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L. No. 104104, 110 Stat. 56 (1996).  See also H.R. Rep. No. 104458, 104th Cong., 2d Sess. 1 (1996). Congress intended to eliminate barriers to  d(#xcompetitive entry and to establish market conditions that promote competition. The Commission continues  d(#to pursue the goal of the 1996 Act to foster competition in markets for the delivery of video programming.  d(#In the 1998 Competition Report, we plan to provide information about, and report on the status of,  d(#competitors in these markets and analyze the effect that implementation of the provisions of the 1996 Act  S- d(#has had on competition among providers of video programming.v\""' {OZ - d(#ԍSee 1997 Competition Report, 13 FCC Rcd at 11401163 211257; Annual Assessment of the Status of  {O$ - d(#Competition in the Market for the Delivery of Video Programming, CS Docket No. 97141, Notice of Inquiry, 12  yO -FCC Rcd 7829, 784144 20 (1997).v In this year's report, we expect to assess  d(#the competitive alternatives available to consumers and to evaluate the factors that affect the degree to  d(#which competition has come about as a result of the existing regulatory framework and industry  d(#zconditions. We intend to compare video and other services (e.g., telephony, data) offered through the  d(# various distribution technologies used to provide multichannel video programming. We also want to  d(#examine interservice competition, including the extent to which cable operators are providing telephone  d(# service and telephone companies are providing video services. We plan to compare the prices of the  d(#individual and combined services offered to consumers through various distribution technologies and by  d(#Mvarious service providers. Further, we would like to understand what factors affect the rates charged  d(#\consumers for video programming and other services (including associated equipment) and changes in those rates over time (e.g., technical upgrades for enhanced services, programming rights fees).  S- A.` ` Competitors in Markets For the Delivery of Video Programming   Sh- n4.` ` Markets for the delivery of video programming are served by video distributors using both  d(#wired and wireless technologies. Among the multichannel video programming distributors ("MVPDs")  d(#using predominantly wired distribution technologies are cable systems, private cable or satellite master  d(#lantenna television ("SMATV") systems, and open video systems ("OVS"). Among those relying  d(#predominantly on wireless distribution technologies are overtheair broadcast television, multichannel  d(#multipoint distribution service ("MMDS"), instructional television fixed service ("ITFS"), local multipoint  d(#distribution service ("LMDS"), direct broadcast satellite ("DBS") service, and home satellite dish ("HSD") service.  S-  P5.` ` As in previous reports, we seek factual information and statistical data about the status of  d(#video programming distributors using different technologies, and changes that have occurred in the past  S- d(#year.eF"' {O$-ԍSee Competition Reports, 19941997, supra note 2.e For each video programming distribution technology, we seek information by company, by  d(#{geographic market served and on an aggregate industry basis. In particular, we request data on the  d(#following: (a) the number of homes passed (for wired technologies) and the number of homes capable"`,>(>(II"  S- d(#of receiving service (for wireless technologies) ;"' yOh- d(#ԍThis includes the number of lineofsight homes for distribution technologies that require lineofsight for reception. (b) the number of operators; (c) the identities of the ten  S- d(#ylargest operators (national market only); (d)the number of subscribers and penetration rates;" "' yO- d(#iԍTo the extent available, we also seek information on the numbers of subscribers to different levels of service  {O`-(e.g., basic, cable programming service or "CPS," premium, payperview, near videoondemand, etc.)." (e)channel  d(#capacities and the number and types of channels offered; and (f) the number and types of services offered.  d(#In addition, we request financial information for each technology, including firm and industry revenues,  d(#in the aggregate and by sources (e.g., subscriber revenues, advertising revenues, programming revenues);  S8-cash flow; changes in stock prices; investments; capital acquisition; and capital expenditures.  S- 6.` ` For each video programming distribution technology, we also request information  S- d(# describing: (a) technological advances (e.g., deployment of digital services) that make or may make the  d(#=technology competitive; (b) the effort (including steps, costs and time) needed to increase the number of  d(#homes passed or capable of receiving service; (c) the effort (including steps, costs and time) needed to  d(#increase the number of channels and types of services offered; and (d)regulatory and judicial  d(#?developments that affect the use of different technologies. In addition, in evaluating the extent of  d(#competition among various MVPDs' services or technologies, we seek information and analysis on the  d(#degree to which viewers or consumers consider the different types of MVPDs to be substitutes. In  d(#particular, we request any information available on the extent to which customers have switched from one  d(#Lprovider or technology to another one, and information concerning what factors were responsible for the  d(#]switching, such as relative prices, service offerings, availability or lack of "favorite" programming, technical problems, ease of use or special features available with a specific technology.  