trial of "On Demand Online" (press release), June
24, 2009, available at www.comcast.com/About/PressRelease/PressReleaseDetail.ashx?PRID=883 (announcing
Comcast's and Time Warner's partnership to develop a "TV Everywhere" model for the MVPD industry). See also
DISH Network Reply Comments, GN Docket No. 09-191 and WC Docket No. 07-52 (filed April 26, 2010), at 5-7
(describing MVPDs that provide online video services).
69 According to AT&T spokeswoman Jenny Bridges, "We're always working to secure programming rights to offer
new content and features across the three screens--the TV, the PC, and the wireless device." Sarah Barry James,
Has Mobile Made Its Way Into Cable Distribution Talks?, SNL KAGAN, Nov. 15, 2010. See also Comcast
Corporation, Comcast Announces Launch for Xfinity TV App for IPad with the Ability to Watch TV Shows and
Movies Anytime, Anywhere (press release), Nov. 15, 2010.
70 See supra Section II.A.1 that discusses MVPD market structure, specifically horizontal concentration and vertical
71 Cablevision Systems, Corp., Cablevision Announces Acquisition of Bresnan Communications (press release), June
14, 2010, available at http://www.cablevision.com/investor/index.jsp (visited Jan. 14, 2011); Comcast Corp.,
Comcast and GE to Create Leading Entertainment Company (press release), Dec. 3, 2009, available at
72 See infra Section IV (discussion of industry inputs).
Federal Communications Commission
Quantity and Quality. We seek data, information, and comment on trends in the number
of linear video channels and VOD programs offered by MVPDs. Has the number of linear channels and
VOD programs available increased? What are the most popular MVPD programming packages?
Describe these packages in terms of the total number of analog and SD channels, number of HD channels,
and number of VOD offerings. What effect has the entry of an additional MVPD had on programming
choices and quality of service? What effect has the growth in OVD services had on the quantity and
quality of MVPD service?73
Subscribership and Penetration Rates. We seek data and information regarding the
number of households passed and the number of subscribers and penetration rate for MVPD service.74
We also seek subscription data for the channel lineup packages (including international, other specific
genres, and premium) and other delivered video programming services that MVPDs currently market to
consumers.75 What percentage of customers subscribe to these video packages and other delivered video
programming services? How often do consumers switch providers (i.e., what is the level of "churn" and
is it increasing or decreasing)?
Financial Performance. We request information on various measures of MVPD financial
performance, including data on MVPD revenues, cash flows, and margins. To the extent possible, we
seek five-year time-series data to allow us to analyze trends. Specifically, what is the average revenue per
MVPD subscriber?76 What are the major sources of video-related revenue for MVPDs? What percentage
of total revenue is derived from each of these sources? What are the major video-related drivers of
revenue growth? We seek data, information, and comments regarding profitability. What metrics and
data should we use to measure profitability (e.g., return on invested capital, operating margins)? Are
there any other quantitative or qualitative metrics that would add to our analysis of MVPD financial
performance? We recognize that many MVPDs also provide non-video services, such as voice service,
and often offer these services on a bundled basis.77 Our focus, however, is delivered video programming,
and commenters submitting financial data should separate video from non-video services. Commenters
should specify the methodology each firm uses for allocating joint and common costs. Likewise,
commenters should explain the methodology each firm uses for allocating bundled revenue.
Investment and Innovation. Investment and the deployment of next-generation
technologies impact the quantity and quality of delivered video programming service. We seek comment
on how investment affects competition among MVPDs. How has investment affected competition
between MVPDs and other providers of delivered video programming? We seek information on
deployment of next generation MVPD technologies. What MVPD services are driving the deployment of
new MVPD technologies?
73 See infra Section II. C. (discussion of OVDs).
74 We define penetration as the number of subscribers to an MVPD service expressed as a percentage of the number
of households that have access to the MVPD. Is this an appropriate definition or should we consider another
75 See Form 477 Modernization NPRM, 26 FCC Rcd at 1536-38, Section IV.B.3.
76 See id. at 71-73.
77 See 13th Report, 24 FCC Rcd at 573-579, 64-71.
Federal Communications Commission
Broadcast Television Stations1.
Broadcast Television Structure36.
Providers of broadcast television service include both individual and group owners that
hold licenses to broadcast video programming to consumers. Consumers who do not subscribe to an
MVPD service may rely on over-the-air distribution of broadcast televisions for their video programming.
Also, many MVPD households receive broadcast television stations over the air on television sets that
they have chosen not to connect to MVPD service.78 The Commission already collects data on the
number of broadcast television stations in each designated market area ("DMA") and ownership of
broadcast television stations using our CDBS database79 and data purchased from BIA/Kelsey80 and The
Nielsen Company.81 Is there a non-proprietary geographic area upon which the Commission could base
its analysis?82 We seek additional data that would help us analyze trends in the number of households
that rely exclusively on over-the-air broadcast television service rather than receiving broadcast
programming from an MVPD. In addition to the number of households relying on over-the-air broadcast
service, we request information regarding any demographic characteristics of such households. How
many households routinely view broadcast programming over-the-air in addition to subscribing to an
Horizontal Concentration. We are interested in tracking common ownership of broadcast
stations by DMA. Commission rules limit the number of broadcast television stations an entity can own
in a DMA, depending on the number of independently owned stations in the market.83 The Commission
already collects data that we can use to assess the horizontal structure of the broadcast television stations,
including the number of stations in each DMA, and the ownership of each station. We seek comment on
how to best report this information in order to assess horizontal concentration.
