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pdfFederal Communications Commission
DA 12-1322
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
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)
)
)
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)
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MM Docket No. 92-266
REPORT ON CABLE INDUSTRY PRICES
Adopted: August 13, 2012
Released: August 13, 2012
By the Chief, Media Bureau:
TABLE OF CONTENTS
Heading
Paragraph #
I. INTRODUCTION AND EXECUTIVE SUMMARY ........................................................................... 1
II. OVERVIEW OF THE SURVEY ........................................................................................................... 6
III. SURVEY RESULTS............................................................................................................................ 11
A. Cable Programming Services..................................................................................................... 12
B. Cable Programming Channels ................................................................................................... 16
C. Customer Premises Equipment .................................................................................................. 19
D. DTV Viewability ......................................................................................................................... 21
IV. CONCLUSION .................................................................................................................................... 25
V. ORDERING CLAUSE ......................................................................................................................... 26
ATTACHMENTS 1-6
APPENDIX: Survey Methodology
1
Federal Communications Commission
I.
DA 12-1322
INTRODUCTION AND EXECUTIVE SUMMARY
1.
Section 623(k) of the Communications Act of 1934, as amended by the Cable Television
Consumer Protection and Competition Act of 1992 (Cable Act),1 requires the Commission to publish
annually a statistical report on the average rates that cable operators2 charge for “basic cable service, other
cable programming,” and cable equipment.3 The Cable Act also requires the Commission to compare the
rates of cable operators subject to effective competition, as identified through specific adjudications, with
those of cable operators without an adjudicated finding of effective competition.4 This Report fulfills
those statutory directives and presents key findings for the 12 months ending January 1, 2011.5
1
Section 623(k) was adopted as Section 3(k) of the Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, codified at 47
U.S.C. § 543(k).
2
All averages in this report are weighted averages where the weight given to an individual cable operator depends
on the number of subscribers to the operator in that community. For the purpose of our report, a cable operator (or
operator) refers to an entity that operates a wireline system and is a multichannel video programming distributor
(MVPD) that makes available for purchase, by subscribers or customers, multiple channels of video programming.
See 47 C.F.R. § 76.905(d). In our report, the term cable operator includes operators of traditional coaxial and fiber
wireline cable systems, municipalities, and telephone companies, including Verizon FiOS. It does not include
MVPD operators of wireless systems, direct broadcast satellite (DBS), or AT&T U-verse, because these operators
are not associated with any FCC Community Unit Identifiers (CUID). The Commission assigns a CUID code to
each registered operator for each community that operator serves. See 47 C.F.R. § 76.1801.
3
The Cable Act requires operators to offer an entry-level basic service, which must include, at a minimum, all
commercial and noncommercial local broadcast stations entitled to carriage under the must-carry provisions of the
Communications Act of 1934, 47 U.S.C. §§ 534-35. Basic service must also offer any other local broadcast station
provided to any subscriber, as well as public, educational, and governmental access channels that the local franchise
authority (LFA) may require the operator to carry. See 47 U.S.C. § 543(b)(7). The term “cable programming
service” refers to a tier of video channels for which the operator charges a separate rate, other than the basic service
channels and channels for which per-channel or per-program charges apply. See 47 U.S.C. § 543(k)(l)(2). Cable
equipment refers to a converter box and other customer premises equipment used for accessing cable services. See
47 U.S.C. § 543(b)(3).
4
See 47 U.S.C. § 543(k)(1) (cross-referencing 47 U.S.C. § 543(a)(2)). Under the Cable Act, if the Commission
grants a finding of effective competition to an operator and the community it serves, that operator is not subject to
regulation of its basic service price. Such a finding requires the operator to meet one of four tests: (1) fewer than 30
percent of households subscribe to the operator’s cable programming service (low penetration test); (2) the operator
and at least one other MVPD offer comparable service to at least 50 percent of households and at least 15 percent of
households subscribe to such service other than from the largest MVPD (50/15 test); (3) a municipality offers
MVPD service to at least 50 percent of households (municipal test); or (4) a local exchange carrier (LEC) or its
affiliate, or an entity using the facilities of the LEC or its affiliate, offers MVPD service by means other than DBS
service in an area that an unaffiliated MVPD also serves (LEC test). See 47 C.F.R. § 76.905(b). The LFA may not
regulate the operator’s rate for basic cable service if the operator is deemed subject to effective competition, unless
the LFA seeks and the Commission grants recertification. See 47 U.S.C. §§ 543(a)(2); and 47 C.F.R. § 76.916(a).
As required by statute, the Commission does not take into consideration those communities that have not been
formally adjudged as being subject to effective competition. See 47 U.S.C. § 543(k)(1). Some communities,
however, may in fact face market competition sufficient to warrant a finding of effective competition but the
incumbent cable operator, for various reasons, has not petitioned the Commission for an effective competition
finding, or, if a petition was filed, it may be pending or may have been granted after the cut-off date for our survey.
For reasons discussed in note 10, infra, there may be a significant number of these communities included in our
noncompetitive sample, which could affect the results of our report. However, because we do not know which of
the noncompetitive communities in our sample actually face effective competition, we are unable to estimate any
potential impact on our findings.
5
The information in this report meets the Commission’s information quality guidelines. See Implementation of
Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility and Integrity of Information Pursuant to
Section 515 of Public Law No. 105-554, Information Quality Guidelines, 17 FCC Rcd 19890 (2002).
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DA 12-1322
2.
Average prices for all communities. The average monthly price of expanded basic
service (the combined price of basic service and the most subscribed cable programming service tier
excluding taxes, fees and equipment charges) for all communities surveyed increased by 5.4 percent over
the 12 months ending January 1, 2011, to $57.46, compared to an increase of 1.6 percent in the Consumer
Price Index (CPI). The price of expanded basic service increased at a compound average annual growth
rate of 6.1 percent during the period 1995-2011. The CPI increased at a compound average annual
growth rate of 2.4 percent over the same period. However, the price per channel (price divided by
number of channels) for subscribers purchasing expanded basic service decreased by 2.1 percent over the
12 months ending January 1, 2011, to 57 cents per channel. Over the 16 years from 1995-2011, the
increase in price per channel was less than 1 percent per year (0.9 percent) on an annual basis.6
3.
Average prices in communities with a finding of effective competition compared with
prices in noncompetitive communities. Over the 12 months ending January 1, 2011, the average price of
expanded basic service increased by 5.2 percent, to $56.82, for those operators serving communities for
which no effective competition finding was made as of January 1, 2011 (noncompetitive communities).
For the effective competition communities, the average price of expanded basic increased by 5.7 percent,
to $58.47. Over this period, price per channel declined by 0.4 percent in noncompetitive communities, to
58 cents per channel, and by 4.9 percent in effective competition communities, to 55 cents per channel.
The price per channel is 6.2 percent lower in effective competition communities than in noncompetitive
communities, which reflects that operators in effective competition communities carry more channels on
expanded basic service than in noncompetitive communities.
4.
As noted, the price of expanded basic service averaged across all effective competition
communities was higher than the price of expanded basic service averaged across noncompetitive
communities. The difference is statistically significant. The two previous surveys also found that the
price of expanded basic service in effective competition communities was higher than the price of
expanded basic in noncompetitive communities. Prior to that, surveys found that effective competition
communities in general had lower prices.7 As discussed further in Section III, several factors contributed
to this change of trend, including an increase in the number of communities where there has been a
finding of effective competition based on the DBS market share test.
5.
