With last week’s release of the 14th Video Competition Report by the FCC, there is no better time for Congress to be conducting hearings about the vibrant video marketplace and to examine whether rules that were established in 1992 still make sense today. During Tuesday’s Senate Commerce hearing – The Cable Act at 20 – we expect to hear much about how the consumer marketplace has bypassed yesterday’s regulatory era.
The Commission’s 14th Report covers the four years from 2007 through 2010, a period that resulted in huge shifts in the video marketplace. Among other things, the 14th Report shows that:
Video competition continued to grow:
- Cable’s share of the video marketplace fell from 65 percent of subscribers in 2006 to 60 percent in 2010.
- DirecTV and Dish Network continued their climb, becoming the second and third largest MVPDs with over 19 million and 14 million customers, respectively. The combined share of the two DBS companies equaled 34 percent of subscribers in 2010 (up from 29 percent in 2006).
- Telco providers served 6.9 million video subscribers, increasing their availability from approximately 4.7 percent of U.S. households in 2006 to 33 percent of U.S. homes in 2010.
- The FCC found that by the end of 2010 “almost 43 million homes have access to four MVPDs. This [large telco] entry represents a significant increase in competition in the market for the delivery of video programming.”
MVPDs competed both on price and non-price:
- “Over time, MVPDs have altered their pricing in response to changes in the competitive landscape”, with some offering low introductory or promotional prices as well as “experimenting with both higher-priced and lower-priced video packages.”
- MVPDs have also adopted various competitive strategies that include “transition to digital service, product differentiation, delivery of video to diverse geographic locations, delivery of video to a variety of in-home or mobile devices, and implementation of marketing tactics.”
And those conclusions came before the most obvious acknowledgement of online video and the competition and options which online services offer. The 14th Report also mentioned “consumers’ rising demands for access to video programming anywhere and anytime,” an acknowledgement that TV Everywhere services are a response to customer demands.
But while the changes during the report’s time span were dramatic, additional developments over the last 15 months have already made the 2010 data stale. In just the last 15 months, telco tv providers have added 2 million video customers, satellite providers have added 700,000 video customers, and cable operators have shed 2 million video customers. Hardly a static marketplace.
The House Energy & Commerce Communications subcommittee explored this rapidly changing marketplace during the late June “Future of Video” hearing at which NCTA President & CEO Michael Powell testified. Powell’s testimony provided a comprehensive assessment of the changes that have transpired in the video marketplace over the last 20 years, including this chart which highlights the significant consumer benefits of the market developments.
Tuesday’s Senate hearing is a great opportunity to examine how the video marketplace has changed over the past twenty years and is providing consumers with more choice, competition and value than ever before. As the marketplace has changed dramatically with consumers now enjoying dozens of options for viewing content on traditional and emerging services, it is only appropriate that Congress examine legacy rules that are based on outdated assumptions. We welcome this dialogue and look forward to exploring a new framework that will enable all companies to continue investing and innovating so consumers will continue to benefit from these exciting services.