Multichannel video programming distributor

In the United States, a multichannel video programming distributor (MVPD) is a service provider that delivers video programming services, usually for a subscription fee (pay television). These operators include direct-broadcast satellite (DBS) providers, cable television (CATV) systems, and other various wireline video providers (including Verizon FiOS as well as AT&T U-verse) and competitive local exchange carriers (CLECs) using IPTV. The corresponding term used by Canadian regulators is broadcast distribution undertaking (BDU).[1]

Section 602 (13) of The Communications Act of 1934 (as amended by the Telecommunications Act of 1996) defines an MVPD as

a person such as, but not limited to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receive-only satellite program distributor, who makes available for purchase, by subscribers or customers, multiple channels of video programming.[2]

Origins of cable television

Prior to 1975, cable television served one purpose: to provide television signals to rural areas that were too far away from broadcast stations for a signal to be received. RCA then launched Satcom I, the first of several satellites allowing new services such as HBO and fledgling Atlanta-based superstation WTCG to send out their programming for hundreds of dollars per hour rather than the $3,000 per hour required to use telephone lines to transmit the services.[3] Satellites were also cheaper than microwave relay systems.[4]

By 1980, 15 million of the 75–80 million U.S. homes with at least one television set had a cable television subscription, and one prediction was for that number to double by 1985.[3]

By 1981, eleven communications satellites were in use, and the Federal Communications Commission planned 24 to be in use by 1985. Most cable channels wanted space on Satcom I, since cable companies had receiving dishes aiming in that direction. In November 1981, Satcom III-R replaced Satcom I, which changed to voice and data distribution.[4]

Growth of satellite

Some areas were too remote for cable or even any over-the-air reception, and other areas did not have a cable television system.[5] In the early days of home satellite dishes, the two types of service were low-power C-band service with large dishes 8 to 12 feet wide, and high-power Ku-band.[6][7]

In 1979, COMSAT announced a plan to allow viewers to receive programming directly from broadcast satellites, a concept called direct-broadcast satellite or DBS. This system would cost "hundreds of millions of dollars" and, at the time, was expected to be ready by the 1990s. Later, the company changed its target date to 1986. By 1983, the FCC had authorized several other companies to offer DBS service. These included CBS, RCA and Western Union, as well as Rupert Murdoch-led Skyband. Unlike the larger television receive-only dishes, DBS used higher-powered satellites with smaller, more affordable dishes that were two to three feet wide.[8]

On November 16, 1983, the first DBS service, with 50 customers paying $39.95 a month for five channels in the Indianapolis, Indiana area, was launched by United Satellite Communications Inc. (USCI), a joint venture of Prudential Insurance, General Instrument and investors that included Francesco Galesi. USCI did not wait for more powerful satellite technology, but instead used the Canadian Anik C2. The company also signed an agreement with ESPN and made programming arrangements with distributors rather than existing cable channels. USCI also had two movie channels and a music video channel similar to MTV. While cable could provide more channels at a cheaper rate, cable was too expensive to offer in rural areas. Also, cable was not yet available in larger cities such as Philadelphia and Chicago. USCI president Nathaniel Kwit stated that 30 million people would never be served by cable companies, and DBS would have 5 million subscribers by 1990.[8][9][10][11] One prediction for USCI was for 2.4 million customers by 1986.[12]

With little success in Indiana, USCI began looking to Washington, D.C., Baltimore and Philadelphia. Early in 1984, USCI expanded into 15 markets in the Northeast and Midwest. At first, USCI leased its equipment because people might be reluctant to buy an unproven technology, but the company later sold its dishes. COMSAT planned to compete with USCI, offering lower prices, but lost its backing from CBS in June 1984.[10][13][14] Of the eight original companies planning DBS service, none had a working system by the start of 1985. The expected cost of entering the market ranged from $200 to $500 million, with $100 million required to put a satellite in orbit. Only Direct Broadcast Satellite Corp., United States Satellite Broadcasting and Dominion Satellite Network still had plans to go ahead, while RCA was looking at changes in its system. Even USCI, which used a Canadian satellite that did not require FCC approval to use, was in trouble. The company had the capability to serve 52 percent of people in the United States but after a year, USCI had only 11,000 customers. USCI's inability to get channels such as CNN, along with a monthly cost of at least $24.95, in addition to the $400 to $700 for the receiver needed to pick up a still-weak signal, kept the numbers low.[13][14] Another problem was that HBO and other channels used C-band while USCI was Ku-band.[12] USCI needed a significantly higher amount of money and began looking at possible mergers. The company could not afford to expand and it had been unable to strike deals with other companies, so its service ended without warning on April 1, 1985.[15] USCI filed for bankruptcy, and one company offered to convert USCI dishes to C-band.[16] People were allowed to keep their dishes; half had bought them and half had leased them, however it was unclear who if anyone would provide the service.[12]

