Report On Average Rates For Cable Programming Service And Equipment
Federal Communications Commission
DA 13-1319
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of)
)
Implementation of Section 3 of the Cable
)
Television Consumer Protection and Competition
)
MM Docket No. 92-266
Act of 1992
)
)
Statistical Report on Average Rates for Basic
)
Service, Cable Programming Service, and
)
Equipment
)
REPORT ON CABLE INDUSTRY PRICES
Adopted: June 7, 2013
Released: June 7, 2013
By the Chief, Media Bureau:TABLE OF CONTENTS
HeadingParagraph #
I. INTRODUCTION AND EXECUTIVE SUMMARY ........................................................................... 1
II. OVERVIEW OF THE SURVEY........................................................................................................... 6
III. SURVEY RESULTS............................................................................................................................ 13
A. Cable Programming Services .................................................................................................... 14
B. Cable Programming Channels ................................................................................................... 18
C. Customer Premises Equipment.................................................................................................. 21
D. DTV Viewability......................................................................................................................... 23
IV. CONCLUSION .................................................................................................................................... 27
V. ORDERING CLAUSE......................................................................................................................... 28
ATTACHMENTS 1-9
APPENDIX: Survey Methodology
Federal Communications Commission
DA 13-1319
I.
INTRODUCTION AND EXECUTIVE SUMMARY
1.Section 623(k) of the Communications Act of 1934, as amended by the Cable Television
Consumer Protection and Competition Act of 1992 (Cable Act),1 requires the Commission to publish
annually a statistical report on the average rates that cable operators2 charge for "basic cable service, other
cable programming," and cable equipment.3 The Cable Act also requires the Commission to compare the
rates of cable operators subject to effective competition, as identified through specific adjudications, with
those of cable operators without an adjudicated finding of effective competition.4 This Report fulfills
those statutory directives and presents key findings for the 12 months ending January 1, 2012.5
1 Section 623(k) was adopted as Section 3(k) of the Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, codified at 47
U.S.C. 543(k).
2 All averages in this report are weighted averages where the weight given to an individual cable operator depends
on the number of subscribers to the operator in that community. For the purpose of our report, a cable operator (or
operator) refers to an entity that operates a wireline system and is a multichannel video programming distributor
(MVPD) that makes available for purchase, by subscribers or customers, multiple channels of video programming.
See 47 C.F.R. 76.905(d). In our report, the term cable operator includes operators of traditional coaxial and fiber
wireline cable systems, municipalities, and telephone companies, including Verizon FiOS. It does not include
MVPD operators of wireless systems, direct broadcast satellite (DBS), or AT&T U-verse, because these operators
are not associated with any FCC Community Unit Identifiers (CUID). The Commission assigns a CUID code to
each registered operator for each community that operator serves. See 47 C.F.R. 76.1801.
3 The Cable Act requires operators to offer an entry-level basic service, which must include, at a minimum, all
commercial and noncommercial local broadcast stations entitled to carriage under the must-carry provisions of the
Communications Act of 1934, 47 U.S.C. 534-35. Basic service must also offer any other local broadcast station
provided to any subscriber, as well as public, educational, and governmental access channels that the local franchise
authority (LFA) may require the operator to carry. See 47 U.S.C. 543(b)(7). The term "cable programming
service" refers to a tier of video channels for which the operator charges a separate rate, other than the basic service
channels and channels for which per-channel or per-program charges apply. See 47 U.S.C. 543(k)(l)(2). Cable
equipment refers to a converter box and other customer premises equipment used for accessing cable services. See
47 U.S.C. 543(b)(3).
4 See 47 U.S.C. 543(k)(1) (cross-referencing 47 U.S.C. 543(a)(2)). Under the Cable Act, if the Commission
grants a finding of effective competition to an operator and the community it serves, that operator is not subject to
regulation of its basic service price. Such a finding requires the operator to meet one of four tests: (1) fewer than 30
percent of households subscribe to the operator's cable programming service (low penetration test); (2) the operator
and at least one other MVPD, including direct broadcast satellite (DBS) operators, offer comparable service to at
least 50 percent of households and at least 15 percent of households subscribe to such service other than from the
largest MVPD (50/15 test); (3) a municipality offers MVPD service to at least 50 percent of households (municipal
test); or (4) a local exchange carrier (LEC) or its affiliate, or an entity using the facilities of the LEC or its affiliate,
offers MVPD service by means other than DBS service in an area that an unaffiliated MVPD also serves (LEC test).
See 47 C.F.R. 76.905(b). The LFA may not regulate the operator's rate for basic cable service if the operator is
deemed subject to effective competition, unless the LFA seeks and the Commission grants recertification. See 47
U.S.C. 543(a)(2); and 47 C.F.R. 76.916(a). As required by statute, the Commission does not take into
consideration those communities that have not been formally adjudged as being subject to effective competition.
See 47 U.S.C. 543(k)(1). Some communities, however, may in fact face market competition sufficient to warrant
a finding of effective competition but the incumbent cable operator, for various reasons, has not petitioned the
Commission for an effective competition finding, or, if a petition was filed, it may be pending or may have been
granted after the cut-off date for our survey. For reasons discussed in paragraph 8, infra, there may be a significant
number of these communities included in our noncompetitive sample, which could affect the results of our report.
However, because we do not know which of the noncompetitive communities in our sample actually face effective
competition, we are unable to estimate any potential impact on our findings.
5 The information in this report meets the Commission's information quality guidelines. See Implementation of
Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility and Integrity of Information Pursuant to
Section 515 of Public Law No. 105-554, Information Quality Guidelines, 17 FCC Rcd 19890 (2002).
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2.Average prices for all communities. The average monthly price of expanded basic
service (the combined price of basic service and the most subscribed cable programming service tier
excluding taxes, fees and equipment charges) for all communities surveyed increased by 4.8 percent over
the 12 months ending January 1, 2012, to $61.63, compared to an annual increase of 2.9 percent in the
Consumer Price Index (CPI). The price of expanded basic service has increased at a compound average
annual growth rate of 6.1 percent during the period 1995-2012. The CPI increased at a compound
average annual growth rate of 2.4 percent over the same period. However, the price per channel (price
divided by number of channels) for subscribers purchasing expanded basic service decreased by 0.4
percent over the 12 months ending January 1, 2012, to 51 cents per channel. Over the 17 years from
1995-2012, the increase in price per channel was less than 1 percent per year (0.2 percent) on an annual
basis.6
3.
Average prices in communities with a finding of effective competition compared with
prices in noncompetitive communities. Over the 12 months ending January 1, 2012, the average price of
expanded basic service increased by 4.3 percent, to $60.99, for those operators serving communities for
which no effective competition finding was made as of January 1, 2012 (noncompetitive communities).
For the effective competition communities, the average price of expanded basic increased by 5.3 percent,
to $62.49. Over this period, price per channel increased slightly, by 0.2 percent, in noncompetitive
communities, to 52 cents per channel, and decreased by 1.4 percent in effective competition communities,
to 49 cents per channel. The price per channel is 6.1 percent lower in effective competition communities
than in noncompetitive communities, which reflects that operators in effective competition communities
carry more channels on expanded basic service than operators in noncompetitive communities.
4.
As noted, the price of expanded basic service averaged across all effective competition
communities was higher than the price of expanded basic service averaged across noncompetitive
communities. The difference is statistically significant. The two previous surveys also found that the
price of expanded basic service in effective competition communities was higher than the price of
expanded basic in noncompetitive communities. Prior to that, surveys found that effective competition
communities in general had lower prices.7 As discussed further in Section III, several factors contributed
to this change of trend, including an increase in the number of communities where there has been a
finding of effective competition based on the DBS market share.
5.
We next compare the expanded basic price in effective competition communities overall
($62.49) to subgroups of communities, as of January 1, 2012. Prices on average were 1.4 percent lower
than that average ($61.64) for incumbent cable operators in communities with a rival operator; less than
one percent lower ($62.28) for the rival operators; 0.4 percent higher ($62.76) when a finding was granted
based on the DBS market share meeting the 15 percent threshold established by the statute; and 0.4
percent higher ($62.71) in the "Other" subgroup of cable operators competing with a wireless MVPD
system or who met the low penetration test as a result of serving fewer than 30 percent of households.
6 To calculate 2011-2012 price changes, the survey sampled two years of data, rather than using the 2011 price from
the prior (2011) survey, so as not to introduce random sampling variance. For further explanation, See Appendix,
paragraph 9. Table 1 reports the 2012 price and annual change based on the 2012 survey. Table 3 reports the
historical price series based on price data from that survey year.
7 See Attachment 7 for citation to previous survey reports. As noted, the effective competition average price for
expanded basic service exceeded the noncompetitive average price for the first time in the 2009 survey.
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II.
OVERVIEW OF THE SURVEY
6.The information and analysis provided in this Report are based on the Commission's
2012 survey of cable industry prices (survey).8 The survey requested data from a random sample of 800
cable operators serving two groups of communities: (1) communities where operators have not been
found to meet one of the statutory tests for effective competition (noncompetitive communities); and (2)
communities where operators have been found to meet one of the statutory tests for effective competition
and, as a result, the cable operator serving that community is not subject to price regulation of its basic
service by the local franchise authority (effective competition communities).
7.
We surveyed operators serving 485 out of the 24,487 noncompetitive communities and
315 out of the 9,464 communities granted an effective competition finding pursuant to the statute. In
selecting cable operators for our sample from the group of effective competition communities, we relied
on the Commission's formal findings of effective competition, which are based on the statutory definition
of effective competition in the Cable Act.9 Most of the effective competition cases that come before the
Commission are based on competition between a cable operator and a DBS provider. The remaining
effective competition cases are based on competition between a cable operator and a wireline or wireless
competitor, or on low subscriber penetration.
8.
Our list of effective competition communities was limited to adjudicated findings of
effective competition because the statute fails to take into account those areas of the country where the
conditions for a finding may be present (i.e., where sufficient market-based competition may be present to
warrant such a finding), but either no cable operator has petitioned the Commission to make a finding of
effective competition, or a petition has been filed with the Commission but not granted as of the date our
sample was drawn.10 We note that, due to the emergence of competing providers like Verizon, AT&T,
WideOpenWest (WOW!) other wireline competing providers, and DBS service (which is available
nationwide and has a national penetration rate greater than 15 percent on average) there may be many
areas of the country where a competing provider exceeds the 15 percent threshold set forth in the 50/15
test for effective competition but the incumbent cable operator has not petitioned the Commission for a
finding of effective competition.
9.
