No Clear Consensus on State of Video Market in Competition Report Responses

"That all relevant markets enjoy unprecedented levels of competition and dynamism should compel [elimination of] outdated legacy regulations," Comcast said. Online video distribution (OVD) and its growth in particular is fundamentally changing the video market, as many are creating their own original content competing with traditional networks and as many broadcast networks, pay-TV networks, sports leagues and studios are offering linear and on-demand online content, it said. That points to no need for government intervention between programmers and distributors, as "willing buyers are having no trouble finding willing sellers," Comcast said. It's OVDs -- not multichannel video programming distributors -- that will contractually limit rivals' access to and offerings of content, Comcast said, pointing to Amazon Prime and Netflix. That results in no one MVPD being able to offer a comprehensive entertainment package, with viewers subscribing to multiple OVD services, Comcast said.

That supposedly competitive MVPD universe is highly consolidated and becoming more so through AT&T buying DirecTV and Charter Communications' planned buys of Bright House Networks and Time Warner Cable, NAB said. The FCC "should not continue to ignore MVPD concentration at the regional and local levels," NAB said, noting that after the Charter deals, the four largest MVPDs will claim 79 percent of the nation's MVPD subscriber base -- compared with about 51 percent in 2002. "Large clustered cable companies charge consumers higher prices ... as clustering discourages the entry of overbuilders into local markets," it said. That consolidation also is leading to big consumer dissatisfaction, NAB said: "In a truly competitive MVPD market, price increases notably above the rate of inflation could not be sustained for nearly two decades, and complaints about customer service and support would not be so consistent and nearly universal." Given that MVPD consolidation trend, there is no reason to "fix" the retransmission consent market as many MVPDs have sought, NAB said. Retrans isn't "'broken' merely because broadcasters are now receiving greater retransmission consent fees than in the past, particularly given the ratings earned by broadcast programming," NAB said, pointing to estimates that 2014 fees were less than programming fees paid to regional sports networks.

NAB's arguments are a "tiresome harangue," as ownership caps of 30 percent of all MVPD customers in the name of protecting a competitive video market were thrown out twice by the U.S. Court of Appeals for the D.C. Circuit, and as any threat of uncompetitive behavior from cable companies owning the majority of popular cable program networks "has long since disappeared," NCTA said: The MVPD market has national DBS services and competitive cable service from phone companies and other overbuilders. It's time to clear away some regulations that were premised on a lack of competition, such as the rule that cable operators be required to include all stations -- including those opting for retrans -- in a basic tier that all customers must buy, NCTA said. While cable systems must continue to provide "must-carry" stations to all subscribers, "the inclusion of all broadcast stations on a mandatory basic tier is one of those requirements that ... has expired," it said.

Video services increasingly are a loss leader, and rising programming costs mean less money available for upgrading and expanding broadband networks, Comptel said. The solution is for the FCC to promote more video competition such as through its current efforts on revisiting the rules governing good-faith carriage negotiations and a possible order to eliminate the program exclusivity rules, Comptel said. The FCC also should back rate transparency such as envisioned by NTCA, requiring broadcasters to publicly disclose the lowest fee they will charge prior to any volume discounts. "The transparency of rates charged by programmers to MVPDs would go a long way toward ensuring that programmers are offering such rates to MVPD competitors on a non-discriminatory basis," Comptel said.

The retail set-top box market remains far from competitive, and the growing app market is "not the type of competition envisioned by Section 629" of the Communications Act, TiVo said. "Section 629 used the term navigation device -- and not viewing device -- for a reason." The company asked the FCC to clarify the requirement to supply and support CableCARDs for retail navigation devices by moving on TiVo's pending petition for rulemaking asking for a reinstatement of the CableCARD technical standard for non-DBS MVPDs. "There can be no retail market for set-top boxes if there is uncertainty among sellers and consumers that the devices purchased at retail will be supported by all cable operators," in the U.S., TiVo said. NCTA defended apps-based approaches, as apps allow recording as well as downloading MVPD content to mobile devices for viewing later, and also permit retail devices to differentiate themselves through their own user interfaces. Any new technology mandates regarding video devices "would risk repeating the expensive failures of the CableCARD regime and chilling further investment and innovation in the device marketplace," Comcast said.

Public Knowledge had made a suggestion that the FCC might want to require companies turn over data the FCC needs for the report, but the American Cable Association said the idea is in response to "no specific problem to be addressed and no corresponding public benefit to offset the costs of an additional mandated data collection."