S- S7.` ` We also request the following additional information for specific types of video distributors or distribution technologies:  Sh- v X(a) Cable television. In our 1997 Price Survey, we found that cable rates were rising faster than  v ]the national inflation rate and that cable systems not subject to competition are generally charging  S- v |higher rates for their services. z"' {O4- d(#KԍSee Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act of 1992  {O- d(#J(Statistical Report on Average Rates for Basic Service, Cable Programming Services, and Equipment), MM Docket  {O- d(#No. 92266, Report on Cable Industry Prices, 12 FCC Rcd 22756, 22763 27 (1997) ("1997 Price Survey"); 1997  {O- d(#YCompetition Report, 13 FCC Rcd at 106061 38. We note that the Commission will be collecting information for preparation of the 1998 Price Survey during the pendency of this proceeding. What factors are causing changes in cable rate levels? Are such  v mchanges attributable to investments made for facilities upgrades that provide increased channel  v Ocapacity, permit the development of digital service tiers or allow cable operators to offer non v video services (e.g., telephony, data)? To what extent are the changes in rates attributable to  v Oincreases in programming costs? Are these increases due to a rise in licensing fees, an increase  v !in the number of programming services offered or a combination of both? Do regulations or laws  v have an impact on increased rates? Are increased rates the result of an absence of rate  v constraining pressures from competitive alternatives, other factors, or a combination of factors? (# "2 ,>(>(II"Ԍ v XTo fully understand the state of competition in the MVPD market, we seek comment on how these  v programming services are being packaged for consumers. We understand that some cable  v operators and other MVPDs offer their programming in "mini-tiers", on an a la carte basis, in  v digital tiers, or as a "lifeline" basic tier. Specifically, we seek comment on the economic,  v 1competitive, legal and technical considerations that go into creating such tiers of programming  v services. We also are interested in information on the extent cable operators are restructuring their  v programming packages and tiers of service as a result of actual or potential competition? What  v 1types of tier, equipment and rate restructuring are cable operators undertaking? We also seek  v comment on whether, and to what extent, these efforts are intended to differentiate cable service from that of competing video services. (#  v XMost of the readily available information regarding new cable service offerings and deployment  v of new technologies is limited to the activities of major multiple system operators ("MSOs"). Yet,  v we understand that other MSOs also are upgrading their cable systems. We, therefore, seek  v linformation on the service and technology deployment activities of medium size and smaller cable  v firms. To what extent do medium and small MSOs offer services in addition to video  v programming to their subscribers? What factors influence the ability of smaller firms to upgrade  v technologically? Are smaller firms implementing digital technologies or are they planning to deploy digital technologies in the foreseeable future?(#  S- v X(b) DirecttoHome Satellite Services. We seek updated information about the further  v ]development of existing directtohome ("DTH") satellite services (e.g., DBS, HSD). In both the  S- v 1996 and 1997 Competition Reports, we noted that DBS subscribership had increased substantially  Sj- v over the previous year, while the number of HSD subscribers has been declining.  j"' {O- d(#kԍ1996 Competition Report, 12 FCC Rcd at 4376, 4385 and 448990 38, 50 and Appendix C; 1997  {O-Competition Report, 13 FCC Rcd at 107071, 1078, and 119497 55, 69 and Tables C3 through C5.  Are these  v 1trends continuing? With respect to the number of DBS and HSD subscribers and penetration  v !levels, we request data on the geographic locations of DBS and HSD subscribers. We also solicit  v !information regarding competition between cable and DBS for subscribers. Are there identifiable  v differences between consumers who choose to subscribe to DBS rather than subscribe to cable?  