A Tale of Two Reports

Abstract:     
Conclusions in the 2006 annual video competition report released by the Federal Communications Commission undercut the rationale for additional regulation of cable providers. Although the data used in the report is 30 months out-of-date, it illustrates a steady trend of increasing competition among video service providers and increasing sources of diverse information and video programming.

The most important finding of the recently released Thirteenth Annual Video Competition Report is the continuation of trends discussed in previous reports: cable competition is growing, consumer choice of diverse sources of video programming and information is increasing and cable operators are offering an ever-increasing array of video and non-video services.

These results undermine the arguments for both increased regulation and sustaining the current level of regulation of cable in two ways. First, the report indicates even as of June 2006, cable penetration is unlikely to have surpassed 70% of the market, the threshold in which cable would be open to further regulation. Second, the report reveals that as of that date, the vertical integration of video programming and distribution channels was decreasing, and the video market was successfully providing consumers with a diversity of information sources, including new distribution methods, such as the Internet.

Especially lamentable is the 14 month delay in the release of the report, keeping vital statistics about the video marketplace out of the hands of both Congress and consumers. Had the FCC been up to date with its annual video competition reports, it might have discovered that the answer to [the perceived twin problems of] cable pricing and the inability of consumers to buy programming on a per-channel basis - are already being addressed through technological innovation and market forces without the expenditure of a single "full time equivalent" federal employee man or woman hour.

Number of Pages in PDF File: 14

Keywords: Competition Report,FCC,Kevin Martin,CMRS,Video Programming,video,cable programming,cable,thirteenth report, 13th report,free market,direct broadcast satellite,DBS,innovation,cable operators,wireline,wireless,digital video,internet video,multichannel,MVPD,video programming,mcdowell,copps,fios

JEL Classification: D4, D41,D73,L1,L43,L5,L82,L96,L98,O38,O31,O33,O3

working papers series