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The Status of Competition in the Multichannel video Industry CS#97-141
Before the Federal Communications Commission
Office of the Secretary
Federal Communications Commission
1919 M Street, N.W.
Washington, D.C. 20554
The Status of Competition
In the Multichannel Video Industry
CS#97-141
September 2, 1997
To Whom it May Concern:
Thank you for the opportunity to submit these ex-parte comments pertaining to the Status of Competition in the Multichannel Video Industry.
In reviewing cable industry comments that video competition has increased and that DBS has eroded the cable television industry’s subscriber base, the City of Indianapolis would like to offer the following observations:
If DBS is serious competition to the cable industry, then why do cable rise at an annual rate three to four times the Consumer Price Index increase instead of going down? Competition usually means the price of the product comes down. Moreover, Cableworld and other industry publications report annual subscribership rising 2-3%
Where the cable industry truly notices effective competition are those areas of the country where wireline overbuilds occur. Due to competition, cable rates go down. Good examples near Indianapolis come from Ameritech in Ohio and several parts of Michigan and Illinois. Competition between Ameritech and Comcast in Sterling Heights, Michigan brought about the reduced pricing of standard service (extended basic) to an amount of $23-$24, with a couple of pay channels included as part of this service. Ameritech took competition a step further by offering phone service, at no additional cost, for periods of time as part of their marketing scheme.
On another subject, that too, speaks to the status of competition, if the FCC is in a pre-emptive mood, then why not pre-empt arrangements multi-dwelling unit landlords have with SMATV companies which prevent competing video service providers, such as cable companies and OVS providers, from providing competitive service to unit dwellers. Presently, multi-dwelling unit tenants are compelled to take the SMATV service that their landlords have contracted with. The Indiana General Assembly had a bill in front of it last summer that spoke to preventing multi-dwelling unit SMATV’s from excluding competitive cable services. We would respectfully submit that multichannel video competition would be greatly enhanced if cable and OVS services were allowed to compete with SMATV’s in multi-dwelling units.
These comments address Item #8 in the FCC’s Notice of Inquiry (NOI).
Also of concern is the lack of overbuilds that take place between traditional cable television operators. Even more alarming is where overbuilding does not take place although two different cable operators may be adjacent to one another. The economies of scale would suggest extending cable plant into a competitor’s territory, if the municipality’s franchise agreement would allow for it. We know of only one area where this has taken place and that is 21st Century Cable’s overbuild of Chicago’s North Shore.
The notion has been conveyed to our franchising authority that neither incumbent operator intends to overbuild the other’s territory even when the franchise agreements allow for it, (upon the completion of their fiber optic upgrades). To paraphrase one of our two incumbent franchised operators, they no sooner want to compete with another cable company here than they want to have that same cable operator compete with them somewhere else. Might this pattern suggest collusion?
This speaks to Items #4 (overbuilds), #7 (structure of the market) & #8 (the outlook of future competition) of the NOI.
The City of Indianapolis is very concerned over the lack of competition in this marketplace for the aforementioned reasons expressed in this document. Effective competition means choice for the consumer, which usually results in a reduction of price that is real and not artificial. Furthermore, under a "regulatory" environment that allows for cable rate increases that are 3-4 times the CPI increases, the City of Indianapolis wishes to express dire concerns for the sun setting of cable television CPST rate regulation at the end of 1999 (per the 96 Act) for those municipalities with no effective competition in place. The City of Indianapolis is against the sun setting of CPST rate regulation for the cable industry at the end of 1999.
This speaks to Item #3 (expanding the definition of effective competition) of the NOI.
Thank you for your kind consideration in review of our comments.
Respectfully submitted,
Rick Maultra
Director
Cable Communications Agency
cc: Dr. Beurt SerVaas
Carlton Curry/Chairman Cable Franchise Board
Peggy Piety/Counsel
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