Report on Cable Industry Prices (2001)

Federal Communications Commission FCC 02-107 Before the Federal Communications Commission Washington, D.C. 20554 In the matter of Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act of 1992 Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment ) ) ) ) ) ) ) ) ) MM Docket No. 92-266 REPORT ON CABLE INDUSTRY PRICES Adopted: April 1, 2002 Released: April 4, 2002 By the Commission: I. INTRODUCTION 1. Section 623(k) of the Communications Act, as amended by the Cable Television Consumer Protection and Competition Act of 1992 (“1992 Cable Act”),1 requires the Commission to publish annually a statistical report on cable prices, or more specifically, average rates for the delivery of basic cable service, cable programming service, and equipment.2 The Act also requires the Commission to compare the average rates of cable operators subject to effective competition with those of operators not subject to effective competition.3 This 2001 Report is issued in compliance with those statutory 1 Section 623(k) was adopted as Section 3(k) of the 1992 Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, codified at 47 U.S.C. § 543(k). 2 See 47 U.S.C. § 543(k). The 1992 Cable Act defines basic cable service as the tier of service that includes the retransmission of local television broadcast signals. See 7 U.S.C. § 543(b)(7). Cable programming service is defined as any video programming other than video programming carried on the basic service tier, and video programming offered on a per channel or per program basis. See 47 U.S.C. § 543(k)(1)(2). Equipment refers to a converter box, remote control, and other equipment necessary to access programming. See 47 U.S.C. § 543(b)(3). 3 Effective competition exists where a multichannel video programming distributor (“MVPD”) meets one of four tests within its franchise area: (1) fewer than 30% of households subscribe to the service of the cable system (herein referred to as the “low penetration test”); (2) at least two MVPDs serve 50% or more of households and at least 15% of those households take service other than from the largest MVPD (the “overbuild test”); (3) a municipal MVPD offers service to at least 50% of households (the “municipal test”); or (4) a local exchange carrier (“LEC”) or its affiliate (or any MVPD using the facilities of the LEC or its affiliate) offers video programming service (other than direct broadcast satellite (“DBS”) service) comparable to the service of an unaffiliated MVPD (the “LEC test”). See 47 U.S.C. § 543(1)(1)(A-D). Federal Communications Commission FCC 02-107 2 obligations.4 2. The information and analysis provided in this Report are based on the Commission’s 2001 survey of cable industry prices (“Survey”).5 The Survey requested data from selected cable operators as of July 1, 2001 and July 1, 2000. Limited amounts of data were requested as of July 1, 1999. The Survey enables the Commission to compare prices charged by two groups of cable operators: (1) operators that are deemed to face effective competition (herein referred to as the “competitive group”) and (2) operators that do not face effective competition (the “noncompetitive group”). Within the noncompetitive group, information was collected from both regulated and unregulated operators.6 Operators in the competitive group are limited to those operators that have sought and obtained a Commission finding of effective competition.7 As a result, within the noncompetitive group, there may be operators that face competition but have not filed a petition with the Commission seeking a finding of effective competition. Similarly, there may be operators within the competitive group that may have met the criteria for a finding of effective competition at the time the finding was made, but because of changed circumstances, may not meet the statutory criteria currently. 3. The Survey collected information about average monthly rates for the basic service tier (“BST”) and major cable programming service tier (“CPST”).8 The BST typically consists of broadcast and other local origination stations plus a few satellite channels. The major CPST typically consists of satellite channels. Most cable customers subscribe to both BST and the major CPST.9 We collected information on the average monthly charge for equipment, consisting of an analog addressable converter 4 For the results of previous surveys, see Imple