Vertical Integration. The Commission has collected data that we can use to analyze trends
in vertical integration, including data on the ownership of the broadcast stations owned by video content
creators and video content aggregators.84 For the 14th Report, we again seek to report on the vertical
integration of broadcast television stations with broadcast networks and cable networks as we have done
78 See id., 24 FCC Rcd at 593, 104.
79 The Commission collects data on broadcast stations through the Broadcast Radio and Television Electronic Filing
System (CDBS). See Federal Communications Commission, Media Bureau: MB-CDBS: CDBS Public Access,
http://licensing.fcc.gov/prod/cdbs/pubacc/prod/cdbs_pa.htm. We collect ownership data on FCC Form 323
Ownership Report for Commercial Broadcast Station and the data are available in CDBS.
80 See BIA/Kelsey, Research: Media Access Pro, http://www.bia.com/data_mapro.asp.
81 Under Commission rules, broadcast television stations serve a community of license. However, Nielsen's DMA
market definition is commonly used as the geographic coverage area for broadcast television stations. A DMA is a
group of counties that form an exclusive geographic area in which the home market television stations hold a
dominance of total hours viewed. There are 210 DMAs, covering the entire continental United States, Hawaii, and
parts of Alaska. The DMA boundaries and DMA data are owned solely and exclusively by The Nielsen Company.
82 See Media Bureau Seeks Comment for Report Required by the Satellite Television Extension and Localism Act on
In-State Broadcast Programming, Public Notice, MB Docket No. 10-238, 25 FCC Rcd 16220 (MB, 2010) (seeking
comment on whether there are alternative to DMAs for defining local television markets).
83 See 47 U.S.C. 73.3555.
84 13th Report, 24 FCC Rcd at 633-34, Table 12; and at 695-722, Appendix C, Table C-2. See also supra Section
II.A.1. (which discusses MVPD vertical integration).
Federal Communications Commission
FCC 11-65in recent reports. As such, we seek data on the vertical structure of the broadcast television. How many
broadcast television stations, nationally and within each DMA, are vertically integrated with a broadcast
network or a cable network? Recognizing that the recent venture of Comcast and NBC Universal resulted
in increased vertical integration between broadcast stations and cable networks, we seek information on
trends in vertical integration between television stations and broadcast networks or cable networks. We
seek comment on how to best report this information in order to assess vertical integration and whether
we should make any changes to the way we report this information.
Conditions Affecting Entry and Rivalry. We note that the Commission's spectrum
allocation policies, licensing policies, and spectrum interference rules affect the structure of broadcast
television by limiting the number of stations that can be located in a geographic area.85 We seek comment
on the effect of these policies and rules on entry and rivalry in broadcast television. Other Commission
rules limit the number of broadcast television stations an entity can own in a DMA and also limit the
national audience reach of commonly owned broadcast television stations.86 We seek data, information,
and comment on the effect of ownership limits on entry and rivalry in broadcast television.87 Does the
ability to provide more than one programming stream as a result of the digital transition increase the
competitiveness of broadcast stations? What other regulations affect entry and rivalry of broadcast
television stations? We ask commenters to provide data and examples for each regulation that effects
entry and rivalry.
We seek information and comment on non-regulatory conditions affecting entry and
rivalry. For example, are there supply-side economies of scale that enable commonly owned broadcast
television stations to spread fixed costs over greater audiences? Are there demand-side economies of
scale that enable commonly owned broadcast television stations to negotiate lower prices for video
programming? We invite analysis of the relationship between the advertising market and entry and exit in
broadcast television. What other non-regulatory conditions influence entry and rivalry? To what extent
do they influence entry and rivalry? Does the ability to offer multiple programming streams since the
digital transition enhance the ability of broadcasters to compete against MVPDs? Do broadcast television
stations, collaborating in conjunction with OVDs or other media, have an increased ability to compete
Broadcast Television Conduct41.
Business Models and Competitive Strategies. As of June 12, 2009, all full-power
broadcast television stations have transitioned from analog to digital service. Each station has been
allotted 6 MHz of spectrum that permits multiple linear program streams and/or HD broadcasts. We seek
data, information, and comment on the use of multiple linear program streams as a business strategy to
enhance a broadcaster's competitive position in the delivery of video programming. What types of
programming are broadcasters carrying on their multiple streams? To what extent are broadcasters
providing multiple linear streams of video programming to attract viewers to over-the-air video service
and away from subscription MVPD service? Digital television allows broadcasters to use part of their
digital bandwidth for subscription video, datacasting, and other pay services as long as they maintain their
85 See generally 47 C.F.R. Part 73, Subpart E.
86 See 47 C.F.R. 73.3555.
87 While we collect data and information about the ownership of broadcast television stations for our Quadrennial
Media Ownership review, the purpose of that review is different from our purpose here. In that context, we explore
whether the current broadcast ownership rules promote the Commission's goals of competition, localism, and
diversity in broadcasting. Here we are specifically exploring how the structure of broadcast television affects
competition in video programming distribution.
Federal Communications Commission
FCC 11-65primary broadcast television service.88 Do broadcasters have business plans to combine and transition
some of their digital capacity into a subscription service or to lease a portion of their digital spectrum
capacity to others for a subscription service?89 Are broadcasters using HD programming as a strategy to
attract viewers? Has digital transmission benefited television broadcasters? We seek comment on
specific benefits that have accrued to broadcasters as a result of the transition. Has the transition
benefitted households that rely solely on over-the-air television service? If so, we seek information on
specific advantages that have accrued to these households. Has the digital transition presented particular
difficulties for broadcasters or viewers?