We next compare the expanded basic price in effective competition communities overall
($58.47) to subgroups of communities, as of January 1, 2011. Prices on average were 6.2 percent lower
than that average ($54.82) for incumbent cable operators in communities with a rival operator; less than
one percent higher ($58.86) for the rival operators; 2.1 percent higher ($59.67) when a finding was
granted based on the DBS market share meeting the 15 percent threshold established by the statute; and
one percent higher ($59.06) in the “other” subgroup of cable operators competing with a wireless MVPD
system or who met the low penetration test as a result of serving fewer than 30 percent of households.
II.
OVERVIEW OF THE SURVEY
6.
The information and analysis provided in this Report are based on the Commission’s
2011 survey of cable industry prices (survey).8 The survey requested data from a random sample of 800
6
To calculate 2010-2011 price changes, the survey sampled two years of data, rather than using the 2010 price from
the prior (2010) survey, so as not to introduce random sampling variance. For further explanation, See Appendix,
paragraph 9. Table 1 reports the 2011 price and annual change based on the 2011 survey. Table 3 reports the
historical price series based on price data from that survey year.
7
See Attachment 4 for citation to previous survey reports. As noted, the effective competition average price
exceeded the noncompetitive average price for the first time in the 2009 survey.
8
The Commission directed a randomly selected sample of cable operators to respond to a survey questionnaire that
requested data primarily as of January 1, 2010 and January 1, 2011. See Implementation of Section 3 of the Cable
Television Consumer Protection and Competition Act of 1992, Statistical Report on Average Prices for Basic
Service, Cable Programming Services, and Equipment, 26 FCC Rcd 10958 (2011).
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DA 12-1322
cable operators serving two groups of communities: (1) communities where operators have not been
found to meet one of the statutory tests for effective competition (noncompetitive communities); and (2)
communities where operators have been found to meet one of the statutory tests for effective competition
and, as a result, the cable operator serving that community is not subject to price regulation of its basic
service by the local franchise authority (effective competition communities).
7.
We surveyed operators serving 485 out of the 25,508 noncompetitive communities and
315 out of the 8,508 communities granted an effective competition finding pursuant to the statute. In
selecting cable operators for our sample from the group of effective competition communities, we relied
on the Commission’s formal findings of effective competition, which are based on the statutory definition
of effective competition in the Cable Act.9 Most of the effective competition cases that come before the
Commission are based on competition between a cable operator and a DBS provider. The remaining
effective competition cases are based on competition between a cable operator and a wireline or wireless
competitor, or are based on low subscriber penetration. Our list of effective competition communities
was limited to adjudicated findings of effective competition because the statute fails to take into account
those areas of the country where the conditions for a finding may be present (i.e., where sufficient marketbased competition may be present to warrant such a finding), but either no cable operator has petitioned
the Commission to make a finding of effective competition, or a petition has been filed with the
Commission but not granted as of the date our sample was drawn.10
8.
Brief Overview of Survey Methodology. The sample of cable operators granted a finding
of effective competition was selected from four subgroups according to the primary basis for the
finding.11 The first two subgroups are comprised of communities in which a second wireline operator’s
offerings provided the basis for the finding of effective competition. The first subgroup (Second Cable
Operator: Incumbent) consists of the incumbent operator in the community and the second subgroup
(Second Cable Operator: Rival) consists of the rival operator in the community. The incumbent is the
operator who provided service prior to the rival operator’s introduction to the market. Findings of
effective competition for this incumbent subgroup are on the basis of either (a) the 50/15 test resulting
from the presence of at least two MVPDs or (b) the local exchange carrier (LEC) test resulting from the
presence of at least two MVPDs, one of which is a LEC or an entity affiliated with or using the LEC’s
facilities. The third subgroup contains operators in communities in which a sufficient percentage of
households subscribed to DBS service to substantiate a finding of effective competition under the 50/15
test (DBS subgroup). The fourth subgroup consists of operators in communities that either (a) are in
range of a wireless operator who offers MVPD programming comparable to the cable operator’s offerings
or (b) met the low penetration test as a result of serving fewer than 30 percent of households in the service
area (Other Operators). All effective competition findings associated with a wireless MVPD to date have
been made under the LEC test, although the Commission could also make a finding of effective
competition based on the presence of a wireless MVPD under the 50/15 test, assuming the wireless
MVPD’s service met the requirements for that test.
9.
For each community selected for the sample, the operator serving that community was
asked to complete a questionnaire that included questions on the prices of basic cable service and other
9
See 47 U.S.C. § 543(a)(2).
10
We note that, due to the emergence of competing providers like Verizon, AT&T, WOW, and other wireline
competing providers, as well as DBS service, which is available nationwide and has a national penetration rate
greater than 15 percent, there may be many areas of the country where a competing provider exceeds the 15 percent
threshold set forth in the 50/15 test for effective competition, but the incumbent cable operator has not petitioned the
Commission for a finding of effective competition. See, 47 U.S.C. § 543(k).
11
These subgroups are designed to achieve desirable levels of statistical precision, and, thus, are not grouped
according to the four statutory tests for effective competition under Section 623(l) of the Cable Act. See Attachment
1 and the Appendix, Section A, for a more complete description of our sampling methodology.
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Federal Communications Commission
DA 12-1322
cable programming service offerings. We used the information collected to estimate and compare
average prices across the sample groups and subgroups. Basic service consists of the local broadcast
stations; public, educational, and governmental access channels12; and typically a few additional channels
that may be of local, regional, national, or international origin. Subscribers purchase basic service as a
prerequisite to subscribing to expanded basic.13 The survey focused on expanded basic service, which
consists of the basic service channels plus a large number of popular national cable networks. Expanded
basic service is generally the most-subscribed-to level of service after basic service. We also collected
information on the price of the “next most popular” (next most subscribed) service after expanded basic.
This next most popular service package generally includes all the programming channels included in the
expanded basic service package and at least seven additional cable network channels. As of January 1,
2011, 85 percent of subscribers took at least expanded basic service, and 15 percent took basic service
only.14 In addition, 47 percent of subscribers on average took the next most popular programming
service. Survey respondents reported prices as of January 1, 2010 and January 1, 2011, permitting us to
calculate the annual percentage changes for the year ending January 1, 2011. We calculated averages for
each survey question by subgroup, by the larger sample groups, and for communities overall.
10.
Accuracy and Reliability Review. We have taken a number of steps to ensure the
accuracy and reliability of the raw data upon which this report is based. Several of these steps were
introduced beginning with the 2009 survey and go beyond the practices implemented in prior years. Our
survey is fully Internet-based, which means we provide it to respondents on the Commission’s Internet
site and the questionnaires are completed and submitted to us on that site. Many of the questions have
built-in checks for reasonableness, which prompt the respondents to re-check their answers as they are
completing the survey if those answers fall outside of a predetermined “range of reasonableness” based
on our experience with prior price surveys. A second responsible party within each cable operator's
company (other than the person who completed the survey) is asked to certify the completeness and
accuracy of that company's responses. After receiving the submitted surveys, we examine all responses
using a computer program designed specifically to identify observations with apparent inaccuracies.
When a particular response is found to lie outside of its statistically expected reasonable range or is
inconsistent with the answers to other questions in the questionnaire, the computer program flags that
response and we contact the cable operator and ask that operator to re-check the flagged response and
make corrections if needed.15
III.
SURVEY RESULTS
11.
In recent surveys, the number of cable operators and communities where effective
competition was found has substantially increased, influencing the comparisons contained in this Report.
12
See, e.g., 47 U.S.C. § 543(b)(7).
13
See, e.g., 47 U.S.C. § 543(b)(7).
14
This 85 percent includes subscribers whose operators do not offer a separate expanded basic service tier but
instead offer a basic service tier that includes many of the popular national networks typically associated with
expanded basic. All operators are required to offer a basic service tier that includes, at a minimum, those channels
prescribed by statute, but the statute does not require operators to offer a separate tier of cable programming service,
i.e., an offering that includes both the basic service tier and other cable programming. See 47 U.S.C. § 543(k).
