*Pages 1--4 from Microsoft Word - 54990.doc* NEWS Federal Communications Commission 445 12 th Street, S. W. Washington, D. C. 20554 This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D. C. Circ 1974). News Media Information 202 / 418- 0500 Internet: http:// www. fcc. gov TTY: 1- 888- 835- 5322 FOR IMMEDIATE RELEASE NEWS MEDIA CONTACT: February 10, 2006 Rebecca Fisher (202) 418- 2359 FCC ISSUES 12 th ANNUAL REPORT TO CONGRESS ON VIDEO COMPETITION Washington, D. C. – The Federal Communications Commission (FCC) today adopted its 12 th Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming. Section 628( g) of the Communications Act of 1934, as amended, requires the Commission to report annually to Congress on the status of competition among multichannel video programming distributors (“ MVPDs”), including cable operators, direct broadcast satellite (“ DBS”) providers, local exchange carriers (“ LECs”) now entering the field, and others. In its examination this year, the FCC scrutinized changes that have occurred in the market in 2005 and factors that have facilitated or impeded competition among rival providers. The report also examines market structure and conditions affecting competition, including programming issues and technical issues, and provides a survey of developments in foreign markets. Americans are voracious consumers of media services. On average, we spend close to 30 percent of our day engaged in some activity involving media, with television viewing the dominant media activity. For the September 2004 – September 2005 television season, the average household tuned into TV for 8 hours, 11 minutes a day. This is almost 3 percent higher than the previous season, more than 12 percent higher than 10 years ago, and the highest level observed since television viewing was first measured by Nielsen Media Research in the 1950s. Within the same period, the average person watched 4 hours, 32 minutes each day, again a record high. In this year’s Video Competition Report, the FCC finds that the competitive MVPD market continues to provide consumers with increased choice, better picture quality, and greater technological innovation. The report concludes that almost all consumers may opt to receive video services from over- the- air broadcast television, a cable service, and at least two DBS providers. In addition, a growing number of consumers can access video programming through digital broadcast spectrum, fiber to the node or to the premises, or video over the Internet. Moreover, once consumers have selected a provider, technology such as advanced set- top boxes, digital video recorders, and mobile video services give them even more control over what, when, and how they receive information. Furthermore, many MVPDs offer nonvideo services in tandem with their traditional video services. The FCC reports that the MVPD market continues to grow. While the largest MVPD remains a cable operator, cable subscribership declined slightly in the past year. According to the FCC’s traditional measure, cable’s share of the MVPD market is now approximately 69.4 percent, down from almost 71.6 percent a year earlier. The second and third largest MVPDs now are DBS operators. They currently serve almost 27.7 percent of all MVPD subscribers, compared to 1 2 approximately 25.1 percent in 2004. Other delivery technologies serve small numbers of subscribers in limited areas, but at least one new type of provider— LECs such as SBC (now AT& T) and Verizon— hold promise to become a growing presence in the marketplace. LECs continue to partner with DBS providers to offer video service but also have expended significant effort in the past year preparing to offer video in their operating areas and building out their facilities to support those new offerings. Cable operators generally have responded to the growth of DBS and other competitors by expanding service offerings rather than lowering prices charged to consumers. Cable efforts to address their rivals include expanding channel line- ups and bundling video service with other service offerings, such as cable modem service (i. e., Internet services) or voice service. DBS operators are matching cable operators’ efforts by offering local broadcast channels, additional sports and international programming, and advanced set- top boxes with digital video recorder (“ DVR”) capabilities. Similarly, broadband service providers continue to offer a triple play of video, voice, and Internet access service and have proved to be price competitive with cable. LECs also are upgrading their traditional copper facilities to high- speed digital subscriber line (“ DSL”) and fiber-based platforms that allow them to offer a suite of video, telephone, and data services. The FCC also finds that data submitted in the record this year raises questions as to whether the so- called “70/ 70 test” has been satisfied. Section 612( g) of the Communications Act provides that when cable systems with 36 or more activated channels are available to 70 percent of households within the United States and when 70 percent of those households subscribe to them, the Commission may promulgate any additional rules necessary to promote diversity of information sources. Accordingly, the Commission is seeking further public comment on the best methodologies and data for measuring the 70- percent thresholds and, if the thresholds have been met, what action might be warranted to achieve the statutory goals. Should the FCC’s analysis of this input indicate that new regulatory action may be appropriate, the agency will issue a notice to open a proceeding. A list of key findings of the report is below. Action by the Commission February 10, 2006 by Report (FCC 06- 11). Chairman Martin, Commissioners Copps, Adelstein, and Tate. Separate statements issued by Chairman Martin, and Commissioners Copps and Adelstein. MB Docket No. 05- 255 -FCC- Media Bureau contacts: Marcia Glauberman, Anne Levine, or Timothy May (202) 418- 2330. 2