Commercial broadcast television stations earn revenue from advertising.90 In addition to
advertising, some commercial broadcast television stations earn revenue from retransmission consent fees
they receive from MVPDs in return for carriage of their stations.91 We seek data, information, and
comment on the business strategies of broadcast television stations as they confront changes in the
advertising market, both long-term changes and recent changes brought on by the economic downturn.
We also seek information regarding any business strategies to grow revenue through retransmission
consent fees paid by MVPDs to broadcast stations for the rights to carry their stations. We seek data on
trends in prices for spot and local advertising on broadcast television stations. What prices (per
subscriber) are broadcast stations receiving from MVPDs for retransmission consent?
We are interested in business strategies associated with making broadcast programming
available online. To what extent is local broadcast programming available online? How does placing
video content online benefit broadcasters? To what extent are broadcast stations tying retransmission
consent negotiations with MVPDs for linear programming to online programming?92
88 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). See also 13th Report, 24 FCC Rcd at 598 n.396.
89 Previously, we reported on U.S. Digital Television, Inc., which combined broadcast spectrum licensed to a
number of broadcasters to create subscription video distribution via DTV streams. See 13th Report, 24 FCC Rcd at
90 Based on Commission staff estimates of data from SNL Kagan, between 1998 and 2008, local and national spot
advertising has represented about 98 percent of television broadcast stations' revenues. SNL Kagan, MEDIA
TRENDS, TV Station Revenues, 1998 2008, at 21 (2009). While 2010 marked an increase in revenue for television
stations, due in part to political advertising, SNL Kagan estimates that broadcast stations' advertising revenues were
nevertheless below 2008's total of $22.0 billion. Robin Flynn, Broadcast Station Revenue Projections: Boosting
TV, Not Radio, SNL Kagan, Nov. 16, 2010, at 1-2.
91 See, e.g., Nexstar Broadcasting Group, Inc., Webcasts, Presentations, Conference Calls & Notices,
http://www.nexstar.tv/index.php?option=com_content&view=section&layout=blog&id=9&Itemid=41 (visited Nov.
24, 2010) (Nexstar Broadcasting Chairman, CEO, and President Perry Sook claims that "[a] revenue stream that
literally didn't exist five years ago for our company contributes $30 million of fee income . . .").
92 For example, in August 2010, Comcast signed a 10-year retransmission consent agreement with CBS. Comcast
Chief Financial Officer and Executive Vice President Michael Angelakis characterized it as "a multi-platform
contract [that] provides us access to programming whether it's online or on demand or other platforms that we think
are unique and correct." Thomson Reuthers, Comcast Corporation at Bank of America Merrill Lynch Media,
Communications and Entertainment Conference (final), Sept. 15, 2010 at 6 available at Comcast Corporation,
Investor Relations: Events and Presentations, http://www.cmcsk.com/eventdetail.cfm?eventid=85682 (visited Jan.
14, 2011). During a retransmission consent dispute with Cablevision, News Corp. temporarily blocked
Cablevision's broadband subscribers from accessing Fox network programming online. Brian Stelter, Internet is a
Federal Communications Commission
Broadcasters remain important providers of local news.93 We seek data and comment on
the provision of local news as a competitive strategy in the delivery of video programming and the extent
to which local news programming is available. Moreover, for many years, broadcast television networks
have used their local broadcast television affiliated stations as their primary distributor of programming.
We seek comment on the strategies broadcast television stations use to remain the primary distributor of
broadcast television network programming, as well as the strategies and partnerships they use to deliver
news online. Does the ability to distribute programming online lead some broadcasters to increase their
investment in news and information programming or provide news to consumers that might not otherwise
What competitive strategies do broadcast television stations use to distinguish themselves
from other broadcast television stations? For example, is there local programming other than news used
to enhance the competitive position of broadcast stations? We seek data, information, and comment on
these other business strategies broadcast television stations use to compete in the delivery of video
Conduct Resulting from Horizontal and Vertical Mergers. We seek data, information, and
comment on the use of horizontal and vertical mergers to improve the competitive position of broadcast
television stations in the delivery of video programming. We seek comment on whether commonly
owned stations have a competitive advantage in the delivery of video programming. Do joint sales
agreements ("JSAs"), local marketing agreements ("LMAs") and shared services agreements ("SSAs")
have an effect on the ability of independent stations to remain competitive? Does business strategy favor
group ownership within a DMA to increase advertising revenue? Does group ownership across DMAs
lower prices for video content? Are broadcast television stations that are vertically integrated with a
broadcast television network better able to compete in the delivery of video programming?
Broadcast Television Performance47.
We seek information and time-series data for the analysis of various performance metrics
for broadcast television. These metrics should include the quantity and quality of broadcast television
station programming, viewership from over-the-air, viewership from carriage on MVPDs, prices of
advertising, revenue from advertising, revenue from retransmission consent fees, other revenue,
investment and innovation, and rate of return/profitability.
Quantity and Quality. We seek data, information, and comment on the impact of the
transition to digital television on the number of linear broadcast television channels available in each
DMA, counting both primary stations and additional multicast programming streams. How many
broadcast television stations offer video content in HD? What percentage of their programming is in HD?
Viewership. We seek data, information, and comment on the viewership of broadcast
television stations both from over-the-air reception and carriage by MVPDs. What is the trend in total
viewership in total household terms? With respect to linear programming, what is the trend in the share
of the total audience that broadcast television stations receive relative to the share received by cable
networks carried by MVPDs. Some broadcast stations also place some of their programming online.
