ITV

Tag: OVD

  • Dish, NAB & others urge FCC to deny Charter-Time Warner Cable merger

    Dish, NAB & others urge FCC to deny Charter-Time Warner Cable merger

    MUMBAI: The Charter Communications, Inc – Time Warner Cable, Inc merger is facing a lot of opposition from broadcasters. 

     

    The National Association of Broadcasters (NAB) has filed a petition with the Federal Communications Commission (FCC) that it should not approve the merger unless it is also willing to change broadcast ownership rules, which limits the number of radio and TV stations that a single entity can own.

     

    Joining the NAB is Dish Network Corp, which has filed a petition with the FCC to deny the proposed merger citing substantial harm to competition and consumers. Additionally, set top box maker Zoom Telephonics also asked the FCC to deny the said merger between the two over the issue of access to third-party modems.

     

    As broadcast ownership rules limit mergers, NAB said that broadcasters have far less negotiating power than big cable companies, which will only get bigger if the FCC allows the latest cable merger to proceed.

     

    According to the NAB, the greater imbalance will harm broadcasters in retransmission consent negotiations, in which cable operators pay broadcast stations for the right to air their channels.

     

    NAB said that if the pending merger was approved, then the top four multichannel video programming distributors (MVPDs) will control 79 per cent of the nationwide MVPD market, measured in terms of subscribers, and the top three alone, according to SNL Kagan, “will control two-thirds of the video delivery universe.” If consummated, the merger also would exacerbate concentration levels at the local and regional levels, with clear implications for consumers, as empirical research has shown that large, clustered cable companies charge higher prices than smaller, unclustered ones.

     

    The creation of yet another pay-TV behemoth would further competitively disadvantage local broadcast stations kept by outdated ownership rules from achieving a fraction of the vital economies of scale and scope that MVPDs enjoy and, as the FCC has recognized, can advance the public interest. The gross regulatory disparities between the pay-TV and the free-TV industries are illustrated in any number of ways, including the sheer size of MVPDs compared to TV broadcasters. The market capitalization of the combined AT&T/DIRECTV, for example, is more than 200 times larger than the market cap of several of the most sizable broadcast TV companies. New Charter – which the merging parties describe as “modest” in size – will have a market capitalization 72 times larger than some of the biggest broadcast TV station groups. Beyond this national scale, single pay-TV providers control access to significant percentages of viewers in many local markets. Even standing alone, Time Warner Cable (TWC), for instance, controls over 40 percent of the total MVPD market in 30 different Designated Market Areas (DMAs), and in eight DMAs, TWC’s share of the entire MVPD market exceeds 60 percent. Broadcast TV stations unable to combine under the FCC’s local TV ownership rule are at a notable disadvantage in negotiating retransmission consent agreements with such locally and nationally consolidated MVPDs.

     

    On the other hand, Dish Network Corp’s petition to deny the merger, outlines, among other things, the critical role that high-speed broadband plays in the video industry and the potential for the merger to significantly damage competitive development of over-the-top (OTT) video and limit consumer access to online video programming.

     

    Dish Network said that the merger presents risk of significant harms:

     

    New Parties, Same Harms: The proposed transaction would be no better for the public interest than the one proposed between Comcast and Time Warner Cable.

     

    A Suffocating Duopoly: The transaction will create a suffocating duopoly. Where a Comcast/Time Warner Cable merger would have created one behemoth, this transaction will result in two broadband providers (Comcast and New Charter) controlling about 90 per cent of the nation’s high-speed broadband homes between them.

     

    Threats to Online Video: The top two cable providers post-merger will not need to collude in order to bring their collective weight to bear on an online video distributor (OVD). Parallel foreclosures, with one of the two following the other, would be enough for an OVD to be shut off from most of the homes in the country.

     

    Concentration of Broadband Subscribers: The impact of New Charter would cause a significant proportion of the combined company’s high-speed broadband subscribers to lack access to alternative high-speed broadband options. Indeed, Charter admits that almost two-thirds of households in the New Charter footprint will not have access to at least one alternative high-speed broadband provider. For these customers, switching ISPs is not just an inconvenience, but an impossibility.

     

    Choke Points on the Charter/TWC Broadband Network: New Charter would have a panoply of foreclosure techniques at its disposal. It would be able to foreclose or degrade the online video offerings of competing MVPD and OTT video providers at any of three “choke points”: (1) the points of interconnection to the combined company’s broadband network, in effect the “on ramp” to the New Charter network; (2) the “public Internet” portion of the pipe to the consumer’s home; and (3) managed or specialised service channels, which can act as super HOV-lanes and squeeze the capacity of the “public Internet” portion of the New Charter broadband pipe. In addition, New Charter would have increased leverage that it could use to coerce third-party content owners and programmers to withhold online rights from online video platforms, thereby stifling a source of competition and innovation in the video industry.

     

    Sling TV CEO Roger Lynch states, “I believe that the proposed merger…. would cause significant and irreparable harm to emerging competitive online video products and services, as well as the performance of traditional satellite television service, ultimately reducing competition and choice for consumers. Accordingly, I believe that the merger as currently constructed is not in the public interest and should be denied.”

