The FCC yesterday released a Public Notice calling for public comment on the state of the communications marketplace so that it can prepare a report to Congress – a report that is required every even-numbered year.  The Notice calls for comments on the state of competition in various sectors of the communications industry – including for audio and video.  The inclusion of audio in this report is relatively new – being included for the first time two years ago (see our article here).  Comments in this proceeding are due on April 13, with replies due May 13.

The Audio Competition Report prepared two years ago was very important in informing the FCC as to the state of competition in that segment of the market.  Comments filed with the Commission on the report were incorporated in the record of the FCC’s Quadrennial Review Notice of Proposed Rulemaking which entertained the possibility of changes in the ownership rules for broadcast radio in light of the substantial competition that comes from digital audio sources (see our article here on the Quadrennial Review NPRM).  Whether this year’s report will be as crucial is unknown, as the Third Circuit Court of Appeals decision on the FCC’s 2017 ownership rule changes have, for now, put all broadcast ownership changes on hold while the FCC (and the Department of Justice) decide whether to appeal that case to the Supreme Court or to attempt to answer the Third Circuit’s concerns that the FCC had not sufficiently addressed the impact of changes in its ownership rules on minority ownership (see our articles here and here).  While these decisions are being made, it appears that all ownership changes are on hold.

Nevertheless, comments in this proceeding will provide the FCC and Congress with an updated view of where the marketplace in audio and video stand so that, when either decides to look at changes in regulations that affect radio or TV, they will have current information on the state of competition.  Thus, even though there may not be imminent changes in the ownership rules that result from the report that the FCC will generate from the responses to this Notice, comments are still important.

In video, the FCC is looking for information about the competition between broadcast television, MVPDs (cable and satellite TV) and online video providers – including comments on the difference in the regulatory environment that may affect competition between these players.  Specific issues on which the FCC seeks comments include:

  • Competition in the provision of video programming services
  • Vertical integration
  • Technological developments
  • Recent entry and exit in the marketplace
  • Trends (e.g., declining MVPD subscriptions, increasing virtual MVPD (vMVPD) prices, fragmentation of Video on Demand (VOD) content, household subscription to multiple video services)
  • Service features (e.g., live vs VOD content, pricing, commercials, device compatibility, leased equipment) that lead some video programming services to be viewed as substitutes for one another and others as supplements
  • Operating and financial statistics including subscriptions, subscription revenue, advertising revenue, retransmission consent fee revenue, and any other sources of revenue
  • Data and comment that will help the Commission analyze how the ongoing evolution in the video programming market affects competition in the related market for set-top boxes and devices, including how it affects the extent to which consumer choice for devices to access MVPD content remains a relevant aspect of the competitive environment

Similar information is requested about the audio marketplace.  The FCC is looking at competition between over-the-air radio, satellite radio and online audio services.  It asks about regulatory constraints on the competition between players in this marketplace.  Specific areas on which the FCC seeks information include:

  • Industry participants in the provision of audio programming services
  • Trends in service offerings, pricing, and consumer behavior
  • The extent of competition among audio marketplace participants, including intramodal competition (i.e., competition among providers of the same type, such as terrestrial radio broadcast stations) and intermodal competition (i.e., competition among providers of different types, such as terrestrial radio broadcast stations and satellite radio providers)
  • Ratings, subscribership, and revenue information, for the marketplace as a whole and for individual industry participants
  • Capital investment, innovation, and the deployment of advanced technology
  • Requirements for entry into the marketplace
  • Recent entry into and exit from the marketplace

As we noted above, comments are due April 13 in this proceeding that will help the FCC establish the competitive framework that will inform its regulatory actions, as well as those of Congress, in the coming years. The FCC needs to know about the fundamental changes that have taken place in the marketplace, so that its regulation reflects today’s competitive environment, not that of some point in the distant past.