(...continued from previous page)
Weapon in Cable Fight, THE NEW YORK TIMES, Oct. 19, 2010, at
http://www.nytimes.com/2010/10/20/business/media/20hulu.html (visited Jan. 14, 2011).
93 Surveys indicate that more adults chose broadcast television stations as their daily news source over any other
major medium. Television Bureau of Advertising, Inc., Planning and Buying: Local News,
http://www.tvb.org/planning_buying/120562 (visited Jan. 14, 2011).
Federal Communications Commission
FCC 11-65How many households view broadcast television stations online? What share of online viewership are
Financial Performance. We seek data on broadcast television station revenues, cash flows,
and margins. To the extent possible, we seek five-year time-series data to allow us to analyze trends.
Specifically, what is the average revenue earned per broadcast television station? We realize that some
broadcast stations are integrated with other businesses but are only interested in financial data related
directly to the delivered video programming of the broadcast television station, such as the sale of
advertising tied to the video programming and retransmission consent fees. What are the major drivers of
revenue growth? We also seek data regarding the profitability of broadcast television stations. What
metrics and data should we use to measure profitability (e.g., return on invested capital, operating
margins)? Are there any other quantitative or qualitative metrics that would add to our analysis of the
financial performance of the broadcast television station group?
Investment and Innovation. We seek comment on how investment in digital television
affects competition among broadcast television stations and with the larger market for the delivery of
video programming. We seek data on broadcast television station investment in digital television, the
innovations related to this investment, and the financial returns on this investment. What has investment
in digital television done to enhance the competitive position of broadcast television stations in the
delivery of video programming?
Online Video Distributors1.
OVDs are entities that distribute video programming over the Internet to consumers.94 To
receive video programming distributed by an OVD, a consumer must subscribe to a high-speed Internet
access service. The Commission already collects data on entities that provide fixed and mobile high-
speed Internet access services, so we have much information regarding the structure, conduct, and
performance of the broadband markets, including the number and size of participants, the number of
households that have access to each provider's high-speed Internet service, the download and upload
speeds, the services offered by broadband providers, and the prices charged for broadband service.95 We
have not, however, previously collected data on OVDs. Therefore, we seek comment on the best
available sources of information to enable us to analyze OVDs.96
We recognize that over the time period we plan to cover in the 14th Report 2007 to 2010
OVDs have made an increasing amount of video programming available to consumers over the Internet.
Broadcast networks, broadcast television stations, and cable networks that offer video content online
through their own brands, such as nbc.com, wabc.com, and Hallmarkchannel.com, are OVDs.97 Cable
networks, broadcast networks, and studios also sell or license their programming to stand-alone OVDs,
94 See supra n.9 (definition of OVD).
95 See FCC Form 477 Broadband Data; Sixth Broadband Report, 25 FCC Rcd 9556; and Fourteenth Mobile
Wireless Report, 25 FCC Rcd 11407. See also Form 477 Modernization NPRM supra n.28.
96 The Commission has addressed OVDs in its review of the Comcast-NBC Universal transaction and in the Open
Internet proceeding. See Comcast-NBCU Order at 74-90. See also Preserving the Open Internet, Broadband
Industry Practices. GN Docket No. 09-191, WC Docket No. 07-52, Report and Order, 25 FCC Rcd 17905, 17912-
13, 17916, 17975-76, 17978 (2010) 16, 22, 128-129, 132 ("Open Internet Report and Order").
97 Open Internet Report and Order, 25 FCC Rcd at 17979, n.421.
Federal Communications Commission
FCC 11-65such as Netflix, Apple's iTunes, Wal-Mart's Vudu, and Hulu.98 We request, data, information, and
comment on the number and size of OVDs. What data sources are available for analysis of the structure
of OVDs? We also seek comment on whether individual OVDs view other OVDs as competitors. In
addition, to what extent do OVDs compete with MVPDs and/or broadcast television stations?
What business models and competitive strategies do OVDs use to compete in the delivery
of video programming? What challenges do OVDs face? Do OVDs highlight the availability of
increasing amounts of online video to attract more viewers and/or subscribers? What media do OVDs use
to advertise their service? To what extent is OVD service a substitute for MVPD service? Or,
alternatively, is it a complement to MVPD service? How is OVD service advertised? Do OVDs that are
not MVPDs have a different business strategy for attracting subscribers than OVDs that are also MVPDs?
We seek data, information, and comment on business strategies that tie OVD service to subscription to
MVPD service. We seek information on the extent to which OVDs rely on advertising, subscription fees,
per-program fees or other sources of revenue, including information on the use of subscription fees. We
also seek information on the prices for the programs or the subscriptions charged by OVDs that sell
access to video content over the Internet. To what extent do OVDs rely on a combination of advertising
and per-program, subscription, or other fees? Is there a trend among OVDs toward greater reliance on
We seek comment on the total amount of video programming available online and the
extent to which consumers are viewing video programming offered by OVDs. Has the entry of OVDs in
the marketplace resulted in reduced viewership of video programming from MVPDs and broadcast
television stations? What metrics should we use to compare OVD viewership, MVPD viewership, and
broadcast television station viewership? In what ways have OVDs improved the quantity and the quality
of their video programming since our 13th Report? Do OVDs provide local news or other local
programming? What financial returns do OVDs earn on their investments? What data are available and
what metrics should we use to analyze the extent to which OVDs' services are substitute or a complement
to MVPD service?99
Rural Versus Urban56.