In October 1984, the U.S. Congress passed the Cable Communications Act of 1984, which gave those using dishes the right to see signals for free unless they were scrambled, and required those who did scramble to make their signals available for a fee.[17][18] Since cable channels could prevent reception by big dishes, other companies had an incentive to offer competition. Dominion planned inspirational programming, USSB intended to sell dishes with three channels of free programming, and Direct Broadcast Satellite Corp. would be a common carrier airing programming from those who paid.[13]

In 1992, nearly all MVPD customers had cable television service.[19]

In 1994, PrimeStar, DirecTV and USSB began offering digital satellite service. With one million subscribers in 18 months, digital direct broadcast satellite set a record for the quickest acceptance of a new technology; by comparison, it took four years before the VCR sold one million units. EchoStar and AlphaStar debuted in 1996.[20]

2.2 million people subscribed to C-band service requiring 6-foot dishes costing as much as $1,500; this number remained steady, while digital satellite service with 18-inch dishes experienced phenomenal growth, reaching 4.5 million subscribers by the end of 1996, up by about two million subscribers in a year. Cable television services had 65 million subscribers, but were already starting to see customers switch to satellite. Satellite television offered more channels than cable did at the time due to limited headend capacity, although broadcast networks were not allowed if their affiliates could be received with an antenna. DirecTV and USSB had 2.5 million subscribers, while PrimeStar, with 27-inch dishes that could be rented rather than purchased, had 1.6 million subscribers.[20]

Cable companies responded to the success of satellite by adopting digital cable services that offered more channels, and required the use of digital set-top boxes. They also owned a share of PrimeStar, because offering cable in rural areas was deemed to be too expensive.[20]

In 1996, the FCC said local zoning laws could not prevent most smaller dishes. Another advancement in satellite TV came with the Satellite Home Viewer Improvement Act of 1999 (SHVIA), which allowed local channels to be included in satellite TV packages. Previously, this was only possible if an area had no local broadcast network affiliates.[21]

A January 8, 2001 report commissioned by the FCC stated that in the year ending June 2000, the number of satellite subscribers had increased from 10.1 million to 13 million people, an increase three times that of cable. Satellite represented 15.4 percent of those paying for television service, while the percentage of those who had cable dropped from 82% to 80%. Cable charges increased at a rate 50% higher than the Consumer Price Index.[22]

By 2012, satellite dishes accounted for 30% of the pay television market.[19]

Cable Television Consumer Protection and Competition Act

The Cable Television Consumer Protection and Competition Act of 1992 stated "No cable system or other multichannel video programming distributor shall retransmit the signal of a broadcasting station, or any part thereof, except with the express authority of the originating station."[23] This meant that instead of must-carry, stations could demand retransmission consent, requiring that the station be compensated for distributing its signal.[23]

Telephone companies

In 2005, telephone provider Verizon entered into the pay television area with the introduction of its own wireline video provider FiOS. In 2008, AT&T followed suit with the introduction of its AT&T U-verse service.

Digital TV Transition Fairness Act

On January 7, 2009, U.S. Senator Bernie Sanders of Vermont introduced the Digital TV Transition Fairness Act. Sanders introduced the idea in a letter to FCC chairman Kevin Martin sent on September 19, 2008, which stated, in part, "Americans should not be forced to pay for cable, satellite, or other telecommunications video services to get their free broadcast channels." The bill provided funds to help people pay for not only converter boxes, but would also subsidize antennas and, where necessary, cable, satellite or other services. The bill was referred to committee.[24][25]

On June 15, 2009, U.S. Representative Peter DeFazio of Oregon introduced a version of Sanders' bill in the United States House, that would require MVPDs to offer a $10 basic package to anyone who lost at least one channel as a result of the digital television transition (with broadcasters waiving fees), pay for outdoor antennas (including installation) and extend the converter box program beyond July 31, 2009.[26][27]

The bill appears to have died in committee.[28]

Proposals to expand wireless broadband

Even after the digital television transition, which resulted in 100 MHz of spectrum becoming available for wireless broadband use, a total of 800 MHz was needed. A Consumer Electronics Association (CEA) study claimed that $62 billion worth of spectrum could be repurposed to about $1 trillion for wireless use, and one proposal would have required all television stations, including low-power broadcasters, to give up their entire spectrum, with subsdized MVPDs replacing over-the-air television, even after viewers spent money on preparing for the digital transition.[29][30] Broadcasters responded, "In the broadcasting context, the 'total value' is not a strict financial measure, but rather is one that encompasses the broader public policy objectives such as universal service, local journalism and public safety."[29] Broadcasters pointed out that the government, viewers and the related industries spent $1.5 billion making sure that a minority of the audience would be ready for the digital transition; and argued that any change would have meant the loss of free over-the-air television service to people in rural areas, particularly "local journalism, universal service, availability of educational programming, and timely and reliable provision of emergency information."[29]

