[opendtv] FCC report on video competition

(This got rejected the first time, due to some code issue with the
subject line.)

The two items from this that I find interesting are:

1. It seems very doubtful to me, using the FCC's numbers, that a 70/70
condition has been met with respect to cable (70 percent of households
have access to cable, and 70 percent actually subscribe to cable). If
DBS households account for about 20 percent of US homes, then the cable
share can be no more than about 67 percent. And I believe the current
DBS number is closer to 25 percent, which suggests cable gets perhaps 62
percent. In this report, they claim 29 percent of households subscribe
to DBS, which I would think makes this 70 percent figure attributed to
cable even more doubtful.

2. "The number of TV households and the number of MVPD subscribers
increased since the FCC released its last report. As of June 2006, there
were 110.2 million TV households, compared to 109.6 million in June
2005. Of that number, approximately 95.8 million TV households subscribe
to an MVPD service, versus 94.2 million as of June 2005."
   So it looks like multichannel service subscribers are increasing.
These FCC numbers suggest that 86.9 percent of US households subscribed
to cable or DBS in 2006, compared with 85.9 in 2005. And they say 14
percent use OTA exclusively. Maybe this shows that some households only
subscribe to cable for broadband Internet access, and use DBS or OTA, or
a combination of the two, for their TV fix. Which also makes that 70
percent figure for cable seem optimistic.

Also interesting is that so-called "wireless cable" subscriptions (MMDS
or LMDS) and subscriptions to master satellite antenna systems have both
dropped. And CableCard uptake has actually been steep, athough in
overall numbers still not that much of the total (up from 90,000 to
216,000).

Bert

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http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-278454A1.pdf

FOR IMMEDIATE RELEASE NEWS MEDIA CONTACT:
November 27, 2007 Mary Diamond (202) 418-2388
FCC ADOPTS 13th ANNUAL REPORT TO CONGRESS ON
VIDEO COMPETITION AND NOTICE OF INQUIRY
FOR THE 14TH ANNUAL REPORT

Washington, D.C. - The Federal Communications Commission (FCC) today
adopted its 13th Annual Assessment of the Status of Competition in the
Market for the Delivery of Video Programming. In its examination this
year, the FCC reported changes that have occurred in the market in 2006
and factors that have facilitated or impeded competition among rival
providers. The report also examines market structure and conditions
affecting competition, including programming issues and technical
issues, and provides a survey of developments in foreign markets.

The FCC finds that while competition in the delivery of video
programming services has provided consumers with increased choice,
better picture quality, and greater technological innovation, prices
continue to outpace the general level of inflation. DBS competition has
not checked cable prices to the same extent as competition from wireline
providers.

The FCC reports that almost all consumers are able to obtain programming
through over-theair broadcast television, a cable system, and at least
two DBS providers. Nevertheless, relatively few consumers have a second
wireline alternative, such as an overbuild cable system. Local exchange
carriers have expanded the areas where they provide facilities-based
video services, and continue to partner with DBS providers to offer
video service.

This year, we again report on the so-called 70/70 test. Specifically,
section 612(g) of the Communications Act provides that when "cable
systems with 36 or more activated channels are available to 70 percent
of households within the United States" and when 70 percent of those
households subscribe to them, "the Commission may promulgate any
additional rules necessary to promote diversity of information sources."
Previously, we determined that the first prong of the test had been met
and suggested that it was possible that the second prong of the 70/70
benchmark had been met. This year we find that based on data from Warren
Communications News, the second prong benchmark has been met at 71.4
percent. However, other data sources do not demonstrate that the second
prong has been met. As a result, we conclude that the only way to
accurately measure the 70/70 test is to collect data directly from the
cable industry. Therefore, the Commission requires each cable operator
to submit the following information for 2006 within 60 days under
penalty of perjury: 1) the total number of homes the cable operator
currently passes; 2) the total number of homes the cable operator
currently passes with 36 or more activated channels; 3) the total number
of subscribers; and 4) the total number of subscribers with 36 or more
activated channels.

Today, the FCC also adopts this year's Notice of Inquiry (NOI), which
solicits comment and information for the 14th Annual Video Competition
Report. The NOI seeks information that will permit the Commission to
compare video distribution alternatives available to consumers and to
evaluate competition in the video marketplace and the factors that have
facilitated or impeded competition. The FCC also expects to examine the
extent to which consumers have choices among video distributors and
programming options. As in the past, the NOI again emphasizes the
importance of receiving substantive information from industry
participants, and non-industry commenters, to ensure that we gain a full
understanding of the state of competition.

A list of key findings of the report is attached, and a full copy of the
report will be available shortly at www.fcc.gov/mb.

Action by the Commission November 27, 2007, by Report to Congress (FCC
07-206). Chairman Martin, Commissioners Copps and Adelstein, with
Commissioner Tate Concurring, and Commissioner McDowell approving in
part and dissenting in part.

Action by the Commission November 27, 2007, by Notice of Inquiry (FCC
07-207). Chairman Martin, Commissioners Copps, Adelstein, Tate and
McDowell.

Separate statements issued by Chairman Martin, Commissioners Copps,
Adelstein, Tate and McDowell.

MB Docket No. 05-255
MB Docket No. 06-189
MB Docket Number 07-269

-FCCMedia

Bureau contacts: Marcia Glauberman, or Dana Scherer (202) 418-2330.