The nationwide availability of DIRECTV and DISH Network DBS services suggest that
a comparison of those companies' prices and channels to cable provider offerings could be informative as
part of this Report. Therefore, we compare herein the national average price, number of channels and
price per channel for cable's expanded basic service package to comparable packages offered by
DIRECTV (Choice) and DISH Network (America's Top 120 Plus). As of January 1, 2012, the average
expanded basic cable price ($61.63) was higher than both DIRECTV ($60.99) and DISH Network
($49.99). DIRECTV offered the greatest number of channels (182 compared to cable's 150), and had a
significantly lower price per channel than the cable average (34 cents compared to 51 cents). Compared
to the average cable provider, DISH Network offered fewer channels (142), and had a significantly lower
price per channel (35 cents). Additional details are provided in Attachment 9.
10.
Brief Overview of Survey Methodology. The sample of cable operators granted a finding
of effective competition was selected from four subgroups according to the primary basis for the
8 The Commission directed a randomly selected sample of cable operators to respond to a survey questionnaire that
requested data primarily as of January 1, 2011 and January 1, 2012. See Implementation of Section 3 of the Cable
Television Consumer Protection and Competition Act of 1992, Statistical Report on Average Prices for Basic
Service, Cable Programming Services, and Equipment, 27 FCC Rcd 5782 (2012).
9 See 47 U.S.C. 543(a)(2).
10 See, 47 U.S.C. 543(k).
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DA 13-1319
finding.11 The first two subgroups are comprised of communities in which a second wireline operator'sofferings provided the basis for the finding of effective competition. The first subgroup (Second Cable
Operator: Incumbent) consists of the incumbent operator in the community and the second subgroup
(Second Cable Operator: Rival) consists of the rival operator in the community. We also report the
weighted average of both the incumbent and rival operators (Both). The incumbent is the operator who
provided service prior to the rival operator's introduction to the market. Findings of effective competition
for this incumbent subgroup are on the basis of either (a) the 50/15 test resulting from the presence of at
least two MVPDs or (b) the local exchange carrier (LEC) test resulting from the presence of at least two
MVPDs, one of which is a LEC or an entity affiliated with or using the LEC's facilities. The third
subgroup contains operators in communities in which a sufficient percentage of households subscribed to
DBS service to substantiate a finding of effective competition under the 50/15 test (DBS subgroup). The
fourth subgroup consists of operators in communities that either (a) in range of a wireless operator who
offers MVPD programming comparable to the cable operator's offerings or (b) met the low penetration
test as a result of serving fewer than 30 percent of households in the service area (Other Operators). All
effective competition findings associated with a wireless MVPD to date have been made under the LEC
test, although the Commission could also make a finding of effective competition based on the presence
of a wireless MVPD under the 50/15 test, assuming the wireless MVPD's service met the requirements
for that test.
11.
For each community selected for the sample, the operator serving that community was
asked to complete a questionnaire that included questions on the prices of basic cable service and other
cable programming service offerings. We used the information collected to estimate and compare
average prices across the sample groups and subgroups. Basic service consists of the local broadcast
stations; public, educational, and governmental access channels12; and typically a few additional channels
that may be of local, regional, national, or international origin. Subscribers purchase basic service as a
prerequisite to subscribing to expanded basic.13 The survey focused on expanded basic service, which
consists of the basic service channels plus a large number of popular national cable networks. Expanded
basic service is generally the most-subscribed-to level of service after basic service. We also collected
information on the price of the "next most popular" (next most subscribed) service after expanded basic.
This next most popular service package generally includes all the programming channels included in the
expanded basic service package and at least seven additional cable network channels. As of January 1,
2012, 85 percent of subscribers took at least expanded basic service, and 15 percent took basic service
only.14 In addition, 48 percent of subscribers on average took the next most popular programming
service. Survey respondents reported prices as of January 1, 2011 and January 1, 2012, permitting us to
11 These subgroups are designed to achieve desirable levels of statistical precision, and, thus, are not grouped
according to the four statutory tests for effective competition under Section 623(l) of the Cable Act. See Attachment
1 and the Appendix, Section A, for a more complete description of our sampling methodology.
12 See, e.g., 47 U.S.C. 543(b)(7).
13 See, e.g., 47 U.S.C. 543(b)(7).
14 This 85 percent includes subscribers whose operators do not offer a separate expanded basic service tier but
instead offer a basic service tier that includes many of the popular national networks typically associated with
expanded basic. All operators are required to offer a basic service tier that includes, at a minimum, those channels
prescribed by statute, but the statute does not require operators to offer a separate tier of cable programming service,
i.e., an offering that includes both the basic service tier and other cable programming. See 47 U.S.C. 543(k).
When an operator offers both a basic service tier and a separate expanded basic service tier, we refer to the basic
service, for purposes of this survey, as "limited basic." Survey results indicate that less than three percent of
subscribers receive basic service from operators that do not also offer a separate expanded basic service, i.e., from
operators that do not offer a "limited basic" service.
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calculate the annual percentage changes for the year ending January 1, 2012. We calculated averages foreach survey question by subgroup, by the larger sample groups, and for communities overall.
12.
Accuracy and Reliability Review. We take a number of steps to ensure the accuracy and
reliability of the data upon which this report is based. Our survey is fully Internet-based, which means we
provide it to respondents on the Commission's Internet site and the questionnaires are completed and
submitted to us on that site. Many of the questions have built-in checks for reasonableness, which prompt
the respondents to re-check their answers as they are completing the survey if those answers fall outside
of a predetermined "range of reasonableness" based on our experience with prior price surveys. A second
responsible party within each cable operator's company (other than the person who completed the survey)
is asked to certify the completeness and accuracy of that company's responses. After receiving the
submitted surveys, we examine all responses using a computer program designed specifically to identify
apparent inaccuracies. When a particular response is found to lie outside of its statistically expected
reasonable range or is inconsistent with the answers to other questions in the questionnaire, the computer
program flags that response and we contact the cable operator and ask that operator to re-check the
flagged response and make corrections if needed.15
III.
SURVEY RESULTS
13.For cable operators and communities where the Commission has found effective
competition, most of these findings have occurred on the basis of DBS market share. Communities in the
DBS subgroup equaled 6,702 for the 2012 survey and accounted for 67 percent of cable subscribers in
communities with an effective competition finding, up from 65 percent in the previous survey. There
were 733 communities where the incumbent operator was found to face effective competition as a result
of the presence of a second operator. Incumbent and rival cable operators in these communities now
account for 26 percent of subscribers in communities with an effective competition finding, up from 24
percent in the previous survey. The remaining seven percent of effective competition subscribers were in
Other subgroups, either because they were in range of a wireless video operator or because they satisfied
the market low penetration test.
15 The percentage of survey responses that requires follow-up inquiries varies over time based on such factors as the
familiarity of the respondents with the survey, the complexity of the questions, and introduction of new questions to
the survey instrument. For the purposes of the 2012 survey, we contacted approximately 15 percent of the survey
respondents with follow-up inquiries. Each operator replied with a data correction or reasonable explanation of why
a particular response was plausible.
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A.
Cable Programming Services
14.Table 1 reports the average price of basic, expanded basic, and the next most popular
service (which we defined for purposes of the survey to include at least seven additional channels) as of
January 1, 2012.16 It also shows the average price per channel for expanded basic service.17 Further,
Table 1 reports the annual percentage change in price for the year ending January 1, 2012, for the sample
overall, for the noncompetitive group and the effective competition group and subgroups. Looking at the
averages in the Overall Average column, the price was $20.55 for basic service (6.2 percent increase),
$61.63 for expanded basic service (4.8 percent increase) and $74.57 for the next most popular service (4.3
percent increase). The price per channel for expanded basic service was 51 cents (0.4 percent decrease)
for expanded basic service.
Table 1
Monthly Price and Price per Channel
January 1, 2012Cable
Effective Competition Group and Subgroups
Overall
Non-
Programming
Average
competitiveGroup
Second Cable Operator
Service
DBS
Other
Average Incumbent
Rival
Both
Basic service
$20.55$20.83
$20.19
$18.93 $17.69 $18.75 $20.47 $22.86
Annual change
6.2%*
5.2%
7.5%*
7.6%*
3.6%
7.1%*
7.5%*
8.6%
Expanded basic
$61.63$60.99
$62.49
$61.64 $62.28 $61.73 $62.76 $62.71
Annual change
4.8%*
4.3%*
5.3%*
5.4%*
3.1%
5.1%*
5.4%*
5.6%
Next most popular
$74.57$74.84
$74.22
$71.51 $75.28 $72.05 $75.01 $74.82
Annual change
4.3%*
4.1%*
4.7%*
4.5%*
2.8%
4.3%*
4.8%*
4.4%*
Expanded basic
price per channel
$0.52
$0.49
$0.43
$0.56
$0.45
$0.50
$0.50
Annual change
-0.4%
0.2%
-1.4%
2.4%
-1.5%
1.7%
-2.4%
-1.2%
Source: Attachments 2 and 4. * Indicates a statistically significant annual change in price.
15.
Table 2 reports the price differentials between the effective competition subgroups
compared to the noncompetitive group. Overall, for expanded basic service, price in the effective
competition group is higher by 2.5 percent compared to the noncompetitive group. (An asterisk *
indicates a statistically significant differential.) One reason for this overall higher price is that price for
expanded basic charged by cable operators in the DBS subgroup is significantly higher, by 2.9 percent,
16 Except for price per channel, as explained in note 17, infra, data in this table does not include prices for customer
premises equipment unless the cable operator bundles the programming service and equipment into a single price.
Attachment 3 reports the price of programming, including equipment, for all operators. Each operator reported its
most commonly leased equipment to be a set-top converter box and remote control. Section III.C, infra, reports the
percent of equipment that included a specific feature such as high definition.
17 Price per channel adjusts the expanded basic programming price to incorporate differences in the number of
channels the subscriber receives. It equals the expanded basic programming price plus the price of the most
commonly leased equipment divided by the number of expanded basic channels including channels which may
require a converter box or other digital gateway equipment for reception.
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than the noncompetitive average.18 Further, in contrast to increases prior to 2009, expanded basic pricesare growing fastest in the effective competition communities, at 5.3 percent over the 12 months ending
January 1, 2012, compared to 4.3 percent annual growth in noncompetitive communities (See Table 1).
