These comments are submitted in response to the Commission's request for comments regarding Section 628(g)'s requirement that the Commission report annually on "the status of competition in the market for the delivery of video programming." The focus of these comments is on that requirement's purpose in keeping the Commission's regulatory policies aligned with video marketplace realities. Today's video market is a vibrant ecosystem of innovation and wellspring of valuable new product and service choices for consumers. But ongoing innovation and growth in video services is now threatened by legacy regulations as well as by Commission proposals for new regulations. Overregulation inevitably diminishes value to consumers by imposing added costs or restrictions on consumer choice.

 

Today's video market indisputably is "effectively competitive." So, the Commission surely should declare this in its forthcoming Seventeenth Video Competition Report. Yet in the face of the significant innovation, rivalry, and development of today's video marketplace, the Commission once again declined to declare the market "effectively competitive" in its Sixteenth Video Competition Report (2015). This avoidance seems calculated to prolong the already overextended life of legacy video regulation. 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 harmful to innovation and investment and, therefore, to consumers.

 

In its recent Effective Competition Order (2015), the Commission examined nationwide and local video market competitive conditions and adopted a baseline presumption that local multi-channel video programming (MVPD) markets are effectively competitive. The Commission's next Video Competition Report should build on that order. The next report should not only acknowledge that the nationwide market for the delivery of video programming is effectively competitive, but it its review of video competition should lead the Commission to remove old analog-era regulations or at least reorient them to a presumptively deregulatory posture to better promote competition and consumer welfare in this digital era.

 

This imperative of matching video regulatory policy to video market reality is bolstered by critical First Amendment dictates. Commission acknowledgment that the MVPD market is effectively competitive conceptually undermines the rationale for a broad swath of early 1990s MVPD regulations that restrict free speech. Must-carry, must-buy, program carriage, leased access, and other legacy regulations tell video service providers what they must say and through whom they must say it. Such rules override their editorial decisions with government mandates.

 

Given the presence of effective competition among MVPDs, OVDs, as well as wireless options, regulations restricting free speech can no longer be justified. And given the absence of identifiable market power concerns or perceived distributional bottlenecks, First Amendment concerns should spur Congress to remove outdated regulatory burdens on speech in light of changed marketplace conditions. Free speech concerns also should prompt the Commission to eliminate regulations where it has the power to do so. The Commission should readjust regulations in a deregulatory direction where Congressional mandates remain in place. For Congress and the Commission, taking the First Amendment seriously means limiting government intervention in the video market to instances where intervention serves a compelling government interest while employing the least restrictive means.

 

In those instances where the Commission lacks the power to repeal legacy rules absent Congressional legislation, the Commission can still exercise its discretionary authority to reorient legacy rules to today's competitive market conditions. Following the approach of its Effective Competition Order, the Commission should employ deregulatory presumptions in its implementation of legacy rules in order to provide swifter and surer relief from burdensome regulations that no longer make sense. A sound basis exists for adopting deregulatory evidentiary presumptions regarding video market competition on a broad scale.

 

The Commission should also lay the groundwork for sunsetting all Section 629 regulations, as the video market approaches being "fully competitive." Given the variety of choice in services and devices providing consumers access to IP-based and Internet-accessible video programming, the video device market is no longer an area where the FCC needs to be so intrusively involved. The availability of wireless and online video distributor ("OVD") bolsters this conclusion.

 

Indeed, explosive growth and high demand for OVD services epitomize the convergence of differing technology platforms on IP-based services. Cable operators have experienced ongoing market share decline simultaneous with DBS and telco MVPD competition, with growing evidence of consumers migrating from MVPD services to OVD services. News reports indicate there may now 100 million or more OVD subscriptions - approximately the same number as MVPD subscriptions. It is therefore time the Commission finally begins taking OVD services seriously as a substitute for MVPD services. In addition to survey data regarding consumers who have dropped MVPD services in favor of OVD services, indicators of OVDs being close substitutes include growing numbers of OVD service providers and the increasing amount of content available through Internet streaming, the growing number of overall subscribers to OVDs, the stronger preferences of younger consumers for OVD services, and the investment by OVDs in original video content.

 

A video policy that truly aligns with today's market reality will recognize the effectively competitive state of the market, respect First Amendment free speech requirements, eliminate unnecessary and outdated regulations, or at least readjust them in a deregulatory direction, and take seriously innovative new services, such as wireless and online video, as real competitors in the market. 

  

* * *