Section 628(a) of the Communications Act sets as a goal increasing the availability of
delivered video programming to persons in rural and underserved areas.100 As in previous reports, we
expect to compare competition in the market for the delivery of video in rural markets with that in urban
98 Hulu aggregates television programs and is a joint venture of Providence Equity Partners and Disney, NBC
Universal, and News Corp, which operate the ABC, NBC, and Fox broadcast networks, respectively as well as
several able networks. See Hulu, Media Info, www.hulu.com/about.
99 See Comcast-NBCU Order at 86 (finding that "OVDs pose a potential competitive threat to Comcast's MVPD
service"). See also Open Internet Report and Order, 25 FCC Rcd at 17975-76, 129 (finding that "a cable or
telephone company's interference with the online transmission of programming by . . . stand-alone video
programming aggregators that may function as competitive alternatives to traditional MVPDs would frustrate
Congress's stated goals in enacting Sec. 628 of the Act . . . ").
100 47 U.S.C. 548(a).
Federal Communications Commission
FCC 11-65markets.101 For the purpose of measuring the availability of and competition among providers of video
programming, how should we define "rural" and "urban"? The Communications Act does not include a
definition of what constitutes a rural area, and the Commission has used various proxies to define rural
areas, including Economic Area ("EA") Nodal versus Non-nodal counties102 and Metropolitan Statistical
Area ("MSA") counties versus Rural Service Areas ("RSA") counties.103 In the 14th Mobile Wireless
Report, the Commission adopted a "baseline" definition of rural as a county with a population density of
100 persons or fewer per square mile.104 Are there other alternatives we should consider based on zip
codes, census tracts, or some other geographic unit to compare competition among video programming
distributors in rural and urban areas?105
We seek data, information, and comment to analyze whether there are differences in the
delivered video programming between rural and urban areas and the factors that affect these differences.
How does competition differ between rural and urban areas? What are the demographic, geographic, and
economic factors that drive differences in competition between rural and urban markets? Which, if any,
delivered video programming services are most often lacking in rural areas? How does access to
broadcast television stations differ between rural and urban areas? We recognize that most households
have access to two DBS services DIRECTV and DISH Network that provide national service. How
does access to other MVPD service differ between rural and urban areas? To what extent do rural areas
lack access to a cable system or other wireline MVPD? How many households lack access to a cable
system? What percentage of these households are in rural areas? Do rural areas have less access to high-
speed Internet service and, therefore, less access to OVD services relative to urban areas?
We seek information, data, and comment regarding the differences in the availability and
price of delivered video service in rural areas relative to urban areas. When cable service is available in
rural areas, are prices higher or quality lower relative to urban markets?106 Are there examples of rural
101 See 13th Report, 24 FCC Rcd at 579-580, 72-73; see also Notice of Inquiry, 24 FCC Rcd at 760-761, 22-
102 Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act Annual Report and Analysis of
Competitive Market Conditions with Respect to Commercial Mobile Services, Eighth Report, 18 FCC Rcd 14783,
14836 12 (2003) ("Eighth Wireless Competition Report"); Implementation of Section 6002(b) of the Omnibus
Budget Reconciliation Act Annual Report and Analysis of Competitive Market Conditions with Respect to
Commercial Mobile Services, Seventh Report ("Seventh Wireless Competition Report"), 17 FCC Rcd 12985, 13033
at 13022 (2002). Economic Areas are defined by the Department of Commerce's Bureau of Economic Analysis,
and consist of one or more counties that are "Economic Nodes" and the surrounding commercially related counties.
As a proxy for urban and rural geographic areas, the Commission compared counties that made up economic nodes,
i.e., nodal counties, with those that do not make up economic nodes, i.e., non-nodal counties. Eighth Wireless
Competition Report, 18 FCC Rcd 14814-14815, 62.
103 For administrative convenience, the Commission defined markets for the licensing of cellular systems in terms of
Metropolitan Statistical Areas (MSAs) and Rural Service Areas ("RSAs"). MSAs are 306 areas defined by the
Office of Management and Budget, as modified by the Commission. RSAs are 428 areas, other than MSAs,
established by the Commission. 47 CFR 22.909. See also Eighth Wireless Competition Report, 18 FCC Rcd
14837, 113; Seventh Wireless Competition Report, 17 FCC Rcd 13022.
104 See 14th Mobile Wireless Report, 25 FCC Rcd at 11611, 351.
105 See Sec. II.A.1. MVPD Structure supra. For example, USDA's Economic Research Service Rural-Urban
Commuting Area (RUCA) codes use census tracts rather than counties. Cromartie & Shawn Bucholtz, Economic
Research Service, U.S. Department of Agriculture, Defining the "Rural" in Rural America, AMBER WAVES 30
available at http://www.ers.usda.gov/AmberWaves/June08/Features/RuralAmerica.htm.
106 The Cable Price Survey Report provides information about cable rates nationally and does not provide a
comparison of rates in urban areas versus rural areas.
Federal Communications Commission
FCC 11-65areas that receive delivered video programming service similar in price and quality to those found in
Alaska and Hawaii59.
In the 13th Report, we discussed unique issues faced by DBS subscribers in Alaska and
Hawaii.107 For example, we discussed the size and number of DBS dishes needed to receive DBS
programming and the use of independent dealers, rather than national retail chains, to purchase DBS
service. We seek information and comment regarding MVPD and OVD service in Alaska and Hawaii.