  • FCC: Dish Network resists Comcast-Time Warner Cable merger

    FCC: Dish Network resists Comcast-Time Warner Cable merger

    BENGALURU:  Citing irreparable harm to competition and consumers, and no discernible benefits, from the proposed union of the first and second largest cable companies in the nation, Dish Network Corp (Dish Network) filed its reply at the FCC to Comcast-Time Warner Cable’s (TWC) Opposition to the Petitions to Deny their proposed merger.

     

    “Everyone who likes to watch high-quality online video has particular reasons to worry about the proposed merger,” said Dish Network senior vice president and deputy general counsel Jeff Blum. “More than 54 per cent of the country’s high-speed broadband connections would be controlled by the combined company, and all online video distributors would be at the mercy of Comcast-TWC.”

     

    Some of the key points of Dish Network reply include:

     

    Comcast-TWC will be able to destroy OVDs with impunity. And destroy them it will: Dish’s experience based on the business case for Dish World and Dish’s soon-to-be-launched domestic OTT service demonstrates that an OTT could still turn a profit if it were to suffer foreclosure at the hands of a standalone Comcast, but not if the effects of the foreclosure spread across both of the Applicants’ systems. Based on his analysis of that business case, Dish’s expert economist Professor David Sappington concludes that, while foreclosure conduct on the part of Comcast today is probably survivable for an OVD such as Dish’s new OTT service, the same conduct would be lethal if undertaken by Comcast-TWC.

     

    As the petitions and comments demonstrate, high-speed cable broadband connections are the lifeblood of over-the-top (“OTT”) video services that typically target national audiences. For that reason, among others, the relevant geographic market for this transaction is national. Furthermore, the relevant product market should include only those services capable of supporting the robust online video services that consumers demand, which requires a household to have actual and consistent download speeds of at least 25 Megabits per second (“Mbps”). If approved, the combined Comcast-TWC would control more than 54 per cent of the broadband pipes in the United States that have speeds of at least 25 Mbps, and will be on a path to virtual dominance of the high-speed broadband market given that the combined company will pass nearly 70 per cent of pay-TV households in the US.

     

    Use of the Commission’s own method for estimating actual departures of a rival’s subscribers due to temporary foreclosure with a time horizon of six months leads to the conclusion that Comcast-TWC can reap eye-popping gains from denying its competitors NBCU programming. This will affect competition in a number of ways. It will cause subscribers to leave the competing distributor in favour of Comcast-TWC; it will cause dissatisfied Comcast-TWC subscribers to stay put instead of losing their access to NBCU; and it will let NBCU extract higher prices for its own programming by leveraging the fear of foreclosure.

     

    The merger’s claimed benefits, if any, cannot outweigh the merger’s harms. In the Opposition, the Applicants devote hundreds of pages to extolling the purported benefits of the merger. Many of these benefits are illusory or speculative—characteristically, the Applicants offer no more precise quantification than “hundreds of millions of dollars.” Many of the benefits are also not merger-specific. The upgrade of TWC systems, supposedly made possible thanks to the merger, is a prime example. Public documents show that TWC had planned to complete this transition itself as a standalone company. This means that large portions of the claimed benefits attributed to TWC upgrades (again left unquantified) should be disallowed in their entirety.

     

    Conduct conditions would fail to address the merger’s many harms. Conduct conditions did not work for Comcast-NBCU, and they would not work for this transaction, which poses substantially greater risks of harm. There is little reason to believe that Comcast will alter its pattern of repeatedly breaking promises. Moreover, the complexity of the gatekeeping function over the Internet choke points alone promises a myriad of technicalities that would likely allow circumvention of, and/or interpretive debate over, any conditions. Ultimately, if the Commission approves the merger believing that conditions are sufficient to address all the harms, there is no going back. The consequences of getting it wrong are too great, the risks too high. The public deserves better.

  • Three out of 10 rural Americans do not have access to high-speed internet: FCC

    Three out of 10 rural Americans do not have access to high-speed internet: FCC

    NEW DELHI: Cable is down, DBS and telcoTV is up, and more than 80 per cent of American broadcast TV signals are now high-definition, says the latest Federal Communications Commission’s annual Video Competition Report. 

    “As of the end of 2011, 1,501-82.2 per cent-of full-power stations were broadcasting in HD, up from 1,036 stations in 2010,” the report said.

    Household adoption of HDTV sets also rose. As of 2012, 85.3 million (74.4 per cent) of US TV households had sets capable of displaying HD signals, up from 75.5 million (65.1 per cent) in 2011. DVR adoption rose as well, from 46.3 million households (40.4 per cent), to 50.3 million households (43.8 per cent).

    However, Acting FCC chairwoman Mignon Clyburn said she was concerned because “Not all of our citizens are realising the promise of these competitive benefits. Nearly three out of 10 rural Americans do not have access to high-speed internet, sufficient to receive online video distributors’ services, and I sincerely hope that these consumers are not forgotten.”

