Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, 47383-47392 [2012-19107]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 77, Number 153 (Wednesday, August 8, 2012)]
[Notices]
[Pages 47383-47392]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19107]



[[Page 47383]]

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FEDERAL COMMUNICATIONS COMMISSION

[MB Docket No. 12-203; FCC 12-80]


Annual Assessment of the Status of Competition in the Market for 
the Delivery of Video Programming

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: The Commission is required to report annually to Congress on 
the status of competition in markets for the delivery of video 
programming. This document solicits data, information, and comment on 
the status of competition in the market for the delivery of video 
programming for the Commission's Fifteenth Report (15th Report). The 
15th Report will provide updated information and metrics regarding the 
video marketplace in 2011 and 2012. Comments and data submitted in 
response to this document in conjunction with publicly available 
information and filings submitted in relevant Commission proceedings 
will be used for the report to Congress.

DATES: Interested parties may file comments, on or before September 10, 
2012, and reply comments on or before October 10, 2012.

ADDRESSES: Federal Communications Commission, 445 12th Street SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Johanna Thomas, Media Bureau (202) 
418-7551, or email at johanna.thomas@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Annual Assessment of the Status of Competition in the Market for 
Delivery of Video Programming, Notice of Inquiry (NOI), in MB Docket 
No. 12-203, FCC 12-80, released July 20, 2012. The complete text of the 
document is available for inspection and copying during normal business 
hours in the FCC Reference Center, 445 12th Street SW., Washington, DC 
20554, and may also be purchased from the Commission's copy contractor, 
BCPI, Inc., Portals II, 445 12th Street SW., Washington, DC 20054. 
Customers may contact BCPI, Inc. at their Web site https://www.bcpi.com 
or call 1-800-378-3160.

Synopsis of Notice of Inquiry

    1. Section 628(g) of the Communications Act of 1934, as amended 
(the Communications Act) requires the Commission to report annually on 
``the status of competition in the market for the delivery of video 
programming.'' This NOI solicits data, information, and comment on the 
state of competition in the delivery of video programming for the 
Commission's Fifteenth Report (``15th Report''). We seek to update the 
information and metrics provided in the Fourteenth Report (``14th 
Report'') and report on the state of competition in the video 
marketplace in 2011 and 2012. Using the information collected pursuant 
to this NOI, we seek to enhance our analysis of competitive conditions, 
better understand the implications for the American consumer, and 
provide a solid foundation for Commission policy making with respect to 
the delivery of video programming to consumers.
    2. We invite all interested parties to provide input for the 15th 
Report. We seek to collect data to gain further insight into such areas 
as the deployment of new technologies and services, as well as 
innovation and investment in the video marketplace. The entry of each 
new delivery technology provides consumers with increasing options in 
obtaining video content. We therefore request comment on industry 
structure, market conduct and performance, consumer behavior, urban-
rural comparisons, and key industry inputs for video programming. To 
the extent possible, we request commenters to provide information and 
insights on competition using this framework.
    3. In particular, we request data, information, and comment from 
entities that provide delivered video programming directly to 
consumers. These entities include multichannel video programming 
distributors (MVPDs), broadcast television stations, and online video 
distributors (OVDs). We also seek data, information, and comment from 
entities that provide key inputs into video programming distribution. 
These include content creators and aggregators as well as manufacturers 
of consumer premises equipment, including equipment that enables 
consumers to view programming on their television sets and on other 
devices (e.g., smartphones and tablets). In addition, we request data, 
information, and comment from consumers and consumer groups. The 
accuracy and usefulness of the 15th Report will depend on the quality 
of the data and information we receive from commenters in response to 
this NOI. We encourage thorough and substantive submissions from 
industry participants, as well as state and local regulators with 
knowledge of the issues raised. When possible, we will augment reported 
information with submissions in other Commission proceedings and from 
publicly available sources.
    4. We expect to use the revised analytical framework adopted in the 
14th Report. Under this framework, first we categorize entities that 
deliver video programming into one of three groups: MVPDs, broadcast 
television stations, or OVDs. Entities delivering video content are 
assigned to these strategic groups based on similar business models or 
combination strategies. Second, we examine industry structure, conduct, 
and performance, considering factors such as: (1) The number and size 
of firms in each group, horizontal and vertical integration, merger and 
acquisition activity, and conditions affecting entry and the ability to 
compete; (2) the business models and competitive strategies used by 
firms that directly compete as video programming distributors, 
including product differentiation, advertising and marketing, and 
pricing; and (3) the improvements in the quantity, quality, and 
delivery methods of programming to subscribers, subscriber and 
penetration rates, financial indicators (e.g., revenue and 
profitability), and investment and innovation activities. Third, we 
look upstream and downstream to examine the influence of industry 
inputs and consumer behavior on the delivery of video programming. In 
the 14th Report, we discussed two key industry inputs: video content 
creators and aggregators and consumer premises equipment.
    5. We seek comment on whether the analytic framework adopted in the 
14th Report is a useful way for the Commission to evaluate and report 
on the status of video programming competition or whether modifications 
are needed for the 15th Report. Do the three strategic group 
classifications allow us to adequately assess the interaction across 
these groups? Are an entity's business incentives or competitive 
concerns affected by operating in more than one group? How does the 
placement of entities into strategic groups affect by their ability to 
offer multiple services (i.e., video, voice and broadband)? What 
influence do industry structure, conduct, and performance have on one 
another?
    6. The data reported in previous reports on the status of 
competition for the delivery of video programming were derived from 
various sources, including data the Commission collects in other 
contexts (e.g., FCC Form 477 and FCC Form 325), comments filed in 
response to notices of inquiry and other Commission proceedings; 
publicly available information from industry associations; company 
filings and news releases; Security and Exchange Commission filings; 
data from trade

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associations and government entities; data from securities analysts and 
other research companies and consultants; company news releases and Web 
sites; corporate presentations to investors, newspaper and periodical 
articles; scholarly publications; vendor product releases; white 
papers; and various public Commission filings, decisions, reports, and 
data. We seek comment on whether there are additional data sources 
available for our analysis. What other sources of data, especially 
quantitative data, should we use to perform a comprehensive analysis of 
the market for the delivery of video programming? Are there certain 
stakeholders we should reach out to in order to diversify the data and 
further supplement the record?
    7. In previous Notices of Inquiry, we have requested data as of 
June 30 of the relevant year to monitor trends on an annual basis. To 
continue our time-series analysis, we request data as of June 30, 2011, 
and June 30, 2012. We also recognize that a significant amount of data 
and information are reported on a calendar year basis, and as such, we 
ask commenters to provide year-end 2011 data when readily available and 
relevant.