When an operator offers both a basic service tier and a separate expanded basic service tier, we refer to the basic
service, for purposes of this survey, as “limited basic.” Survey results indicate that less than three percent of
subscribers receive basic service from operators that do not also offer a separate expanded basic service, i.e., from
operators that do not offer a “limited basic” service.
15
The percentage of survey responses that requires follow-up inquiries varies over time based on such factors as the
familiarity of the respondents with the survey, the complexity of the questions, and introduction of new questions to
the survey instrument. For the purposes of the 2011 survey, we contacted approximately 15 percent of the survey
respondents with follow-up inquiries. Each operator replied with a data correction or reasonable explanation of why
a particular response was plausible.
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Federal Communications Commission
DA 12-1322
Most of these new findings occurred on the basis of DBS market share. Communities in the DBS
subgroup equaled 5,987 for the 2011 survey and accounted for 65 percent of cable subscribers in
communities with an effective competition finding. Communities where the incumbent operator was
found to face effective competition as a result of the presence of a second operator reached 756 in 2011,
and now account for 24 percent of subscribers in communities with an effective competition finding.
A.
Cable Programming Services
12.
Table 1 reports the average price of basic, expanded basic, and the next most popular
service (which we defined for purposes of the survey to include at least seven additional channels) as of
January 1, 2011.16 It also shows the average price per channel for expanded basic service.17 Further,
Table 1 reports the annual percentage change in price, for the year ending January 1, 2011, for the sample
overall, for the noncompetitive group and the effective competition group and subgroups. Looking at the
averages in the Overall column, the price was $19.33 for basic service (7.1 percent increase), $57.46 for
expanded basic service (5.4 percent increase) and $70.79 for the next most popular service (4.7 percent
increase). The price per channel was 57 cents (2.1 percent decrease) for expanded basic service.
Table 1
Monthly Price and Price Per Channel
January 1, 2011
Cable
Programming
Service
Effective Competition Subgroups
Non
Overall competSecond Cable Operator
Group
DBS
itive
Incumbent Rival
Both
Other
$19.33
$19.46
$19.13
$18.17
$16.58
$17.94
$19.33
$21.57
7.1%*
6.1%*
8.7%*
9.9%*
3.2%*
9.0%*
8.6%*
8.3%*
$57.46
$56.82
$58.47
$54.82
$58.86
$55.42
$59.67
$59.06
5.4%*
5.2%*
5.7%*
4.5%*
20.9%*
6.8%*
5.4%*
5.1%*
Next most popular
$70.79
$70.70
$70.93
$67.75
$71.51
$68.30
$71.91
$71.86
Annual change
4.7%*
4.7%*
4.7%*
3.5%*
17.2%*
5.4%*
4.4%*
4.4%*
Expanded basic
price per channel
$0.57
$0.58
$0.55
$0.52
$0.57
$0.53*
$0.56
$0.54
Annual change
-2.1%
-0.4%
-4.9%
-6.6%*
21.4%*
-3.0%
-6.0%*
-1.5%
Basic service
Annual change
Expanded basic
Annual change
Source: Attachment 2. * Indicates a statistically significant annual change in price.
13.
Table 2 reports the price differentials between the effective competition group overall
and subgroups compared to the noncompetitive group. Overall, for expanded basic service, the effective
competition price is higher by 2.9 percent compared to the noncompetitive group average. (An asterisk *
indicates a statistically significant differential.) One reason for this overall higher price is that price for
16
Except for price per channel, as explained in note 17, infra, data in this table does not include prices for customer
premises equipment unless the operator bundles the programming service and equipment in a single price.
Attachment 2 reports the price of programming, including equipment, for all operators.
17
Price per channel adjusts the expanded basic programming price to incorporate differences in terms of the number
of channels the subscriber receives. It equals the expanded basic programming price plus the price of the most
commonly leased equipment divided by the number of expanded basic channels including channels which may
require a converter box or other digital gateway equipment to be received.
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Federal Communications Commission
DA 12-1322
expanded basic service in the DBS subgroup is significantly higher, by 5.0 percent, compared to the
noncompetitive average.18 Further, in contrast to price increases prior to 2009, expanded basic prices are
growing fastest in the effective competition communities, at 5.7 percent over the 12 months ending
January 1, 2011, compared to 5.2 percent annual growth in noncompetitive communities (shown in Table
1). Price per channel however is significantly lower, by 6.2 percent, in the effective competition
communities. For the other two services in Table 2, the average price differentials for basic service (1.7
percent lower) and the next most popular service (0.3 percent higher) are not significantly different from
the average price in the noncompetitive group. At the subgroup level, some price differentials for cable
services are significantly different. In the Second Cable Operator subgroup, the price incumbents offer on
average is significantly lower for both basic (6.6 percent lower) and the next most popular service (4.2
percent lower). Rivals offer a significantly lower basic service price (14.8 percent lower) though the
expanded basic and next most popular service prices are only insignificantly different from operators in
noncompetitive communities. In the Other subgroup, the price of both basic service and expanded basic
are significantly higher, by 10.9 percent and 3.9 percent respectively, than for the operators in
noncompetitive communities. Finally, on a per channel basis for expanded basic service, the price per
channel is significantly lower for incumbents in the second cable operator subgroup reflecting the carriage
of more channels than operators in the noncompetitive group.
Table 2
Price Differentials of Effective Competition Subgroups
in Comparison to Noncompetitive Price Averages
January 1, 2011
Cable
Programming
Service
Basic service
Expanded basic
Next most popular
Price per channel
Effective
Competition
Group
-1.7%
2.9%*
0.3%
-6.2%*
Second Cable Operator Subgroup
Incumbent
Rival
Both
-6.6%*
-3.5%
-4.2%*
-10.9%*
-14.8%*
3.6%
1.1%
-2.1%
-7.8%*
-2.5%
-3.4%*
-9.6%*
DBS
Subgroup
Other
Subgroup
-0.6%
5.0%*
1.7%
-4.7%
10.9%*
3.9%*
1.6%
-7.5%
Source: Attachment 2. * Indicates a statistically significant difference from the noncompetitive price.
14.
Table 3 shows that the average price of expanded basic service grew at a compound
annual rate of 6.1 percent over the 16-year period from 1995-2011, higher than the annual 2011 increase
of 5.4 percent shown in Table 1.19 Over the 16-year period, the number of channels offered with
expanded basic service grew annually at 5.0 percent, and price per channel grew by less than one percent
(0.9 percent) on an annual basis.20 For comparison, the CPI for All Items published by the Bureau of
18
The DBS subgroup constitutes about two-thirds of all effective competition findings and thus has considerable
weight. Note that the survey does not include DBS prices but rather the prices that cable operators charge in areas
where an effective competition finding was made on the basis of DBS market share. See note 2, supra.
19
The prices in Table 3 in each year are taken from the survey for that year. Because of the random variance of
survey samples from year to year, the “starting rate” will not necessarily match the “ending rate” from the prior
year’s survey. For example, the 2010 prices in Table 3 were obtained from the sample communities included in the
2010 survey and do not exactly match the 2010 prices reflected in the 2011 survey shown in Attachment 2 because
the sample communities included in the 2011 survey may be different than those in the 2010 survey and may have
had different 2010 rates. For this same reason, the 2009 prices in Table 3 do not exactly match 2009 prices reflected
in the 2010 survey, and so on for each year reported in Table 3.
20
In Table 3, 2010 is the start of a new data series for channels and price per channel, reflecting the change to the
survey questionnaire. The difference between the 2009 and 2010 number of channels results in part from the
(Continued….)