We are interested in how the availability of MVPD and OVD services in these states differs from those
that are available in the other states. Do consumers in Alaska and Hawaii have the same or similar access
to MVPD, broadcast, and OVD services as consumers in the other 48 states? Are prices for subscription
to MVPDs higher than those found in other states? Is the same quantity of video programming available
and is it offered in programming packages similar to the services in other states? We request updated
information on the delivery of video programming to consumers in Alaska and Hawaii relative to that
provided in other states.
KEY INDUSTRY INPUTS
Video Content Creators60.
Creators of video programming include major studios that are subsidiaries of
entertainment conglomerates and independent production companies.108 Many of the large firms that
create content also own broadcast and/or cable networks.109 Because MVPDs and broadcast television
stations increasingly negotiate directly with content creators for non-linear forms of content distribution,
including VOD and online video distribution, we plan to look more closely at content creators in our 14th
Report. We request data, information, and comment that will help us analyze the number and size of
content creators and the evolving relationship between content creators and the firms that distribute video
content. Are there barriers for independent production entities to access the audiences of all delivery
systems (including broadcast and online) not just MVPDs? In addition, we are interested in information
regarding entities, local and national, that create news, public interest programming and/or sports and the
relationships between the content creators and those that deliver video programming.110
107 13th Report, 24 FCC Rcd at 663-665, 257-260.
108 Large firms that create content include CBS Corporation, NBC Universal, News Corporation, Disney
Corporation, Sony Corporation, and Viacom. See Jonathan A. Knee, Bruce C. Greenwald, and Ava Seave, THE
CURSE OF THE MEDIA MOGUL 164, Table 9.1 (2009). In addition to creating television content, many of these
companies produce theatrical movies that become video programming in a subsequent distribution window. Id. See
also Harold L. Vogel, Entertainment Industry Economics, 7th Edition at 88 (2007) (" . . . since the 1980s, the total
fees from licensing of films for use in ancillary markets (network and syndicated television, pay cable, and home
video) have collectively far overshadowed revenues derived from theatrical releases."). Independent content
creators include companies, such as Lionsgate, the producer of Mad Men. Lionsgate, Investors: About Lionsgate,
http://investors.lionsgate.com (visited Jan. 27, 2011).
109 For example, Disney and its affiliated companies include movie and television production studios, as well as the
ABC television network and several cable networks, including ESPN and ABC Family. The Walt Disney Company,
Corporate Information: Company Overview, http://corporate.disney.go.com/corporate/overview.html (visited Jan.
110 We note that, a significant portion of news programming is produced at the local and regional level, and that with
respect to sports, each league negotiates rights differently. See HAROLD VOGEL, ENTERTAINMENT INDUSTRY
ECONOMICS, 422-434 (2007) and Rich Thomaselli, As College Football's TV Landscape Changes, Brands Still Find
Federal Communications Commission
We seek data, information, and comment on the business strategies of content creators
regarding the selling and licensing of video content and the effect on video distribution. How have
changes in the creation of content affected the distribution of video programming? Have changes in
content creation increased investment in the distribution of video programming? Have changes in the
business strategies of content creators regarding the type of video content created, the timing of release of
specific video content through the various delivery systems (i.e., the order of delivery technologies used
to distribute the programming, a process also called windowing),111 and the prices charged for content in
each window affected competition between distributors of video programming? Have there been
significant changes in the bargaining power between content creators and distributors of video
programming? How do the windowing strategies of video content creators affect the distribution of video
programming through VOD and over the Internet? Have business strategies changed for creators of news
programming, especially local news programming? Are there specific strategies that affect the delivery
of sports programming that differ from those of creators of other types of video content? We seek data,
information, and comment to analyze each of these issues.
Video Content Aggregators62.
Video content aggregators are entities that combine video content into packages of video
programming for distribution.112 Video content aggregators include broadcast networks (e.g., ABC) and
cable networks (e.g., ABC Family), which package video content produced in-house or by outside
producers into regularly scheduled programming. Video content aggregators also include broadcast
stations (e.g., WJLA-TV, Washington, DC) which combine in-house productions with individual
programs acquired from syndicators, and, in the case of network affiliates, programming supplied by a
network for distribution to consumers. The Commission has tracked the number and ownership of cable
and broadcast networks in previous reports, in part because Section 628 of the Act prohibits MVPDs from
unduly or improperly influencing a cable network in which it has an attributable interest in its
negotiations with competing, unaffiliated MVPDs.113
We plan to continue to look at traditional video programming and seek data, information,
and comment regarding the impact of changes in the aggregation of content on the delivery of video
programming. Have changes in the business models of content aggregators affected competition among
distributors of video programming? Have there been significant changes in the bargaining power between
content aggregators and distributors of video programming? Has entry by new video content aggregators
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Marketing Opportunities, ADVERTISING AGE, July 26, 2010,
111 In addition to distributing movies in theaters, producers sell rights to distribute them on DVDs, on demand, pay
television services (e.g., HBO and Showtime), broadcast networks, and cable television networks. Likewise,
television production companies have traditionally adhered to prescribed time gaps between the initial broadcast and
cable distribution of a program series, DVDs, and syndication. Doug Heise, Accelerating Pace of Online Innovation
Threatens Traditional Hollywood Distribution Windows, Panvidea, Aug. 26, 2010 at
http://www.panvidea.com/category/blog/ (visited Jan. 14, 2011). See also Eirk Gruenwedel, Bewkes: Netflix Bad
for Repurposed Programming, HOME MEDIA MAGAZINE, Dec. 6, 2010 at
http://www.homemediamagazine.com/warner/bewkes-netflix-bad-repurposed-programming-21331 (visited Jan. 14,
112 We note that some OVDs distribute video programming aggregated by other entities and that some OVDs
aggregate the programming they distribute.