Providers of Delivered Video Programming

    8. We seek information and comment that will allow us to analyze 
the structure, conduct, and performance of MVPDs, broadcast television 
stations, and OVDs. To improve our description and analysis of the 
video products within each group, we seek specific and granular 
quantitative and qualitative data as well as information from companies 
in each group. In addition, we request comment from the perspective of 
consumers, advertisers, content aggregators, content creators, and/or 
consumer premises equipment manufacturers on whether and to what extent 
MVPDs, broadcast stations, and OVDs consider the other two groups' 
offerings to be complements and/or substitutes for one another.

Multichannel Video Programming Distributors

    9. MVPD Structure. MVPDs include all entities that make available 
for purchase multiple channels of video programming. In our 14th 
Report, we determined that most MVPD subscribers use cable, DBS, or 
telephone MVPDs for their video service. Fewer than one percent of MVPD 
subscribers use other types of MVPDs (e.g., home satellite dishes 
(HSD), open video systems (OVS), wireless cable systems, and private 
cable operators (PCOs). We also found that little reliable data is 
available for these other types of MVPDs. We request comment on the 
extent to which these other types of MVPDs should be included in the 
15th Report.
    10. For each type of MVPD, we seek data on the number of MVPD 
providers, the number of homes passed, the number of subscribers for 
delivered video programming, the number of linear channels and amount 
of non-linear programming offered, the ability of subscribers to watch 
programming on multiple devices, and the geographic area in which 
individual providers offer service. In addition, we seek comment on the 
most appropriate unit of measurement for assessing geographic coverage. 
We note that different types of MVPDs may report data regarding 
availability and use that is not standardized to a common geographic 
unit. This greatly hinders our ability to assess the competitive 
alternatives available to homes and to identify where MVPDs are engaged 
in head-to-head competition. In the 14th Report, we addressed this 
concern in the context of estimating the number of homes with access to 
multiple MVPDs. We therefore seek data and information on the number of 
homes that are passed by one MVPD, two MVPDs, and three or more MVPDs. 
We wish to identify those markets and geographic areas where head-to-
head competition exists, where entry is likely in the near future, and 
where competition once existed but failed. What factors influence a 
subscriber's decision to switch from one type of MVPD service to 
another, for instance from cable MVPD service to DBS MVPD service or 
vice versa?
    11. We request information identifying differences between cable, 
DBS, and telephone MVPD subscribers. Are DBS subscribers more likely to 
reside in rural areas or areas not served by cable systems? What 
percentage of homes cannot receive DBS service because they are not 
within the line-of-site of the satellite signal? In addition, we 
request updated information on the number of markets where DBS 
operators provide local-into-local broadcast service. Particular MVPD 
providers offer bundles of multiple services, including broadband, 
voice, and mobile wireless services. How, if at all, do these bundled 
offerings affect competition? For example, what affect, if any, does 
the inability of DBS operators to directly provide broadband, voice, 
and mobile wireless services along with their video service have on 
competition among and the financial performance of MVPDs?
    12. With respect to non-contiguous states, do DBS MVPDs offer the 
same video packages at the same prices in Alaska and Hawaii as they 
offer in the 48 contiguous states? Do subscribers need different or 
additional equipment to receive video services in these states?
    13. We seek comment on other MVPDs such as HSD and PCOs. Are these 
technologies still relevant today? If so, how are they relevant and to 
what extent are they available?
    14. The Commission has not addressed the extent to which wireless 
providers offering video programming to mobile phones and other 
wireless devices should be classified as MVPDs under the Act, and we do 
not intend to do so within the context of this proceeding. We note 
that, in past reports, the Commission considered certain of these 
providers in its analysis of video competition. For the 15th Report, we 
request information on the extent to which mobile wireless providers 
continue to offer video programming to their customers. How has this 
changed during 2011 and the first half of 2012, and what are the 
reasons for such changes? How and to what extent do mobile wireless 
providers and MVPDs use wireless technologies, including Wi-Fi and 
wireless broadband, to provide video programming today, and what trends 
should we anticipate for the future? How do these services compete with 
or complement the traditional video programming services offered by 
MVPDs and by other providers of video programming?
    15. In the 14th Report, we did not directly measure horizontal 
concentration for video distribution. Rather, we estimated the number 
of homes on a nationwide basis that have access to two, three, or four 
MVPDs. We seek comment on the value of our approach. We also seek data 
or comment on what information we can acquire to assist us in 
performing this analysis. Likewise, we invite analysis regarding the 
relationship between horizontal concentration and competition. To what 
extent does horizontal concentration affect price or quality of 
service?
    16. In merger reviews, the Commission routinely examines horizontal 
concentration. It has classified MVPD service as a distinct product 
market and found individual homes to be the appropriate focus regarding 
competitive choices. In the 15th Mobile Wireless Report, the Commission 
applied the Herfindahl-Hirshman Index (HHI) to shares of mobile 
wireless connections held by facilities-based wireless providers at the 
level of Economic Areas, calculating shares of connections from the 
providers' number of connections.