    Reliance on over-the-air TV has remained steady at around 11.1 million households, according to the report. This figure is in agreement with one proffered by Nielsen in January, but far short of another published last month in GfK’s Home Technology Monitor, an annual survey that found 19.3 per cent of U.S. TV households rely exclusively on over-the-air reception. 

    Broadcast TV station revenue followed the political cycle-$22.22 billion in 2010; $21.31 billion in 2011; and a projected $24.7 billion for 2012, a rise in part attributed to retransmission consent fees. However, TV stations were said to make about 88 per cent of their revenues through advertising, “A slight decline from the last report.”

    Prime-time ad rates for a 30-second spot in the top 100 TV markets, based on composite figures, rose from $26.76 CPM (cost per thousand households) in 2010, to $28 in 2011, and $32.08 in 2012.

    Local news is said to account for 35 to 40 per cent of advertising revenues. In 2011, the average TV station aired 5.5 hours of local news per weekday, up from 5.3 hours in 2010.

    Network compensation, once paid to TV station affiliates by the networks, has “All but disappeared,” the report said. Network compensation dipped from $48.2 million in 2010 to $25.1 million in 2011, according to SNL Kagan numbers cited in the report. The 2012 figure is projected at $287,000. Networks have reversed the compensation model by taking a percentage of retransmission fees from stations.

    Retrans fees comprised 8.1 per cent of TV station revenues in 2011, or $1.76 billion; and 9.4 per cent or $2.36 billion in 2012.

    Ancillary DTV revenues were nearly negligible. Broadcasters can use a portion of their spectrum for revenue-generating activities such as subscription video or data transfer, but they must pay the FCC five per cent of those revenues. In 2012, 81 licensees made total ancillary DTV revenue of $499,970. The peak year was 2010, when 99 licensees brought in more than $7.1 million in ancillary revenues.

    Clyburn said she was “Encouraged by the pro-consumer trends it reveals,” adding “Options for accessing video programming are swelling,” she said. “Nearly all consumers now have a choice among three. MVPDs, and today, more than one-third of all households can choose from four or more providers. I note that broadcast TV remains one of the most affordable sources of entertainment and news,” she continued. “As the report shows, 11 million American [households] still rely on free, over-the-air broadcast signals as their exclusive source for TV viewing.”

    While the commission has been bullish on reducing the spectrum available for TV broadcasting, it did give stations props for public service: “Since the last report, full-power television stations have continued to take advantage of digital broadcasting technology to offer improved service to the public. In addition to high-definition content, broadcasters are using multicasting to bring more programming to consumers by expanding the availability of established networks and adding new startup digital networks-including networks targeting minorities and programming targeting niche audiences-and Spanish language offerings.”

    Multicast diginets include Bounce TV, which now has 154 affiliates, This TV, with 133, and Retro TV with 44 affiliates. Established networks have also benefited from multicasting. The CW is on 115 multicast channels; MyNetworkTV, on 92.

    Total day audience share for the network affiliates held steady between 2011 and 2012 at 28, per cent with the total broadcast share at 33 per cent, compared to 52 per cent for ad-supported cable networks. In prime time, network affiliates held 33 per cent of the audience; all broadcast, 38 per cent; and ad-supported cable, 51 per cent.

    The availability of mobile DTV grew between reports, from 60 stations in 2010 to 105 stations at the end of 2011. 

    The National Association of Broadcasters said the total now stands at 130 stations in 30 states delivering 150 channels.

    Despite ongoing reports of cord-cutting, the FCC found that pay TV subscriptions rose slightly between the end of 2010 to June 2012, from 100.8 million to 101 million households. Cable’s share fell however, from 59.3 per cent to 55.7 per cent as of June 2012. Direct broadcast satellite TV providers picked up 600,000 subscribers in the time period to end June 2012 with 34 million, or 33.6 per cent of all pay U.S. pay TV subscribers.

    TelcoTV grew by 1.7 million subscribers during the period, to 8.6 million, according to the report. However, it noted that the total comprised “AT&T’s Uverse and Verizon’s FiOS services,” but not other small telcoTV providers around the country.

    Technologically, cable systems are catching up with telcoTV, which delivers only the channels being watched at a given time versus the entire package a la traditional cable. At the end of last year, more than half of the footprint of the top eight cable providers was all-digital, with 43 per cent of that portion using switched digital video delivering only those channels watched.

    The average price of a basic cable subscription increased by 6.2 per cent to $20.55 between 2011 and 2012, with expanded basic up 4.8 per cent to $61.63. The basic price-per-channel was up 1.5 per cent to 63 cents, while expanded price-per-channel fell one-tenth of a penny in the 50 cent range.

    The Video Competition Report divides TV distributors in to three types-broadcast, multichannel video programming distributors (cable, satellite and telco pay TV), and online video providers, or OVD. The commission cited SNL Kagan numbers indicating that the number of internet-connected TV households grew from around 26.6 million (22.8 per cent) at the end of 2011, to an estimated 41.6 million (35.4 per cent) by the end of 2012.

    The commission said OVD accounted for a growing portion of internet traffic during peak hours, and noted that most major cable operators imposed bandwidth caps or metered pricing during the first half of 2012. Phone companies are said to be following suit.