The Federal Communications Commission released its 18th Video Competition Report on Jan. 17. Data points in the report demonstrate persuasively that the video services market is characterized by competition among cable, satellite, and telco providers of video subscription services as well as disruptive online video services. The market also is being transformed by the proliferation of media streaming devices and video apps.

Yet for all the technological advancements and proliferation of choices now available to consumers, much of the video market is still subject to regulatory restrictions that originated in the early 1990s, if not earlier. These regulatory burdens, and the uncertainty posed by the threat of new regulations based on leftover cable analog-era perceptions, impose costs and inhibit investment in advanced digital technologies and business models.

Evidence from the report revealing that the market for video products and services is innovative and competitive includes the following highlights:
MVPD Competition: At the end of 2015, 99% of all households were served by three competing multichannel video programming distributors (MVPDs), and 18% of households were served by four MVPDs. Cable MVPDs’ share of the national market was 53%, while satelitte providers served 33%, and former telephone company MVPDs served 13.4% percent. Yet total MVPD subscriptions dropped 1 million to a 99.4 million total.

OVD Competition: By the second quarter of 2016, subscriptions to online video distributor (OVD) services, such as Netflix, Amazon Prime, and Hulu Plus grew to more than 120 million. OVDs are negotiating "exclusive streaming rights, which they use to attract consumers seeking specific video content," and also "investing in original programming to attract and retain customers."

Broadcast TV Competition: Broadcast TV also remains a viable choice for video consumers. Households relying on over-the-air  broadcast service exclusive of any MVPD service increased to 12.4 million TV households in 2015. According to an analysis cited in the report, in 2015 retransmission consent fees paid by MVPDs to TV broadcast stations increased to about 23% of total TV revenue, or $6.4 billion.

Video App Use: Consumers are increasingly using apps to view video content on Internet-connected devices. More than 460 million IP-enabled consumer-owned devices support video apps.

Video Device Alternatives: The report grudgingly acknowledged “MVPDs are introducing innovative services on the devices that they lease,” yet claimed the device market lacks competition. But all MVPDs support CableCard-enabled devices manufactured by third parties. And, importantly, alternative digital devices for viewing video content today include smart TVs, Apple TV, Amazon Fire TV, Google's Chromecast, Roku, Sony Playstation and Xbox video game consoles, as well as Internet-connected Blu-Ray players, tablets, and smartphones. These developments point to a video device market that is fully competitive.

In view of the vibrant competition for video services and products reflected in the report, the FCC should review, comprehensively and promptly, its video regulations. Pursuant to its review, it should close regulatory proceedings in which it has previously proposed to expand legacy regulations.

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Randolph J. May is president and Seth L. Cooper is a senior fellow of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Md.

FCC chairman Ajit Pai was getting plenty of warm fuzzies from process reform fans for testing increased transparency by publishing the texts of proposals and orders before they are voted on at the agency's public meetings.

Related: Pai to Test Publishing Text of FCC Agenda Items Before Votes

"I applaud Chairman Pai for beginning the practice of making public the content of items intended to be voted on at FCC Open Meetings,” Sen. John Thune, chairman of the Senate Commerce Committee, said. “Commissioner O'Rielly also deserves credit for long advocating for this change. After leading an investigation last year into the FCC’s manipulation of information in advance of open meetings, I believe that a more transparent FCC will be more credible and more accountable. I am pleased that the new leadership is correcting this long-recognized process flaw.”

"Chairman Pai is taking quick and decisive action to make the agency more transparent," said Sen. Roger Wicker (R-Miss.), chairman of the Communications Subcommittee. "The American people stand to benefit from this important and long-overdue reform."

Sen. Dean Heller (R-Nev.), who has long backed FCC process reform legislation, said: “Transparency should be a cornerstone of government, and the FCC is no exception to this. While the previous leadership at the FCC did not embrace this idea, I applaud FCC chairman Pai for setting an early example in his chairmanship by releasing the text of the rules before the Commission votes and appreciate Commissioner O’Rielly’s commitment to this effort.... As the leading advocate for FCC process reform in the Senate, I will continue working to codify this important transparency reform at the FCC.”

AT&T SVP Joan Marsh said: “Clear and transparent processes lead to better regulatory results. FCC Chairman Pai made clear his commitment to these goals with the voting process reform he enacted at his first Open Meeting. Today’s announcement underscores that commitment even further. The pilot program of releasing proposed rules to the public, before they are voted on by the FCC, allows for greater public engagement and ultimately better government actions.  We applaud chairman Pai’s and his fellow commissioners’ efforts to improve the agency’s transparency to produce better results.”

Randolph May, president of free market think tank The Free State Foundation also supported the move, an approach the former FCC official had recommended in a blog post Wednesday (Feb. 1).

“I certainly commend chairman Pai for starting a trial regarding the public release of draft agenda items at the time they are circulated for consideration by the commissioners," May said. "There is no reason why reform of FCC processes can’t be subject to trials in cases where there are non-frivolous concerns raised about the change in process." 

Sen. Commerce Committee chairman John Thune (R-S.D.) said he plans to introduce a bill in the next few days, the FCC Reauthorization Act of 2016, to do what its name suggests.

Authorization bills establish, or reestablish as in this case, a federal agency, including the terms under which it operates and how funds may be spent.

As a result, the bill could be a vehicle for FCC reforms.

Thune pointed out in an FCC oversight hearing Wednesday (March 2) that the agency has not been reauthorized in a quarter century, the longest such gap for any agency the committee oversees.

He said it was the committee's responsibility to reauthorize the agency for the sake of its constituents, who are increasingly affected "by a regulatory agency with a nearly half a billion dollar budget."

"It is time for this committee to regularly reauthorize the agency as a part of its regular business," Thune said.

Thune added that he intends to mark up the bill, amend it if necessary and vote on it if possible in the next few weeks.