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These Economic Areas are compiled based on census block data. For 
purposes of the 15th Report, we seek comment on the appropriate 
methodology for calculating concentration in delivered video services. 
Should we continue to consider MVPDs a separate product market, or are 
there narrower or broader product segments we should consider? What are 
the appropriate geographic markets associated with these product 
markets (e.g., individual households, census tracts, or cable franchise 
areas)?
    17. In 1992, Congress enacted provisions related to common 
ownership between cable operators and video programming networks. In 
the 14th Report, we discussed vertical integration in terms of 
affiliations between programming networks and MVPDs. Specifically, we 
identified the number of national video programming networks affiliated 
with one or more MVPDs. Similarly, we reported on regional programming 
networks affiliated with MVPDs. We also differentiated between the 
availability of standard definition (SD) and high definition (HD) 
versions of individual networks consistent with recent Commission 
decisions.
    18. We anticipate reporting this type of information again in the 
15th Report. We therefore request data, information, and comment on 
vertical integration between MVPDs and video programming networks. In 
particular, we request information on satellite and terrestrially 
delivered national and regional networks. How should we measure such 
vertical integration? For purposes of analyzing vertical integration, 
how should we determine affiliation? Should we use a minimum ownership 
share or apply standards similar to those contained in our attribution 
rules rather than report on any known affiliations as we have done in 
the past?
    19. Underlying regulatory, technological, and market conditions 
affect market structure and influence the total number of firms that 
can compete successfully in the market. We invite comments and 
information regarding the conditions that affect the entry into MVPD 
markets and rivalry among MVPDs.
    20. A number of provisions of the Communications Act and the 
Commission's rules affect MVPD operators in the market for the delivery 
of video programming. These include, for example, regulations governing 
program access, program carriage, must carry, retransmission consent, 
franchising, effective competition, access to multiple dwelling units, 
exclusivity, inside wiring, leased access, ownership, over-the-air 
reception devices, and public interest programming. We seek comment on 
the impact of these regulations and other Commission rules on entry and 
rivalry among MVPDs. Are MVPDs identifying the costs attributed to any 
of these regulations (e.g., retransmission consent) on the bills of 
their subscribers?
    21. We also request data on the number of channels MVPDs dedicate 
on their respective systems to must-carry; public, educational, and 
governmental (PEG); and leased access programming. On which tier are 
these channels placed and is extra equipment required to view them? Are 
there more or fewer PEG and leased access channels carried on MVPD 
systems than were carried as of June 2010? What data sources exist to 
track the availability of PEG and leased access programming? We 
recognize that the regulations applicable to cable operators may differ 
from the regulations applicable to DBS systems and other MVPD 
operators. How do regulatory disparities affect MVPD rivalry? We also 
solicit comment on specific actions the Commission can take to 
facilitate MVPD entry and rivalry with the intent to increase consumer 
choice in the delivery of video programming. In addition, we request 
comment on any state or local regulations that affect entry and rivalry 
among MVPDs.
    22. We seek information and comment on non-regulatory conditions 
affecting MVPD entry and rivalry, including the availability of 
programming. Do these conditions include economies of scale, where 
large MVPDs can spread fixed costs over more subscribers or negotiate 
lower prices for video content? Do these conditions also include 
expected retaliation, where potential MVPD entrants believe incumbents 
will lower prices to any home considering switching to the new MVPD 
entrant? What other non-regulatory conditions influence MVPD entry and 
rivalry?
    23. MVPD Conduct. MVPDs may choose from a variety of business 
models and competitive strategies to attract and retain subscribers and 
viewers. MVPDs decide, for example, the type of delivered video 
services they will offer, the programming they offer consumers, and how 
they package the programming (i.e., the number of tiers of video 
programming and the specific programming carried on each tier); the 
complementary product features they will offer (e.g., HD, DVR (digital 
video recorder), video-on-demand (VOD), online video programming to PCs 
and mobile devices, and bundled services where telephony and/or 
broadband is packaged with video service). MVPDs also decide the level 
of advertising, the degree of vertical integration with suppliers of 
video programming, whether to initiate or respond to price discounting, 
and their approach to customer service.
    24. We seek descriptions of the varied business models and 
strategies used by MVPDs for the delivery of video programming. What 
are key differences among the business models and strategies in terms 
of services offered to consumers? How do providers distinguish their 
delivered video services from their rivals? Do cable, DBS, and 
telephone MVPDs offer comparable video services? Does DBS ``local-into-
local'' delivery of broadcast television signals make it a closer 
substitute for cable than it would be otherwise? We note that content 
creators have negotiated ``TV Everywhere'' agreements in which MVPD 
subscribers receive access to programming via VOD, online, and mobile 
wireless devices. To what extent do MVPDs view VOD and TV Everywhere 
service offerings, both online and on mobile wireless devices, as ways 
to retain existing subscribers and attract new ones? How extensively do 
MVPDs offer specialized services to consumers (e.g., multi-room DVR 
service, more channels, more HD, video content online, access to 
content on mobile devices, and/or a variety of bundles)? How do MVPDs 
advertise their services to existing and potential subscribers? What 
delivered video services do they feature in their advertising?
    25. We also seek information regarding the pricing behavior of 
MVPDs. How does the price MVPDs pay for programming, including sports 
programming, impact the prices they charge to consumers? Are the prices 
of MVPD video packages and services easily identifiable and well-
explained on consumers' monthly bill and/or MVPDs' web sites and other 
promotional materials? To what extent do providers of MVPD service 
reduce prices or offer promotion pricing to attract new subscribers 
and/or retain existing subscribers? Do providers negotiate with 
individual subscribers over prices before and after introductory 
periods? Do homes that subscribe to the same delivered video services, 
from the same provider, in the same geographic area, pay different 
prices? How do bundles of service (i.e., packages that combine video, 
voice, equipment, and/or Internet service) affect the price charged for 
video services? To what extent have MVPDs been raising prices?

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    26. We are interested in learning whether an increase in the number 
of MVPD rivals affects pricing strategies. Do MVPDs charge lower prices 
(or use different pricing strategies) to homes that have access to 
multiple MVPDs? For its Annual Cable Price Survey, the Commission 
collects price data from a sample of cable systems, but does not 
collect price data for other types of MVPDs (e.g., DBS and AT&T U-
verse). We seek price data for MVPDs not included in the Annual Cable 
Price Survey, such as the monthly rate for both the lowest programming 
package and any equipment needed to access the video service. What 
additional data sources on MVPD prices are available for our 15th 
Report?
    27. We also seek information on the competitive strategies of MVPDs 
in providing VOD and TV Everywhere programming on fixed and mobile 
devices. In particular, we are interested in learning what competitive 
issues MVPDs encounter when acquiring content for VOD and TV Everywhere 
from content creators and aggregators. Does the horizontal or vertical 
integration of content creators or aggregators, particularly companies 
that own broadcast television stations as well as broadcast and cable 
networks and studios, impact the ability of MVPDs to acquire rights to 
programming or the price of the programming? How does the size of an 
MVPD impact its bargaining power in such negotiations?
    28. We seek data and comment on the provision of local news and 
sports by MVPDs as a competitive strategy in the delivery of video 
programming. What other types of local programming do MVPDs offer? What 
data sources are available to help in our analysis of MVPD provision of 
local news and sports, as well as other local programming?
    29. As discussed above, we seek data, information, and comment on 
trends in horizontal and vertical mergers and acquisitions. Has any 
MVPD acquired sufficient market power to impair competition? If so, how 
has competition been impaired? What consumer benefits, if any, have 
recent horizontal and vertical mergers achieved? In addition, we invite 
comment on any other issues concerning MVPD conduct that will assist 
our analysis of competition in the delivery of video programming by 
MVPDs.
    30. MVPD Performance. We seek comment on the information and time-
series data we should collect for the analysis of various MVPD 
performance metrics. In the 14th Report, we considered performance 
metrics such as subscribership and penetration rates, financial 
performance, and investment and innovation. We expect to continue to 
report on these metrics in the 15th Report. Are there other metrics 
that would enhance our analysis of MVPD performance? To the extent 
commenters suggest other metrics, we request data for their use in 
preparation of the 15th Report.
    31. We seek data, information, and comment on trends in the number 
of linear video channels as well as VOD and TV Everywhere video content 
offered by MVPDs to fixed and mobile devices. Has the number of linear 
channels and/or the number of VOD and TV Everywhere programs available 
increased? What are the most popular MVPD programming packages? 
Describe these packages in terms of the total number of analog and SD 
channels, number of HD channels, and number of VOD and TV Everywhere 
offerings. Are there geographic differences with respect to programming 
choices? How is the deployment of next-generation MVPD technologies 
affecting the amount of programming MVPDs offer subscribers on a linear 
and non-linear basis? What effect has the entry of additional MVPDs had 
on programming choices and improvements in the delivery of video 
programming? What impact has the growth in OVD services had on MVPD 
services, in particular the deployment of VOD and TV Everywhere 
services? What are the subscription levels for DVR and HD services? How 
many VOD titles are viewed per system?
    32. We seek data and information regarding the number of homes 
passed nationally, the number of subscribers, and the resulting 
penetration rate for MVPD service. We also request data regarding 
trends in the number of new homes that subscribe to MVPD services. In 
addition, we solicit subscription data for the channel lineup packages 
(including international, other specific genres, and premium) and other 
delivered video programming services that MVPDs currently market to 
consumers. What percentage of customers subscribe to these video 
packages and other delivered video programming services? How does 
subscription and penetration data vary by geographic region for MVPDs? 
What is the level of ``churn'' (i.e., consumer switching among MVPDs) 
and is it increasing or decreasing?
    33. We request information on various measures of MVPD financial 
performance, including data on MVPD revenues, cash flows, and margins. 
To the extent possible, we seek five-year time-series data to allow us 
to analyze trends. We are interested in the performance of the MVPD 
industry as a whole as well as the performance of individual MVPDs. 
What is the average revenue per MVPD subscriber? What are the major 
sources of video-related revenue for MVPDs? What percentage of total 
revenue is derived from each of these sources? What are the major 
video-related drivers of revenue growth? What are the major sources of 
costs for MVPDs, including programming costs? What is the impact of 
such costs on MVPDs? We seek data, information, and comments regarding 
profitability. What metrics and data should we use to measure 
profitability (e.g., return on invested capital, operating margins)? 
Are there any other quantitative or qualitative metrics that would add 
to our analysis of MVPD financial performance? We recognize that many 
MVPDs also provide non-video services, such as voice and high-speed 
Internet services, along with video service often offered on a bundled 
basis. We also note that MVPDs may cross-subsidize services. Our focus, 
however, is delivered video programming, and commenters submitting 
financial data should separate video from non-video services. 
Commenters should specify the methodology each firm uses for allocating 
joint and common costs. Likewise, commenters should explain the 
methodology each firm uses for allocating bundled revenue.
    34. We ask commenters to provide information concerning MVPDs' 
investments in the market for video programming, including investment 
levels over time, investment per subscriber, investment as a percentage 
of revenue, and capital expenditures by individual MVPDs. Does 
investment vary by geographic region or between national and regional 
providers? What innovative services or technologies are MVPDs currently 
deploying? What is driving this deployment? In addition, we seek 
comment on how investment and innovation affect competition among MVPDs 
and other providers of delivered video programming. Have OVDs spurred 
investment and innovation by MVPDs? To what extent do content 
aggregators and creators as well as manufacturers of consumer premises 
equipment influence MVPD investment and innovation?
    35. We also request information on the pace at which MVPDs are 
deploying, or have plans to deploy, new technologies, including 
transitioning from analog, or hybrid analog/digital, to all-digital 
distribution, adding IP-delivered video programming, deploying more 
efficient video encoding technologies (e.g., MPEG-4), deploying 
enhanced transmission technologies