Price per channel however is significantly lower, by 6.1 percent, in the effective competition
communities. For the other two services, the average price differentials for basic service (3.0 percent
lower) and the next most popular service (0.8 percent lower) are not significantly different from the
average price in the noncompetitive group. At the subgroup level, some price differentials for cable
services are significantly different. In the Second Cable Operator subgroup, the average price an
incumbent offers is significantly lower for basic service and the next most popular service (4.5 percent
lower). Rivals offer a 15.0 percent lower basic service price although expanded basic and next most
popular service prices are not significantly different from operators in noncompetitive communities. In
the Other subgroup, the basic service price is significantly different than for noncompetitive communities.
Finally, on a per channel basis for expanded basic service, the price per channel is significantly lower in
the effective competition group overall and for incumbents in the second cable operator subgroup
reflecting the carriage of more channels in the effective competition group than in the noncompetitive
group.
Table 2
Price Differential for Effective Competition
Compared to Noncompetitive Average Price
January 1, 2012Cable
Effective
Effective Competition Subgroups
Programming
Competition
Second Cable Operator
Service
Group
Incumbent
Rival
Both
DBS
Other
Basic service-3.0%
-9.1% *
-15.0% *
-10.0% *
-1.7%
9.8% *
Expanded basic
2.5% *
1.1%
2.1%
1.2%
2.9% *
2.8%
Next most popular
-0.8%
-4.5% *
0.6%
-3.7% *
0.2%
0.0%
Expanded basic
price per channel
-6.1% *
-17.1% *
7.5%
-13.6% *
-3.6%
-2.7%
Source: Attachments 2 and 4. * Indicates a statistically significant differential.
16.
Table 3 shows that the average price of expanded basic service grew at a compound
annual rate of 6.1 percent over the 17-year period from 1995-2012, higher than the annual 2012 increase
of 4.8 percent shown in Table 1.19 Over the 17 years, channels offered with expanded basic service grew
annually at 5.8 percent, and price per channel grew by less than one percent (0.2 percent) on an annual
basis.20 For comparison, the CPI for All Items published by the Bureau of Labor Statistics (BLS) as a
18 The DBS subgroup constitutes about two-thirds of all effective competition findings and thus has considerable
weight. Note that the survey does not include DBS prices but rather the prices that cable operators charge in areas
where an effective competition finding was made on the basis of DBS market share. See note 2, supra.
19 The prices in Table 3 in each year are taken from the survey for that year. Because of the random variance of
survey samples from year to year, the "starting rate" will not necessarily match the "ending rate" from the prior
year's survey. For example, the 2011 prices in Table 3 were obtained from the sample communities included in the
2011 survey and do not exactly match the 2011 prices reflected in the 2012 survey shown in Attachment 2 because
the sample communities included in the 2012 survey may be different than those in the 2011 survey and may have
had different 2011 rates. For this same reason, the 2010 prices in Table 3 do not exactly match 2010 prices reflected
in the 2011 survey, and so on for each year reported in Table 3.
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measure of general price inflation grew annually at 2.4 percent over the 17 years. BLS also publishes aCPI for Cable, Satellite, and Radio Services, which grew annually at 4.1 percent over the 17 years.21
Table 3
Historical Averages
1995-2012Expanded Basic Service
Next Most
CPI
Basic
Year
Popular
Price
All
Price
Channels
Price per Channel
Service and
Cable
No.
Index
($)Index
Equipment*
Items
1995---
$22.35
44
100.0
$0.60
100.0
---
100.0
100.0
1996
---
$24.28
47
106.8
$0.61
101.7
---
103.0
106.9
1997
---
$26.31
49
112.3
$0.63
105.0
---
105.2
114.9
1998
$12.06
$27.88
50
113.9
$0.65
108.3
$38.58
107.0
122.6
1999
$12.58
$28.94
51
116.1
$0.65
108.3
$38.43
109.3
127.0
2000
$12.84
$31.22
55
124.5
$0.66
110.0
$39.64
113.3
132.9
2001
$12.84
$33.75
59
135.0
$0.60
100.0
$45.33
116.4
139.1
2002
$14.45
$36.47
63
142.5
$0.66
110.0
$46.59
118.1
147.8
2003
$13.45
$38.95
68
153.4
$0.65
108.3
$49.03
120.9
154.7
2004
$13.80
$41.04
70
159.8
$0.66
110.0
$51.76
123.2
160.7
2005
$14.30
$43.04
71
160.2
$0.62
103.3
$56.03
126.9
167.0
2006
$14.59
$45.26
71
161.4
$0.65
108.3
$59.09
131.9
171.8
2007
$15.33
$47.27
73
165.0
$0.67
111.7
$60.27
134.7
176.4
2008
$16.11
$49.65
73
165.5
$0.68
113.3
$63.66
140.4
181.1
2009
$17.65
$52.37
78
177.7
$0.71
118.3
$67.92
140.5
183.7
2010
$17.93
$54.44
117
204.6
$0.56
109.7
$71.39
144.2
189.1
2011
$19.33
$57.46
124
217.2
$0.57
115.9
$75.37
146.5
189.1
2012
$20.55 $61.63
150
262.0
$0.51
102.9
$78.91
150.8
196.8
Total change
---
176%
---
162%
---
3%
---
51%
97%
Average annual**
3.9%
6.1%
---
5.8%
---
0.2%
5.2%
2.4%
4.1%
Source: Attachment 7. * Customer premises equipment consisting of the most commonly leased set-top converter
and remote control. ** The average annual change is the compound average annual rate of change from 1995-2012.
17.
The survey collects data on a "family-friendly" package of channels specifically
marketed as a substitute for expanded basic. A number of operators offer such a programming service as
an alternative targeted toward subscribers who may object to some of the programming on expanded
basic. Survey responses show that the typical family package offers fewer channels than expanded basic
and requires a converter or other digital gateway. Some operators bundle the digital equipment with the
family-friendly package, while in other cases it is leased separately. Typically, the family-friendly
(Continued from previous page)
20 In Table 3, 2010 is the start of a new data series for channels and price per channel, reflecting the change to the
survey questionnaire. The difference between the 2009 and 2010 number of channels results in part from the
difference in the set of channels surveyed. The price per channel index in Table 3 adjusts for this difference in order
to accurately measure the percent change in the number of channels between 2009 and 2010. See the Appendix,
Section C, for a more complete explanation.
21 Because it covers a different mix of services and is adjusted for change in the number of programming channels,
the Cable, Satellite, and Radio CPI cannot be compared directly with the change in cable prices in our survey.
9
Federal Communications Commission
DA 13-1319
package includes basic service and some, but not all, of the channels included in expanded basic service.It also includes some channels included in the next most popular service or other programming service
package. Operators offered an average of 77 channels with a family-friendly package, compared to 49
channels for basic service and 150 channels for expanded basic service. While 45 percent of subscribers
had the option to elect a family-friendly package, less than one percent subscribed, the others electing
basic or expanded basic service. While this low percentage likely reflects a number of factors, the data
indicate that family-friendly packages generally lack sports programming (e.g. ESPN) and thus many
families may not consider it to be a viable alternative to expanded basic service. On average, expanded
basic services offered 2.2 channels devoted to regional sports networks,22 compared to the family-friendly
packages average of 0.1 regional sports networks. As of January 1, 2012, the price for a family-friendly
package, including the additional price of equipment if not included with the package, averaged $37.22,
which fell between the average for basic service ($20.55) and expanded basic service ($61.63).
B.
Cable Programming Channels
18.Table 4 shows the average number of video channels offered, the annual percentage
change in the number of video channels offered over the previous 12 months, and whether the percent
change is statistically significant (indicated with an asterisk *). Channels shown under expanded basic
include all basic service channels. The next most popular service package includes expanded basic
channels plus at least seven additional channels.23 Overall, the number of channels average 49, 150, and
231 for basic service, expanded basic service, and the next most popular service, respectively. The
number of video channels for all services averaged 407, which consists of the channels shown with basic,
expanded basic, the next most popular service, other non-premium and premium packages, and pay and
per-per-view programming. The number of channels in each category grew although not always by a
statistically significant percentage. Looking at effective competition subgroups, the number of channels
in almost all subgroups and services are higher than in the noncompetitive group counterparts.
Table 4
Number of Video Channels
January 1, 2012Cable
Effective Competition Group and Subgroups
Overall Noncom-
Programming
Average
petitiveGroup
Second Cable Operator
Service
DBS
Other
Average Incumbent
Rival
Both
Basic service
4946
53
64
43
61
50
52
Annual change
6.6%*
5.6%
8.0%*
6.9%
6.0%
6.8%
8.0%
12.3%
Expanded basic
150146
155
168
149
165
151
151
Annual change
7.0%*
6.4%*
7.8%*
3.4%
9.3%
4.2% 9.2%*
9.6%
Next most popular
231222
243
257
231
254
241
233
Annual change
6.5%*
6.2%*
6.9%*
4.6%
6.2%
4.8% 7.8%*
6.9%
All services
407373
451
490
449
484
436
460
Annual change
7.2%*
6.5%*
8.2%*
5.6%*
9.3% 6.1%* 8.8%* 11.0%*
Source: Attachment 5. * Indicates a statistically significant annual change.
22 Regional sports networks are defined in paragraph 20, below.
23 The survey asks respondents to provide the maximum number of video channels, including those which require
customer premises equipment to view. These video channels include local broadcast (including all viewing formats
and both main channel and multicast channels); public, educational, and governmental; commercial leased access;
other non-premium cable networks; video on demand offering free content; and other channels if offered at no extra
programming charge. The numbers do not include audio only channels.
10
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DA 13-1319
19.Table 5 displays basic service broken into its component channel categories, which vary
by only a few channels between effective competition and noncompetitive communities. The categories
are local broadcast; public, educational, and governmental (PEG) access; commercial leased access; non-
premium regional sports networks; and other non-premium channels.
Table 5
Basic Service Channels
January 1, 2012Effective Competition Group and Subgroups
Overall
Non-
Channel Category
Average competitive
Group
Second Cable Operator DBS Other
Average Incumbent Rival Both
Analog & std. definitiondigital broadcast channels
13.7
13.0
14.7
15.3
14.0 15.1 14.3
17.1
High definition digital
4.0
3.9
4.0
3.4
5.2
3.6
4.2
4.3
Digital multicast channels
11.6
10.1
13.5
15.3
10.7 14.6 13.5
10.1
All local broadcast
29.227.0
32.3
34.0
29.9 33.4 31.9
31.6
Pub., educ. & govt. (PEG)
3.3
3.1
3.6
4.1
5.6
4.3
3.4
2.9
Commercial leased access
1.0
0.7
1.4
1.8
0.5
1.6
1.3
1.7
Regional sports Networks
0.3
0.3
0.4
0.7
0.2
0.6
0.4
0.1
Other channels
15.2
15.0
15.4
23.4
7.3
21.1 13.2
16.1
All basic service
49.146.0
53.1
64.1
43.4 61.1 50.1
52.2
channels
Source: Survey. Totals may not add due to rounding.