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DA 12-1322
Labor Statistics (BLS) as a measure of general price inflation grew annually at 2.4 percent over the 16
years. BLS also publishes a CPI for Cable, Satellite, and Radio Services, which grew annually at 4.1
percent over the 16 years.21
Table 3
Historical Averages
1995-2011
Expanded Basic Service
Number of
Price Per
Channels
Channel
Nbr.
Index
($)
Index
Next
Most
Popular
Service*
All
Items
Cable
100.0
101.7
105.0
108.3
108.3
110.0
100.0
110.0
108.3
110.0
103.3
108.3
111.7
113.3
118.3
109.7
------$38.58
$38.43
$39.64
$45.33
$46.59
$49.03
$51.76
$56.03
$59.09
$60.27
$63.66
$67.92
$71.39
100.0
103.0
105.2
107.0
109.3
113.3
116.4
118.1
120.9
123.2
126.9
131.9
134.7
140.4
140.5
144.2
100.0
106.9
114.9
122.6
127.0
132.9
139.1
147.8
154.7
160.7
167.0
171.8
176.4
181.1
183.7
189.1
$0.57
115.9
$75.37
146.5
189.1
117%
---
16%
47%
89%
5.0%
---
0.9%
2.4%
4.1%
Basic
Service
Price
Price
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
------$12.06
$12.58
$12.84
$12.84
$14.45
$13.45
$13.80
$14.30
$14.59
$15.33
$16.11
$17.65
$17.93
$22.35
$24.28
$26.31
$27.88
$28.94
$31.22
$33.75
$36.47
$38.95
$41.04
$43.04
$45.26
$47.27
$49.65
$52.37
$54.44
44
47
49
50
51
55
59
63
68
70
71
71
73
73
78
117
100.0
106.8
112.3
113.9
116.1
124.5
135.0
142.5
153.4
159.8
160.2
161.4
165.0
165.5
177.7
204.6
$0.60
$0.61
$0.63
$0.65
$0.65
$0.66
$0.60
$0.66
$0.65
$0.66
$0.62
$0.65
$0.67
$0.68
$0.71
$0.56
2011
$19.33
$57.46
124
217.2
157%
---
6.1%
---
Year
1995-2011 change
Average annual **
--3.7%
--5.3%
CPI
Source: Attachment 4. * Price includes equipment. ** 1995-2011 compound average annual growth rate.
15.
The survey also collects data on a “family-friendly” package of channels specifically
marketed as a substitute for expanded basic. A number of operators offer such a programming service as
an alternative targeted toward subscribers who may object to some of the programming on expanded
basic. Survey responses show that the typical family package offers fewer channels than expanded basic
and requires a converter or other digital gateway. Some operators bundle the digital equipment with the
family-friendly package, while in other cases it is leased separately. Typically, the family-friendly
package includes basic service and some, but not all, of the channels included in expanded basic service.
It also includes some channels included in the next most popular service or other programming service
(Continued from previous page)
difference in the set of channels surveyed. The price per channel index in Table 3 adjusts for this difference in order
to accurately measure the percent change in the number of channels between 2009 and 2010. See the Appendix,
Section C, for a more complete explanation.
21
Because it covers a different mix of services and is adjusted for change in the number of programming channels,
the Cable, Satellite, and Radio CPI cannot be compared directly with the change in cable prices in our survey.
8
Federal Communications Commission
DA 12-1322
package. Operators offered an average of 65 channels with a family-friendly package, compared to 44
channels for basic service and 124 channels for expanded basic service. While 44 percent of subscribers
had the option to elect a family-friendly package, as of January 1, 2011, less than one percent subscribed,
the others electing to take basic service or expanded basic service. While this low percentage likely
reflects a number of factors, the data indicate that family-friendly packages generally lack sports
programming (e.g. ESPN) and thus many families may not consider it to be a viable alternative to
expanded basic service. On average, expanded basic service packages offered 2.1 channels devoted to
regional sports networks,22 and family-friendly packages included 0.3 channels devoted to regional sports
networks. As of January 1, 2011, the average price for a family-friendly package, including the additional
price of equipment if not included with the package, was $36.41, which fell between the average for basic
service ($19.33) and expanded basic service ($57.46).
B.
Cable Programming Channels
16.
Table 4 shows the average number of video channels offered, the annual percentage
change in the number of video channels offered over the previous 12 months, and whether the percent
change is statistically significant (indicated with an asterisk *). Channels shown under expanded basic
include all basic service channels. The next most popular service package includes expanded basic
channels plus at least seven additional channels.23 Overall, the number of channels average 44, 124, and
201, respectively, for basic service, expanded basic service, and the next most popular service. The
average number of video channels for all services is 366, which consists of the channels shown with
basic, expanded basic, the next most popular package, other non-premium and premium packages, and
pay and per-per-view programming services. The number of channels offered with each level of service
grew year-over-year at least 7 percent. Looking at effective competition subgroups, the number of
channels in almost all subgroups and services are significantly higher than in the noncompetitive group
counterparts.
Table 4
Video Programming Channels
January 1, 2011
Cable
Programming
Service
Basic service
Annual change
Expanded basic
Annual change
Next most popular
Annual change
All services
Annual change
Overall
Non
competitive
Effective Competition Subgroups
Second Cable Operator
DBS
Incumbent
Rival
Both
56
41
54
48
Group
44
41
49
9.1%*
7.1%*
12.1%*
15.8%*
8.0%*
14.8%*
11.2%*
Other
43
8.8%*
124
120
130
130
133
131
130
130
9.0%*
7.8%*
10.8%*
10.5%*
-18.8%*
4.8%
13.7%*
9.9%*
201
192
214
208
215
209
217
207
7.1%*
6.1%*
8.6%*
6.5%*
1.6%*
5.8%*
9.9%*
7.9%*
366
335
416
437
414
434
412
390
8.5%*
7.9%*
9.6%*
6.6%*
-2.6%
5.2%*
11.7%*
8.9%*
Source: Attachment 3. * Indicates a statistically significant annual change.
22
Regional sports networks are defined in paragraph 18, below.
23
The survey asks respondents to provide the maximum number of video channels, including those which require
customer premises equipment to view. These video channels include local broadcast (including all viewing formats
and both main channel and multicast channels); public, educational, and governmental; commercial leased access;
other non-premium; video on demand offering free content; and other channels if offered at no extra programming
charge. The numbers do not include audio only channels.
9
Federal Communications Commission
DA 12-1322
17.
Table 5 displays basic service broken into its component channel categories, which vary
only by a few channels between effective competition and noncompetitive communities. The categories
are local broadcast; public, educational, and governmental (PEG) access; commercial leased access; nonpremium regional sports networks; and other non-premium channels.
Table 5
Basic Service Channels
January 1, 2011
Effective Competition Subgroups
Second Cable Operator
DBS
Incumbent Rival Both
Channel Category
Overall
Non
competitive
Analog & SD digital
HD digital versions
Multicast channels
All local broadcast
PEG
Leased access
Regional sports
Other
13.0
3.6
8.2
24.8
3.2
0.9
0.3
14.8
12.4
3.5
7.3
23.1
3.0
0.7
0.2
13.9
14.0
3.9
9.6
27.6
3.5
1.2
0.4
16.3
13.8
4.1
12.8
30.6
4.3
1.5
0.6
18.7
13.7
5.4
9.5
28.6
4.6
0.5
0.1
7.7
13.8
4.3
12.3
30.3
4.3
1.3
0.5
17.1
14.0
3.8
8.4
26.3
3.2
1.1
0.3
16.8
14.9
3.6
10.2
28.8
3.3
1.2
0.0
10.0
Total
43.9
40.8
48.9
55.7
41.5
53.6
47.7
43.3
Group
Other
Source: Survey.
18.