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(e.g., DOCSIS 3.0) and expanding 3-D services. To the extent that MVPDs 
are migrating to digital or otherwise repurposing spectrum, we seek 
comment on what new or additional services are they providing to 
consumers (e.g., more HD channels, broadband, VOD, etc.).

Broadcast Television Stations

    36. Broadcast Television Structure. Providers of broadcast 
television service include both individual and group owners that hold 
licenses to broadcast video programming to consumers. Consumers who do 
not subscribe to an MVPD service may rely on over-the-air distribution 
of broadcast televisions for their video programming. Also, many MVPD 
homes receive broadcast television stations over-the-air on television 
sets that they have chosen not to connect to MVPD service. The 
Commission already collects data on the number of broadcast television 
stations in each designated market area (DMA) and ownership of 
broadcast television stations using our CDBS database, and purchases 
data from BIA/Kelsey and The Nielsen Company. We seek additional data 
concerning the number of households that rely on over-the-air broadcast 
television service, either exclusively or supplemented with OVD 
service, rather than receiving broadcast programming from an MVPD. In 
addition to the number of homes relying on over-the-air broadcast 
service, we request information regarding any demographic and 
geographic characteristics of such households. We also seek data on the 
percentage of households that own television sets, i.e., the total 
number of television households. We also seek data regarding the number 
of households with DVRs and HD sets. How many households routinely view 
broadcast programming over-the-air in addition to subscribing to an 
MVPD?
    37. We are interested in tracking common ownership of broadcast 
stations nationally and by DMA. Commission rules limit the number of 
broadcast television stations an entity can own in a DMA, depending on 
the number of independently owned stations in the market. The 
Commission already collects data that we can use to assess the 
horizontal structure of broadcast television stations, including the 
number of stations in each DMA and the ownership of each station. Is 
there other available data that may better inform our assessment of 
horizontal concentration in the broadcast station industry?
    38. The Commission has collected data that we can use to analyze 
trends in vertical integration, including data on the number of 
broadcast stations owned by or affiliated with video content creators 
and aggregators. For the 15th Report, we seek to report on the vertical 
integration of broadcast television stations with broadcast networks 
and cable networks as we have done in the past. As such, we seek data 
on the vertical structure of the broadcast television industry. How 
many broadcast television stations, nationally and within each DMA, are 
vertically integrated with a broadcast network or a cable network? 
What, if any, trends exist with respect to the vertical integration 
between television stations and broadcast networks or cable networks? 
How does the vertical integration of television stations with broadcast 
networks, cable networks, and studios affect their ability to negotiate 
with MVPDs and OVDs for carriage rights? We also seek comment on ways 
to improve our analysis of vertical integration.
    39. We also request data, information, and comment on the impact of 
horizontal and vertical combinations on the competitive condition of 
broadcast television stations with respect to the delivery of video 
programming. Does group ownership of broadcast stations within a DMA 
and/or across DMAs affect advertising revenue? Does group ownership 
within a DMA or across DMAs affect the price paid for video content? 
Are broadcast television stations that are vertically integrated with 
broadcast television networks better able to compete in the delivery of 
video programming? Do joint sales agreements (JSAs), local marketing 
agreements (LMAs), and shared services agreements (SSAs) impact the 
provision of programming to the public? Do these types of sharing 
arrangements affect the competitiveness of independent stations?
    40. The Commission's spectrum allocation and licensing policies 
affect the structure of broadcast television by limiting the number of 
stations located in a given geographic area. Other Commission rules 
limit the number of broadcast television stations an entity can own in 
a DMA as well as limit the national audience reach of commonly owned 
broadcast television stations. Congress recently enacted legislation 
that provides for voluntary participation of broadcast station 
licensees in ``reverse auctions'' in which they may offer to relinquish 
some or all of their licensed spectrum usage rights in exchange for a 
share of the proceeds from a ``forward auction'' of licenses for the 
use of any reallocated TV broadcast spectrum. In the 14th Report, we 
noted that these statutory and regulatory actions may affect the entry 
and rivalry of broadcasters. We seek data, information, and comment on 
the impact of these requirements on entry and rivalry in the broadcast 
television industry. Are there other regulations that affect entry and 
rivalry of broadcast television stations? We ask commenters to provide 
data and examples for each regulation that affects entry and rivalry.
    41. We seek information and comment on non-regulatory conditions 
affecting entry and rivalry, including access to capital and 
programming. For example, are there supply-side economies of scale that 
enable commonly owned broadcast television stations to spread fixed 
costs over greater audiences? Are there demand-side economies of scale 
that enable commonly owned broadcast television stations to negotiate 
lower prices for video programming? We invite analysis of the 
relationship between the advertising market and entry and exit in 
broadcast television. What other non-regulatory conditions influence 
entry and rivalry and to what extent? Which broadcast station licensees 
have entered or exited the broadcast televisions industry and why?
    42. Broadcast Television Conduct. Because broadcast television 
stations do not charge consumers directly for the delivery of their 
signals, they do not compete on price in the traditional sense. 
Broadcast television is free to consumers who receive it over-the-air. 
Nevertheless, since about 90 percent of all television households 
receive broadcast stations from an MVPD, most consumers pay for 
broadcast stations as part of their MVPD service. In the case of cable, 
broadcast television stations are part of the basic service package, 
which is generally a low price offering. What price do MVPDs charge to 
consumers to receive broadcast television stations on their basic tier 
of service?
    43. Commercial broadcast television stations earn revenue from 
advertising. We seek data, information, and comment on the business 
strategies of broadcast television stations as they confront changes in 
the advertising market, both long-term changes and those changes 
brought on by the economic downturn. In particular, we seek data on 
trends in prices for spot and local advertising on broadcast television 
stations. How does revenue from political advertising affect 
broadcasters' business strategies? To what extent has offering video 
content online increased the advertising revenue of broadcast stations?