v 1For example, is DBS more likely to attract "high end" subscribers (i.e., those subscribers who  v purchase the most video programming)? We seek information regarding programming packages  v offered to DTH subscribers, the pricing of such programming, and any changes since our last  v report. To the extent that changes have occurred in DTH services (i.e., programming or prices),  S- v Oare there identifiable factors causing these changes? Commenters also are asked to discuss the  v status of proposed DTH services, including planned pricing, programming, and launch dates, as  v well as whether customers will lease or purchase their receiving equipment. We request  v information on any new planned DTH service providers, regardless of which satellite band they  v may choose to use. We also request information on any foreign licensed DBS systems that,  v !pursuant to agreements between their countries and the United States, may plan to provide DBS  v service to the U.S. We note that the ability of DTH services to provide broadcast television  S - v 0programming is limited under the Copyright Act._ ZX $"' {O%- d(#-ԍ17 U.S.C. 119. See H.R. 3210 and S. 1720. These pending bills propose to: (1) give satellite providers a  d(#permanent compulsory copyright license; (2) eliminate the 90day waiting period for new satellite subscribers who"@' ,>(>(&"  d(#Jhad been cable subscribers; (3) allow satellite carriers to retransmit local signals to households within a station's local market; and (4) establish a new Copyright Royalty Adjudication Board to determine royalty fees for satellite carriers._ In the 1997 Competition Report, we observed"  ,>(>(IIV""  v that the DBS industry is developing antennas to facilitate the reception of overtheair broadcast  S- v transmissions by their subscribers.e "' {O`-ԍ1997 Competition Report, 13 FCC Rcd at 107273 58.e We seek information on any recent developments in this area.  v We also request comment on the effect that the provision of local broadcast signals into local  S- v television markets has on the ability of DBS operators to compete with incumbent cable operators.  v {We further request information on whether consumers continue to subscribe to cable service along with DTH satellite services, especially DBS. (#  S- v X(c) Local Exchange Carriers. The 1996 Act delineated four options for local exchange carriers  v ("LECs") provision of video services: open video systems ("OVS"), common carriage, radio  S- v !communications, and cable.h z"' {O-ԍSee Communications Act 651(a), 47 U.S.C. 571(a).h We seek information on LEC entry into video distribution markets  v through each of these delivery options and the effect of such entry on competition. What changes,  SH - v if any, have occurred since the 1997 Competition Report with respect to LEC plans for video  S" - v ?distribution? In the 1997 Competition Report, we reported on developments regarding franchised  v ^cable systems operated by LECs, both within their telephone services areas and outside those  v lregions. To update our information on the status of competition from overbuilds, from both LEC  v 2and nonLEC operators, we request data on the number and location of overbuilt markets,  v including maps and other information regarding the overlapping coverage areas of competing  v services. In addition, we request information regarding the manner in which overbuilders market  v their services and the effect of overbuild competition on cable rates, services and service quality.  v |We note that several LECs, such as Bell Atlantic and SBC, have recently announced marketing  v and distribution agreements with DirecTV. We request information regarding these agreements  v !and other similar arrangements between LECs and other video distributors, including the services  v offered and costs. Are video programming services being bundled with telephone and other services? (#  S- v X(d) Broadcast Television. We seek information on the role of broadcast television in markets for  v the delivery of multichannel video programming. We request information, particularly empirical  v ^evidence and economic studies, regarding the extent to which broadcast television competes as  v a distribution medium with MVPDs and with other entertainment and information venues (such  v mas radio or newspapers) for audiences or for advertising revenue. We also seek information on  v ^technological, copyright, competitive and other issues associated with the distribution of local  v broadcast signals by video programming distributors, including those not currently subject to  v mbroadcast television signal carriage requirements. While we recognize that broadcast television  v !stations are still planning for the conversion to digital television ("DTV"), we ask commenters to  v |provide any available information on the current status of high definition television ("HDTV")  v @experimental operations, the construction of digital television transmission facilities and other"  ,>(>(II"  v aspects of the implementation of digital television service that may be useful for preparation of  S-the 1998 Competition Report."' yO@- d(#ԍTo the extent this information is already on file with the Commission, commenters should crossreference other submissions. (#  S- v _X(e) LMDS. As noted in the 1997 Competition Report, local multipoint distribution service  Sb- v }("LMDS") technology is currently in very limited use for video service.jb "' {O"-ԍ1997 Competition Report, 13 FCC Rcd at 1084  79. j The Commission  v recently auctioned additional LMDS licenses that would permit operators to offer video  v programming and numerous other services including highspeed data access, twoway interactive  S- v |video and teleconferencing.\\"' {O< - d(#iԍ1997 Competition Report, 13 FCC Rcd at 1084 79. See also Winning Bidders in the Auction of 986 Local  {O - d(#Multipoint Distribution Service (LMDS) Licenses, Report No. AUC17I (Auction No. 17), DA 98572, 1998 WL 136069 (released March 26, 1998).\ To what extent could LMDS provide video programming service  v ]in competition with other MVPDs? We ask commenters to provide data on planned deployment and expected launch dates for LMDS technology.