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Federal Communications Commission FCC 07-206 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Annual Assessment of the Status of ) MB Docket No. 06-189 Competition in the Market for the ) Delivery of Video Programming ) THIRTEENTH ANNUAL REPORT Adopted: November 27, 2007 Released: January 16, 2009 By the Commission: Chairman Martin, Commissioners Copps, and Adelstein issuing separate statements; Commissioners Tate and McDowell approving in part, dissenting in part, and issuing separate statements. TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION.................................................................................................................................. 1 A. Scope of This Report........................................................................................................................ 2 B. Summary .......................................................................................................................................... 4 1. The Current State of Competition: 2006 .................................................................................. 4 2. General Findings ....................................................................................................................... 5 3. Specific Findings....................................................................................................................... 8 II. COMPETITORS IN THE MARKET FOR THE DELIVERY OF VIDEO PROGRAMMING ......... 26 A. Cable Television Service ............................................................................................................... 26 1. General Performance............................................................................................................... 27 2. Programming Services and Pricing ......................................................................................... 44 3. Financial Performance............................................................................................................. 46 4. Capital Acquisition and Disposition........................................................................................ 51 5. Advanced and Other Services.................................................................................................. 54 B. Direct-to-Home Satellite Service ................................................................................................... 74 1. Direct Broadcast Satellite........................................................................................................ 74 2. Home Satellite or Large Dish Service ..................................................................................... 93 3. Satellite-Based Advanced Services ......................................................................................... 97 C. Broadband Service Providers....................................................................................................... 100 D. Broadcast Television Service....................................................................................................... 104 1. General Performance............................................................................................................. 104 2. Digital Television .................................................................................................................. 107 E. Other Wireline Video Services .................................................................................................... 130 1. Local Exchange Carriers ....................................................................................................... 130 2. Open Video Systems ............................................................................................................. 135 3. Electric and Gas Utilities....................................................................................................... 136 F. Other Wireless Video Services .................................................................................................... 139 Federal Communications Commission FCC 07-206 1. Private Cable Systems ........................................................................................................... 139 2. Wireless Cable Systems ........................................................................................................ 141 3. Commercial Mobile Radio Service and Other Wireless Providers ....................................... 142 G. Other Entrants .............................................................................................................................. 150 1. Web-Based Internet Video .................................................................................................... 150 2. Home Video Sales and Rentals ............................................................................................. 164 III. MARKET STRUCTURE AND CONDITIONS AFFECTING COMPETITION ............................. 168 A. Market Structure and Ownership Issues ...................................................................................... 168 1. Competitive Issues in the Retail Market for the Distribution of Video Programming to Consumers......................................................................................................................... 169 2. Competitive Issues in the Program Supply Market ............................................................... 177 B. Vertical Integration and Other Programming Issues.................................................................... 183 1. Status of Vertical Integration................................................................................................. 183 2. Other Programming Issues .................................................................................................... 194 C. Other Competitive Issues............................................................................................................. 245 1. Competitive Developments in Small and Rural Markets ...................................................... 245 2. Competitive Developments in the MDU Market .................................................................. 250 3. Competitive Developments in Alaska and Hawaii................................................................ 257 IV. TECHNICAL ISSUES ....................................................................................................................... 261 A. Navigation and Reception Devices .............................................................................................. 262 B. Emerging Technologies ............................................................................................................... 270 V. FOREIGN MARKETS....................................................................................................................... 282 VI. ADMINISTRATIVE MATTERS ...................................................................................................... 290 APPENDIX A – List of Commenters APPENDIX B – Market Structure and Ownership Tables APPENDIX C – Vertical Integration and Other Programming Tables I. INTRODUCTION 1. This is the Commission’s thirteenth annual report (“2006 Report”) to Congress on “the status of competition in the market for the delivery of video programming.”1 Congress imposed this annual reporting requirement in the Cable Television Consumer Protection and Competition Act of 1992 (“1992 Cable Act”)2 as a means of obtaining information on the of competition in the marketplace for the delivery of video programming. 1 Section 628(g) of the Communications Act of 1934, as amended (the “Act”) requires the Commission to report annually on the status of competition in the video marketplace. The Commission’s previous reports appear at: Implementation of Section 19 of the 1992 Cable Act (Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming), 1994 Report, 9 FCC Rcd 7442 (1994); 1995 Report, 11 FCC Rcd 2060 (1996); 1996 Report, 12 FCC Rcd 4358 (1997); 1997 Report, 13 FCC Rcd 1034 (1998); 1998 Report, 13 FCC Rcd 24284 (1998); 1999 Report, 15 FCC Rcd 978 (2000); 2000 Report, 16 FCC Rcd 6005 (2001); 2001 Report, 17 FCC Rcd 1244 (2002); 2002 Report, 17 FCC Rcd 26901 (2002); 2003 Report, 19 FCC Rcd 1606 (2004); 2004 Report, 20 FCC Rcd 2755 (2005); and 2005 Report, 21 FCC Rcd 2503 (2006). See Communications Act of 1934 § 628(g), 47 U.S.C. § 548(g). 2 Pub. L. No. 102-385, 106 Stat. 1460 (1992) (“1992 Cable Act”). 2 Federal Communications Commission FCC 07-206 A. Scope of This Report 2. Consistent with the statutory purpose, we report on developments in the marketplace for the delivery of video programming and on the factors that have fostered or impeded changes in the competitive environment over the past year. We present information and analysis regarding changes in the marketplace since the 2005 Report, and we describe how those changes affect the current state of the marketplace. The information and analysis provided in this Report are based on information submitted by commenters in response to a Notice of Inquiry (“Notice”) in this docket,3 publicly available data, and filings in various Commission proceedings.4 3. The marketplace for the delivery of video programming services is served by a number of operators using a wide range of distribution technologies. In Section II, we examine each of these delivery technologies, and the services provided over them, and we assess their
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