FCC broadband advisor Blair Levin wanted a plan by February 2010. Among the possibilities were restricting over-the-air stations to a single standard definition channel, and requiring each network affiliate to be one of a group of subchannels of a single channel, with high definition service being available only from a MVPD. Although other types of spectrum was being considered for reallocation for broadband use, Levin said of the broadcast spectrum, "It's very attractive for wireless." As for the CEA "total recall" proposal, Levin said, "The discussions to date between the broadcasters and the commission would free up spectrum but allow all channels to broadcast over the air."[30]

Regarding the CEA study's findings, David Donovan of The Association for Maximum Service Television said to Broadcasting & Cable magazine:

Wireless companies are asking the government to participate in the biggest consumer bait-and-switch in American history. For the last few years, the government told consumers that digital television would bring them free over-the-air HDTV and more channels. Now, after purchasing billions of dollars in new digital equipment and antennas, wireless advocates are asking the government to renege on its promise. High-definition programming and more digital channels would become the sole and exclusive province of pay services. The American public simply will not stand for this.[30]

Michigan Rep. John Dingell in a letter to FCC chairman Julius Genachowski, predicted a spectrum reallocation using broadcast stations would cause "an adverse effect on consumers."[31] Another proposal was "geo-filtered WiMAX", which would allow high-definition service but only in a particular market, with the remainder of the spectrum sold for $60 billion. WiMax would replace the existing services but would make MVPD services cheaper, while still allowing broadcasters to make more money. The additional spectrum made available could then be sold to pay the industry's debt.[30]

Municipal systems

In 2008, Greenlight was introduced in Wilson, North Carolina, which created the system at a cost of $28 million.[32]

In November 2010,[33] Salisbury, North Carolina introduced Fibrant, a fiber optic broadband utility offering Internet, cable and telephone service.[34] Fibrant was one of 60 municipal networks located across the country. The city borrowed $30 million to install the service, which offered faster Internet speeds at a lower price than competitors. The North Carolina General Assembly was considering legislation to stop such networks, which private companies opposed to them as the municipal utilities did not have to pay taxes and did not have the ability to subsidize.[33] After eight months, 96% of customers continued to subscribe, and 1,255 people had service or wanted it.[34] A total of 4,500 subscribers were needed for the service to be self-sufficient; this was predicted to happen in 2014.[35] In 2015, the system was believed to be the first municipal system offering 10 gigabits.[36]

On February 26, 2015, the FCC voted on a petition by Chattanooga, Tennessee and Wilson, North Carolina asking for "federal preemption of state laws". States opposed this effort to increase competition. South Carolina had a law which prevented governments from benefitting in ways private sector services could not. A service provided by Monticello, Minnesota had failed and bondholders sued, leading to concerns about who would pay if similar situations occurred as a result of the FCC action. After the FCC vote, U.S. Sen. Thom Tillis of North Carolina and Rep. Marsha Blackburn of Tennessee introduced bills to stop the action.[37][38] On February 1, 2016, FCC Chairman Tom Wheeler recommended that the commission act on the petition. If the vote went in the cities' favor, the state laws would no longer be in effect and municipal systems could expand outside the cities.[39]

After Tennessee and North Carolina appealed, on August 10, 2016, the Sixth Circuit Court of Appeals ruled that the Telecommunications Act of 1996 did not necessarily give the FCC the right to prevent states from prohibiting municipal broadband.[40]

Merging TV and Internet

In December 2009, the FCC began looking into using set-top boxes to turn television sets into broadband video players. FCC Media Bureau Chief Bill Lake had said earlier that television and the Internet would soon be the same, but only 75 percent of homes had computers, while 99 percent had television service. A Nielsen survey said 99 percent of video viewing was done through television.[41]

On May 21, 2012, Discovery Communications CEO David M. Zaslav said that in the future, companies would sell cable channels using the Internet. These companies would not have their own delivery system, but would depend on existing cable companies or other Internet service providers.