(#   SJ - v X(f) Interservice Competition. The 1996 Act repealed the statutory prohibition against an entity  S" - v holding attributable interests in a cable system and a LEC with overlapping service areas.h" "' {O-ԍSee Communications Act 652(d), 47 U.S.C. 572(d).h This  v Nchange was expected to lead to a technological convergence that would permit the use of the same  S - v ^facilities for the provision of telephone and cable service. In the 1997 Competition Report, we  v noted that the one area where cable operators and telephone companies have started to compete  S - v is in the provision of Internet access. h "' {O-ԍ1997 Competition Report, 13 FCC Rcd at 1043, 10641067 11, 4749.  Other video programming distributors, such as wireless  v "cable and private cable operators using MMDS and SMATV technologies, also are providing  S4- v maccess to the Internet.s4 "' {O-ԍ1997 Competition Report, 13 FCC Rcd at 108384, 1088 78, 86.s We seek information, by distribution technology and firm, concerning  v 1the provision of multiple services in local, regional and national geographic markets. For each entity providing services in addition to video services, we seek the following information: (#   XX` ` a. A description of the video and nonvideo services it provides, and the equipment and facilities it uses to provide each service;(#`   XX` ` b. Whether multiple services are provided using, in whole or in part, the same equipment   or facilities, and, if so, a full description of the equipment or facilities used to provide  omultiple services, the costs, advantages and disadvantages involved in doing so, and the types of customers to which each service economically can be provided; (#`   XX` ` c. The actual and projected number of subscribers to, and homes passed by, each service as of the end of June 1998, December 1998, and June 1999; and(#` ", ,>(>(II"Ԍ ԙXX` ` d. The comparative total and persubscriber physical plant, operating and programming  costs of providing (i) multichannel video programming, and (ii) combined video and nonvideo services.(#`  S`- v ?X(g) Service to MDUs. The 1997 Competition Report identified services to multiple dwelling unit  S:- v ("MDU") buildings as a market warranting separate consideration.x:"' {O-Ѝ1997 Competition Report, 13 FCC Rcd at 110910 129130.x We solicit updated  v information on video delivery competition for and within MDUs. In 1997, the Commission  v established procedures for the orderly disposition of MDU wiring in the event the MDU owner  v ^wants to switch the entire building to an alternative provider or wants to permit an alternative  S- v !provider onto the premises to compete for the right to use inside wiring on a unit by unit basis.Z"' {O - d(#[ԍCable Home Wiring, CS Docket No. 95184 and MM Docket No. 92260, Report and Order and Second Further Notice of Proposed Rulemaking, 13 FCC Rcd 3659 (1998).  v The Commission also provided that individual subscribers may install their own home wiring or  v add to their service provider's home wiring. We seek information and comment on whether and  v ]how these new rules have affected competition among MVPDs for subscribers within MDUs. Is  v competition for or within MDUs more or less robust than competition for individual residential  v subscribers? What factors influence MDU competition? Are there factors unique to the MDU market that have policy consequences for the regulatory process? (#   SZ-  8.` ` In the 1998 Competition Report, we plan to assess the extent to which the various video  d(#distribution technologies provide competitive alternatives for consumers. We seek this information to  d(#allow us to compare the cost to consumers of subscriptions to alternative MVPD services (cable, DBS,  d(#MMDS, SMATV, or OVS) and to better understand the factors considered by consumers when choosing  S- d(#among alternative MVPDs.h"' {O-ԍ1997 Competition Report, 13 FCC Rcd at 106162 3942.h For each type of MVPD, we ask commenters to describe the service  d(#provided (e.g., 50 channels of video programming, Internet access) and the average monthly cost to the  d(#customer of each service (e.g., video, data) provided by the MVPD. We ask commenters to provide  SB- d(#separate cost figures for each type of service offered by the MVPD. The information submitted should  d(#yreflect: (a) the upfront costs for equipment and installation for each service; (b) the costs of adding each  d(#service to more than one television set; (c) prices for the various program options and packages offered  d(#kby each service; (d) the costs of receiving local broadcast stations along with each service; and (e) any  d(#other information relevant to consumer considerations when selecting among services. Further, we seek  d(# comment on the appropriate method for comparing the services and costs of different MVPDs. For  d(#example, for services that require the purchase, rather than the rental, of equipment, should the costs of  d(#equipment be amortized over a period of time? What is the appropriate time period? Are there other factors that we should consider in making such comparisons?  S-  S- B.` ` Market Structure and Conditions Affecting Competition  Rb-` `  1. Industry and Market Structure   S - A9.