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Comcast Corporation 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 ) COMMENTS OF COMCAST CORPORATION Joseph W. Waz, Jr. James L. Casserly COMCAST CORPORATION Ryan G. Wallach 1500 Market Street Stephanie L. Podey Philadelphia, Pennsylvania 19102 WILLKIE FARR & GALLAGHER LLP 1875 K Street, N.W. James R. Coltharp Washington, D.C. 20006-1238 Mary P. McManus COMCAST CORPORATION 2001 Pennsylvania Avenue, N.W. Suite 500 Washington, D.C. 20006 Thomas R. Nathan COMCAST CABLE COMMUNICATIONS, LLC 1500 Market Street Philadelphia, Pennsylvania 19102 November 29, 2006 TABLE OF CONTENTS Page I. INTRODUCTION AND SUMMARY. ........................................................................... 1 II. CONSUMERS’ VIDEO OPTIONS ABOUND AND CONTINUE TO INCREASE ON A DAILY BASIS. ................................................................................. 7 A. DIRECTV and EchoStar Are Significant Sources for Video Programming and Formidable Competitors in the Video Marketplace. .......................................................................................................... 7 B. LECs Continue To Rapidly Build Networks That Provide Video Services to Consumers, and the Impact on Competition Is Already Being Seen............................................................................................................ 17 1. Telcos Large and Small Continue To Expand Their Cable Offerings and Provide Vigorous Competition...................................... 18 2. The Telcos’ Success in Deploying Video Offerings Is Strong Evidence That There Are No Significant Regulatory Impediments to Competition. ................................................................ 22 C. Internet Video Is Commanding the Attention of Consumers and Increasing “Video Mania.”................................................................................. 29 D. Broadcasters Remain an Important Source of Video Programming............. 37 E. Broadband Service Providers/Overbuilders Provide Important Competition in Markets of All Sizes.................................................................. 43 F. Home Video Sales and Rentals Are Popular Options for Consumers, and the Availability of New Delivery Methods Will Facilitate Consumers’ Continued Reliance on These Options as a Significant Source for Video Programming......................................................................... 46 III. NEW PLAYERS IN THE VIDEO MARKETPLACE PROVIDE MORE CHOICES FOR PROGRAMMERS AND CONSUMERS. ....................................... 50 A. The Mobile Telephone “Third Screen” Has Picked Up Momentum This Year, and Continues To Increase in Popularity. ..................................... 50 B. Broadband over Power Line Technology Is Another Potential Video Distributor. .......................................................................................................... 55 C. The Evolution of the Video Marketplace Is Generating Entirely New Distribution Alternatives, with Massive Competitive Impact......................... 57 1 TABLE OF CONTENTS Page IV. COMCAST CONTINUES TO INVEST AND INNOVATE TO OFFER CONSUMERS THE HIGHEST QUALITY, AND MOST DIVERSE AND ATTRACTIVE, OPTIONS IN VIDEO, BROADBAND, AND TELEPHONY. ................................................................................................................ 59 A. Comcast Brings Its Video Subscribers Greater Choice and Greater Value..................................................................................................................... 60 B. Comcast Brings New Broadband Technologies and Innovative Services to More Consumers Than Ever Before. ............................................. 69 C. Comcast Actively Maintains and Honors Its Commitments As a Good Corporate Citizen................................................................................................ 73 V. DYNAMIC CHANGE IN THE VIDEO MARKETPLACE IS OUTPACING LAW AND REGULATION, WITH TROUBLING RESULTS................................. 79 VI. CONCLUSION. .............................................................................................................. 83 Exhibit 1: Verizon’s FiOS TV Channel Lineup (Washington, DC Metro Area) Exhibit 2: Comcast’s Rate Card and Channel Lineup (Arlington County, VA) Exhibit 3: Chart: Anomalies of Video Regulation: Treating Like Services Differently 2 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 ) COMMENTS OF COMCAST CORPORATION Comcast Corporation (“Comcast”) hereby responds to the above-captioned Notice of Inquiry (“Notice”).1 These comments address many of the questions posed in the Notice, supplying information about the video marketplace in general and Comcast’s role in particular. The facts and evidence herein show indisputably that the quantity and diversity of programming available to American consumers continues to expand rapidly, the means by which consumers can access video programming continue to proliferate, and the public policy rationales underlying many of the laws and regulations that apply only to a subset of video providers -- traditional cable television operators -- have eroded. I. INTRODUCTION AND SUMMARY. Over the nearly 15 years since Congress first directed the Commission to report annually on the status of competition in the video marketplace, that marketplace has changed radically. And the pace of change is still accelerating. Video distribution technologies are evolving rapidly, and established models and expectations are constantly being challenged by seismic 1 In re Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Notice of Inquiry, 21 FCC Rcd. 12229 (2006) (“Notice”). changes, including the fundamentally and irrevocably disruptive role of broadband Internet, the proliferation of distribution outlets, the micro-fragmentation of audiences, and the inexorable movement away from traditional linear networks and audience passivity toward on-demand viewing and consumer sovereignty. To serve its statutory purpose of effectively informing the deliberations of Congress, it is essential that the Commission’s video competition report objectively survey the entire video landscape and fully and fairly detail the abundance and diversity of competition that characterize the video marketplace. The Commission cannot responsibly fulfill its charge unless it acknowledges, catalogs, and understands the dramatic changes that have occurred in recent years -- and especially in recent months. With these Comments, we attempt to assist the Commission in that task. There has never in history been such an extraordinary diversity of programming available to consumers -- or so many ways in which they can access it. As recently reported in The New York Times: Video mania is in full swing. Amazon is finally doing movie downloads. Apple is touting a new wireless gizmo to beam movies from laptops to TV screens. NBC is introducing a video syndication service that might pit it against Google and Yahoo, and it’s joining the other big networks in putting its shows online for free with advertising. MTV is working with Google to populate its video content all over the Web.2 And that describes only a fraction of the newest developments in the video marketplace. Meanwhile, there is a wide variety of established distribution outlets available to consumers -- including cable systems, direct broadcast satellite (“DBS”) providers, broadcasters, home video sales and rentals, and so on -- with new options, including telephone companies and Internet 2 Richard Siklos, A Video Business Model Ready To Move Beyond Beta, N.Y. Times, Sept. 17, 2006, at 33. 2 video providers, constantly emerging. Consumers’ appetite for video programming appears to be nearly insatiable, and technology has evolved to help feed that appetite. Anyone with a video camera and a broadband connection can now distribute his or her content to a potential audience that far exceeds the number of TV households in the United States. For consumers, video can be consumed anytime and anywhere; as Internet and mobile video programming and time-shifting technologies become increasingly widespread, consumers face an explosion of choices, including alternatives to the types of experience traditionally offered by cable operators and other MVPDs. Although some viewers still choose to view The Office or Dancing with the Stars at the scheduled time on the living room television, others may prefer to watch these shows later, on a different device at a different location, or instead to view videos from YouTube or thousands of other Internet sites. Although no one can possibly know what the future holds in the video marketplace, every informed participant and observer sees rapid changes, intensifying competition and choice, and greater empowerment of consumers. Here is just a sampling from the press about the video explosion during the last few months: • “We will see greater changes in the media industry in the next five years than we have seen in the last 50 years.”3 • “What is happening to storefront commerce is what we think is happening with content: It’s adapting to the broadband era. Change is now measured in 4 nanoseconds.” 3 Meg James & Maria Elena Fernandez, NBC’s Cuts Will Alter the
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