FCC Video Report: Competition Is Here


Washington —The Federal Communications Commission’s
latest Video Competition Report, covering 2007
through 2010, differs markedly
from the last report in
2006 in one important way: It
does not conclude that competition
from telco, satellite and
online providers is not enough
to hold down cable prices.

The fact that the report
doesn’t hammer the industry
over rates or conclude the market
is not competitive is good
news for MSOs. Still, operators
would have preferred the FCC
to have concluded the marketplace
was sufficiently competitive
to justify revisiting current
regulations, including programcarriage
and access mandates.

One FCC staffer described the report, which has been circulated
among the commissioners for their input, as a “massive
comment-seeking mechanism” and survey, rather than
an opportunity to draw a conclusion as to how competitive
the video marketplace is.

The 2006 report, released under
chairman Kevin Martin, a
cable price critic, concluded
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.

According to two sources
who searched the document,
the current report includes no
similar language or conclusion.

“There is no catch-all,” one
source said.

The report concludes that cable’s share of the multichannel
video-programming distributor marketplace in 2010
had declined since the last report. In 2006, cable MVPDs
accounted for more than 65% of subscribers, the report said;
by 2010, their share was less than 60%.

By contrast, satellite-TV providers DirecTV and Dish Network
accounted for more than 33% of the market by 2010, up
from just over 29%. The most significant change, the report
said, is the entry of telcos AT&T and Verizon Communications
into the video-services business.

At the end of 2010, Verizon’s FiOS TV and AT&T’s U-verse
TV were available to one-third of U.S. homes with a subscriber
share of about 7%. In 2006, FiOS was available to
about 3% of U.S. homes, while U-verse had just launched.

Although over-the-top providers get their own section in
the report, the MVPD section also calls the development of
“TV Everywhere” services significant.

The report finds that the key changes in broadcast video
competitors include the rise in HDTV ownership from 25%
penetration in 2007-2008 to 64% in 2010-2011 and a doubling
of digital video recorders from 19% in 2007-2008 to 38% in
2010-2011. In the online video-distribution section, the report
said over-the-top distributors have emerged as “significant providers of content” since the last report, with all major
content providers entering the marketplace.