Table 6 reports the number of regional sports networks (RSNs) included in service
offerings. Overall, the average is 0.3 RSN channels on basic service, 2.1 channels on expanded basic
service, and 2.3 on the next most popular service package. A regional sports network in this report is
defined as a channel that carries a substantial number of live games from at least one nearby professional
sports team that is a member of the National Football League, Major League Baseball, the National
Basketball Association, or the National Hockey League. It does not include pay-per-view events.
Table 6
Regional Sports Networks
January 1, 2011
Cable
Programming
Service
Overall
Non
competitive
Group
Basic
Expanded basic
Next most popular
0.3
2.1
2.3
0.2
1.9
2.2
0.4
2.3
2.4
Source: Survey.
10
Effective Competition Subgroups
Second Cable Operator
DBS
Incumbent Rival Both
0.6
2.8
2.9
0.1
4.6
5.1
0.5
3.1
3.2
0.3
2.0
2.1
Other
0.0
2.9
2.9
Federal Communications Commission
C.
DA 12-1322
Customer Premises Equipment
19.
The survey asked cable operators if subscribers would need equipment to view all or
some channels when purchasing each programming service. Such equipment can include, for example, a
converter set-top box to enable consumers to view digital signals on analog TVs, or a high definition
(HD) converter that allows consumers to view HD channels in HD format. If respondents answered in the
affirmative, the survey asked operators to report the extra monthly fee required to lease the most
commonly-leased equipment for this purpose. Operators were also asked to identify the equipment
features, such as an interactive programming guide. Table 7 shows that, as of January 1, 2011, the
average equipment price was $4.98 with basic service, $7.12 with expanded basic service, and $7.46 with
the next most popular service package.24 Most equipment prices increased on an annual basis. The
overall price increase for the most commonly leased equipment with expanded basic service was 4.6
percent. This is lower than the expanded basic programming price increase of 5.4 percent (shown in
Table 1). The overall equipment price increases for basic service (0.7 percent) and the next most popular
services (1.9 percent) were lower than the programming price increases for those services (7.1 percent
and 4.7 percent, respectively). Finally, we note that equipment may change from year to year and thus the
comparison of equipment prices to some extent may reflect quality change.
Table 7
Customer Premises Equipment Prices
Most Commonly Leased Equipment*
January 1, 2011
Cable
Programming
Service
Effective Competition Subgroups
Second Cable Operator
DBS
Incumbent Rival Both
Overall
Non
competitive
Group
Basic service
$4.98
$4.76
$5.29
$6.16
$6.59
$6.21
$5.05
$4.06
Annual change
0.7%
1.8%
-0.4%
-0.6%
-0.7%
-0.6%
-0.1%
-2.0%
Expanded basic
$7.12
$7.05
$7.22
$7.06
$9.41
$7.42
$7.29
$5.70
Annual change
4.6%
5.4%
3.7%
4.4%
-0.1%
3.7%
3.8%
3.3%
Next most popular
$7.46
$7.21
$7.78
$7.42
$9.36
$7.69
$7.82
$7.82
Annual change
1.9%
2.8%
0.9%
-0.1%
0.3%
-0.1%
1.2%
3.1%
Other
Source: Attachment 6. * Set-top converter box or other digital service gateway.
20.
Table 8 identifies equipment features and the percent of cable systems in which the most
commonly leased customer premises equipment includes one or more of the following features: a remote
control unit (RCU), an interactive programming guide (IPG), HD video capability, or a digital video
recorder (DVR). For customers purchasing basic service only, 91 percent of systems offer a RCU. The
most commonly leased equipment for 87 percent of systems include an interactive programming guide;
for 35 percent of systems, the most commonly leased equipment includes HD video capability; and for 19
percent of systems, the most commonly leased equipment includes a DVR. Percentages are similar
across all three services.
24
An equipment price is not included in the average price of equipment if the respondent stated that the price of
programming already includes equipment or that equipment is unnecessary to view all or some of the channels.
11
Federal Communications Commission
DA 12-1322
Table 8
Equipment Features Offered by Cable Systems
Most Commonly Leased Customer Premises Equipment
January 1, 2011
Cable
Programming
Service
Basic service
Expanded
basic service
Next most
popular
service
Feature
DVR
HD
IPG
RCU
DVR
HD
IPG
RCU
DVR
HD
IPG
RCU
Overall
Non
competitive
19%
35%
87%
91%
20%
40%
88%
93%
24%
43%
95%
93%
15%
29%
86%
90%
16%
35%
87%
90%
19%
37%
93%
89%
Effective Competition Subgroups
Second Cable Operator
Group
DBS Other
Incumbent Rival Both
26%
45%
89%
92%
26%
47%
88%
97%
30%
53%
99%
98%
55%
72%
96%
95%
53%
71%
94%
98%
55%
74%
100%
100%
0%
30%
96%
85%
2%
84%
98%
90%
4%
78%
98%
89%
47%
66%
96%
93%
45%
73%
95%
97%
48%
75%
100%
98%
19%
38%
88%
92%
20%
40%
87%
97%
25%
45%
99%
98%
15%
25%
78%
92%
16%
25%
78%
95%
18%
42%
96%
98%
Source: Survey.
D.
DTV Viewability
21.
The survey asked respondents to identify the scenario which best describes how signals
sent from local broadcast stations are processed at the cable system headend and transmitted from there to
subscriber premises as of January 1, 2011.25 All operators in our survey responded that cable system
headend equipment was in place to receive analog and digital broadcast signals. There are several
scenarios that operators use to format those signals and transmit the signals to customer premises for
viewing in analog, standard definition (SD) or HD digital formats. The tables below report the percentage
of subscribers on average whose cable system operates under each scenario. Table 9 provides this
information by sample group and Table 10 by subscriber size of the cable system.
22.
Figures shown in the Overall column for all sample groups in Table 9 show that 83
percent of households (or other subscriber premises) received analog, SD, and HD signals over three
separate transmission paths for viewing by analog, SD, and HD customers, respectively. Seven percent
received signals over all-digital systems with HD and SD capability where the HD and SD signals are
25
Under the Communications Act, cable operators are required to ensure that subscribers with analog television sets
can continue to view all must-carry stations after the end of the digital television transition. See 47 U.S.C. §
534(b)(7) (must-carry signals “shall be viewable via cable on all television receivers of a subscriber which are
connected to a cable system by a cable operator or for which a cable operator provides a connection”). The survey
included questions which addressed viewing capability. We note that under our recently adopted viewability order,
cable operators of a hybrid system (i.e., a system that offers both analog and digital cable service to its subscribers)
may comply with the statutory viewability requirement either by choosing to down-convert digital must-carry
stations to analog format in addition to carrying those stations in digital format. Alternatively, after December 12,
2012, a hybrid cable operator may make must-carry signals available to analog subscribers by offering the necessary
equipment for sale or lease, either for free or at an affordable cost that does not substantially deter the use of the
equipment. See Digital Television Broadcast Signals: Amendment to Part 76 of the Commission’s Rules, Fifth
Report and Order, CS Docket 98-120, FCC 12-59 (rel. June 12, 2012).
12
Federal Communications Commission
DA 12-1322
either sent separately or on the same transmission path. If there is a single transmission path, a signal
transmitted in HD format is converted to SD format and then from SD to analog format, using customer
premises equipment, for viewing by SD digital and analog television customers, respectively. Four
percent of subscribers received signals over separate analog and digital transmission paths. Four percent
of subscribers received signals over an analog-only system. Two percent received signals over SD
digital-only systems. In the SD digital-only scenario, customer premises equipment converts the SD
signals to analog format for viewing by analog television customers.