[[Page 47388]]

    44. Some commercial broadcast television stations also earn revenue 
in the form of retransmission consent fees from MVPDs in return for 
carriage of their stations. We seek information regarding the types and 
characteristics of stations seeking retransmission consent fees. We 
also request comment on the types and characteristics of stations 
choosing MVPD carriage under the must-carry regime. In addition, we 
request information regarding any business strategies aimed at 
increasing revenue from retransmission consent fees. What prices (per 
subscriber) are broadcast stations receiving from MVPDs for 
retransmission consent?
    45. Broadcast stations compete with each other for viewers and 
advertisers on two major non-price criteria--programming and the 
ability to view such programming in multiple formats. As a result of 
the digital transition, each broadcast television station has been 
allotted 6 MHz of spectrum permitting multiple linear program streams, 
HD broadcasts, and/or the delivery of programming to mobile devices. We 
seek data, information, and comment on the use of multiple program 
streams as a business strategy to enhance a broadcaster's competitive 
position in the delivery of video programming. What types of 
programming are broadcasters carrying on their multiple streams? Does 
the ability to offer multiple programming streams since the digital 
transition enhance the ability of broadcasters to attract viewers to 
over-the-air video service and to compete against MVPDs? We also seek 
data, information, and comment on the number of broadcast television 
channels available in each DMA, counting both primary stations and 
additional multicast programming streams. Has the amount of programming 
increased since the digital transition?
    46. Are broadcasters using HD programming as a strategy to attract 
viewers? How many broadcast television stations offer video content in 
HD? What percentage of their programming is in HD? Has this percentage 
increased over time? What effect does the ability to offer video 
programming in HD have on broadcast stations' ability to compete 
against other broadcasters and attract viewers? Are broadcasters using 
their ability to deliver programming to mobile devices as a competitive 
strategy? How many broadcasters are currently delivering programming to 
mobile devices? Do broadcasters have business plans to use some of 
their digital capacity for a subscription service or to lease a portion 
of their digital spectrum capacity to others for a subscription 
service?
    47. Broadcasters remain important providers of local news. We seek 
data and comment on the provision of local news as a competitive 
strategy in the delivery of video programming and the geographic 
availability of local news programming. We also request comment on the 
strategies and partnerships broadcasters are using to deliver news 
online. Does the ability to distribute programming online lead some 
broadcasters to increase their investment in news and information 
programming or provide news to consumers that might not otherwise be 
available?
    48. For many years, broadcast television networks have used their 
local broadcast television affiliated stations as their primary 
distributor of programming. We solicit comment on whether and how 
broadcast television stations position themselves to remain the primary 
distributor of broadcast television network programming. To what extent 
is local broadcast programming available online, either on their own 
Web sites or through licensing agreements with OVD aggregators, such as 
Hulu and iTunes? What effect does the availability of broadcast 
programming online have on broadcast stations? Are there benefits to 
broadcasters of making video content available online and on devices 
other than a television set? If so, what are those benefits?
    49. Finally, what competitive strategies do broadcast television 
stations use to distinguish themselves from other broadcast television 
stations? For example, are broadcasters investing in local programming, 
other than news, to enhance the competitive position of their stations? 
We also seek data, information, and comment on the additional business 
strategies broadcast television stations use in competing against each 
other.
    50. Broadcast Television Performance. We seek information and time-
series data for the analysis of various performance metrics for 
broadcast television. These metrics include the improvements in 
quantity and quality of broadcast television station programming, over-
the-air viewership, viewership from carriage on MVPDs, revenue from 
advertising, revenue from retransmission consent fees, other revenue, 
investment and innovation, and rate of return/profitability.
    51. We seek data, information, and comment on the viewership of 
broadcast television stations both from over-the-air reception and MVPD 
carriage. What is the trend in total viewership in total household 
terms? What is the trend in the share of the total audience that 
broadcast television stations receive either over-the-air or via MVPD 
carriage relative to the share received by cable networks carried by 
MVPDs? How many households view broadcast television stations online 
rather than over-the-air?
    52. We seek data on broadcast television station revenues, cash 
flows, and profit margins. We are interested in the performance of the 
broadcast television industry as a whole as well as the performance of 
broadcast television stations, on average.
    53. In the 14th Report, we provided information regarding the major 
sources of revenue for broadcast stations--advertising, network 
compensation, retransmission consent, and ancillary DTV revenues. We 
seek data on each of these revenue sources. What percentage of total 
revenue is derived from each of these sources? How are these revenue 
sources and their relative shares of total revenue changing? Are there 
changes to the network/affiliate relationships that affect broadcast 
stations' revenues? We specifically seek information regarding the 
extent to which network affiliated broadcast stations now pay ``reverse 
compensation'' to their networks and/or share retransmission consent 
revenues with the network. We realize that some broadcast stations are 
integrated with other businesses but we are primarily interested in 
financial data related directly to the video programming of broadcast 
television stations, such as the local and national advertising 
revenue, retransmission consent fees, and revenue from stations' Web 
sites.
    54. We also seek data regarding the profitability of broadcast 
television stations. In the 14th Report, we assessed profitability by 
examining both financial reports and data on a station-level and 
company-level basis. What metrics and data should we use in the 15th 
Report to measure profitability (e.g., return on invested capital and 
operating margins)? What are the major expenses for broadcast 
television stations? We are particularly interested in the impact of 
programming costs on broadcast television stations. Has the financial 
performance of broadcast stations improved given the broader 
distribution of broadcast stations' video programming through nonlinear 
formats, such as OVDs, VOD, and TV Everywhere services? Are there any 
other quantitative or qualitative metrics that would add to our 
analysis of broadcast television stations' financial performance?
    55. We seek comment on how investment in digital television affects 
competition among broadcast television stations and in the larger 
market for the delivery of video programming. We

