GAO Recommends Re-evaluation of FCC Reporting Process on Cable Pricing, Video Competition
Competition in the video market is evolving, and the FCC’s reporting process on cable and video pricing should be reevaluated, GAO said Tuesday in a report (http://1.usa.gov/12nHwXG). With technological advances, companies are increasingly distributing video online, the report said. Online video distributors “are developing a variety of business models, including free and subscription-based services,” it said. But, “online viewing and revenues represent a small portion of overall media viewing hours and revenue,” it said.
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Stakeholders generally said laws and regulations haven’t kept pace with changes in the video industry, “and FCC has not consistently reported on competition,” said GAO. A majority of stakeholders with whom GAO spoke said some provisions of legislation governing the media industry should be revisited, it said. The annual cable industry price report and the video competition price report, which are required by Congress, haven’t been published four times since 1992, GAO said. It said FCC officials said the reports are time consuming to prepare and they “impose burdens on some industry participants."
Less-frequent reporting on cable industry prices and video market competition “could allow for continued measurement of industry performance while reducing the burden on FCC and industry participants,” GAO said: The commission’s reports “may not be needed on an annual basis, especially given demand on FCC staff’s time for other monitoring and regulatory duties."
The concentration of content production among a handful of large media and entertainment companies has changed little in recent years, the report said. Of the top 20 cable networks by subscribership in 2005, it said that “more than half experienced no change in ownership from 2005 through 2012.” Since 2005, local markets have gained access to additional multichannel video programming distributor service, it said. “Satellite services have continued to grow, although more slowly in recent years."
While the Internet has emerged as a new source for viewing video, “online viewing and revenues represents a small portion of overall media activity, particularly as compared to traditional television,” said GAO: Americans “watch over 34 hours of live television per week.” Prices for traditional multichannel video programming distributor (MVPD) services continue to increase, despite entrants providing new choices, GAO said.
From 2005 to 2011, cable rates rose more than 33.5 percent for both basic and expanded service tiers, GAO said. MVPD and content companies cited the cost of content production and infrastructure investment as factors, it said. GAO said sports leagues like the NFL and Major League Baseball “are seeking higher fees from broadcast and cable networks to carry their sporting events."
GAO recommended that the FCC chair study the advantages and disadvantages of different reporting frequencies, “including annual and biennial reporting, and transmit the results of its analysis to Congress.” The FCC is reviewing the recommendation, Media Bureau Chief Bill Lake said in a letter to GAO. “The FCC strives to use its resources efficiently in order to meet the agency’s mission and its congressional requirements.”