Table 9
Path of Local Broadcast Signals
Percent of Subscribers by Scenario
January 1, 2011
Path of Signal
Cable System Headend to
Residential Premises and
Customer Premises Equipment
Overall
Effective Competition Subgroups
Non
competSecond Cable Operator
DBS Other
Group
itive
Incumbent
Rival
Both
Separate analog/SD/HD paths
HD/SD path(s). CPE converts
from HD to SD / SD to analog
Separate analog/digital paths
CPE converts from HD to SD
83%
78%
92%
92%
34%
83%
96%
93%
7%
8%
4%
8%
50%
14%
0%
0%
4%
6%
1%
0%
16%
2%
0%
2%
Analog path and viewing only
SD path. CPE converts from
SD to analog for analog TV
4%
5%
2%
0%
0%
0%
3%
4%
2%
3%
1%
0%
0%
0%
1%
0%
Source: Survey. Scenarios may not add to 100% due to rounding.
23. Table 10 displays the signal transmission path percentages arranged by cable system size.
Looking at the scenario for three separate analog/SD/HD paths, the percent of subscribers whose system
had this architecture ranged from 83 percent of large systems to 21 percent of very small systems. A
range from three percent to nine percent of the total number of systems surveyed were HD/SD digital
systems with no analog path. Systems transmitting over separate analog and digital paths ranged from 21
percent of very small systems to three percent of large and very large systems. Analog-only architectures
ranged from one percent of large systems to 55 percent of very small systems. SD digital only systems
ranged from zero to four percent by system size.
Table 10
Path of Local Broadcast Signals
Percent of Subscribers by Cable System Size
January 1, 2011
Path of Signal
Cable System Headend to
Residential Premises
Analog/SD/HD
HD/SD digital
Analog/digital
Analog only
SD digital only
paths
path(s)
paths
path
path
Very Large
Subscriber Size of Cable System
Large
Medium
Small
Very
Over 75,000
25,001-50,000
10,001-25,000
1,001-10,000
Up to 1,000
83%
9%
3%
2%
2%
84%
8%
3%
1%
4%
75%
8%
9%
6%
3%
57%
9%
13%
18%
3%
21%
3%
21%
55%
0%
Source: Survey. Scenarios may not add to 100% due to rounding.
13
Federal Communications Commission
DA 12-1322
24.
Table 11 reports the average number of local broadcast channels by carriage election
(either retransmission consent or must carry) and by channel viewing format (either analog, SD, or HD).
The channels counted consist of main signals and simulcasts of the main signal on separate analog, SD, or
HD channels. The counts do not include multicast signals. Table 11 shows the difference in the overall
average of the number of channels carried via retransmission consent (7.0) compared to must carry (9.7).
More analog and SD channels were must-carry channels (7.9) than retransmission consent (5.2), and the
average number of HD channels carried via retransmission consent and must carry was the same (1.8).
Table 11
Average Number of Local Broadcast Channels
By Carriage Election and Channel Format
January 1, 2011
Cable
Programming
Service
Viewing
Format
Overall
Non
competitive
Effective Competition Subgroups
Group
Second Cable Operator
Incumbent
Rival
Both
DBS
Other
Retransmission Analog/SD
HD digital
consent
Total
5.2
1.8
7.0
5.1
1.7
6.8
5.3
2.0
7.3
4.6
1.7
6.3
5.1
3.2
8.3
4.7
1.9
6.6
5.5
2.0
7.5
6.0
2.0
8.0
Analog/SD
HD digital
Total
7.9
1.8
9.7
7.3
1.8
9.1
8.7
1.9
10.7
9.2
2.4
11.5
8.6
2.2
10.8
9.1
2.3
11.4
8.6
1.8
10.4
9.0
1.6
10.6
Must carry
Source: Survey.
IV.
CONCLUSION
25.
Expanded basic cable prices increased by 5.4 percent for the 12 months ending January
1, 2011, and at a compound average annual rate of 6.1 percent over the 16-year period from 1995-2011.
This compares to a 1.6 percent increase in general inflation as measured by the CPI (All Items) for the
same one-year period, and a 2.4 percent compound average for the CPI over the 16-year period.
Compared to the average price cable operators charged in noncompetitive communities, prices on January
1, 2011 were four percent higher for rival operators and three percent lower for the incumbents in
communities with at least two cable operators. Prices of cable operators were five percent higher in the
areas where effective competition determinations were granted based on the existence of a DBS market
share exceeding the 15 percent threshold established by the statutes. On a per channel basis, the average
price per channel (programming price divided by number of channels) of expanded basic service has
grown by 0.9 percent on an annual basis over the last 16 years. The price per channel averages six
percent lower in effective competition communities overall compared to prices in noncompetitive
communities, and two percent lower in the subgroup of rival operators where there are at least two cable
operators, reflecting that cable operators in effective competition communities carry more channels on
expanded basic than operators in noncompetitive communities.
14
Federal Communications Commission
V.
DA 12-1322
ORDERING CLAUSE
26.
IT IS ORDERED that this Report be issued pursuant to authority contained in Section
623(k) of the Communications Act of 1934, as amended, 47 U.S.C. § 543(k).
FEDERAL COMMUNICATIONS COMMISSION
William T. Lake
Chief, Media Bureau
15
Federal Communications Commission
DA 12-1322
Attachment 1
2011 Survey
Sample Groups
and Subgroups *
Cable
Communities
Percent of
Sample
Sample
National
Size
Responses
Subscribers
25,508
61.49%
485
475
8,508
38.51%
315
315
34,016
100%
800
790
1. Very large ( subscribers >75,000)
6,771
26.89%
149
149
2. Large
(25,001 - 75,000)
4,982
16.23%
118
117
3. Medium
(10,001 - 25,000)
4,482
8.70%
80
79
4. Small
(1,001 - 10,000)
6,019
8.30%
98
92
5. Very small
(1,000 or fewer)
3,254
1.37%
40
38
Presence of second cable operator **
- Incumbent operator in the locale
756
9.10%
56
56
- Rival operator in the same locale
478
1.41%
56
56
5,987
25.02%
163
163
1,287
2.98%
40
40
Noncompetitive Group
Effective Competition Group
Overall
Noncompetitive Subgroups
Stratified by cable system size
Effective Competitive Subgroups
Stratified on the basis of the finding of effective
competition for the cable operator and community
DBS market share at or above 15% threshold
In range of wireless MVPD or cable operator’s
market share below 30% (low-penetration test)
Sources: FCC Form 322, Cable Community Registration, 47 C.F.R § 76.1801; FCC Form 325, Annual Cable
Operator Report, 47 C.F.R § 76.403; and Commission findings pursuant to 47 U.S.C. §543(a)(2).
* The Commission assigns a community unit identifier (CUID) to each cable operator for each community the
operator serves. Noncompetitive communities are those for which the Commission had not made a finding of
effective competition as of January 1, 2011 and effective competition communities are those for which the
Commission had made such a finding. The Appendix further discusses the survey groups and subgroups.
** There are fewer rivals (478) than incumbents (756) in the second cable operator subgroup mainly because the
rival group does not include AT&T U-verse since these systems are not associated with a CUID. The Commission
however considers AT&T U-Verse to be a rival cable operator for purposes of findings of effective competition for
incumbent operators. Similarly, the DBS market share subgroup consists of cable operators with a finding made on
the basis of DBS market share, however, this subgroup does not include the DBS operators.