[[Page 47389]]

request data on broadcast television stations' investment in digital 
television and innovative technologies for distributing traditional 
programming, as well as on the financial returns of these investments. 
What has investment in digital television done to enhance the 
competitive position of broadcast television stations in the delivery 
of video programming? Are there geographic differences in the amount of 
investment?

Online Video Distributors

    56. OVD Structure. OVDs are entities that distribute video content 
over the Internet to consumers. To receive video content distributed by 
an OVD, a consumer must subscribe to a high-speed Internet access 
service. The Commission already collects data on entities that provide 
fixed and mobile high-speed Internet access services. We therefore have 
significant information regarding the structure, conduct, and 
performance of the broadband markets, including the number and size of 
participants, the number of homes that have access to each provider's 
high-speed Internet service, the download and upload speeds, the 
services offered by broadband providers, and the prices charged for 
broadband service. With respect to the delivery of video content by 
OVDs, we seek comment on the best available sources of information to 
enable us to analyze OVDs. The 14th Report surveyed some of the major 
players in the OVD marketplace, but lacked data and information 
covering the OVD industry as a whole. To the extent they are available, 
we ask commenters to provide data and information regarding the OVD 
marketplace for the 15th Report.
    57. The OVD marketplace has grown substantially over the last few 
years. Today, OVDs include programmers and content producers/owners 
(e.g., broadcast and cable networks, sports leagues, and movie 
studios), video sharing sites and social network services (e.g., 
YouTube and Facebook), and affiliates of manufacturers, retailers, and 
other businesses (e.g., Amazon.com and Wal-Mart's Vudu service). We 
request data, information, and comment on the number, size, and types 
of OVDs. Are OVDs typically affiliated with other businesses or are 
they stand-alone entities? To what extent do individual OVDs compete 
with other OVDs? What data sources are available to analyze the 
structure of the OVD marketplace? What entities do OVDs view as direct 
competitors? For instance, do OVDs compete with MVPDs and/or broadcast 
television stations? Is OVD service a substitute or complement for MVPD 
service? What data are available and what metrics should we use to 
analyze the extent to which OVDs' services are a substitute or 
complement to MVPD service?
    58. We request input about issues relating to horizontal 
concentration and vertical integration in the OVD marketplace. In the 
14th Report, we noted that it is difficult to measure horizontal 
concentration in the OVDs market due to continual entry and exit of 
industry participants, inability to access necessary data, and lack of 
established metrics to measure OVD performance. Are there any new data 
sources available that would help the Commission undertake a horizontal 
concentration analysis in the 15th Report? What methodologies might the 
Commission employ? What metrics could the Commission use?
    59. We also seek comment and data that would permit us to assess 
vertical integration in the OVD marketplace. We note that many OVDs are 
vertically integrated with other businesses. How do these relationships 
affect competition in OVD marketplace? For example, do affiliations 
between OVDs and content owners impact the availability of specific 
online content via multiple OVDs? Do affiliations between OVDs and 
equipment retailers and/or manufacturers have an impact on the ability 
of consumers to access OVD content via multiple devices, including 
mobile devices?
    60. We further request comment on conditions that affect entry into 
the OVD marketplace and rivalry among OVDs. What legal and regulatory 
barriers to entry do OVDs face? What non-regulatory barriers exist? For 
example, OVDs often depend on unaffiliated ISPs to deliver content to 
their customers. What affect does the need to rely on third parties to 
deliver their video content to consumers have on the ability of 
entities to enter and compete in the OVD marketplace? What percentage 
of a typical ISP's traffic is due to OVD content? Do difficulties in 
acquiring content rights, or the costs of acquiring such rights, act as 
a significant barrier to entry? Does the increasing cost of programming 
content have the potential to drive OVDs out of business? What other 
non-regulatory barriers to entry are there? What are the trends in 
recent OVD entry or exit, and what specific factors contribute to OVD 
entry or exit?
    61. OVD Conduct. What business models and competitive strategies do 
OVDs use to compete in the delivery of video content? What are the key 
differences among the business models and strategies in terms of 
services offered to consumers? Some OVDs provide content to users for 
free, while others charge users a fee to access content. Some OVDs 
charge a monthly fee, while others charge separately for each 
television program or movie. We seek comment on the factors that affect 
an OVD's choice of business models. Are OVDs increasingly inclined to 
charge consumers for access to their content? To what extent do OVDs 
rely on advertising, subscription fees, per-program fees, or other 
sources of revenue? Are OVDs implementing additional revenue 
strategies? We also seek information on the prices OVDs charge for 
access to video content over the Internet. What prices are consumers 
currently paying for OVD service? Have these prices changed over the 
last few years, and if so, why? In addition, we request information on 
whether OVDs are implementing business models that are not free, 
subscription, or transaction based. For example, to what extent are 
OVDs entering partnerships with MVPDs or other entities to provide 
bundled, exclusive, or otherwise enhanced access to the OVD service for 
subscribers of MVPDs or other entities?
    62. In the last few years, OVDs have made an increasing amount of 
video content available to consumers over the Internet. What are the 
types of business arrangements OVDs use to acquire distribution rights 
for content? What strategies are OVDs implementing to obtain video 
content for their libraries? How does the decision to charge customers 
affect an OVD's ability to deliver additional content to consumers? To 
what extent are producers and owners of highly desirable content 
willing to make that content available to consumers online? What other 
factors have an impact on the ability of OVDs to secure the rights to 
compelling content?
    63. OVDs increasingly make their video content available to 
subscribers via multiple devices, including mobile devices such as 
smartphones and tablets. To what extent must OVDs make content 
available via multiple devices, including mobile devices, in order to 
compete in the OVD marketplace? What costs or difficulties do OVDs face 
when attempting to make content available via multiple devices?
    64. How is OVD service advertised? What media do OVDs use to 
advertise their service? Do OVDs highlight the availability of 
increasing amounts of online video content to attract more viewers and/
or subscribers? Do OVDs use the ability to access content via multiple 
devices, including mobile devices, as a means to attract and retain

