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December 17, 1998


Re: In the Matter of Annual Assessment of the Status of Competition in Markets for the Delivery of Video Programming, CS Docket 98-102

When Congress passed the Telecommunications Act of 1996, it affirmed the principle that when it comes to innovation and consumer choice, competition is preferable to regulation. Congress envisioned that the removal of market entry barriers would produce robust competition offering a wide array of viewing choices at reasonable prices to millions of American families across the nation. Our annual report shows that, although competition is increasing, the level of competition that consumers are seeking has not yet arrived.

Eighty-five percent of all households subscribing to multi-channel video service receive that service from their local cable operator (a two percent decline from the 87 percent we reported a year ago). With this high market share, it is not surprising that cable prices rose more than four times the rate of inflation between June 1997 and June 1998.

The drop in local cable operators' dominance of this market is primarily due to the continued growth of DBS systems, and to a lesser degree, the launch of new open video systems and instances where incumbent cable operators have faced head-to-head competition from other cable operators. These cases are immensely important for they teach us an important lesson. That lesson is that competition brings consumer benefits. And, as we continue to move towards a more competitive market, it is my hope that consumers will benefit from lower prices, improved customer service, and additional services.

Over the past year, the Commission has taken a number of steps to foster vigorous competition in this field. We improved our program access rules. We pre-empted rules and regulations that prohibited renters and residents in multiple-dwelling units from setting up satellite dishes and antennae in areas under their exclusive control. We ensured that consumers soon will be able to choose to purchase set top boxes from their local retailer instead of leasing their boxes from their cable operator. And we sought updated information on the state of horizontal concentration in the cable industry and how it affects competitiveness.

The Commission will continue to take aggressive actions to promote competition. I believe that we could do even more if we were given additional statutory tools. Congress has done much to promote competition in this marketplace, and I believe it would be beneficial for Congress to consider taking additional actions to promote competition. Specifically, I believe that Congress should continue to consider whether to amend the Satellite Home Viewer Act to allow DBS providers to carry local broadcast signals. In my view, it is difficult for DBS to develop as a head-to-head competitor to cable if DBS can't carry many of the channels at the heart of our TV experience. In other words, it's more than a little frustrating to be able to watch a football game a 1,000 miles away, but not be able to tune in to your local news to see if it is going to rain tomorrow. Many consumers have reported this type of frustration with DBS. I believe that removing this prohibition would help promote the further growth of DBS.

I would like to work with Congress as they evaluate other statutory proposals to promote competition. For example, the Commission's current impact on competition in MDUs is limited because our authority to allow use of the inside wiring by competitors extends only to circumstances where the incumbent video service provider no longer has a legal right to remain in the building. And, as I said only a month ago when we adopted new OTARD rules, I would like to open a dialogue with Congress regarding the possible extension of the OTARD provisions for renters and others who do not have exclusive use or control of suitable areas for antenna placement. Finally, I would welcome a debate as to whether it would be beneficial to expand the coverage of the program access provisions of the Act.

Finally, I share Commissioner Tristani's vision of a competitive marketplace governed by variety and consumer choice on all levels -- a marketplace in which different firms "vie for consumers with different mixes of price, quality and service." And, I join in Commissioner Tristani's praise of efforts to create additional tiers of cable services. As she so eloquently states, "[o]nly when all consumers have the opportunity to meaningfully express their preferences in the marketplace can we declare victory and go home." I couldn't agree more.