16
Federal Communications Commission
DA 12-1322
Attachment 2
Price Averages
January 1, 2011
Cable
Programming
Service
Overall
Average
Non
competitive
Effective Competition Subgroups
Second Cable Operator
Group
Incumbent
Rival
Both
DBS
Other
Programming Price
$19.33
$19.46
$19.13
$18.17
$16.58
$17.94
$19.33
$21.57
Standard error
0.23
0.33
0.28
0.41
0.78
0.37
0.40
0.56
Prior year
Standard error
$18.05
$18.34
$17.60
$16.53
$16.06
$16.46
$17.80
$19.92
0.23
0.33
0.28
0.39
0.72
0.35
0.40
0.55
Expanded basic
$57.46
$56.82
$58.47
$54.82
$58.86
$55.42
$59.67
$59.06
Standard error
0.27
0.36
0.39
1.06
1.16
0.92
0.44
0.87
Prior year
Standard error
$54.51
$54.01
$55.30
$52.47
$48.68
$51.91
$56.62
$56.21
0.26
0.36
0.37
0.95
0.79
0.82
0.45
0.75
Next most popular
Basic service price
$70.79
$70.70
$70.93
$67.75
$71.51
$68.30
$71.91
$71.86
Standard error
0.33
0.43
0.52
0.97
1.08
0.84
0.70
1.00
Prior year
Standard Error
$67.63
$67.54
$67.76
$65.43
$61.00
$64.78
$68.89
$68.82
0.32
0.43
0.48
0.92
1.03
0.80
0.65
0.88
Programming and Equipment *
Basic service
$23.23
$22.99
$23.62
$23.52
$21.63
$23.24
$23.59
$25.18
Annual change
5.8%
5.4%
6.6%
7.3%
2.3%
6.6%
6.5%
6.7%
$61.47
$60.47
$63.08
$60.26
$66.39
$61.17
$63.97
$62.37
5.2%
5.2%
5.2%
3.9%
17.7%
5.9%
5.0%
5.0%
$75.37
$74.89
$76.10
$74.08
$79.08
$74.82
$76.72
$75.39
4.5%
4.6%
4.4%
3.2%
15.1%
4.9%
4.2%
4.4%
Expanded basic
Annual change
Next most popular
Annual change
Price per Channel
$0.569
$0.583
$0.547
$0.520
$0.571
$0.528
$0.556
$0.540
Standard error
0.009
0.011
0.014
0.023
0.026
0.020
0.019
0.037
Prior year
Standard error
$0.581
$0.586
$0.575
$0.557
$0.470
$0.544
$0.591
$0.548
0.008
0.011
0.013
0.023
0.032
0.020
0.018
0.032
Expanded basic
Source: Survey. Averages are subscriber weighted means.
* Along with the programming price, if the survey respondent’s programming price did not include customer
premises equipment, this measure adds the price of the most commonly leased equipment.
17
Federal Communications Commission
DA 12-1322
Attachment 3
Channel Averages
January 1, 2011
Cable
Programming
Service
Overall
Average
Effective Competition Subgroups
Non
competitive
Group
Second Cable Operator
Incumb
-ent
Rival
Both
DBS
Other
Basic service
43.9
40.8
48.9
55.7
41.5
53.6
47.7
43.3
Standard error
0.7
0.9
1.1
2.0
2.6
1.7
1.6
1.7
40.3
38.1
43.7
48.1
38.4
46.7
42.9
39.8
0.6
0.8
1.0
1.4
2.3
1.3
1.5
1.6
124.2
120.4
130.2
130.3
133.1
130.7
129.9
130.1
1.5
2.0
2.3
4.8
6.4
4.2
3.0
4.7
114.0
111.7
117.4
117.9
163.8
124.7
114.3
118.4
1.4
1.8
2.0
4.4
10.7
4.1
2.5
3.6
200.6
191.8
213.9
208.2
214.9
209.2
216.8
206.6
2.3
3.1
3.5
5.7
8.0
5.0
4.8
7.7
187.3
180.7
197.0
195.4
211.6
197.8
197.3
191.5
Standard error
2.1
2.7
3.2
5.3
8.5
4.7
4.4
6.0
All services
366.1
334.9
415.9
437.0
413.6
433.5
411.7
390.2
Standard error
3.7
4.7
5.8
10.7
20.0
9.5
7.8
14.3
337.4
310.5
379.6
409.8
424.6
412.0
368.5
358.5
3.6
4.7
5.5
10.2
22.4
9.3
7.4
12.1
Prior year
Standard error
Expanded basic
Standard error
Prior year
Standard error
Next most popular
Standard error
Prior year
Prior year
Standard error
Source: Survey. Averages are subscriber weighted means.
18
Federal Communications Commission
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Attachment 4
Historical Averages
1995-2011
CPI
Next Most
Popular
Price Per Channel
All
Service
&
Cable
Series*
Items
Index Equipment
Expanded Basic Service
Date
Basic
Price
Price
Price
Index
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
------12.06
12.58
12.84
12.84
14.45
13.45
13.80
14.30
14.59
15.33
16.11
17.65
17.93
22.35
24.28
26.31
27.88
28.94
31.22
33.75
36.47
38.95
41.04
43.04
45.26
47.27
49.65
52.37
54.44
100.0
108.6
117.7
124.7
129.5
139.7
151.0
163.2
174.3
183.6
192.6
202.5
211.5
222.1
234.3
243.6
2011
$19.33
$57.46
257.1
Total
Change
---
---
157%
Annual
Change
3.7%
---
6.1%
Channels
Series*
1
2
44.0
47.0
49.4
50.1
51.1
54.8
59.4
62.7
67.5
70.3
70.5
71.0
72.6
72.8
78.2
Index
1
0.60
0.61
0.63
0.65
0.65
0.66
0.60
0.66
0.65
0.66
0.62
0.65
0.67
0.68
0.71
2
101.6
117.0
100.0
106.8
112.3
113.9
116.1
124.5
135.0
142.5
153.4
159.8
160.2
161.4
165.0
165.5
177.7
204.6
0.601
0.560
100.0
101.7
105.0
108.3
108.3
110.0
100.0
110.0
108.3
110.0
103.3
108.3
111.7
113.3
118.3
109.7
------$38.58
$38.43
$39.64
$45.33
$46.59
$49.03
$51.76
$56.03
$59.09
$60.27
$63.66
$67.92
$71.39
100.0
103.0
105.2
107.0
109.3
113.3
116.4
118.1
120.9
123.2
126.9
131.9
134.7
140.4
140.5
144.2
100.0
106.9
114.9
122.6
127.0
132.9
139.1
147.8
154.7
160.7
167.0
171.8
176.4
181.1
183.7
189.1
124.2
217.2
0.569
115.9
$75.37
146.5
189.1
---
---
117%
---
---
16%
---
47%
89%
---
---
5.0%
---
---
0.9%
5.3%
2.4%
4.1%
Sources: Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment, 612
FCC Rcd 3239 (1997) (1997 survey); 14 FCC Rcd 8331 (1999) (1998 survey); 15 FCC Rcd 10927 (2000) (1999
survey); 16 FCC Rcd 4346 (2001) (2000 survey); 17 FCC Rcd 6301 (2002) (2001 survey); 18 FCC Rcd 13284 (2003)
(2002 survey); 20 FCC Rcd 2718 (2005) (2003-04 survey); 21 FCC Rcd 15087 (2006) (2005 survey); 24 FCC Rcd
259 (2009) (2006-08 survey); 25 FCC Rcd 13350 (2010) (2009 survey); 27 FCC Rcd xxxxx (2012) (2010 survey);
and survey. Consumer price index (CPI): Extracted from Bureau of Labor Statistics, Dept. of Labor, Consumer
Price Index, All Urban Consumers, U.S. City Average, Not Seasonally Adjusted, Series CUUR0000SA0, All Items
(1982-84=100); Series CUUR0000SERA02, Cable and Satellite Television and Radio Service (Dec. 1983=100).
http://data.bls.gov/cgi-bin/srgate. Mar. 16, 2011. Rebased to Jul. 1995=100 for the purpose of this report.
