FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
OFFICE OF
THE CHAIRMAN
June 3, 2015
The Honorable Anna G. Eshoo
U.S. House of Representatives
241 Cannon House Office Building
Washington, D.C. 20515
Dear Congresswoman Eshoo:
Thank you for your letter expressing your support for the Commission's proposal to
update its implementation of the Effective Competition provision of the 1992 Cable Television
Consumer Protection and Competition Act (the 1992 Cable Act).
The proposal being considered by the Commission reflects the changes in the video
marketplace that you describe and that Congress envisioned when establishing its definition for
Effective Competition in the 1992 Cable Act. Prior to the passage of the 1992 Act, incumbent
cable operators had approximately a 95 percent market share of multichannel video
programming distributor (MVPD) subscribers. Satellite television was not yet an option, and
phone companies had just begun to offer video programming to consumers. Congress sought to
encourage new entrants into the marketplace and established standards 1 for determining when
local franchising authorities could, in the absence of Effective Competition, choose to step in and
regulate cable rates.
The nationwide presence of DIRECT V (which provides local broadcast channels to 197
markets representing over 99 percent of U.S. homes) and DISH Network (which provides local
broadcast channels to all 210 markets), alongside the significant number of direct broadcast
satellite (DBS) subscribers (34.2 million or 33.9 percent ofMVPD subscribersr' and subscribers
(11.3 million) who receive their video programming through Verizon, AT&T, or other Local
Exchange Carriers, demonstrate the changed realities of marketplace. As a result, the FCC has
granted Effective Competition petitions in over 10,000 communities thus far, resulting in an
approval rate of more than 99.5 percent ofthe communities evaluated since 2013.
1 The statute defmes four types of Effective Competition: Competing Provider Effective Competition, Low
Penetration Effective Competition, Municipal Provider Effective Competition, and Local Exchange Carrier (LEC)
Effective Competition. Only a presumption of Competing Provider Effective Competition is at issue in this
proceeding. The statutory test for the type of Effective Competition at issue in the proposed Order is satisfied if the
franchise area is "(i) served by at least two unaffiliated [MVPDs] each of which offers comparable video
programming to at least 50 percent of the households in the franchise area; and (ii) the number of households
subscribing to programming services offered by [MVPDs] other than the largest [MVPD] exceeds 15 percent of the
households in the franchise area." 47 U.S.c. § 543(1)(1).
2 Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Sixteenth
Report, 30 FCC Rcd 3253, 3256, ~ 2, and 3300-01, ~~ 112-113 (2015) (" J61h Annual Video Competition Report").
Page 2-The Honorable Anna G. Eshoo
I share your concern that continued adherence to outdated regulations causes particular
harm to small cable operators, which often serve communities overlooked by larger providers.
In proposing a rebuttable presumption that cable systems are subject to Competing Provider
Effective Competition as defined by Congress, the item reflects the current marketplace, while
preserving a role for local franchising authorities that demonstrate a lack of competitive options
for consumers.
I appreciate your interest and support in this matter, and your views will be included in
the record of the proceeding for the Commission's review. Please let me know if I can be of any
further assistance. ;};1I4.1-
Tom Wheeler
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
OFFICE OF
THE CHAIRMAN
June 3, 2015
The Honorable Steve Scalise
U.S. House of Representatives
2338 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Scalise:
Thank you for your letter expressing your support for the Commission's proposal to
update its implementation of the Effective Competition provision of the 1992 Cable Television
Consumer Protection and Competition Act (the 1992 Cable Act).
The proposal being considered by the Commission reflects the changes in the video
marketplace that you describe and that Congress envisioned when establishing its definition for
Effective Competition in the 1992 Cable Act. Prior to the passage of the 1992 Act, incumbent
cable operators had approximately a 95 percent market share of multichannel video
programming distributor (MVPD) subscribers. Satellite television was not yet an option, and
phone companies had just begun to offer video programming to consumers. Congress sought to
encourage new entrants into the marketplace and established standards' for determining when
local franchising authorities could, in the absence of Effective Competition, choose to step in and
regulate cable rates.
The nationwide presence of DIRECT V (which provides local broadcast channels to 197
markets representing over 99 percent of U.S. homes) and DISH Network (which provides local
broadcast channels to all 210 markets), alongside the significant number of direct broadcast
satellite (DBS) subscribers (34.2 million or 33.9 percent of MVPD subscribers)" and subscribers
(11.3 million) who receive their video programming through Verizon, AT&T, or other Local
Exchange Carriers, demonstrate the changed realities of marketplace. As a result, the FCC has
granted Effective Competition petitions in over 10,000 communities thus far, resulting in an
approval rate of more than 99.5 percent of the communities evaluated since 2013.
3 The statute defines four types of Effective Competition: Competing Provider Effective Competition, Low
. Penetration Effective Competition, Municipal Provider Effective Competition, and Local Exchange Carrier (LEC)
Effective Competition. Only a presumption of Competing Provider Effective Competition is at issue in this
proceeding. The statutory test for the type of Effective Competition at issue in the proposed Order is satisfied if the
franchise area is "(i) served by at least two unaffiliated [MVPDs] each of which offers comparable video
programming to at least 50 percent of the households in the franchise area; and (ii) the number of households
subscribing to programming services offered by [MVPDs] other than the largest [MVPD] exceeds 15 percent ofthe
households in the franchise area." 47 U.S.c. § 543(1)(1).
4 Annual Assessment a/the Status a/Competition in (he Market/or the Delivery a/Video Programming, Sixteenth
Report, 30 FCC Rcd 3253, 3256, ~ 2, and 3300-0 I, ~~ 112-113 (2015) (" 16th Annual Video Competition Reporf').
Page 2-The Honorable Steve Scalise
I share your concern that continued adherence to outdated regulations causes particular
harm to small cable operators, which often serve communities overlooked by larger providers.
In proposing a rebuttable presumption that cable systems are subject to Competing Provider
Effective Competition as defined by Congress, the item reflects the current marketplace, while
preserving a role for local franchising authorities that demonstrate a lack of competitive options
for consumers.
I appreciate your interest and support in this matter, and your views will be included in
the record of the proceeding for the Commission's review. Please let me know if I can be of any
further assistance.