20.
Table 6 reports the number of regional sports networks (RSNs) included in service
offerings. Overall, the average is 0.2 RSN channels on basic service, 2.2 channels on expanded basic
service, and 2.5 on the next most popular service package. A regional sports network in this report is
defined as a channel that carries a substantial number of live games from at least one nearby professional
sports team that is a member of the National Football League, Major League Baseball, the National
Basketball Association, or the National Hockey League. It does not include pay-per-view events.
Table 6
Regional Sports Networks
January 1, 2012Cable
Effective Competition Group and Subgroups
Overall
Non
Programming
Average
competitiveGroup
Second Cable Operator
Service
DBS Other
Average
Incumbent
Rival
Both
Basic service
0.20.2
0.3
0.5
0.2
0.5
0.3
0.1
Expanded basic
2.22.2
2.2
2.5
5.0
2.9
1.9
2.7
Next most popular
2.52.6
2.3
2.5
5.3
2.9
2.0
2.9
Source: Survey.
11
Federal Communications Commission
DA 13-1319
C.
Customer Premises Equipment
21.The survey asked cable operators if subscribers would need equipment to view all or
some channels when purchasing each programming service. Such equipment can include, for example, a
converter set-top box to enable consumers to view digital signals on analog TVs, or a high definition
(HD) converter that allows consumers to view HD channels in HD format and a remote control. If
respondents answered in the affirmative, the survey asked operators to report the extra monthly fee
required to lease the most commonly-leased equipment for this purpose. Operators were asked to identify
the equipment features, such as an interactive programming guide, a digital video recorder, etc. Table 7
shows that, as of January 1, 2012, the average equipment price was $6.28 with basic service, $7.29 with
expanded basic service, and $7.75 with the next most popular service package.24 Most equipment prices
increased on an annual basis. The overall price for the most commonly leased equipment with basic
service increased from $5.11 to $6.28 or 22.9 percent. The overall equipment price increases for
expanded basic service (0.9 percent) and the next most popular services (1.9 percent) were lower than the
programming price increases for those services (4.8 percent and 4.3 percent, respectively). Finally, we
note that equipment may change from year to year and thus the comparison of equipment prices to some
extent may reflect quality change.
Table 7
Price for Customer Premises Equipment
Most Commonly Leased EquipmentJanuary 1, 2012
Effective Competition Group and Subgroups
Cable
Overall
Non
Programming
Second Cable Operator
Average competitive
Group
Service
DBS
Other
Average
Incum-
Rival
Both
bentBasic service
$6.28$6.12
$6.45
$6.65
$7.89 $6.80 $6.37 $5.32
Annual change
22.9%
28.1%
18.1%
8.7%
23.1% 10.7% 20.9% 22.7%
Expanded basic
$7.29$7.20
$7.38
$7.55
$8.14 $7.64 $7.40 $5.96
Annual change
0.9%
0.0%
1.8%
2.9%
-12.6%
0.1%
2.3%
6.3%
Next most popular
$7.75$7.40
$8.16
$7.99
$8.15 $8.02 $8.25 $7.96
Annual change
1.9%
0.1%
4.0%
4.5%
-11.4%
1.6%
5.0%
7.0%
Source: Attachment 5.
22.
Table 8 identifies equipment features and the percent of cable systems in which the most
commonly leased customer premises equipment includes one or more of the following features: a remote
control unit (RCU), an interactive programming guide (IPG), HD video capability, or a digital video
recorder (DVR). For customers purchasing basic service only, 89 percent of systems offer a RCU. The
most commonly leased basic service equipment for 63 percent of systems includes an IPG, compared to at
least 90 percent for the other two services. Percentages are similar across all three services for the other
two features in the table. Regarding basic service, for 37 percent of systems, the most commonly leased
equipment includes HD video capability; and for 15 percent of systems, the most commonly leased
equipment includes a DVR.
24 An equipment price is not included in the average price of equipment if the respondent stated that the price of
programming already includes equipment or that equipment is unnecessary to view all or some of the channels.
12
Federal Communications Commission
DA 13-1319
Table 8
Equipment Features Offered by Cable Systems
Most Commonly Leased Customer Premises EquipmentJanuary 1, 2012
Cable
Non
Effective Competition Group and Subgroups
Overall
Programming Feature
com-Average
Group
Second Cable Operator
Service
petitiveDBS
Other
Average
Incumbent
Rival
Both
DVR
15%9%
24%
30%
2% 27%
23%
18%
Basic service
HD
37%28%
49%
72%
76% 72%
42%
29%
IPG
63%65%
61%
83%
93% 84%
54%
37%
RCU
89%85%
94%
88%
96% 89%
96%
97%
DVR
16%10%
23%
30%
2% 26%
23%
19%
Expanded
HD
40%33%
50%
70%
77% 71%
43%
36%
basic
IPG
90%90%
89%
93%
92% 93%
90%
76%
RCU
96%93%
100%
100%
96% 99% 100%
98%
DVR
19%13%
27%
36%
9% 32%
25%
21%
Next most
HD
45%37%
56%
77%
75% 76%
48%
54%
popular
IPG
96%94%
99%
98%
95% 98%
99% 100%
RCU
95%92%
98%
100%
95% 99%
99%
93%
Source: Survey.
D.
DTV Viewability
23.The survey asked respondents to identify the scenario which best describes how signals
sent from local broadcast stations are processed at the cable system headend and transmitted from there to
subscriber premises as of January 1, 2012.25 All operators in our survey responded that cable system
headend equipment was in place to receive analog and digital broadcast signals. There are several
scenarios that operators use to format those signals and transmit the signals to customer premises for
viewing in analog, standard definition (SD) or HD digital formats. The tables below report the percentage
of subscribers on average whose cable system operates under each scenario. Table 9 provides this
information by sample group and Table 10 by subscriber size of the cable system.
24.
Figures shown in the Overall Average column for all sample groups in Table 9 show
that 82 percent of households (or other subscriber premises) received analog, SD, and HD signals over
three separate transmission paths for viewing by analog, SD, and HD customers, respectively. Eleven
25 Under the Communications Act, cable operators are required to ensure that subscribers with analog television sets
can continue to view all must-carry stations after the end of the digital television transition. See 47 U.S.C.
534(b)(7) (must-carry signals "shall be viewable via cable on all television receivers of a subscriber which are
connected to a cable system by a cable operator or for which a cable operator provides a connection"). The survey
included questions which addressed viewing capability. We note that under our viewability order, cable operators of
a hybrid system (i.e., a system that offers both analog and digital cable service to its subscribers) may comply with
the statutory viewability requirement either by choosing to down-convert digital must-carry stations to analog
format in addition to carrying those stations in digital format. Alternatively, after December 12, 2012, a hybrid
cable operator may make must-carry signals available to analog subscribers by offering the necessary equipment for
sale or lease, either for free or at an affordable cost that does not substantially deter the use of the equipment. See
Carriage of Digital Television Broadcast Signals: Amendment to Part 76 of the Commission's Rules, CS Docket
98-120, Fifth Report and Order, 27 FCC Rcd 6529 (2012).
13
Federal Communications Commission
DA 13-1319
percent received signals over all-digital systems with HD and SD capability where the HD and SD signalsare either sent separately or on the same transmission path. If there is a single transmission path, a signal
transmitted in HD format is converted to SD format and then from SD to analog format, using customer
premises equipment, for viewing by SD digital and analog television customers, respectively. Three
percent of subscribers received signals over separate analog and digital transmission paths. Two percent
of subscribers received signals over an analog-only system and two percent received signals over SD
digital-only systems. In the SD digital-only scenario, customer premises equipment converts the SD
signals to analog format for viewing by analog television customers.
Table 9
Path of Local Broadcast Signals
Percent of Subscribers by ScenarioJanuary 1, 2012
From Cable System Headend
Effective Competition Group and Subgroups
Overall
Non
to Customer PremisesAverage competitive
Second Cable Operator
Equipment
Group
DBS Other
Incumbent Rival Both
3 separate analog/SD/HD paths82%
76%
89%
80%
30%
73%
95%
98%
HD/SD path(s). If 1 path, CPE
converts HD to SD to analog
11%
13%
7%
17%
54%
22%
2%
2%
2 separate analog/digital paths.
CPE converts digital HD to SD
3%
5%
1%
0%
14%
2%
1%
0%
1 analog path. Analog viewing
only
2%
3%
2%
3%
0%
3%
1%
0%
1 SD digital path. CPE converts
SD to analog for analog TV
2%
3%
1%
0%
2%
0%
1%
0%
Source: Survey. Scenarios may not add to 100% due to rounding.
25. Table 10 displays the signal transmission path percentages arranged by cable system size.
Looking at the scenario for three separate analog/SD/HD paths, the percent of subscribers whose system
had this architecture ranged from 85.1 percent of large systems to 36.4 percent of very small systems. A
range from 3.0 percent to 19.0 percent of the total number of systems surveyed were HD/SD digital
systems with no analog path. Systems transmitting over separate analog and digital paths ranged from 9.1
percent of very small systems to 2.1 percent of very large systems. Analog-only architectures ranged
from zero to 51.5 percent of very small systems. SD digital only systems ranged from zero to 11.7
percent by system size.
Table 10
Path of Local Broadcast Signals
Percent of Subscribers by Cable System SizeJanuary 1, 2012
Very Large
Large
Medium
Small
Very Small
From Cable System Headend to
Over 75,00025,001 -
10,001 -
1,001-
Up to 1,000
Customer Premises Equipment
Subscribers75,000
25,000
10,000
Subscribers
3 separate analog/SD/HD paths
77.5%
85.1%
70.1%
64.3%
36.4%
1 or 2 digital HD/SD paths
19.0%
11.4%
6.5%
4.8%
3.0%
2 separate analog/digital paths
2.1%
3.5%
7.8%
11.9%
9.1%
1 analog path only
0.0%
0.0%
3.9%
14.3%
51.5%
1 SD digital path
1.4%
0.0%
11.7%
4.8%
0.0%
Source: Survey. Scenarios may not add to 100% due to rounding.
