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FCC Releases Video Competition Report

The FCC released its fourteenth annual
video competition report
on Friday, covering 2007 through 2010, and as B&C/Multichannel Newsreported more than six weeks ago, it differs from the
last 2006 report by not concluding that competition from telco, satellite and
online providers is insufficient to hold down cable prices.

Cable operators would have preferred the FCC to have
concluded the marketplace was sufficiently competitive to justify revisiting
current regulations, including program carriage and access mandates, but the
report is short on conclusions, period.

The report points out that cable operators account for less than
60% of all MVPD subs, down from 65% in 2006. But while video sub counts have
been falling, says the FCC, MVPDs have still done well by increasing sales of
phone and Internet.

The report says satellite operators have increased their
share of the market from 29% to 33%,but says the most significant change in the
status of competition has been the addition of AT&T and Verizon, which now
account for about 7% of the MVPD market.

TV Everywhere access to some of that programming on fixed
and mobile Internet devices -- as in phones, tablets and computers -- also gets
a nod as a significant development.

The report, for the first time, divides up the video
universe into MVPD, broadcast TV, and OVD (online video distributor) and looks
at the state of each market.

Commissioner Robert McDowell suggested the report led to a
conclusion the FCC should have drawn. "I would have preferred for this
report to affirmatively conclude that the video programming marketplace is
competitive," he said, adding there was ample evidence for drawing that

The report's view of online video was confined to
professionally produced content rather than the "kitten on the piano"
user-generated variety that populates the Web in numbers some would suggest are
too big to ignore.

"Unfortunately, the report's analysis of the Internet's
effect on the video market is generally limited to online video distributors
offering professional content previously exhibited on television or
theatrically," he said, which obviously reduces the among of video
competition the FCC is crediting to over-the-top. "Although such content
is clearly a driving force in the video market, the Internet, coupled with
mobile devices, provides alternate outlets for content outside of the
traditional media and entertainment structure. I hope that future reports will
also explore the market effects of alternative and emerging online video
distributors that are creating new and original content."

Commissioner Ajit Pai also had no trouble drawing his own
conclusion, commenting that the report demonstrates that the video marketplace
is "more competitive than it has ever been." He also put in a plug
for putting out the report annually.

FCC Friday also issued a notice of inquiry
to collect data for 2011 and

"Given the fast pace of change within the industry, it
is vital that the Commission comply with it statutory mandate to "annually
report to Congress on the status of competition in the market for the delivery
of video programming," said Pai. "Our record on this score is a
matter of public record and need not be repeated here. I am hopeful, however,
that we are back on track and that we will release our next report in
2013." Comments are due Sept. 10 and reply comments Oct. 10.

The notice says the FCC will continue to divide the market
into MVPD, broadcast and OVD. The FCC is currently also seeking comment on
whether OVDs should be defined as MVPDS, so that could change in future