` ` As in prior reports, we will provide updated information in the 1998 Competition Report  d(#[on the structure of, and rivalry in, markets for the delivery of video programming. We intend to evaluate" F,>(>(IIt""  d(#market concentration at the local, regional and national levels as we have done previously. We ask  d(#.commenters to provide updated information on industry transactions, including information on mergers,  d(#=acquisitions, consolidations, swaps and trades, crossownership, and other structural developments that  d(#affect distributors' delivery of video programming. In local markets where incumbent cable operators face  d(#\competition from one or more other video programming distributors, we seek information on: (a)the  d(#identity of the competitors; (b)the distribution technology used by each competitor; (c)the date that each  d(#competitor entered the market; (d)the location of the market, including whether it is predominantly urban  d(#or rural; (e)an estimate of the subscribership and market share for the services of each competitor; (f)a  d(#description of the service offerings of each competitor; (g)differentiation strategies each competitor is pursuing; and (h)the prices charged for the service offerings.  SH - # 10.` ` With respect to regional concentration (i.e., "clustering"), for cable and other MVPDs, we  d(#zseek information on the geographic areas served by particular companies. What effects have industry  d(#.consolidation and clustering had on competition? We seek specific, detailed information on transactions  d(#involving system acquisitions and trades for each video distribution technology and the "geography" of  S -the major companies in each technology.  SX-  11.` ` We also seek data regarding current national subscribership levels of all MVPDs, whether  S0- d(#these levels have changed since the 1997 Competition Report, and, if so, how significantly.$0"' {O- d(#ԍThe Commission also seeks information regarding national ownership levels in Implementation of Section 11(c)  {Ob- d(#of the Cable Television Consumer Protection and Competition Act of 1992: Horizontal Ownership Limits, MM  d(#Docket No. 92264, Memorandum Opinion and Order on Reconsideration and Further Notice of Proposed Rulemaking, FCC 98138 (adopted June 23, 1998). To the  d(# extent national concentration has increased or decreased for specific MVPDs, we ask commenters to  d(#!discuss the reasons for such changes, including whether such changes are the result of merger and  d(#/acquisition activity, marketing strategies, or other factors. We also seek updates on the status of the  S- d(#jmergers and transactions that were described in the 1997 Competition Report as pending or proposed but  d(#not consummated. In addition to comparing MVPDs as we have done in the past, we would like to  d(#Levaluate MVPD service providers in the economic context of the larger communications marketplace. In  d(# this regard, we solicit data and information that will show how broadcast television, cable television,  d(#Mtelephone, satellite, equipment suppliers and other participants compare in terms of relative size and  d(#resources (e.g., revenues) and indicate the extent to which participants have the ability to enter each others' market.  RT-` `  2. Programming Issues   S-  12.` ` In the 1998 Competition Report, we will update information on existing and planned  d(#=programming services, with particular focus on those programming services that are affiliated with video  d(#programming distributors. As in previous reports, we will assess the extent to which video programming  d(#.services are affiliated with cable multiple system operators ("MSOs") and continue to examine trends in  d(#=the ownership of programming services. We seek information detailing each MSO's ownership interests  d(#zin video programming services, including the amount and type of interest held by each MSO, the date  S -such interest was acquired, and any changes since last year.  S!-  13.` ` We also ask commenters to provide updated figures for the number of subscribers or  d(#nationwide share of subscribers for: (a)independent programming networks; (b)national programming"" ,>(>(II$"  S- d(# networks distributed by cable systems; (c)national programming networks distributed by noncable  d(#MVPDs; (d)national programming networks affiliated with noncable MVPDs distributed by cable  d(#Ksystems; and (e)national programming networks affiliated with noncable MVPDs distributed by noncable  d(#Mdistribution systems. In addition, commenters are asked to provide current figures for the number of  d(#subscribers or market share of subscribers for: (a)independent regional programming networks;  S8- d(#(b)regional programming networks distributed by cable systems; (c)regional cable programming networks  d(#.distributed by noncable MVPDs; (d)regional programming networks affiliated with noncable MVPDs  d(#distributed by cable systems; and (e)regional programming networks affiliated with noncable MVPDs distributed by noncable distribution systems.   Sp-  14.` ` We seek information on the various program options offered by each MVPD technology,  d(# including exclusive program offerings, the number of channels available, and the comparability of the  d(#program options and packages available with each technology. Are there certain programming services  d(#(i.e., "marquee" program services) or specific classes of service (e.g., movie, sports or news channels) that  d(#an MVPD needs to provide to subscribers in order to be successful? If so, which services or classes of  d(#.services? Are there services that have substitutes and that are not critical to the competitive viability of MVPDs?  