14
Federal Communications Commission
DA 13-1319
26. Table 11 reports the average number of local broadcast channels by carriage election (eitherretransmission consent or must carry) and by channel viewing format (either analog, SD, or HD). The
channels counted consist of main signals and simulcasts of the main signal on separate analog, SD, or HD
channels. The counts do not include multicast signals. Table 11 shows the difference in the overall
average of the number of channels carried via retransmission consent (6.8) compared to must carry (10.9).
More analog and SD channels were must-carry channels (9.0) than retransmission consent (4.8), and the
average number of HD channels carried via retransmission consent and must carry was almost the same
(2.0 and 1.9, respectively).
Table 11
Average Number of Local Broadcast Channels
by Carriage Election and Channel FormatJanuary 1, 2012
Effective Competition Subgroups
Carriage
Viewing Overall
Non
Election
Format
Average competitive Group
Second Cable Operator
DBS Other
Avg.
Incumbent Rival Both
Analog &SD digital
4.8
4.7
4.8
5.0
4.6
4.9
4.6
7.0
Retransmission
HDconsent
digital
2.0
2.0
2.0
1.5
3.0
1.7
2.1
2.4
Total
6.86.7
6.8
6.4
7.5
6.6
6.7
9.4
Analog &
SD digital
9.0
8.3
9.9
10.3
9.4
10.2
9.8
10.1
Must carry
HDdigital
1.9
1.9
2.0
1.9
2.2
1.9
2.1
1.9
Total
10.910.2
11.9
12.2
11.6
12.2 11.8
12.0
Source: Survey. Totals may not add due to rounding.
IV.
CONCLUSION
27.Expanded basic cable prices increased by 4.8 percent for the 12 months ending January
1, 2012, and at a compound average annual rate of 6.1 percent over the 17-year period from 1995-2012.
This compares to a 2.9 percent increase in general inflation as measured by the CPI (All Items) for the
same one-year period. The CPI's compound average rate of growth over the 17-year period was 2.4
percent. The CPI for Cable, Satellite, and Radio Services grew by 4.1 percent in both 2012 and over the
17 year period. Compared to the average expanded basic price that cable system operators charged in
noncompetitive communities, prices on January 1, 2012 were two percent higher for rival operators and
one percent higher for the incumbent operators in communities with at least two cable operators.
Expanded basic prices of cable operators were three percent higher in the areas where effective
competition determinations were granted based on the existence of a DBS market share exceeding the 15
percent threshold established by the statute. On a per channel basis, the average price per channel
(programming price divided by number of channels) of expanded basic service has grown by 0.2 percent
on an annual basis over the last 17 years. The price per channel averages six percent lower in effective
competition communities overall compared to price per channel in noncompetitive communities, and 14
percent lower in the subgroup where there are at least two cable operators, reflecting that cable operators
in these effective competition communities carry more channels on expanded basic than operators in
noncompetitive communities.
15
Federal Communications Commission
DA 13-1319
V.
ORDERING CLAUSE
28.IT IS ORDERED that this Report be issued pursuant to authority contained in Section
623(k) of the Communications Act of 1934, as amended, 47 U.S.C. 543(k).
FEDERAL COMMUNICATIONS COMMISSION
William T. Lake
Chief, Media Bureau
16
Federal Communications Commission
DA 13-1319
Attachment 1
2012 SurveyPercent of
Survey
Sample Groups
No. of Cable
Sample
National
Sample
and SubgroupsCommunities
Responses
Subscribers
Size
Overall Sample
33,951100%
800
775
Noncompetitive Group
24,487
57.70%
485
462
Effective Competition Group
9,464
42.30%
315
313
Noncompetitive Subgroups *
Very Large
: > 75,000 subscribers6,763
25.64%
149
148
Large
: 25,001-75,0004,787
15.16%
118
117
Medium
: 10,001-25,0004,161
7.78%
80
79
Small
: 1,001-10,0005,958
8.08%
98
85
Very Small
: 1,000 or less2,818
1.04%
40
33
Effective Competitive Subgroups **
effective competition for a cable operator in a
community
Second Cable Operator :
Presence of two ormore cable operators in the same community
Incumbent
cable operator subgroup733
9.37%
56
56
Rival
"second" operator subgroup545
1.57%
56
56
DBS
subgroup: Cable operators (does notinclude DBS operators) with finding on the
basis of DBS market share under 50/15 test
6,702
28.22%
163
163
Other
subgroup: Communities in range of awireless MVPD or where less than 30% of
households subscribe to the operator's cable
programming service (low penetration test)
1,484
3.13%
40
38
Sources: FCC Form 322, Cable Community Registration, 47 C.F.R 76.1801; FCC Form 325, Annual Cable
Operator Report, 47 C.F.R 76.403; and Commission findings pursuant to 47 U.S.C. 543(a)(2).
* The Commission assigns a community unit identifier (CUID) to each cable operator for each community the
operator serves. Noncompetitive communities are those for which the Commission had not made a finding of
effective competition and effective competition communities are those for which the Commission had made an
effective competition finding as of January 1, 2012. The Appendix further discusses the survey groups.
** There are fewer rivals (545) than incumbents (733) in the second cable operator subgroup mainly because the
rival operators do not include AT&T U-verse since these systems are not associated with a CUID. The Commission
however considers AT&T U-Verse to be a rival cable operator for purposes of findings of effective competition for
incumbent operators. Similarly, the DBS market share subgroup consists of cable operators with a finding made on
the basis of DBS market share, however, this subgroup does not include the DBS operators.
17
Federal Communications Commission
DA 13-1319
Attachment 2
Cable Programming
Average Prices
January 1, 2012Effective Competition Subgroups
Cable
Overall
Non
Effective
Programming
Second Cable Operator
Average competitive Competition
Service
Incum-
DBS
Other
Rival
Both
bentBasic service
$20.55$20.83
$20.19
$18.93 $17.69 $18.75 $20.47 $22.86
Standard error
0.246
0.378
0.277
0.446
0.760
0.397
0.377
0.723
Observations
775
462
313
56
56
112
163
38
Prior year
$19.36
$19.80
$18.79
$17.58 $17.08 $17.51 $19.04 $21.05
Standard error
0.238
0.370
0.262
0.366
0.701
0.329
0.362
0.739
Observations
759
446
313
56
56
112
163
38
Annual change
6.2%
5.2%
7.5%
7.6%
3.6%
7.1%
7.5%
8.6%
Expanded
basic
$60.99
$62.49
$61.64 $62.28 $61.73 $62.76 $62.71
Standard error
0.240
0.326
0.351
0.408
0.762
0.366
0.490
1.176
Observations
774
461
313
56
56
112
163
38
Prior year
$58.83
$58.46
$59.32
$58.45 $60.40 $58.73 $59.54 $59.39
Standard error
0.228
0.311
0.334
0.539
0.813
0.476
0.450
1.011
Observations
758
445
313
56
56
112
163
38
Annual change
4.8%
4.3%
5.3%
5.4%
3.1%
5.1%
5.4%
5.6%
Next most
popular
$74.84
$74.22
$71.51 $75.28 $72.05 $75.01 $74.82
Standard error
0.322
0.428
0.487
0.870
0.946
0.757
0.656
1.088
Observations
740
428
312
56
56
112
162
38
Prior year
$71.47
$71.91
$70.92
$68.42 $73.23 $69.11 $71.55 $71.66
Standard error
0.313
0.411
0.481
0.840
0.847
0.730
0.652
1.002
Observations
727
415
312
56
56
112
162
38
Annual change
4.3%
4.1%
4.7%
4.5%
2.8%
4.3%
4.8%
4.4%
Source: Survey. Averages are subscriber weighted means of the survey responses. The averages in this table do
not include the price for customer premises equipment unless the cable operator bundles the programming service
and equipment into a single price. Attachment 3 reports the price of programming, including equipment, for all
operators, and the percent of operators that bundle programming and equipment.
18
Federal Communications Commission
DA 13-1319
Attachment 3
Programming and Equipment
Average Total Prices
January 1, 2012Effective Competition Subgroups
Cable
Overall
Non
Effective
Programming
Second Cable Operator
Average competitive Competition
Service
Incum-
DBS
Other
Rival
Both
bentBasic service
$24.15$24.01
$24.34 $24.50 $23.47 $24.35 $24.21 $25.61
Standard error
0.298
0.430
0.394
0.563
0.559
0.488
0.550
0.876
Observations
774
461
313
56
56
112
163
38
Bundled *
28.6%
31.1%
25.2%
11.3%
7.0%
10.7%
29.6%
36.4%
Prior year
$22.95
$22.87
$23.06 $23.20 $21.78 $23.00 $22.94 $24.34
Standard error
0.292
0.428
0.376
0.498
0.550
0.433
0.527
0.896
Observations
758
445
313
56
56
112
163
38
Bundled *
14.9%
17.3%
11.8%
3.2%
7.0%
3.8%
14.9%
12.2%
Annual change
5.2%
5.0%
5.6%
5.6%
7.8%
5.9%
5.5%
5.2%
Expanded
basic
$64.56
$66.92 $67.10 $68.53 $67.31 $66.84 $66.22
Standard error
0.311
0.418
0.464
0.486
1.036
0.442
0.651
1.512
Observations
774
461
313
56
56
112
163
38
Bundled *
38.5%
41.3%
34.8%
22.7%
15.7%
21.7%
39.4%
38.8%
Prior year
$62.71
$61.94
$63.70 $63.88 $67.55 $64.41 $63.53 $62.68
Standard error
0.297
0.411
0.424
0.606
1.180
0.546
0.581
1.303
Observations
758
445
313
56
56
112
163
38
Bundled *
38.3%
41.2%
34.4%
21.1%
15.7%
20.3%
39.4%
38.8%
Annual change
4.6%
4.2%
5.1%
5.0%
1.5%
4.5%
5.2%
5.6%
Next most
popular
$78.80
$79.08 $77.54 $82.30 $78.22 $79.48 $78.37
Standard error
0.300
0.411
0.437
0.680
0.989
0.600
0.599
1.165
Observations
740
428
312
56
56
112
162
38
Bundled *
43.1%
45.0%
40.5%
24.5%
13.9%
23.0%
45.8%
55.4%
Prior year
$75.86
$75.93
$75.78 $74.46 $81.15 $75.42 $76.00 $74.98
Standard error
0.296
0.413
0.420
0.668
0.964
0.588
0.574
1.051
Observations
727
415
312
56
56
112
162
38
Bundled *
41.4%
44.1%
38.0%
21.1%
12.2%
19.8%
43.3%
55.4%
Annual change
4.0%
3.8%
4.4%
4.1%
1.4%
3.7%
4.6%
4.5%
Source: Survey. Averages are subscriber weighted means of the survey responses.
