FSF Comments Contend the Video Programming Delivery Market Is Effectively Competitive
Legacy Regulations Should Be Eliminated or Curtailed
ROCKVILLE, MD - Free State Foundation President Randolph May, Legal Fellow Sarah Leggin, and Adjunct Senior Fellow Seth Cooper submitted comments today
with the Federal Communications Commission in the matter of the Commission's Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming.
Immediately below is the
Introduction and Summary of the comments without the footnotes included. A PDF of the full comments with the footnotes is available
here.
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Introduction and Summary
These comments are submitted in response to the Commission's request for comments regarding the Communications Act's requirement that the Commission report annually on "the status of competition in the market for the delivery of video programming," The requirement's purpose is to help keep the Commission's regulatory policies in line with video marketplace realities and that is the focus of these comments. Today, the video market is flourishing. Indeed, D.C. Circuit Judge Brett Kavanaugh was correct when, in his May 2013 opinion in the "Tennis Channel" case, he said: "In today's highly competitive market, neither Comcast nor any other video programming distributor possesses market power in the national video programming distribution market." But legacy regulations threaten to slow the pace of innovation and growth and pass unnecessary costs onto consumers.
In its forthcoming Sixteenth Report on Video Competition Report the Commission should recognize that the market for the delivery of video programming is effectively competitive. And it should take the opportunity to pursue the sunset of regulations - like the video device integration ban - that have failed to promote competition as intended or that are inconsistent with the current state of the video marketplace.
Despite the apparent best intentions of Congress and the Commission, video device regulations under Section 629 of the Telecommunications Act have not caused competition to increase in the video device marketplace. Instead, growth, diversification, and innovation in the video marketplace have occurred in spite of regulatory barriers to innovation and investment like the integration ban. The integration ban was proposed when cable providers still dominated the multichannel video programming distributor ("MVPD") marketplace. At that time the Commission did not contemplate the existence of online video distributors ("OVDs") or other innovations. Today, companies are increasingly expanding their offerings to compete across platforms. This convergence has led voice providers to enter the broadband and MVPD markets and to offer cable television, IP, streaming, and over-the-top services. The rapid growth of OVDs and changing consumer demands further fuel this virtuous cycle, driving innovations in content delivery platforms and devices.
Despite the significant innovation and rivalry evident in today's video marketplace, the Commission declined to declare the market "effectively competitive" in its
Fifteenth Annual Report on Video Competition. This failure is likely, whether calculated or otherwise, to prolong the already overextended life of legacy video regulations. By remaining mute about the market's competitiveness, the Commission also lends unmerited credence to calls for future regulatory intervention. Enforcing regulations premised on supposed video market deficiencies while ignoring the effectively competitive state of the market results in a policy mismatch that is harmful to consumers.
The Commission should bring its regulatory policy for video services into alignment with the competitive conditions that characterize today's market. Alignment efforts should begin with the Commission expressly recognizing that the MVPD market is effectively competitive and eliminating the cable set-top box integration ban. Such efforts should proceed with the Commission laying the groundwork for sunsetting all Section 629 regulations while, at the same time, determining the video device market is fully competitive. This finding should also spur the Commission or Congress, as appropriate, to remove other video regulations that have placed unreasonable burdens on video service providers and consumers, and that are no longer supported by current video market conditions. Obtaining alignment with video marketplace realities requires deregulatory action to better allow continuing investment and innovation and to enhance consumers' welfare through new products and services.
Finally, although perhaps not at the core of what the Commission considers to be the central purpose of this proceeding to assess the competitiveness of the video marketplace, the Commission should have in mind that its regulatory actions in this area have serious First Amendment implications. Indeed, the impact of its actions on the First Amendment's free speech guarantee should always be at the core of the Commission's consideration. Judge Kavanaugh's opinion in the "Tennis Channel" case warrants special attention in this regard. Referring to what he called "massive changes" in the video marketplace over the last two decades, and invoking established First Amendment jurisprudence, Judge Kavanaugh declared that "[i]n restricting the editorial discretion of video programming distributors, the FCC cannot continue to implement a regulatory model premised on a 1990s snapshot of the cable market." Respect for the First Amendment demands no less.
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A PDF of the full comments, with footnotes included, is
here.
The Free State Foundation is an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland.