[[Page 47390]]

subscribers? What other factors do OVDs stress in advertisements?
    65. Currently, most OVD services allow viewers to search for 
content (e.g., video clips, episodes of TV shows, or movies) within the 
OVD's library and to view such content whenever the customer wishes. To 
what extent have OVDs begun to produce or acquire original content? 
What are the costs of producing or acquiring such content and does such 
content attract additional viewers? Are those OVDs offering original 
content more competitive with MVPDs and broadcasters? Are OVDs 
providing live and local content as a means to attract viewers (e.g., 
local news and sporting events)? What additional strategies are OVDs 
using to differentiate themselves from competitors? To what extent do 
OVDs provide data on content availability to third parties for 
inclusion in their content directories?
    66. OVD Performance. We seek input concerning OVD viewership, 
revenue, investment, and profitability. In order to measure viewership, 
we seek information concerning the type of video content available 
online, particularly television programs, movies, and sports, as well 
as the extent to which consumers are viewing such content. How many 
consumers viewed content online as of June 30, 2011 and June 30, 2012? 
We also seek other metrics that might be used to measure OVD 
viewership, such as hits/views, subscribership numbers, and consumer 
purchase transactions. Have these numbers increased over the last few 
years, and if so, why? Has the entry of OVDs in the marketplace 
resulted in reduced viewership of video programming from MVPDs and 
broadcast television stations? What metrics should we use to compare 
OVD viewership, MVPD viewership, and broadcast television station 
viewership? How have the windowing strategies of video content 
aggregators and creators impacted OVDs? How have OVDs increased the 
quantity and improved the delivery of their video content since the 
14th Report? Is the OVD market affected by the ability of MVPDs to 
increase their capacity to offer video content using digital and IP-
based technologies?
    67. The 14th Report identified several possible revenue sources for 
OVDs, including fees from consumers; in-video advertising; display 
advertising around the video; product placement; and advergaming. We 
seek updated revenue data for these sources, as well as any other 
revenue sources available to OVDs. What revenue sources are the most 
lucrative for OVDs?
    68. We also request information and comment on investments and 
innovations in the OVD marketplace. What types of entities are 
investing in new and existing OVDs? What financial returns do OVDs earn 
on their investments? What types of investments are OVDs making to 
enhance their growth? Are OVDs increasingly entering into joint 
ventures or partnerships to increase investment opportunities? What 
innovative services or technologies are OVDs currently deploying? How 
should we measure profitability for OVDs given that many operate within 
multimedia conglomerates or other large, diversified businesses? Are 
there additional performance metrics we should consider for OVDs? We 
seek comment on suggested ways to measure OVD performance and relevant 
data that will allow us to perform such analysis.

Rural Versus Urban Comparison

    69. Section 628(a) of the Communications Act sets as a goal 
increasing the availability of video programming to persons in rural 
and underserved areas. As in previous reports, we expect to compare 
competition in the market for the delivery of video in rural markets 
with that in urban markets. The Communications Act does not include a 
definition of what constitutes a rural area, and the Commission has 
used various proxies to define rural areas, including Economic Area 
(EA) Nodal versus Non-nodal counties and Metropolitan Statistical Area 
(MSA) counties versus Rural Service Areas (RSA) counties. In the 14th 
Report, the Commission opted to use its definition of the term 
``rural,'' which it defines as a county with a population density of 
100 persons or fewer per square mile. Is this a satisfactory definition 
for the purpose of measuring the availability of and competition among 
providers of video programming? Are there other alternatives we should 
consider based on zip codes, census tracts, or some other geographic 
unit to compare competition among video programming distributors in 
rural and urban areas?
    70. We seek data, information, and comment to assess whether there 
are differences in the delivery of video programming between rural and 
urban areas, and the factors that account for any differences. Are 
there differences between the quantity and types of video programming 
offered to rural consumers versus urban consumers? How does competition 
between MVPDs, broadcast stations, and OVDs differ in rural and urban 
areas? Are there demographic, geographic, and economic factors driving 
competitive differences in rural and urban markets? Which, if any, 
delivered video programming services are most often lacking in rural 
areas? We recognize that most homes have access to two DBS services--
DIRECTV and DISH Network--that provide national service. How many homes 
in rural and urban areas lack access to a cable system or another 
wireline MVPD? Is the percentage of these homes greater in rural areas? 
How does access to broadcast television stations differ between rural 
and urban areas? Are there any distinctions between rural and urban 
areas in the reliance of over-the-air broadcast signals? Do rural areas 
have less access to high-speed Internet service and, therefore, less 
access to OVD services relative to urban areas? How has the growth of 
online video increased the buildout of broadband in rural areas?
    71. We also request information, data, and comment regarding the 
differences in the prices of delivered video service in rural areas 
relative to urban areas. Are MVPDs operating in rural areas charged 
similar rates for content as MVPDs in urban areas? How do the 
retransmission rates in rural areas compare to those in urban areas? 
When MVPD service is available in rural areas, are prices higher or 
quality lower relative to urban markets? Are there examples of rural 
areas that receive delivered video programming service similar in price 
and quality to those found in urban areas?

Key Industry Inputs

Video Content Creators and Aggregators

    72. Creators of video programming are major production studios and 
independent production companies. Video content aggregators are 
entities that combine video content into packages of video programming 
for distribution. Video content aggregators include broadcast networks 
(e.g., ABC), cable networks (e.g., ABC Family), and broadcast stations 
(e.g., WJLA-TV, Washington, DC). Many of the large entertainment 
conglomerates include subsidiaries that are both video content creators 
and aggregators. We request data, information, and comment that will 
help us analyze the number and size of content creators and aggregators 
and the relationships between the content creators and aggregators and 
the firms that distribute video content. Do independent production 
entities face any barriers in obtaining carriage on all or some 
delivery systems (including broadcast, MVPDs, and OVDs)? In addition, 
we are interested in information regarding entities, local and

[[Page 47391]]

national, creating news, public interest programming and/or sports and 
the relationships between the content creators and those that deliver 
video programming. We are also interested in trends in vertical 
integration among studios and networks. What effect, if any, does 
vertical integration have on their willingness and ability to make 
programming available to MVPDs, broadcast television stations, or OVDs 
on a linear and nonlinear basis? Are there any differences for MVPDs, 
broadcasters, or OVDs with respect to their relationships with 
independent content creators in comparison to vertically integrated 
content creators? If so, what is the impact of these differences?
    73. We also seek data, information, and comment on the business 
strategies of content creators and aggregators regarding the selling 
and licensing of video content and the effect on video distribution. In 
recent years, some content owners have altered their business 
strategies with respect to the type of video content created, the 
timing of release of specific video content through the various 
delivery windows (``windowing''), and the prices charged for content in 
each window. How have these changes affected competition between 
distributors of video programming or the growth of OVDs? Have there 
been significant changes in the bargaining power between content owners 
and distributors of video programming since the 14th Report? How have 
changes in content creation altered investment in the distribution of 
video programming? How do the windowing strategies of video content 
owners affect the distribution of video programming through VOD and 
over the Internet? How do the business models of OVDs (i.e., electronic 
sell-through, advertising-supported, and/or subscription-based models) 
alter the windowing strategies of content aggregators and creators? 
Have business strategies changed for creators of news programming, 
especially local news programming? Do the delivery strategies for the 
creators of sports programming differ from other video content 
creators? Have the business strategies of sports leagues evolved and, 
if so, how? Has the entry or growth of new video content aggregators 
lead to an expanded number of MVPD channel offerings or additional 
programming on broadcast television stations using multiple digital 
streams? Are new entrants or established video content aggregators 
driving the creation of additional programming networks and/or 
packages?