Sky Angel carried the Discovery Channel in this manner. After distributing Discovery for two years, Discovery removed its programming. Sky Angel asked that the Federal Communications Commission declare it to be an MVPD. In spring 2012, the FCC asked for comments on such a plan.[42]

The National Cable & Telecommunications Association, American Cable Association, Time Warner Cable, Comcast and Cablevision said that online video distributors (OVDs) were not MVPDs unless they had their own distribution facilities, and the decision to change this status could not be done by the Media Bureau. Instead, such a change would have to be made by the full commission or by Congress. Specifically, Comcast said, "Congress did not and could not conceive of OVD services ... as MVPD services."[43] Affiliates of ABC, CBS and NBC asked to include OVDs in the MVPD definition. By not being included as MVPDs, OVDs would not be subject to retransmission rules. The Media Bureau pointed out in its request for comment that if companies such as Netflix, Hulu, Vudu and Vimeo were given program-access protection and subjected to MVPD regulations, some companies might be put out of business.[43]

The term "virtual MVPDs" is used for over-the-top services.[44]

Cord cutters

Main article: Cord-cutting

In broadcast television, cord cutting and cord shaving refer to patterns of viewers cancelling subscriptions to subscription television, dropping expensive pay television channels or reducing the number of hours of subscription TV viewed, a response to competition from rival media. A small but growing number of cord cutters or cord nevers tune out from subscription television in favor of some combination of broadband Internet and IPTV, digital video recorders, digital terrestrial television or free-to-air satellite television.[45]

Some cite higher costs due to deregulation of cable television and tied selling practices which force subscribers to pay monthly for a large bundle of unwanted channels to receive a few desired programs.[46] Others find rival on-line media better fits a specific viewing pattern, such as video on demand or easy access from mobile devices.

Estimates of the impact of cord-cutting on the market for broadcast television vary; as of 2014 there is a small net drop (typically 0.1% per year) in the number of cable TV subscriptions, even as the number of households increases.[47] Some, such as the Nielsen ratings agency, downplay this as negligible[48] while others point to the drop in number of hours of subscription television viewed and the number of subscribers planning to cancel service in the future as indicators of a growing trend.

