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Before the Federal Communications Commission Washington, D.C BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 In the Matter of ) ) Annual Assessment of the Status of ) MB Docket No. 07-269 Competition in the Market for the ) Delivery of Video Programming ) COMMENTS OF COMCAST CORPORATION Joseph W. Waz, Jr. James L. Casserly COMCAST CORPORATION Stephanie L. Podey One Comcast Center WILLKIE FARR & GALLAGHER LLP Philadelphia, Pennsylvania 19103 1875 K Street, N.W. Washington, D.C. 20006-1238 Kathryn A. Zachem James R. Coltharp COMCAST CORPORATION 2001 Pennsylvania Avenue, N.W. Suite 500 Washington, D.C. 20006 Thomas R. Nathan Catherine Fox COMCAST CABLE COMMUNICATIONS, LLC One Comcast Center Philadelphia, Pennsylvania 19103 May 20, 2009 TABLE OF CONTENTS Page I. INTRODUCTION AND SUMMARY............................................................................. 1 II. CONSUMERS HAVE A RAPIDLY INCREASING NUMBER OF SOURCES FOR VIDEO PROGRAMMING. ............................................................... 7 A. DBS Providers Continue To Provide Strong Competition in the MVPD Marketplace.............................................................................................. 7 B. Video Delivered by Telephone Companies Has Quickly Become a Significant Source of Competition..................................................................... 17 C. Viewing Video over the Internet Has Become Mainstream and Provides a Broad Diversity of Programming Options to Consumers. ........... 27 D. Broadcasters Are Making the Transition to Digital and Continue To Provide Consumers with an Important Source of Video Programming....................................................................................................... 37 E. Broadband Service Providers/Overbuilders Present a Competitive Force for Video, Voice, and Data in a Number of Markets. ........................... 44 F. Home Video Sales, Rentals, and Downloads Are a Popular, and Increasingly Convenient, Way To Access Video Programming. .................... 46 III. NEWER PLAYERS IN THE VIDEO MARKETPLACE PROVIDE MORE CHOICES FOR PROGRAMMERS AND CONSUMERS. ....................................... 50 A. Audiences Accessing Video over Mobile Devices Are Steadily Growing, While Wireless Technologies Continue To Improve. ..................... 50 B. Broadband over Power Line Continues To Be A Potential Video Delivery Vehicle................................................................................................... 58 C. The Video Marketplace Is Generating a Multitude of New Ways To Access Video, with “To-Be-Determined” Competitive Impact....................... 59 IV. COMCAST TAKES GREAT PRIDE IN ITS RESPONSES TO CONSUMER DEMAND FOR THE HIGHEST QUALITY, AND MOST DIVERSE AND ATTRACTIVE, OPTIONS FOR VIDEO, BROADBAND, AND VOICE. .................................................................................................................. 62 A. Comcast Provides Its Video Subscribers Unparalleled Programming Choices, Enhanced Services, and Value............................................................ 63 B. Comcast Continues To Deliver High-Quality Broadband Internet and Voice Services to a Growing Number of Subscribers...................................... 76 V. CONCLUSION ............................................................................................................... 82 ii BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 In the Matter of ) ) Annual Assessment of the Status of ) MB Docket No. 07-269 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 Profound changes have occurred in the nearly three years since the Commission last surveyed the video marketplace. Video is now being delivered via a variety of platforms and devices -- cable, satellite, telco, broadcast, Internet, mobile devices, gaming consoles, and more -- all competing for revenues and for consumers’ attention. Many of these sources did not exist (or barely existed) three years ago. Consumers demand the video they want, when and where they want it, and the marketplace is delivering as never before. I. INTRODUCTION AND SUMMARY Comcast is pleased to assist the Commission in its video competition inquiry. These comments illustrate how the video options available to consumers have continued to expand. Year after year, in each of its video competition filings, Comcast consistently has reported to the Commission about the dynamic and fast-paced competition that it faces in the battle for subscribers in the video marketplace. That competition continues to intensify. 