* This statistic refers to the percent of cable operators that bundle the programming service and equipment into a
single price. In this attachment, along with the programming price in Attachment 2, if the respondent's
programming price does not include customer premises equipment, this measure adds the price of the most
commonly leased equipment.
19
Federal Communications Commission
DA 13-1319
Attachment 4
Average Price Per Channel
Price Divided by No. of ChannelsJanuary 1, 2012
Effective Competition Subgroups
Cable
Overall
Non
Effective
Programming
Second Cable Operator
Average competitive Competition
Service
Incum-
DBS
Other
Rival
Both
bentBasic service
$0.631$0.680
$0.567 $0.445 $0.799 $0.496 $0.593 $0.583
Standard error
0.014
0.018
0.021
0.027
0.072
0.025
0.029
0.063
Observations
774
461
313
56
56
112
163
38
Prior year
$0.622
$0.660
$0.573 $0.448 $0.772 $0.495 $0.600 $0.602
Standard error
0.013
0.017
0.020
0.025
0.066
0.023
0.028
0.056
Observations
758
445
313
56
56
112
163
38
Annual change
1.5%
3.0%
-1.0%
-0.8%
3.5%
0.1%
-1.1%
-3.1%
Expanded
basic service
$0.518
$0.487 $0.429 $0.557 $0.448 $0.500 $0.504
Standard error
0.008
0.010
0.013
0.017
0.032
0.015
0.017
0.036
Observations
774
461
313
56
56
112
163
38
Prior year
$0.507
$0.517
$0.493 $0.419 $0.565 $0.440 $0.512 $0.510
Standard error
0.007
0.009
0.012
0.016
0.025
0.014
0.016
0.032
Observations
758
445
313
56
56
112
163
38
Annual change
-0.4%
0.2%
-1.4%
2.4%
-1.5%
1.7%
-2.4%
-1.2%
Next most
popular
$0.408
$0.359 $0.327 $0.402 $0.338 $0.365 $0.390
Standard error
0.005
0.008
0.007
0.012
0.020
0.010
0.010
0.021
Observations
740
428
312
56
56
112
162
38
Prior year
$0.391
$0.411
$0.366 $0.322 $0.411 $0.335 $0.376 $0.382
Standard error
0.005
0.007
0.007
0.009
0.017
0.008
0.010
0.020
Observations
727
415
312
56
56
112
162
38
Annual change
-1.1%
-0.7%
-1.7%
1.6%
-2.2%
0.9%
-3.0%
2.2%
Source: Survey. Averages are subscriber weighted means of the survey responses. Price per channel adjusts the
expanded basic programming price to incorporate differences in the number of channels the subscriber receives. It
equals the expanded basic programming price plus the price of the most commonly leased equipment divided by the
number of expanded basic channels including channels which may require a converter box or other digital gateway
equipment to receive.
20
Federal Communications Commission
DA 13-1319
Attachment 5
Customer Premises Equipment
Average Prices
January 1, 2012Effective Competition Subgroups
Cable
Overall
Noncom-
Effective
Programming
Second Cable Operator
Average
petitiveCompetition
Service
Incum-
DBS
Other
Rival
Both
bentBasic service
$6.28$6.12
$6.45
$6.65
$7.89
$6.80
$6.37
$5.32
Standard error
0.175
0.250
0.245
0.316
0.323
0.279
0.366
0.636
Observations
432
228
204
47
42
89
96
19
Prior year
$5.11
$4.78
$5.46
$6.11
$6.41
$6.15
$5.27
$4.33
Standard error
0.153
0.202
0.232
0.325
0.218
0.288
0.337
0.419
Observations
507
264
243
52
42
94
121
28
Annual change
22.9%
28.1%
18.1%
8.7%
23.1%
10.7%
20.9%
22.7%
Expanded
basic
$7.20
$7.38
$7.55
$8.14
$7.64
$7.40
$5.96
Standard error
0.144
0.202
0.206
0.180
0.316
0.161
0.318
0.585
Observations
420
224
196
40
44
84
90
22
Prior year
$7.22
$7.20
$7.25
$7.34
$9.32
$7.63
$7.24
$5.61
Standard error
0.148
0.215
0.202
0.174
0.239
0.155
0.314
0.541
Observations
407
210
197
41
44
85
90
22
Annual change
0.9%
0.0%
1.8%
2.9%
-12.6%
0.1%
2.3%
6.3%
Next most
popular
$7.40
$8.16
$7.99
$8.15
$8.02
$8.25
$7.96
Standard error
0.115
0.172
0.145
0.108
0.275
0.101
0.230
0.315
Observations
434
240
194
41
48
89
88
17
Prior year
$7.61
$7.39
$7.85
$7.65
$9.20
$7.89
$7.85
$7.44
Standard error
0.113
0.173
0.143
0.103
0.200
0.095
0.226
0.274
Observations
433
233
200
43
48
91
92
17
Annual change
1.9%
0.0%
4.0%
4.5%
-11.4%
1.6%
5.0%
7.0%
Source: Survey. Averages are subscriber weighted means of the survey responses. * Customer premises equipment
(CPE) refers to a set top converter box or other digital gateway. The survey asks whether or not subscribers who
purchase programming require CPE to view all or some channels and whether or not the service includes (bundles)
such CPE at no additional charge. If not, the survey asks the respondent to report the unbundled price for the most
commonly leased CPE. CPE features may differ yearly between services and sample groups, and thus comparisons
of these CPE prices to some extent reflect quality differences.
21
Federal Communications Commission
DA 13-1319
Attachment 6
Cable Programming
Number of Channels
January 1, 2012Effective Competition Subgroups
Cable
Overall
Non-
Effective
Programming Average competitive Competition
Second Cable Operator
Service
DBS
Other
Incumbent Rivals Both
Basic service
49.146.0
53.1
64.1
43.4
61.1
50.1
52.2
Standard error
0.710
0.912
1.123
2.086
2.562
1.823
1.502
2.222
Observations
774
461
313
56
56
112
163
38
Prior year
46.0
43.5
49.2
60.0
40.9
57.2
46.4
46.5
Standard error
0.676
0.891
1.033
1.930
2.435
1.689
1.382
1.913
Observations
758
445
313
56
56
112
163
38
Annual change
6.6%
5.6%
8.0%
6.9%
6.0%
6.8%
8.0% 12.3%
Expanded
basic
146.1
154.8
167.8
148.7 165.0 151.3 151.1
Standard error
1.608
2.111
2.478
4.118
7.525
3.688
3.353
6.095
Observations
774
461
313
56
56
112
163
38
Prior year
140.0
137.3
143.6
162.2
136.0 158.4 138.5 137.8
Standard error
1.519
2.033
2.281
3.948
6.281
3.499
3.072
5.434
Observations
758
445
313
56
56
112
163
38
Annual change
7.0%
6.4%
7.8%
3.4%
9.3%
4.2%
9.2%
9.6%
Next most
popular
221.7
243.3
257.4
230.6 253.5 240.5 232.7
Standard error
2.409
3.055
3.842
6.728
8.970
5.903
5.181
8.943
Observations
740
428
312
56
56
112
162
38
Prior year
217.1
208.7
227.6
246.0
217.1 241.8 223.1 217.7
Standard error
2.279
2.934
3.570
5.600
8.219
4.938
4.910
7.991
Observations
727
415
312
56
56
112
162
38
Annual change
6.5%
6.2%
6.9%
4.6%
6.2%
4.8%
7.8%
6.9%
Source: Survey. Averages are subscriber weighted means of the survey responses.
22
Federal Communications Commission
DA 13-1319
Attachment 7
Historical Average
1995-2012Expanded Basic Service
Next Most
CPI
Basic
Price per
Popular
Year
Service
Price
Channels
Service and
Price
Channel
All
*Cable
Equipment
Items
($)Index
No.
Index
($)Index
1995---
22.35 100.0
44.0
100.0
0.60
100.0
---
100.0
100.0
1996
---
24.28 108.6
47.0
106.8
0.61
101.7
---
103.0
106.9
1997
---
26.31 117.7
49.4
112.3
0.63
105.0
---
105.2
114.9
1998
12.06 27.88 124.7
50.1
113.9
0.65
108.3
38.58 107.0
122.6
1999
12.58 28.94 129.5
51.1
116.1
0.65
108.3
38.43 109.3
127.0
2000
12.84 31.22 139.7
54.8
124.5
0.66
110.0
39.64 113.3
132.9
2001
12.84 33.75 151.0
59.4
135.0
0.60
100.0
45.33 116.4
139.1
2002
14.45 36.47 163.2
62.7
142.5
0.66
110.0
46.59 118.1
147.8
2003
13.45 38.95 174.3
67.5
153.4
0.65
108.3
49.03 120.9
154.7
2004
13.80 41.04 183.6
70.3
159.8
0.66
110.0
51.76 123.2
160.7
2005
14.30 43.04 192.6
70.5
160.2
0.62
103.3
56.03 126.9
167.0
2006
14.59 45.26 202.5
71.0
161.4
0.65
108.3
59.09 131.9
171.8
2007
15.33 47.27 211.5
72.6
165.0
0.67
111.7
60.27 134.7
176.4
2008
16.11 49.65 222.1
72.8
165.5
0.68
113.3
63.66 140.4
181.1
2009
17.65 52.37 234.3
78.2
177.7
0.71
118.3
67.92 140.5
183.7
2010
17.93 54.44 243.6 117.0
204.6
0.560
109.7
71.39 144.2
189.1
2011
19.33 57.46 257.1
124.2
217.2
0.569
115.9
75.37 146.5
189.1
2012
20.55 61.63
275.8
149.9
262.1
0.505
102.9
78.92
150.2
196.8
Total change
------ 176%
---
162%
---
3%
---
51%
97%
Average annual**
3.9%---
6.1%
---
5.8%
---
0.2%
5.2%
2.4%
4.1%
* Customer premises equipment (CPE) consisting of the most commonly leased set-top converter and remote
control. ** The average annual change is the compound average annual rate of change from 1995-2012.