See also

References

  1. ↑ "General Authorizations for Broadcasting Distribution Undertakings". Canadian Radio-television and Telecommunications Commission. Retrieved 2015-01-07.
  2. ↑ Communications Act of 1934 as Amended by the Telecommuncations Act of 1996, Retrieved on 2009-07-16.
  3. 1 2 McCormick, Lynde (1980-01-17). "When you're the boss". Christian Science Monitor.
  4. 1 2 Reibstein, Larry (1981-11-20). "Cable Television Scrambles for Some Room on a Satellite". The Philadelphia Inquirer. p. B14.
  5. ↑ Reibstein, Larry (1981-09-27). "Watching TV Via Satellite Is Their Dish". The Philadelphia Inquirer. p. E01.
  6. ↑ Berger, Dan (1984-07-15). "Linkabit's success is built on intellectual curiosity". The San Diego Union. p. I-1.
  7. ↑ Stecklow, Steve (1984-07-07). "America's Favorite Dish". The Miami Herald. Knight-Ridder News Service. p. 1C.
  8. 1 2 Wolf, Ron (1983-11-22). "Satellite Television: The Future Is Now". The Philadelphia Inquirer. p. D01.
  9. ↑ Stecklow, Steve (1984-05-06). "New Service Offers Stations Via Satellite, No Cable Necessary". The Philadelphia Inquirer. p. P09.
  10. 1 2 Stecklow, Steve (1984-09-30). "Change Is Near for Satellite Service". The Philadelphia Inquirer. p. P10.
  11. ↑ Clark, Kenneth R. (1983-01-25). "TV's New Frontier: Outer Space". Miami Herald. United Press International. p. 23D.
  12. 1 2 3 Borowski, Neill (1983-12-18). "Defunct Pay-TV Firm May Abandon Antennas". The Philadelphia Inquirer. p. C10.
  13. 1 2 3 Wolf, Ron (1985-01-20). "Direct-Broadcast TV Is Still Not Turned On". The Philadelphia Inquirer. p. C01.
  14. 1 2 Wolf, Ron (1984-04-30). "Satellite Television Service Gets More Susbscribers Than Expected". The Philadelphia Inquirer. p. D07.
  15. ↑ Wolf, Ron (1985-04-02). "Satellite TV Service Goes Off the Air". The Philadelphia Inquirer. p. E08.
  16. ↑ Stecklow, Steve (1985-04-28). "Problems of Satellite-TV Service Leave Viewers with Empty Dishes". The Philadelphia Inquirer. p. M11.
  17. ↑ Dawidziak, Mark (1984-12-30). "Satellite TV Dishes Getting Good Reception". Akron Beacon-Journal. p. F-1.
  18. ↑ Takiff, Jonathan (1987-05-22). "Satellite Tv Skies Brighten As War With Programmers Ends". Chicago Tribune. Knight-Ridder Newspapers. Retrieved 2014-04-10.
  19. 1 2 "Cheer for the Chairman," Broadcasting & Cable, 2012-05-28.
  20. 1 2 3 Boraks, David (1997-01-19). "The Dish Gets Hot". The Charlotte Observer. p. 1D.
  21. ↑ Sandi Towers (2008). Media and Entertainment Law. Cengage Learning. pp. 181–82.
  22. ↑ Guerrero, Lucio (2001-01-09). "Dishes gain on cable TV: Cost, features nudge viewers to satellites". Chicago Sun-Times. p. 12.
  23. 1 2 Schindler, Harold (1993-06-15). "KSL Puts Cable on Notice". The Salt Lake Tribune. p. C7.
  24. ↑ Sanders Supports Digital TV Delay, sanders.senate.gov, Retrieved on 2009-07-16.
  25. ↑ S. 25: Digital TV Transition Fairness Act, govtrack.us, Retrieved on 2009-07-16.
  26. ↑ Eggerton, John (2009-06-17). "House Version of Sanders DTV Bill Introduced". Broadcasting & Cable. Retrieved 2009-07-08.
  27. ↑ H.R. 2867: Digital TV Transition Fairness Act, govtrack.us, Retrieved on 2009-07-16.
  28. ↑ https://www.govtrack.us/congress/bills/111/hr2867
  29. 1 2 3 Eggerton, John (2009-10-26). "Broadcasters Defend Spectrum From Reclamation Proposals". Broadcasting & Cable. Retrieved 2009-10-30.
  30. 1 2 3 4 Eggerton, John (2009-11-02). "Broadcasters Defend Their Spectrum". Broadcasting & Cable. Retrieved 2009-11-05.
  31. ↑ Eggerton, John (2009-11-17). "Dingell Concerned About Spectrum Reallocation Proposals". Broadcasting & Cable. Retrieved 2009-11-20.
  32. ↑ Wineka, Mark (2010-04-20). "Salisbury rolls out new Fibrant Web site". Salisbury Post.
  33. 1 2 Ford, Emily (2010-12-03). "Analysis: Fibrant superior". Salisbury Post.
  34. 1 2 Ford, Emily (2011-08-26). "Fibrant subscribers a month and a half behind projections". Salisbury Post.
  35. ↑ Ford, Emily (2012-02-22). "Fibrant costs down, sales up". Salisbury Post.
  36. ↑ "Salisbury announces significant upgrade in municipal Internet system". Salisbury Post. 2015-09-04. Retrieved 2015-09-04.
  37. ↑ Eggerton, John (2015-02-05). "States Pushing Back Hard With D.C. on Preemption Of Broadband Regs". Broadcasting & Cable. p. 18.
  38. ↑ Dalesio, Emery P. (2015-02-26). "FCC allows city-owned Internet providers to expand". News & Observer. Associated Press. Retrieved 2015-02-27.
  39. ↑ "FCC could knock down state law, open door for Fibrant's expansion". Salisbury Post. Associated Press. 2016-02-07.
  40. ↑ Amanda, Raymond (2016-08-14). "Appeals court overturns FCC order on municipal broadband". Salisbury Post.
  41. ↑ Eggerton, John (2009-12-14). "Broadcasters Squeezed by Convergence Push". Broadcasting & Cable. Retrieved 2009-12-17.
  42. ↑ Stelter, Brian (2012-05-22). "If Video Sites Could Act Like Cable Companies". The New York Times. Retrieved 2014-03-07.
  43. 1 2 Eggerton, John (2012-05-21). "What Is an MVPD, Exactly? Cable Ops Weigh In". Multichannel News. Retrieved 2014-03-06.
  44. ↑ Baumgartner, Jeff (2016-07-11). "Vidgo Gets Closer to Go Time". Broadcasting & Cable. p. 12.
  45. ↑ "Ready To Cut The Cable TV Cord? Here's How To Do It". Forbes. 2013-10-16. Retrieved 2015-01-07./
  46. ↑ Worden, Nat (2014-06-24). "If you haven't cut the cord on cable TV, you should". MarketWatch. Retrieved 2015-01-07.
  47. ↑ Tencer, Daniel (2013-08-14). "Cable Cord-Cutting: These Companies Are Bleeding TV Subscribers". The Huffington Post. Retrieved 2015-01-07.
  48. ↑ "Busting the Cord-Cutting Myth Video in the Interactive Age". Nielsen N.V. 2010-06-16. Retrieved 2015-01-07.

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