113 See 47 U.S.C. 548. A "video programming vendor" is any "person engaged in the production, creation, or
wholesale distribution of video programming for sale." See also supra 18-19 (vertical integration).
Federal Communications Commission
FCC 11-65or increased programming channels offered by existing content aggregators lead to an expanded number
of channels offered by MVPDs or additional programming offered by broadcast television stations on
their multiple digital streams? Have changes in the business models of content aggregators affected the
growth of OVDs? Are existing video content aggregators creating additional programming networks and
packages, or are new aggregators creating video programming packages? What factors do video content
aggregators, including broadcast networks, cable networks, and broadcast stations, consider when
deciding the terms of distributing their content?
Consumer Premises Equipment64.
Consumer premises equipment traditionally refers to devices that enable consumers to
watch video content from MVPDs and broadcast stations on televisions. Such devices include
televisions, antennas, cable and satellite set-top boxes, VHS and DVD players, and recording equipment
(e.g., DVRs). Today, however, consumer premises equipment also includes devices (e.g., video game
consoles, and media streaming devices) that enable video content delivered by OVDs to be viewed on a
television.114 It also includes devices that enable video content delivered by broadcast television stations
and MVPDs to be viewed on a personal computer or handheld device.
Recently, the term "consumer premises equipment" has come to include devices, such as
"connected-TVs," that receive video content directly from the Internet.115 For example, in addition to
enabling users to watch videos on their computers, several browsers and set-top boxes (e.g., Roku, Boxee,
Kylo, and Apple TV) deliver online video directly to viewers' televisions.116 With an Internet-enabled
television set, game console (e.g., Microsoft's Xbox117 and Sony's PlayStation), or Blu-Ray player,
consumers can watch certain television programs, movies, and sporting events online. Many consumer
electronics manufacturers have partnerships with Netflix to enable streaming of movies and television
shows to subscribers of the NetFlix service.118 DVR manufacturer TiVo enables consumers to purchase
movies and television programs from online stores. Likewise, mobile devices such as Apple's iPad
enable consumers to watch some television programs and movies using broadband wireless connections.
In the 14th Report, we plan to discuss the devices current and forthcoming that
facilitate the delivery of video programming and examine how these inputs affect competition in the
delivery of video programming.119 We request information on developments relating to consumer
114 For purposes of this Further Notice, we consider consumer premises equipment used in conjunction with MVPD
service as a separate input, consistent with the Commission's navigation device proceedings, although we recognize
that some operators consider such equipment an integral part of their service. See, e.g., AT&T Comments, MB
Docket No. 10-91, CS Docket No. 97-80 and PP Docket No. 00-67 (filed July 13, 2010), at 18, and Verizon
Comments, MB Docket No. 10-91, CS Docket No. 97-80 and PP Docket No. 00-67 (filed July 13, 2010) at 8.
115 For example, we note that Time Warner Cable and Comcast recently announced plans to bring MVPD
programming to Samsung's Internet "connected-TVs" and tablets without the need for a set-top box. See Consumer
Electronics Association, Major Products Innovation and Keynotes from Verizon, Audi and Samsung Kick Off 2011
International CES (press release), Jan. 7, 2011.
116 See Michael Learmonth, "Thinking Outside the Box: Web TVs Skirt Cable Giants," ADVERTISING AGE, Jan. 18,
2010. See also, the Diffusion Group, "Over-the-Top, Cord-Cutting, and the Consumer," MARKET DBRIEF, 2009
available at http://tdgresearch.com/media/p/522.aspx (visited Dec. 16, 2010).
117 Brian Stelter, "For Xbox, Focus Shifts from Game to Video," The New York Times, Jan. 19, 2010.
118 For a complete list of devices supported by NetFlix, see Stream Movies & TV Online, Watch Online Movies,
Netflix Ready Device, http://www.netflix.com/NetflixReadyDevices?Inktrk=nmh_nrd (visited Feb. 7, 2011).
119 See, e.g., Video Device Competition; Implementation of Section 304 of the Telecommunications Act of 1996:
Commercial Availability of Navigation Devices; Compatibility between Cable Systems and Consumer Electronics
Federal Communications Commission
FCC 11-65premises equipment and services that provide options to consumers for viewing video programming.
Further, we seek information on the retail market for set-top boxes, including set-top boxes that do not
use CableCARDs such as those sold at retail for use with DBS services. What are the challenges that
manufacturers face in investing and innovating in consumer equipment? Can consumers easily compare
prices to lease smart video devices from their MVPDs and/or purchase them in retail outlets? Therefore,
we request information regarding the different types of consumer premises equipment both MVPD
supplied and non-MVPD supplied used to access video content and the capabilities thereof. We also
seek information and comment on how competition among video programming distributors is affected by
developments related to consumer premises equipment, such as electronic programming guides, two-way
functionality, and CableCARDs that permit the reception of secured programming services without a
leased set-top box, and developments in the regulatory environment for consumer premises equipment.120
We also request information regarding digital rights management technology and issues that affect the
availability of video programming to consumers.