Specific Finding of the FCC's 13th Annual Video Competition Report:

o The number of TV households and the number of MVPD subscribers
increased since the FCC released its last report. As of June 2006, there
were 110.2 million TV households, compared to 109.6 million in June
2005. Of that number, approximately 95.8 million TV households subscribe
to an MVPD service, versus 94.2 million as of June 2005.

o 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." According to Warren Communications
News, a source on which we have traditionally relied, 71.4 percent of
households passed by cable systems offering 36 or more channels
subscribe to these systems. However, other data sources do not
demonstrate that the second prong has been met. As a result, we conclude
that the only way to accurately measure the 70/70 test is to collect
data directly from the cable industry. Therefore, the Commission
requires each cable operator to submit the following information for
2006 within 60 days under penalty of perjury: 1) the total number of
homes the cable operator currently passes; 2) the total number of homes
the cable operator currently passes with 36 or more activated channels;
3) the total number of subscribers; and 4) the total number of
subscribers with 36 or more activated channels.

o Cable continues to serve the largest percentage of MVPD subscribers.
The Report finds that as of June 2006, approximately 68.2 percent of
MVPD subscribers received video programming from a franchised cable
operator.

o DBS subscribers comprise the second largest group of MVPD households,
representing 29 percent of total MVPD subscribers as of June 2006. DBS
operators continue to add localinto-local broadcast television service.
In approximately 175 of the 210 television markets, at least one DBS
provider offers the signals of local broadcast stations.

o The number of MVPD subscribers choosing all other delivery
technologies represented 2.6 percent of all subscribers in June 2006.

o The Nielsen Company estimated that, as of January 2007, 15.5 million
households, or about 14 percent of all television households rely on
over-the air television broadcasts for video programming. In addition,
many households that subscribe to an MVPD also rely on over the air
signals to receive broadcast programming on some of their television
sets.

o From June 30, 2005 to June 30, 2006, the number of commercial and
noncommercial television stations rose from 1,747 to 1,753. As of
January 2007, approximately 1,600 stations nationwide were on the air
with DTV operations, including all 119 stations affiliated with the
top-four network affiliates in the top 30 television markets.

o Incumbent local exchange carriers also are providing video service. At
the end of 2006, Verizon reported that it offered video programming via
FiOS TV to more than 2.4 million households in 200 cities in 10 states
and served 207,000 subscribers. At the end of 2006, AT&T served
approximately 11 cities through U-verse TV. In addition, Qwest has taken
steps to provide IPTV service in its service area.

o As of June 2006, Broadband Service Providers ("BSPs") served
approximately 1.4 million subscribers, representing 1.5 percent of all
MVPD households.

o Electric and gas utilities also provide MVPD and other services on a
limited basis. The American Public Power Association, which represents
more than 20,000 not-for-profit community and state-owned electric
utilities, reports that the average subscriber penetration rate for its
members offering video service was 50 percent of the homes passed by
utility video services, and that 40 percent of these subscribers
purchase a combination of video and high-speed Internet access service.

o The number of subscribers to private cable operator systems, also
known as satellite master antenna systems, has declined to 900,000
subscribers as of 2006, a decrease of ten percent from last year's one
million subscribers.

o The number of wireless cable subscribers has declined steadily from a
peak of 1.2 million in 1996 to approximately 100,000 as of June 2006,
unchanged from a year earlier.

o In recent years, major commercial mobile radio service and other
wireless providers have begun offering services that allow subscribers
to access video programming through handheld devices, such as mobile
telephones.

o The amount of web-based video provided over the Internet continues to
increase significantly each year. In July 2006, 107 million Americans,
three out of every five Internet users, viewed video online. In July
2006, about 60 percent of U.S. Internet users downloaded videos. More
than 7 billion videos were downloaded that month.

o Between July 2005 and June 2006, a total of 28 MVPD transactions were
announced. Together these transactions were valued at approximately $5.3
billion and affected approximately 1.8 million subscribers.

o In 2006 we identified 565 satellite-delivered national programming
networks, an increase of 34 networks over the 2005 total of 531
networks. Of the 565 networks, 84 (14.9 percent) were vertically
integrated, or affiliated, with at least one cable operator. Five of the
top seven cable operators own, in whole or in part, all of the networks
that are affiliated with any cable operator.

o In 2006, we identified 101 regional networks, an increase of six over
those identified in 2005. These networks provide programming of local or
regional interest and are distributed to subscribers of one or more
MVPDs in an area. Of these, 57 networks, or 56.4 percent, were
vertically integrated with at least one multi-system cable operator
("MSO"). There are 43 regional sports networks, representing 42.6
percent of all regional networks, as compared to the 37 we reported last
year. Of the 43 regional sports networks, 19, or 44.2 percent, are
vertically integrated with a cable MSO.

o The sale of DTV consumer electronics continues to accelerate. The
Consumer Electronics Association ("CEA") estimates that, in 2006,
digital televisions ("DTVs") will have outsold analog televisions by 66
percent.

o The development and deployment of CableCARDs continued in 2006.
CableCARDs permit the reception of secured digital cable services
without the addition of a set-top box. As of December 22, 2006, more
than 216,000 CableCARDs had been deployed by cable operators, up from
90,000 the previous year.

o The Report also surveyed developments in foreign markets. MVPDs in a
number of countries provide programming on an a la carte basis or in
mixed bundles, themed tiers, and subscriberselected tiers. For example,
in Hong Kong, consumers receive a free basic package and also can
subscribe to more programming for an additional charge per channel. In
Canada, the largest cable operators offer a la carte services. In the
United Kingdom, consumers may select additional programming services
they want, either on a subscription or pay-as-you-go basis, without
first purchasing a monthly basic-tier package. In India, as of January
1, 2007, consumers in certain cities can subscribe to programming on a
per channel basis.
 
 
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