S0- Q15.` ` We request data on the extent to which there are programming networks affiliated with  d(#noncable MVPDs and whether such programming networks are available to competing MVPDs, including  d(# cable operators, on reasonable and nondiscriminatory terms. What is the current status of noncable  d(#MVPDs' efforts to produce their own programming? Commenters are asked to describe the costs of, and  d(#|any difficulties they have encountered in, producing or securing their own programming, either individually or jointly.  S- 16.` ` We also request updated information on recent and planned programming launches. How  d(#many new programming services are in development, and when are they currently scheduled to launch?  d(#What types of programming will they offer? To what extent does the success of a new service depend  d(#]on the tier or package of service on which it is placed by MVPDs? To what extent are local cable operators or broadcasters involved in providing local or regional news or sports channels?  S(- $17.` ` In addition, we request information on electronic programming guides offered by cable  d(#operators and other MVPDs. To what extent do MVPDs offer or plan to offer programming guides to  d(#their subscribers? Electronic programming guides can be produced by individual MVPDs or can be  d(#=distributed by national services and customized for local program offerings. We seek information on the  d(# number and different types of available electronic programming guides. We also request information  d(#/regarding the ownership of nationally distributed programming guides. Are these existing or planned  d(#electronic programming guides owned or affiliated with MVPDs? In addition, to what extent do electronic programming guides receive financial support from advertising, subscriber fees or a combination of both?  S!-  P18.` ` We also seek information on the extent to which MVPDs are now offering or plan to offer  d(#yconsumers discrete programming choices (i.e., service on an "a la carte" or individual channel basis) rather  d(#than programming service packages (i.e., tiers of programming services). How many cable systems and  d(#zother MVPDs are technically equipped to offer customized programming packages at present? What  d(#would be required to allow operators to offer more customization than is currently available? What are  d(#the technical requirements that permit an MVPD to offer customized service? What are the economic, legal or other impediments to offering programming services in this manner?"& ,>(>(IIn("Ԍ S- ԙ19.` ` Moreover, we seek information and comment regarding public, educational and  d(#=governmental ("PEG") access and leased access channels. We specifically request data on the number of  d(#channels being used for each of these purposes and the types of programming offered on such channels.  d(#zWe also seek information on the extent to which leased access channels are used on a part time, rather  d(#[than full time, basis. Do these channels provide any competition to the programming channels under the control of the cable operator?  S- o20.` ` We further seek information and analysis regarding the effect of increased programming  S- d(#costs on rates, especially for cable service."' yO( - d(#KԍThe Commission also is seeking information on the effect of programming license fees on cable rates in its 1998 Annual Survey of Cable Prices. Many cable operators cite rising programming costs as the  S- d(#Lreason for increased cable rates. "' {OX - d(#xԍSee 1997 Price Survey, 12 FCC Rcd at 22758 6; 1997 Competition Report, 13 FCC Rcd at 1043, 106061 11, 38. To what extent are increases in programming costs offset by increases  d(#in advertising revenues rather than by increasing subscriber rates? Should our existing rules for the  d(#regulation of subscriber rates be modified to provide incentives for the cable industry to recover increased  d(#program costs by raising advertising rates as well as or instead of subscriber rates? Are adjustments to  d(#[our current rate rules appropriate or necessary? What effect, if any, are recent financial developments in  d(#{professional sports (e.g., multibillion dollar deal for rights to National Football League games, the  d(# purchase of sports teams by MSOs and broadcast interests) expected to have on the costs of sports  d(#kprogramming and video programming in general? We seek information on these and other factors that  d(#affect programming costs for cable operators and other MVPDs. To what extent are the increased  S0-programming costs passed through to MVPD subscribers and to advertisers?  )  S- `21.` ` As in previous reports, we will update our assessment of our program access, program  d(#carriage and channel occupancy rules that govern the relationships between cable operators and  S- d(#programming providers.u\z"' {O- d(#ԍ1997 Competition Report, 13 FCC Rcd at 112627 169; 1996 Competition Report, 12 FCC Rcd at 443239  {Ot- d(#14966; 1995 Competition Report, 11 FCC Rcd at 213542 15772; 1994 Competition Report, 9 FCC Rcd at 752022, 752836  15859, 17398.u The program access rules also apply to OVS operators and common carriers  Sh- d(#in the same manner as they apply to cable operators.Lh"' yO-ԍ47 C.F.R. 76.1004, 76.1507.L Commenters are asked to provide information  d(#?regarding the effectiveness of these rules. We request information on whether the coverage of the  d(#program access rules is appropriate and on any other issues of concern to video programming providers  S- d(#or MVPDs relating to the availability and distribution of programming.'