Sources: Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment, 612
FCC Rcd 3239 (1997) (1997 survey); 14 FCC Rcd 8331 (1999) (1998 survey); 15 FCC Rcd 10927 (2000) (1999
survey); 16 FCC Rcd 4346 (2001) (2000 survey); 17 FCC Rcd 6301 (2002) (2001 survey); 18 FCC Rcd 13284
(2003) (2002 survey); 20 FCC Rcd 2718 (2005) (2003-04 survey); 21 FCC Rcd 15087 (2006) (2005 survey); 24
FCC Rcd 259 (2009) (2006-08 survey); 25 FCC Rcd 13350 (2010) (2009 survey); 27 FCC Rcd 2427 (2012) (2011
survey); Media Bureau, DA 12-1322 (rel. Aug. 13, 2012) (2011 survey); and survey. Bureau of Labor Statistics,
Dept. of Labor, Consumer Price Index, All Urban Consumers, U.S. City Average, Not Seasonally Adjusted, Series
CUUR0000SA0, All Items (1982-84=100); Series CUUR0000SERA02, Cable and Satellite Television and Radio
Service (Dec. 1983=100). http://data.bls.gov/cgi-bin/srgate. Accessed Dec. 10, 2012. Rebased to Jul. 1995=100.
Notes: Years 1995-2002 are July data and afterward the table reports January data. Table values are the overall
survey average, except for 1995-2000 prices and 2000-01 channels, which are from the noncompetitive sample:
overall composites were not reported. The 2011 averages are from the 2011 survey and may not match 2011
averages from the 2012 survey in other parts of this report, due to random sampling variance. A missing value
indicates we did not survey the metric that year. The 1995 expanded basic price is programming and CPE less an
estimate of the CPE portion. The next most popular service price prior to 2010 is the expanded basic price plus the
price of a digital tier and CPE. In 2010, the series changed to a more expansive set of channels and the index
combines the prior and current series. Through 2009 the index is the prior series and beginning in 2011 is the
current series. For 2010, the index uses 2009-2010 data from the 2010 survey. (The 2009 data from the 2010
survey, not displayed in the table, is 101.6 channels and $0.601 per channel). See Appendix, Section C.
23
Federal Communications Commission
DA 13-1319
Attachment 8
Historical Average
by Sample GroupNoncompetitive Group
Competitive Group
Expanded Basic
Expanded Basic
Year
Basic
Basic
Service
Channels
Service
Channels
Price
Price
Price
Price
No.
Index
No.
Index
1995---
$22.35
44.0
100.0
---
$21.64
38.0
100.0
1996
---
$24.28
47.0
106.8
---
$23.32
39.6
104.2
1997
---
$26.31
49.4
112.3
---
$25.29
46.5
122.4
1998
$12.06 $27.88
50.1
113.9
$11.12 $26.12
54.0
142.1
1999
$12.58 $28.94
51.1
116.1
$12.03 $27.30
52.3
137.6
2000
$12.84 $31.22
54.8
124.5
$12.03 $29.44
59.9
157.6
2001
$12.87 $33.89
59.3
134.8
$12.43 $31.66
60.9
160.3
2002
$14.47 $36.61
62.7
142.5
$14.09 $34.34
62.9
165.5
2003
$13.38 $39.11
67.3
153.0
$14.25 $36.86
69.7
183.4
2004
$13.73 $41.29
70.1
159.3
$14.58 $38.17
72.5
190.8
2005
$14.25 $43.33
70.3
159.8
$14.80 $40.15
72.0
189.5
2006
$14.52 $45.48
70.6
160.5
$15.09 $43.70
74.0
194.7
2007
$15.10 $47.49
72.5
164.8
$16.37 $46.28
73.0
192.1
2008
$15.83 $49.97
72.8
165.5
$17.37 $48.19
73.0
192.1
2009
$17.88 $52.10
77.7
176.6
$17.16 $52.96
79.3
208.7
2010
$17.97 $54.27
111.6
200.5
$17.84 $54.77
127.8
246.5
2011
$19.46 $56.82
120.4
216.4
$19.13 $58.47
130.2
251.0
2012
$20.83
$60.99
146.1
262.6
$20.19
$62.49
154.8
298.4
Total change
---
173%
---
163%
---
189%
---
198%
Average annual
3.7%
6.1%
---
5.8%
4.1%
6.4%
---
6.6%
Sources and notes: See Attachment 7.
24
Federal Communications Commission
DA 13-1319
Attachment 9
Programming Service Comparisons
Between Cable and DBS Providers
Cable Average
DBS Provider Average
Price, Channels and
Price per Channel
Expanded Basic
DIRECTV
DISH
Service
Choice
America's Top 120 Plus
Programming price
$61.63$60.99
$49.99
Significant difference *
---
Yes
Yes
Observations774
40
40
Standard error
0.240
0.000
0.000
t-value
2.667
48.500
p-value
0.010
<0.001
Number of channels
150182
142
Significant difference *
---
Yes
Yes
Observations774
40
40
Standard error
1.608
1.626
1.440
t-value
---
13.866
3.544
p-value
---
<0.001
0.001
Price per channel
$0.505$0.337
$0.353
Significant difference *
---
Yes
Yes
Observations774
40
40
Standard error
0.008
0.003
0.003
t-value
---
19.691
17.530
p-value
---
<0.001
<0.001
Source: Cable prices and channel information from survey at Attachments 2, 4 and 6; DBS prices from SNL Kagan,
Multichannel Video Pricing Report, End of 2011 (Feb. 10, 2012); DIRECTV national channels from http://web.
archive.org/web/20120116131803/http://www.directv.com/DTVAPP/compare/ printablePackageChannels.jsp?
packageId=960008&skuId=sku930008 (Jan. 16, 2012); DISH national channels from http://web.archive.org/web/
20120227014641/http://www.mydish.com/downloads/channel-lineup/ standardhdchannelguide.pdf and http://
web.archive.org/web/20120204110147/http://www. dish.com/ entertainment/packages/americas-top-120-plus
(Feb. 2012); Local broadcast channels from Satellite Television Extension and Localism Act of 2010 (STELA),
Section 305 Report, DIRECTV Inc. (Jan. 3, 2011) at Exhibit B; and DISH Network L.L.C. (Dec. 28, 2010) at
Exhibit A; Regional Sport Networks for DIRECTV from http://www.directv.com/DTVAPP/compare/ printable
PackageChannels.jsp?packageId=960008 &skuId=sku930008 (Jan. 16, 2013), for DISH from http://www.dish.com
/entertainment/channels/local/?WT. svl=why (March 27, 2013).
* Statistically significant difference at the 95 percent confidence level between cable and the DBS average.
Methodology: In Attachment 9, cable price and channel data for expanded basic service are from the Survey. DBS
service packages are sold nationally at a uniform price for each package. We determined that DIRECTV Choice and
DISH America's Top 120 Plus were the DBS packages most comparable to cable expanded basic service. The
number of DBS channels delivered varies by Designated Market Area (DMA) depending on the number of local
broadcast signals and regional sports networks (RSNs) provided. The DBS channel averages are based on 40
communities chosen in a systematic random sample of the 800 cable communities in the survey. Using STELA
reports from DISH Network and DIRECTV, we determined each DMA's local broadcast channel count, including
both standard and high definition channels. DBS providers did not include RSNs in their STELA reports and, thus,
the RSN count is the average number of RSNs across the 40 communities, which is equal to 3.05 channels for
DIRECTV and 1.8 channels for DISH. Local broadcast channels and RSNs were added to each DBS provider's
national programming package to represent the total number of DBS channels offered in each community sampled.
We did not include satellite radio networks in any of the channel tallies.
25
Federal Communications Commission
DA 13-1319
APPENDIX
Survey Methodology
A.
Sampling Procedure
1.The 2012 survey was conducted pursuant to the requirements of the Cable Act.26
Communities were selected nationwide at random to be part of the sample and were chosen from the
Commission's list of MVPD operators and communities the operators serve.27 For the purpose of
choosing our sample, we divided the communities into two groups. Noncompetitive communities were
those where the Commission had not made a finding of effective competition as of January 1, 2012.
Effective competition communities were those where the Commission had made such a finding. Further,
we subdivided the two groups into strata, and selected a sample of communities from each stratum. For
each community selected, we asked the operator in that community to complete a survey questionnaire
that included questions on the prices charged for video programming service offerings as well as other
questions related to the operator's system. We used the information collected to estimate and compare
mean prices, and other statistics, across the different strata of operators and communities. Attachment 1
provides additional information on the sample.
2.
We divided the groups into strata to compare subgroups as well as to achieve desirable
levels of statistical precision. Creating strata in which prices are less disparate than in the group overall
tends to increase the efficiency of sampling by reducing sample price variance.28 Because there is a
correlation between price and the operator's system size, we stratified noncompetitive communities into
five strata by system size very large, large, medium, small, and very small systems depending on the
number of subscribers the system serves. We stratified the effective competition cable operators and
communities into four strata on the basis for which the Commission had made a finding of effective
competition. The first stratum consisted of incumbent cable operators in communities with a second rival
operator. The second stratum consisted of the rival operators. The third stratum consisted of
communities where the finding of effective competition was based on the level of DBS subscribers in that
community. The fourth stratum consisted of communities within range of a wireless MVPD or who met
the cable low penetration test as a result of serving fewer than 30 percent of households in that
community.29 The survey collected prices charged by wireline operators. The survey did not collect
prices charged by DBS and wireless MVPD operators.30
3.
We determined the number of observations to select for statistical precision to be 800
communities. These 800 selections were divided between the two sampling groups. To determine the
number to allocate in each group, we used a sampling size formula calibrated to yield sample price means
26 See note 1, Section I, supra.
27 The Commission assigns a community unit identifier (CUID) code to each registered operator for each
community that operator serves. See 47 C.F.R. 76.1801. If two operators serve the same community, the
Commission assigns two CUIDs. A current list is downloadable from the Commission's website. See FCC Media
Bureau, All Cable Communities registered with the FCC, <www.fcc.gov/mb>;.
28 See e.g., W. G. Cochran, Sampling Techniques, 2nd ed. (1977) at 87-107.
29 Low market penetration may have resulted from the presence of a second operator in the community. However,
we did not include the second operators in this low penetration stratum, because the finding of effective competition
was not made on that basis.
30 This is because there are no CUID codes associated with DBS or wireless operators. For the same reason, AT&T
U-verse service was not surveyed.
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DA 13-1319
within one percent of actual price means at a 95 percent confidence level.31 We then allocated the numberof selections in each group among the group's strata. Allocation methods generally emphasize two
criteria; selections allocated to a stratum increase relative to other strata in proportion to population size
and price variance. Thus, for each stratum, we multiplied its share of the group's cable subscribers by the
standard deviation of price.32 A higher measure relative to the other strata resulted in a relatively higher
allocation. Further, we adjusted each allocation by a non-response factor.33 After completing this
process, 42 of the 800 overall selections remained to be allocated. We assigned these 42 observations
among the incumbent and rival subgroups since these strata were of particular interest to survey, yet had
been allocated relatively few selections. Attachment 1 reports the sample sizes for all strata.