Consumer Premises Equipment

    74. Consumer premises equipment traditionally refers to devices 
that enable consumers to watch video content from MVPDs and broadcast 
stations on televisions. Such devices include televisions, antennas, 
cable and satellite set-top boxes, DVD players, and recording equipment 
(e.g., DVRs). Today, however, consumer premises equipment also includes 
devices (e.g., video game consoles and media streaming devices) that 
permit video content delivered by MVPDs and OVDs to be viewed on a 
television, as well as allow video content delivered by broadcast 
television stations and MVPDs to be viewed on personal computers or 
mobile devices.
    75. Recently, the term ``consumer premises equipment'' has come to 
include devices, such as ``connected-TVs,'' that receive video content 
directly from the Internet. Similarly, in addition to enabling users to 
watch videos on computers, several set-top boxes (e.g., Roku, Boxee, 
and Apple TV) deliver online video directly to viewers' televisions. 
With connected-TVs, game consoles (e.g., Microsoft's Xbox and Sony's 
PlayStation), or Blu-Ray players, consumers can also watch certain 
television programs, movies, and sporting events online. DVR 
manufacturer TiVo enables consumers to purchase movies and television 
programs from online stores, stream movies and content from 
subscription services like Hulu Plus and Netflix, and, in certain 
areas, access cable-provided video-on-demand. Likewise, mobile devices, 
such as Apple's iPad, enable consumers to watch some television 
programs and movies using broadband wireless connections. These and 
other devices allow consumers to purchase and download online video 
content.
    76. In the 15th Report, we plan to discuss the devices that 
facilitate the delivery of video programming and their effect on 
competition in the delivery of video programming. We recognize the 
costs of consumer premises equipment may hinder competition by, among 
other things, raising consumers' switching costs. We therefore request 
information on developments relating to consumer premises equipment and 
the services providing options to consumers for viewing video 
programming. In particular, we seek information on the retail market 
for set-top boxes, including set-top boxes that do not use CableCARDs, 
such as those sold at retail for use with DBS services or for use with 
OVD services. What are the challenges that manufacturers face in 
investing and innovating in consumer equipment? What are the different 
types of consumer premises equipment--both MVPD supplied and non-MVPD 
supplied--used to access video content and the capabilities thereof? 
What prices do MVPDs typically pay for those devices? To what extent do 
MVPDs offer different equipment options at different price points on 
their systems, and what is the overall lease cost of such equipment to 
subscribers? To the extent that consumers can purchase comparable 
devices, what price would a consumer pay for such a device?
    77. We also seek information and comment on how competition among 
MVPDs affects the deployment of new CPE and delivery technologies to 
improve the subscriber experience, such as through improved search and 
navigation capabilities. In particular, we seek information on the 
extent to which MVPDs are using managed IP clouds to deliver network-
based DVRs, interactive programming guides, IP video streaming, VOD and 
other interactive applications. In addition, we request information 
regarding the impact of digital rights management technology and 
conditional access technology (and associated patent or content 
licensing terms) on the availability of video programming to consumers. 
What are the adoption trends among consumers for these types of 
equipment? To what extent are CPE manufacturers partnering with OVDs, 
MVPDs, content aggregators, and content creators to offer linear or 
non-linear video programming to consumer devices?
    78. We understand that there are certain things MVPDs must 
coordinate with electronics manufacturers (e.g., DRM, codecs, and 
connectors) in order to deliver video programming to consumers. We seek 
comment on other technical specifications that MVPDs, content owners, 
and consumer electronics manufacturers coordinate. How do these parties 
agree on the devices that are used? How much interaction is there 
between MVPDs delivering video programming and manufacturers of 
consumer premises equipment, especially manufacturers of cable and DBS 
set-top boxes and devices enabling consumers to view online video on 
their televisions?

Consumer Behavior

    79. We seek information about how trends in consumer behavior 
affect the products and services of providers of delivered video 
programming. For instance, we seek data on trends that compare consumer 
viewing of regularly scheduled video programming with viewing of time-
shifted programming using DVRs, VOD content, and OVD

[[Page 47392]]

content. Video content available online is increasing, and reports 
indicate that an increasing number of consumers are viewing videos 
online. To what extent are consumers becoming ``cord avoiders'' and 
dropping MVPD service in favor of OVDs or a combination of OVDs and 
over-the-air television? Are consumers reducing their MVPD 
subscriptions by, for example, substituting Netflix for premium 
channels or VOD services? Do consumers view OVD services separately or 
in conjunction with over-the-air broadcast television service as a 
potential substitute for MVPD service? What impact do ``cord-nevers'' 
have on the market for delivered video programming?
    80. Video distributors advertise their services on television, in 
newspapers, and through mailings, as well as offer Internet sites where 
potential consumers can find information about services, equipment, 
prices, and the cost of installation. We seek data, information, and 
comment on the consumer information sources for delivered video 
programming services and equipment. Do consumers have sufficient 
information to compare the prices, services, and equipment that video 
distributors offer? What do consumers consider most important when 
choosing a provider? What do consumers say are the main reasons for 
switching providers (e.g., price, program packages, and customer 
service)?

Procedural Matters

    81. Ex Parte Rules. There are no ex parte or disclosure 
requirements applicable to this proceeding pursuant to 47 CFR 
1.204(b)(1).
    82. Comment Information. Pursuant to sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using: (1) the 
Commission's Electronic Comment Filing System (ECFS), (2) the Federal 
Government's eRulemaking Portal, or (3) by filing paper copies. See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: https://www.regulations.gov.
    [ssquf] For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet email. To get filing instructions, 
filers should send an email to ecfs@fcc.gov, and include the following 
words in the body of the message ``get form.'' A Sample form and 
directions will be sent in response.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and four copies of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th Street SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes must be disposed of 
before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington DC 20554.
    [ssquf] People with Disabilities: Contact the FCC to request 
materials in accessible formats for people with disabilities (braille, 
large print, electronic files, audio format), send an email to 
fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 
202-418-0530 (voice), 202-418-0432 (TTY).

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2012-19107 Filed 8-7-12; 8:45 am]
BILLING CODE 6712-01-P