$. "' {O!- d(#;ԍWe also sought comment regarding program access issues in Implementation of the Cable Television Consumer  {M"- d(#;Protection and Competition Act; Petition for Rulemaking of Ameritech New Media, Inc. Regarding Development of  {OP#- d(#Competition and Diversity in Video Programming and Distribution and Carriage, CS Docket No. 97248, RM No. 9097, Memorandum Opinion and Order and Notice of Proposed Rulemaking, 12 FCC Rcd 22840 (1997).' In particular, we seek  d(#[information on whether there have been any cases of MVPDs being denied programming when a satellite  d(#delivered service becomes terrestrially delivered, or being denied programming by nonvertically integrated programmers."x ,>(>(II"Ԍ R-ԙ ` ` 3. Technical Advances  S-  S- Q22.` ` The 1997 Competition Report described various technological advances that may affect  S- d(#industry structure and competition in markets for the delivery of video programming.m"' {O-ԍ1997 Competition Report, 13 FCC Rcd at 112730 17177.m For this year's  d(#jreport, we seek updated information on system upgrades, particularly to digital technology, and the time  d(# frames for completion of these upgrades. We request information regarding MSOs that have created  d(#digital tiers. How have cable systems increased their channel capacities by using digital tiers? For  d(#specific MSOs, we request data on the number and proportion of cable systems that provide digital tiers.  d(#yWe also request information on the number and proportion of subscribers for whom digital cable services  d(#zare available and the number and proportion of subscribers that actually choose to subscribe to digital  d(#Lservices. Are upgrades being undertaken only in specific geographic areas, or nationwide? Are upgrades  d(#being conducted mainly in response to competitive entry in the area, or are there other factors that  d(#.determine where and when a system will be upgraded? Have planned system upgrades been canceled or  d(#scaled back? If so, why? We seek information on the feasibility of combining distribution technologies  d(#(e.g., DBS and SMATV) and data regarding MVPDs' current use of combined distribution technologies.  d(#We also solicit data on estimated rollout or launch dates for new technologies, and on potential problems or other issues relevant to video distribution competition in a digital environment.  S2- 23.` ` An important aspect of the technological developments taking place relates to the  d(#deployment of set top boxes, integrated receiver/decoders, or receivers that facilitate or differentiate  d(#MVPD service offering. We ask commenters to identify and describe developments in this part of the  d(#market, setting forth the following for each type of device: (a) its type and manufacturer(s); (b) its  d(#function and capabilities; (c) its advantages and disadvantages; (d) its cost to the company and price to  d(#the consumer; (e) the extent to which the device will be available for retail purchase as opposed to being  d(#ymade available through the service provider; (f) the actual and projected number of subscribers using each  d(#such device as of the end of June 1998, December 1998 and June 1999; and (g) the actual and projected  S-average monthly purchases of each video and other service by the subscribers using each such box.  S- C.` ` Competition in Local Markets  Sz-  SR- 24.` ` Currently, basic and cable programming service rates are deregulated where a cable  S*- d(#zoperator faces "effective competition."*Z"' {O$- d(#ZԍSee 47 U.S.C. 543(a)(2). Under the 1996 Act, CPS rate regulation sunsets in March 1999. See 47 U.S.C. 543(c)(4). Effective competition exists: (1) where the franchise area is  d(#served by at least two unaffiliated multichannel video programming distributors, each of which offers  d(#comparable video programming to at least 50% of households, and at least 15% of households  d(#Lsubscribing to programming services offered by an MVPD subscribe to services other than those offered  d(#Lby the largest MVPD; (2) where fewer than 30% of the households in the franchise area subscribe to the  d(#cable service of a cable system; (3) where a municipal cable system offers service to at least 50% of the  d(#households in the franchise area; or (4) when a local exchange carrier or its affiliate (or any MVPD using  d(#the facilities of such carrier or its affiliate) offers video programming services (other than directtohome  d(#jsatellite services) in the franchise area of an unaffiliated cable operator, but only if the services so offered" ,>(>(IIe""  S- d(#are comparable to the services provided by the cable operator."' {Oh-ԍSee Communications Act  623(l)(1)(A), (B), (C) and (D), 47 U.S.C.  543(l)(1)(A), (B), (C) and (D). We seek comment on whether the  d(#\existing test for effective competition is an appropriate measurement of the existence of competition.  