1 In re Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Notice of Inquiry, 24 FCC Rcd. 750 (2009) (“Notice”); see also In re Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Supplemental Notice of Inquiry, 24 FCC Rcd. 4401 (2009). As Comcast has previously noted, to serve its statutory purpose of informing Congressional deliberations, 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. This task is especially important this year, as the Commission resumes its congressionally-assigned annual survey of competition in the video marketplace by collecting data for 2007, 2008, and 2009 -- the three most dynamic years ever (so far) in the video marketplace.2 The statutorily-mandated annual video competition report has been stalled for nearly three years.3 During this pivotal period, as cable operators were continuing the ongoing battle for subscribers with robust MVPD competition presented by DirecTV and Dish Network, cable operators were also facing fierce new MVPD competitors with tremendous resources, as well- established telephone companies continued to introduce facilities-based video services. And competition among traditional cable operators, DBS providers, overbuilders, and telephone companies increasingly involves bundles of services -- packaging video, voice, Internet, and sometimes wireless services together -- all designed to deliver maximum value to customers who choose a particular provider. At the same time, video delivered over the Internet blossomed, with increasingly more consumers viewing programming online (from fixed or mobile locations) every day. As explained by one observer: 2 Despite unprecedented competition and rapid marketplace change, the cable industry has faced three years of regulatory challenges, which have skewed competition, limited technology choices, and increased costs for consumers. In addition, over the past year, all marketplace participants have faced the challenges of an economic downturn. With the Nation and the Commission enjoying welcome new leadership, the time is ripe for a fresh review of video competition and video regulation. 3 See Barbara Esbin, A Tale of Two Reports, Progress on Point (Jan. 2009), available at http://pff.org/issues- pubs/pops/2009/pop16.1taleoftworeports.pdf; Barbara Esbin & Adam Thierer, Where Is the FCC’s Annual Video Competition Report?, Progress Snapshot (May 2008), available at http://www.pff.org/issues- pubs/ps/2008/ps4.11whereisFCCvidcompreport.html. 2 [T]he market for the delivery of video programming continues to become more and more competitive, both from traditional MVPDs like DBS and telephone company video providers, and increasingly, through video programming available over the Internet . This increase in competition has led to greater consumer choice among distributors, the number of video programming channels offered and the array of services offered by each type of provider.4 Meanwhile, the viewing of video reached record levels, with the average American watching 151 hours of television per month at the end of 2008.5 In addition to watching more television overall, many consumers have became accustomed to watching video in new ways, including on the device of their choosing, at the time of their choosing, and at the location of their choosing. Increasingly, consumers are dividing their attention between more than one screen at a time, with laptops on their laps and iPhones in their hands, while the television is on. Informed commentators from across the legal, business, and financial spectrum recognize the frenzied pace of competition present in the video marketplace. For example, the U.S. Court of Appeals for the Second Circuit has characterized competition between cable operators and DBS providers as “extremely fierce.”6 Many industry watchers and journalists perceive seismic changes: • [R]unning a media or entertainment company in the 21st century is not for the faint of heart. The change is relentless, the learning curve sharp, and the competition both fierce and seemingly infinite.7 • There’s no doubt the multiplatform business is getting bigger and much more competitive. Deals, company milestones and other strategic maneuvers . demonstrate 8 that companies within this industry aren’t going to give up market share without a fight. 4 Esbin, A Tale of Two Reports, supra note 3, at 4-5. 5 Todd Spangler, TV Watching Hits Heights in Q4: Nielsen, Multichannel News, Feb. 23, 2009 (noting that, “[a]mong the ‘three screens,’ TV remains vastly more popular for viewing video”), available at http://www.multichannel.com/article/179727-TV_Watching_Hits_Heights_In_Q4_Nielsen.php.
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