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NCTA: Market Power a Thing of the Past

8/15/1999 8:00 PM Eastern

Washington -- With direct-broadcast satellite scoring
impressive gains, the National Cable Television Association asserted that cable operators
no longer possess market power in the video-distribution arena.

"By any measure, competition has taken hold in the
video marketplace. It is time for the [Federal Communications Commission] to declare
it," the NCTA said in Aug. 6 comments filed for the FCC's annual
cable-competition survey for Congress.

The association added that cable's market share stood
at 82 percent, down from 85 percent a year ago. "This trend shows no signs of
diminishing or reversing course," the NCTA said.

According to the DBS industry, DBS operators serve 11.9
million subscribers. Cable, meanwhile, serves about 66 million.

Although cable remains dominant in terms of total
subscribers, the NCTA said, DBS is growing rapidly and providing consumers with a real
alternative to cable.

"And the last perceived impediment to DBS' full
blossoming -- the inability to retransmit local broadcast signals -- is about to be
resolved by legislation," the trade group said, referring to House and Senate bills
that are expected to be reconciled and sent to the White House in the months ahead.

In its own comments, EchoStar Communications Corp., which
serves 2.5 million dish owners, took issue with the notion that DBS is fully competitive
with cable.

"Effective competition has yet to arrive in the
[multichannel-video] market," EchoStar said. "In particular, cable operators
preserve their stranglehold in urban areas."

Under the 1992 Cable Act, the FCC is required to prepare an
annual report on the status of competition in the multichannel-video-distribution market.
In recent years, the report has documented steady erosion in cable's market share.

Cable incumbents and their competitors typically use the
comment period either to refight old battles or to urge the FCC to adopt new rules that
are favorable to their interests.

For example, Ameritech New Media called once again for
stronger program-access rules. The cable overbuilder, with 250,000 subscribers in 90
Midwest communities, claimed that it cannot obtain access to Ohio News Network in
Cleveland because of an exclusive agreement between the programmer and Cox Communications
Inc.

ANM added that it continues to be denied access to TV Land,
Tribune Co.'s ChicagoLand Television News, MSNBC and Fox News Channel. "These
networks have refused to permit Ameritech to carry their programming because of exclusive
distribution arrangements with incumbent cable operators," ANM said.

Current FCC rules allow cable incumbents to sign exclusive
deals with networks that they are unaffiliated with. ANM said incumbents use their market
power to force unaffiliated programmers to sign exclusive deals that shut out competitors.

In other comments, MediaOne Group Inc., which serves 5
million subscribers in 15 states, said it is facing stiff competition not only from DBS,
but also from phone companies that have decided to build competing cable systems.

MediaOne, which is in the process of being acquired by
AT&T Corp., said ANM is competing hard in Michigan with wireline systems, and
BellSouth Corp. is doing the same in Georgia and Florida with a combined approach -- both
wireline and wireless video facilities.

At several points in its comments, MediaOne complained that
competitors to cable incumbents are benefiting from an easier set of regulations.

"MediaOne is unable to package or even align its
channel lineups in the same manner as DBS companies due to the restrictions imposed upon
cable operators by rate-regulation and must-carry requirements," the MSO said.

The American Cable Association (formerly the Small Cable
Business Association) used the competition report to urge the FCC not to require cable
operators to open their facilities to unaffiliated Internet-service providers and not to
impose draconian digital must-carry rules on small systems.

The ACA also urged the FCC to take action against powerful
broadcast-network affiliates that use their market clout to secure unreasonable
retransmission-consent terms, citing demands for cash and carriage of cable networks that
are affiliated with the broadcasters.

"Broadcasters, having no downside to withholding their
analog signals from smaller systems, frequently make significant demands in exchange for
retransmission consent," the ACA said.

 

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