Cable Subscribership Fell While Broadcasting Held Steady, says Video Competition Report

"I'm encouraged by the pro consumer trends,” said acting Chairwoman Mignon Clyburn. “The options for receiving video programming are swelling.” The 15th report, submitted just a year after the 14th iteration, marks the first time in several years the FCC has kept to the annual schedule mandated by the 1992 Cable Act, Commissioner Ajit Pai said Friday. Pai and Commissioner Jessica Rosenworcel both said the report showed a large expansion in video programming choices. The data in the report shows that “linear television still leads the pack” but that time-shifted viewing and online video distribution “are gaining a toehold,” said Rosenworcel.

The report said cable’s portion of the multichannel video program distribution market fell from 59.3 percent of all MVPD subscribers in 2011 to 55.7 percent at the end of June 2012, while the number of MVPD households as a whole grew from 100.8 million at the end of 2010 to 101 million by June 2012, according to portions of the report released by the Media Bureau Friday. In contrast, the report said DBS and telephone company MVPDs “gained both video subscribers and market share” -- DBS MVPDs had 33.6 percent of all MVPD subscribers in 2012, up from 33.1 percent in 2010. Telco MVPDs had 8.4 percent of MVPD subscribers in 2011, up from 6.9 percent in 2010. “At the end of June 2012, AT&T’s U-verse and Verizon’s FiOS services combined had 8.6 million subscribers,” said the Media Bureau release. “Competition continues to increase.”

Despite the growth in the number of MVPD subscribers, the report said households that don’t receive MVPD service -- defined in the report as receiving over-the-air broadcasting only -- stands at 11.1 million, the same as in the 14th report. Meanwhile, broadcasters have expanded their multicasting efforts, airing more than 4,500 multicasting channels, the report said. Some of the consumers in the over-the-air figure may also be using online video distributors such as Hulu, and the Media Bureau said consumers are increasingly watching online video on their TV sets, reaching 35 percent of all TV households. The rise in online video is good for consumers because it allows them to save monthly by not having to pay leasing rates for set top boxes, said acting Chairwoman Mignon Clyburn, though she said she was concerned that 3 out of 10 citizens don’t have access to fast enough Internet to watch online streaming video. “I am concerned because not all of our citizens are receiving the benefit,” she said.

The wide range of video options available to consumers is a benefit of a competitive market, Pai said. “American consumers are reaping the benefits of competition and innovation in the video marketplace,” he said. But Free Press challenged that interpretation of the report’s numbers, in a press release Friday. “No matter what the FCC might say about increased choices online, it’s a sure sign of a broken market when the best that giants like Google and Apple can promise is a better cable box,” said Free Press policy Director Matt Wood in a statement. “It’s not an actual alternative if customers are still tied to the cable model,” Wood said. Public Knowledge also said the report did not show much industry adaptation. “This report shows that industry itself has not changed much, and it’s not evolving fast enough to meet consumers’ evolving demands,” said Senior Staff Attorney John Bergmayer. Public Knowledge said policymakers should look at what’s preventing online video from “truly competing” with existing MVPDs. “Coupled with the FCC’s reports on cable industry prices, a pattern emerges of consumers paying more each year for more of the same,” Bergmayer said in a release.