4.
After determining the number of sample selections using the process described above,
we drew independent samples of communities from the strata,34 using probability proportional to size
(PPS) sampling without replacement.35 A PPS design is efficient for our survey because the relative size
of a community in terms of the number of subscribers is correlated with our primary survey study variable
(price).36 Using the PPS method of sampling, we assigned a selection probability to each community in
direct proportion to the relative number of subscribers. In a group and stratum, the higher the level of
subscribers relative to other communities in the strata, the higher the likelihood was of selection. PPS
sampling requires sampling selection probability not to exceed one (or 100 percent). Therefore, we sub-
stratified communities whose probability exceeded one into one-unit strata with probability equal to
one.37 The PPS sample design requires an estimate of the relative number of subscribers in each
community. We estimated the relative sizes using the FCC's 1994 census of communities, the most
recent census of subscribers at the community level. If the service areas of two communities merged
subsequent to the census, we merged the subscriber counts accordingly. For newly registered
communities, not part of the census, we set the subscriber counts equal to the mean number of subscribers
for the municipality types, i.e., an incorporated city, private settlement, etc.
31 See B. J. Mandel, Statistics for Management (1984) at 258. See also, e.g., C. A. Boneau, Effects of Violations of
Assumptions Underlying the t test, Psychological Bulletin, 57 (1960) at 49-54.
32 See G. W. Snedecor and W. G. Cochran, Statistical Methods, 7th ed. (1980) at 458-59. The allocation formula
equals NhSh / NhSh, where in stratum h, N is the number of cable subscribers on January 1, 2010 and S is the finite
population adjusted standard deviation of price in the 2009 survey. (Snedecor and Cochran).
33 Because previous surveys suggest not all selections will respond to the survey questionnaire for various reasons --
e.g., the system no longer operates -- the non-response factor adjusts selections by the expected number of non-
responses. Our non-response factor equals [1+ [NRh / (NRh + Rh)]], where in stratum h, NR equals the number of
non-responses and R equals responses to our 2009 survey.
34 To prevent sampling bias, the samples are drawn independently, including incumbents and rivals in locations with
a second cable operator; i.e., selection of an incumbent did not necessarily require that the rival would be selected
and vice versa.
35 This sample was generated using the SurveySelect Procedure, PPS Method without Replacement, SAS software,
Version SAS/STAT 9.2, SAS Institute Inc., Cary, NC (2010).
36 See, e.g., F. Yates and P. M. Grundy, "Selection without Replacement from Within Strata with Probability
Proportional to Size," Journal of the Royal Statistical Society, 15 (1953) at 253-261; and B. K. Som, Practical
Sampling Techniques, 2nd ed. (1996).
37 We applied the following algorithm to identify, remove, and sub-stratify community units whose selection
probability exceeded one in a stratum, where Z = number of subscribers in the stratum, z,i = subscribers in
community unit i, n = sample size, i = n (zi /Z) = selection probability of unit i, k = number of units for which Pi
is greater than one: (a) Sub-stratify the unit with the highest Ph,i which exceeds one; (b) reduce sample size to nh
minus one; (c) reduce, kh by one; (d) recalculate Ph,i for the remaining units; and (e) repeat steps a-d until kh =0. An
alternative would be to set maximum Ph,i =1 and not sub-stratify; however, to a degree, Ph,i would no longer be
proportionate to subscribers.
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B.
Data Quality Control
5.To improve the quality of the survey data and reduce the burden on operators, the survey
questionnaire is web-based.38 After the samples were drawn, operators serving the communities selected
were notified and instructed on how to complete the survey questionnaire on the Commission's website.
Steps were taken to ensure the reliability and accuracy of the data collection. Computer programming
checks notified respondents in real time of inconsistent answers. In addition, we asked a responsible
party within each company (other than the person who completed the survey) to certify the completeness
and accuracy of the company's responses. The survey response rate (the ratio of completed to requested
questionnaires) equaled 97 percent (or 775 of 800 communities in the sample). Of the 25 non-responses,
12 operators no longer provided cable service to the community; seven operators (accounting for eight
communities) had yet to commence service; three operators (accounting for four communities) acquired
these systems recently, and therefore, did not have data over the survey timeframe; and one operator did
not file due to extenuating circumstances.
6.
We systematically examined all questionnaires submitted using a computer program
designed to identify answers which appeared to be inaccurate. When a particular response fell outside of
its expected reasonable range or was inconsistent with the answers to other questions in the survey, the
computer program automatically flagged that response and we contacted the operator and asked that
operator to re-check and verify the flagged answer, or make a correction if needed. In all cases, the
operators we contacted cooperated with these requests and, where necessary, submitted revised data.
About 15 percent the operators in the sample were asked to review at least one answer. Each of these
operators replied with either a data correction or reasonable explanation as to why a particular response
was plausible. In the case of missing data, some operators provided these data and others explained that
the operating company did not collect the particular information.
C.
Estimation of Means
7.After the responses were collected and checked, estimates of the population means and
variances were calculated from the samples based on the response to each survey question. We estimated
the means and variances on a basic subscriber basis rather than a cable community basis. We choose this
level of analysis because we are interested in understanding the price paid by the average subscriber
rather than the price charged in the average community. These two methods of analysis yield different
results when the number of subscribers in a community is correlated with the response. To estimate the
per-subscriber means and variances of those means, we use the Horvitz-Thompson ratio estimator.39 This
estimator is a well-known, unbiased method of estimation applicable to probability sampling designs.
The Horvitz-Thompson estimator estimates the ratio of two totals.40 By appropriately selecting those
totals we are able to weight the response from each cable community by the number of subscribers and
estimate the per-subscriber mean of the responses. The numerator of our ratio estimator is the estimate of
the industry total of the value of the response of the cable community multiplied by the number of basic
subscribers in the community. The denominator is the estimate of the industry total of basic subscribers.
For example, in estimating the mean basic price the numerator is the estimate of the industry total of the
38 Our web-based questionnaire includes several features which ease the respondent's filing burden. For example,
the questionnaire pre-fills some survey questions based on information already on file with the Commission, and
asks the respondent to verify the information.
39 We began using the Horvitz-Thompson ratio estimator with the 2009 report. Prior to the 2009 report, we
calculated the arithmetic mean in each stratum.
40 See, e.g., D. G. Horvitz and D. J. Thompson, "A Generalization of Sampling without Replacement from a Finite
Universe," Journal of the American Statistical Association, 47 (1952) at 663-685; W. S. Overton and S. V. Stehman,
"The Horvitz-Thompson Theorem as a Unifying Perspective for Probability Sampling: With Examples from Natural
Resource Sampling," The American Statistician, 49(3) (1995); and Cochran (1977) at 259.
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DA 13-1319
basic price in the community multiplied by the number of basic subscribers in the community. Thisresulting total is an estimate of total revenues from the purchase of basic service. The denominator is
simply the estimate of the total basic subscribers. The resulting product is an estimate of basic service
revenue per subscriber. Formally, the estimator of the per basic subscriber mean of variable X is
N 1 X Sub
i
i
i1
i
N 1 Subi
1 1
i
where Xi is the response from cable community i, Subi is the number of basic subscribers in community i,
and i is the probability of community i being selected into the sample.41
8.
For expanded basic service, we report the overall mean as reported in previous survey
reports, and we also report time-series indices of the cumulative percent change in price, number of
channels, and price per channel. There are two data series each for channels and price per channel. The
2010 price survey collected data on a more expansive set of cable channels for 2009 and 2010. As shown
in Attachments 4 and 5, both the 2009 and 2010 value for Series 2 are from the 2010 survey and the 2010
index value reflects the 2009 to 2010 change in Series 2. The data in series 1 is from prior surveys and
forms the basis of the 1995-2009 index values. The index, in effect, links the percent changes of the two
series by re-basing the newer series (Series 2) which began in 2010 to index base year 1995. For variable
X, the index value (I) of mean (x) in time series (s) in year (t) is
It = It- (x
)
1
s,t / xs,t-1
where It =100 in base year 1995 and the time series (s) is 1 (s=1) if t<2010, and s=2 if t>=2010. The
mean price per channel of expanded basic service in a community (i) is
xt = ((Pi,t + Ei,t ) / Ci,t)
where Pi,t is programming price, Ei,t is equipment price, and Ci,t is the number of channels. Equipment
refers to the most commonly leased set-top converter or other digital gateway leased with expanded basic
service. The equipment price is zero if equipment is pre-bundled into the programming price or if it is
unnecessary to view any of the expanded basic channels.
D.
Survey Accuracy
9.Because our survey is based on a sample of communities rather than a 100 percent
census, the price averages in this report are subject to sampling variance. Expanding the survey to
include all communities might increase accuracy, but would also increase the burden of collecting the
information. Our sample results are likely to be different from results that would be obtained if we were
able to collect prices from all communities nationwide. The attachments report estimates of sampling
variance or statistical "standard error" for each price mean. Standard errors can be used to express the
degree of confidence that the true mean falls within a range around a sample mean. This is usually
expressed as assurance that in 95 out of 100 similar samples, the true mean will fall within the stated
range (the "95 percent confidence interval").42 Standard errors can also identify whether or not price
differences are statistically significant at a 95-percent confidence level. The discussion above refers to
41 We conducted the data analysis using SAS Software, Version 9.3, SAS Institute Inc.; and SAS Macro SMSUB,
Version 3.1. HTTP:// support.sas.com/kb/25/addl/fusion_25033_1_. smsub.sas.txt (Accessed Oct. 31, 2012).
42 This "95 percent confidence interval" is a range surrounding the sample average plus or minus 1.96 multiplied by
the standard error.
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within-sample variance. To prevent random variance which may occur across samples when measuringannual percentage change, the survey collected two years of data rather than comparing estimates over
two different surveys. The exception is the historical time series table which reports means from each
survey year.
10.
In addition to the sampling variance discussed above, changes in the composition of
sample subgroups affect means.43 The composition of communities making up the subgroups changes
from year to year as a result of operators starting, ceasing, merging, or transferring operations. Further,
the composition changes as a result of findings of effective competition and, therefore, migration of
operators in the communities from the noncompetitive group to one of the effective competition
subgroups.
43 See, e.g., D. Holt and C. J. Skinner, Components of Change in Repeated Surveys, International Statistical Review,
57 (1989) at 1-18.
30
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