d(#Where commenters believe it is not the correct measure of competition, all or in part, we ask for suggested alternative means for determining competition.  S8- 25.` ` In the 1996 and 1997 Competition Reports, we examined several case studies of local  S- d(#markets where cable operators faced actual competition from MVPD entrants. Z"' {O - d(#ԍ1997 Competition Report, 13 FCC Rcd at 113040 178210; 1996 Competition Report, 12 FCC Rcd at 445262 20133. In each of these cases the Commission determined that the statutory conditions were met.  We seek updated  d(#/information on the effects of actual and potential competition in these and other local markets where  d(#consumers have, or soon will have, a choice among MVPDs. What regulatory changes have facilitated  d(#headtohead competition in local markets between or among MVPDs? What barriers still exist which  d(#inhibit further competition? Commenters are asked to provide specific data regarding areas where headto d(#head competition exists between cable and other MVPDs, or among various types of MVPDs, and to  d(#0contrast this with areas where effective competition has been determined to exist. How has such competition affected prices, service offerings, quality of service, and other relevant factors?  S - 326.` ` We also would like to gather information on video delivery competition for and within  d(#multiple dwelling units ("MDUs"). How common is it for consumers to have options to choose between  d(#\or among MVPD services within a particular MDU? How comparable are the program offerings and  d(#prices charged by competing MVPDs serving MDUs in the same geographic area, and by cable and  d(#alternative MVPD services within the same MDU? How comparable are the program offerings and prices  d(#charged by MVPDs serving both MDUs and nonMDU customers in the surrounding area? Are MVPDs  d(#Lcommonly providing multiple services to MDU customers? If so, what services are being provided, and  d(#in what geographic locations are the multiple services offered? Is the use of exclusive video service  d(#.contracts in MDUs increasing or decreasing? How many exclusive service contracts, and how many so SB- d(#called "perpetual" exclusive contracts, exist at present? What impact have the recent inside wiring,Q!\B"' {O- d(#JԍSee Telecommunications Services Inside Wiring, Customer Premises Equipment, CS Docket No. 95184; Cable  {O`- d(#Home Wiring, MM Docket No. 92260, Report and Order and Second Further Notice of Proposed Rulemaking, 13 FCC Rcd 3659 (1998).Q over S-theair reception device ("OTARD"),."&"' {O- d(#;ԍSee Preemption of Local Zoning Regulation of Satellite Earth Stations, IB Docket No. 95-59; Implementation  {O\- d(#of Section 207 of the Telecommunications Act of 1996, Restrictions on OvertheAir Reception Devices: Television  {O& - d(#Broadcast Service and Multichannel Multipoint Distribution Service, CS Docket No. 96-83, Report and Order, Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd. 19276 (1996).. and cable bulk rate rulesW# "' yO"-ԍ1996 Act 301(b)(2), 47 U.S.C. 543(d).W had on MDU competition?  S- 27.` ` We request information regarding existing or potential regulatory impediments that may  d(#deter entry or prevent expansion of competitive opportunities in video program delivery markets. We also  d(#ask commenters to identify specific Commission rules, policies or regulations that ought to be reexamined in light of current competitive opportunities within multichannel video programming markets. "R V #,>(>(II"Ԍ S- ÙIII.PROCEDURAL MATTERS   S-  28.` ` This Notice is issued pursuant to authority contained in Sections 4(i), 4(j), 403, 613 and  d(#628(g) of the Communications Act of 1934, as amended. Pursuant to applicable procedures set forth in  d(#zSections 1.415 and 1.419 of the Commission's Rules, 47 C.F.R. 1.415 and 1.419, interested parties  d(#may file comments on or before July 31, 1998, and reply comments on or before August 31, 1998. To  d(#file formally in this proceeding, participants must file an original and four copies of all comments, reply  d(#comments and supporting comments. If participants want each Commissioner to receive a personal copy  d(#of their comments, an original plus nine copies must be filed. We also encourage commenters to include  d(#a computer disk copy of their comments with their official filings whenever possible, as this will allow  d(#.the comments to be easily transferred to the Commission's Internet site. Submissions on disk should be  d(#Non 3.5 inch diskettes, formatted for Windows 3.1. These filings should be in WordPerfect 5.1 for  d(#Windows format with the whole submission contained in one file. Comments and reply comments should  d(#be sent to the Office of the Secretary, Federal Communications Commission, Washington, D.C. 20554.  d(#Comments and reply comments will be available for public inspection during regular business hours in  d(#>the FCC Reference Center (Room 239) of the Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554.  S2- o29.` ` There are no ex parte or disclosure requirements applicable to this proceeding pursuant  S -to 47 C.F.R.  1.1204(a)(4).   S- n30.` ` Further information on this proceeding may be obtained by contacting Marcia Glauberman in the Cable Services Bureau at (202) 4187200 or TTY (202) 4187172. XX` ` X XXhhCFEDERAL COMMUNICATIONS COMMISSION(#h ` ` X XhhCMagalie Roman Salas(# ` ` X XXhhCSecretary(#h