We are also interested in MVPDs that purchase consumer equipment from consumer
electronics manufacturers as inputs for the delivery of video programming. Because technical
specifications differ among distributors of delivered video programming, electronics manufacturers must
coordinate with firms that deliver video programming to ensure equipment compatibility. We seek
information to analyze the relationships between MVPDs that deliver video programming and
manufacturers of consumer premises equipment, especially cable and DBS set-top boxes and devices that
enable consumers to move video delivered over the Internet to televisions.
We seek information about how trends in consumer behavior affect the products and
services of providers of delivered video programming. We seek data on trends that compare consumer
viewing of regularly scheduled video programming with viewing of time-shifted programming using
DVRs, VOD content, and OVD content. Recent reports indicate that an increasing number of consumers
are viewing videos online.121 In the Comcast-NBC Universal transaction, we found that if viewers are
able to watch television and other programming online, when they want, that OVD service will compete
against Comcast's DVR and on demand services, and thereby affect the number of people who subscribe
to its traditional MVPD service.122 In the Comcast-NBC Universal transaction, we also found that while
most consumers view OVD service today as a complement rather than a substitute for MVPD service,
(...continued from previous page)
Equipment, 25 FCC Rcd 4275 (2010) ("AllVid NOI"). To effectuate the intent of Congress as set forth in Section
629 of the Communications Act, the AllVid NOI sought comment on steps to foster a retail market for devices that
access all MVPDs by requiring MVPDs to support a standardized interface by which retail devices can
communicate with the MVPD. Id. See 47 U.S.C. 549(a). See also FEDERAL COMMUNICATIONS COMMISSION,
CONNECTING AMERICA: THE NATIONAL BROADBAND PLAN 52 (2010).
120 See Implementation of Section 304 of the Telecommunications Act of 1996, Commercial Availability of
Navigation Devices, Compatibility Between Cable Systems and Consumer Electronic Equipment, CS Docket No.
97-80, PP Docket No. 00-67, Third Report and Order and Order on Reconsideration, 25 FCC Rcd 14657 (2010).
121 ComScore estimates that in November 2007, 138 million Americans, representing about 75 percent of U.S.
Internet users, watched a video online, averaging 3.25 hours during the month. ComScore, Inc., Google Sites' Share
of Online Video Market Expands to 31 Percent in November 2007, According to ComScore Video Metrix (press
release) Jan. 17, 2008. ComScore estimates that three years later, this number increased to 172 million Americans,
representing 84 percent of Internet users, averaging 14.7 hours during November 2010. ComScore, Inc., ComScore
Releases November 2010 U.S. Online Video Rankings (press release) Dec. 16, 2010.
122 Comcast-NBCU Order at 82.
Federal Communications Commission
FCC 11-65Comcast has an incentive and ability to diminish the potential competitive threat from these new
services.123 Do these assertions apply equally to the incentives and ability of other MVPDs? Are
consumers who are not "cutting" the MVPD cord "shaving" their subscriptions by, for example,
substituting Netflix for premium channels or VOD services? Do consumers view OVD service in
conjunction with over-the-air broadcast television service as a potential substitute for MVPD service?
Video distributors advertise their services on television, in newspapers, through mailings,
and offer Internet sites where potential consumers can find information about services, equipment, prices,
and the cost of installation. We seek data, information, and comment on the development of consumer
information sources for delivered video programming services and equipment. Do consumers have
sufficient information to compare the prices, services, and equipment that video distributors offer? What
do consumers consider most important when choosing a provider? What do consumers say are the main
reasons for switching providers (e.g., price, quantity, quality)?
Authority. This Further Notice 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,
Ex Parte Rules. There are no ex parte or disclosure requirements applicable to this
proceeding pursuant to 47 C.F.R. 1.1204(b)(1).
Comment Information. Interested parties may file comments and reply comments on or
before the dates indicated on the first page of this document. Comments may be filed using: (1) the
Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking
Portal, or (3) by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63
FR 24121 (1998). All filings concerning matters referenced in this Public Notice should refer to MB
Docket No. 07-269.
Electronic Filers: Comments may be filed electronically using the Internet by
accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal:
Paper Filers: Parties who choose to file by paper must file an original and four copies
of each filing. If more than one docket or rulemaking number appears in the caption
of this proceeding, filers must submit two additional copies for each additional docket
or rulemaking number. Filings can be sent by hand or messenger delivery, by
commercial overnight courier, or by first-class or overnight U.S. Postal Service mail.
All filings must be addressed to the Commission's Secretary, Office of the Secretary,
Federal Communications Commission.
o All hand-delivered or messenger-delivered paper filings for the Commission's
Secretary must be delivered to FCC Headquarters at 445 12th St., SW, Room
TW-A325, Washington, DC 20554. All hand deliveries must be held together
with rubber bands or fasteners. Any envelopes must be disposed of before
entering the building. The filing hours are 8:00 a.m. to 7:00 p.m.
o Commercial overnight mail (other than U.S. Postal Service Express Mail and
Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD
123 Comcast-NBCU Order at 9. See also Open Internet Report and Order, 25 FCC Rcd at 17916-18, 22, n.54.
Federal Communications Commission
FCC 11-65o U.S. Postal Service first-class, Express, and Priority mail must be addressed to
445 12th Street, SW, Washington DC 20554.
Accessibility Information. To request materials in accessible formats for people with
disabilities (Braille, large print, electronic files, audio format), send an e-mail to email@example.com or call
the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).
For further information about this Further Notice of Inquiry, please contact Marcia
Glauberman at (202) 418-7046, firstname.lastname@example.org, or Dan Bring at (202) 418-2164,
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
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