Note: Data are Jul. 1995-2002 and Jan. 2003-2011 subscriber-weighted averages of the noncompetitive and effective
competition sample groups, except 1995-2000 prices and 2000-01 channels, which are the noncompetitive averages
(composites were unreported). The 2010 values are from the 2010 survey and may not match 2010 values from the
2011 survey in other tables of this report due to random sampling variance. A missing value indicates we did not
survey the metric that year. The 1995 expanded basic price is programming and equipment minus the estimated
equipment portion. Before 2010, the “next most popular” price is expanded basic plus the digital tier and equipment.
* Series 1 is from the 1995-2009 surveys and Series 2 reflects a more expansive set of channels starting with 2009-10
data collected in the 2010 survey. The indices combine series 1 and 2 and measure the percentage change in Series 1
from 1995 through 2009 and in Series 2 afterwards. See Appendix, Section C.
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Federal Communications Commission
DA 12-1322
Attachment 5
Historical Averages
By Sample Group
Noncompetitive Group
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Competitive Group
Expanded Basic Service
Basic
Service
Price
Price
------$12.06
$12.58
$12.84
$12.87
$14.47
$13.38
$13.73
$14.25
$14.52
$15.10
$15.83
$17.88
$17.97
$19.46
$22.35
$24.28
$26.31
$27.88
$28.94
$31.22
$33.89
$36.61
$39.11
$41.29
$43.33
$45.48
$47.49
$49.97
$52.10
$54.27
$56.82
Number of Channels
Series Series
Index
1
2
44.0
47.0
49.4
50.1
51.1
54.8
59.3
62.7
67.3
70.1
70.3
70.6
72.5
72.8
77.7
-----
98.3
111.6
120.4
100.0
106.8
112.3
113.9
116.1
124.5
134.8
142.5
153.0
159.3
159.8
160.5
164.8
165.5
176.6
200.5
216.4
Expanded Basic Service
Basic
Service
Price
Price
------$11.12
$12.03
$12.03
$12.43
$14.09
$14.25
$14.58
$14.80
$15.09
$16.37
$17.37
$17.16
$17.84
$19.13
$21.64
$23.32
$25.29
$26.12
$27.30
$29.44
$31.66
$34.34
$36.86
$38.17
$40.15
$43.70
$46.28
$48.19
$52.96
$54.77
$58.47
38.0
39.6
46.5
54.0
52.3
59.9
60.9
62.9
69.7
72.5
72.0
74.0
73.0
73.0
79.3
-----
108.2
127.8
130.2
100.0
104.2
122.4
142.1
137.6
157.6
160.3
165.5
183.4
190.8
189.5
194.7
192.1
192.1
208.7
246.5
251.0
Number of Channels
Series Series
Index
1
2
Total and Average Annual Change
Total
Annual
---
154%
---
---
116%
---
170%
---
---
151%
3.7%
6.0%
---
---
4.9%
4.3%
6.4%
---
---
5.9%
Sources and notes: See Attachment 4.
20
Federal Communications Commission
DA 12-1322
Attachment 6
Customer Premises Equipment
Most Commonly Leased
January 1, 2011
Cable
Programming
Service
Non
competitive
Overall
Average
Group
Effective Competition Subgroups
Second Cable Operator
DBS
IncumbRival
Both
ent
Other
Unbundled Price
Basic service
$4.98
$4.76
$5.29
$6.16
$6.59
$6.21
$5.05
$4.06
Standard error
0.14
0.19
0.21
0.30
0.20
0.26
0.30
0.44
Prior year
Standard error
$4.94
$4.67
$5.31
$6.19
$6.63
$6.25
$5.05
$4.15
0.13
0.18
0.20
0.29
0.21
0.25
0.29
0.41
Expanded basic
$7.12
$7.05
$7.22
$7.06
$9.41
$7.42
$7.29
$5.70
Standard error
0.14
0.20
0.18
0.23
0.21
0.20
0.27
0.61
Prior year
Standard error
$6.81
$6.69
$6.96
$6.76
$9.42
$7.16
$7.02
$5.52
0.13
0.19
0.18
0.25
0.21
0.22
0.26
0.57
Next most popular
$7.46
$7.21
$7.78
$7.42
$9.36
$7.69
$7.82
$7.82
Standard error
0.11
0.16
0.14
0.17
0.29
0.15
0.21
0.52
Prior year
Standard Error
$7.32
$7.02
$7.71
$7.42
$9.33
$7.70
$7.73
$7.58
0.11
0.17
0.14
0.19
0.29
0.17
0.20
0.49
Percent of Systems that Require CPE
to Receive Complete Channel Lineup
Basic service
83%
82%
86%
88%
82%
87%
85%
89%
Expanded basic
88%
87%
90%
88%
87%
88%
89%
98%
Next most popular
99%
99%
99%
100%
97%
99%
99%
100%
Percent of Systems that Bundle CPE
with the Price of Programming
5%
7%
1%
2%
5%
2%
1%
0%
Expanded basic
32%
35%
26%
11%
7%
11%
31%
40%
Next most popular
37%
41%
32%
15%
16%
15%
37%
55%
Basic service
Source: Survey. Averages are subscriber weighted means. Customer premises equipment (CPE) refers to a set top
converter box or other digital service gateway. The survey asked if subscribers need equipment to view all or some
channels when purchasing the programming service and whether or not such equipment is included (bundled) with
the programming at not additional charge. If not, the survey asks the operator to report the unbundled price for the
most commonly leased equipment. CPE features may change from year to year and differ on average between
services and sample groups, and thus comparisons of these CPE prices to some extent reflect quality change.
21
Federal Communications Commission
DA 12-1322
APPENDIX
Survey Methodology
A.
Sampling Procedure
1.
The 2011 survey was conducted pursuant to the requirements of the Cable Act.26
Communities were selected nationwide at random to be part of the sample and were chosen from the
Commission’s list of MVPD operators and communities the operators serve.27 For the purpose of
choosing our sample, we divided the communities into two groups. Noncompetitive communities were
those where the Commission had not made a finding of effective competition as of January 1, 2011.
Effective competition communities were those where the Commission had made such a finding. Further,
we subdivided the two groups into strata, and selected a sample of communities from each stratum. For
each community selected, we asked the operator in that community to complete a survey questionnaire
that included questions on the prices charged for video programming service offerings as well as other
questions related to the operator’s system. We used the information collected to estimate and compare
mean prices, and other statistics, across the different strata of operators and communities. Attachment 1
provides additional information on the sample.
2.
We divided the groups into strata to compare subgroups as well as to achieve desirable
levels of statistical precision. Creating strata in which prices are less disparate than in the group overall
tends to increase the efficiency of sampling by reducing sample price variance.28 Because there is a
correlation between price and the operator’s system size, we stratified noncompetitive communities into
five strata by system size – very large, large, medium, small, and very small systems – depending on the
number of subscribers the system serves. We stratified the effective competition cable operators and
communities into four strata on the basis for which the Commission had made a finding of effective
competition. The first stratum consisted of incumbent cable operators in communities with a second rival
operator. The second stratum consisted of the rival operators. The third stratum consisted of
communities where the finding of effective competition was based on the level of DBS subscribers in that
community. The fourth stratum consisted of communities within range of a wireless MVPD or who met
the cable low penetration test as a result of serving fewer than 30 percent of households in that
community.29 The survey collected prices charged by wireline operators. The survey did not collect
prices charged by DBS and wireless MVPD operators.30
3.
We determined the number of observations to select for statistical precision to be 800
communities. These 800 selections were divided between the two sampling groups. To determine the
number to allocate in each group, we used a sampling size formula calibrated to yield sample price means
within one percent of actual price means at a 95 percent confidence level.31 We then allocated the number
26
See note 1, Section I, supra.
27
The Commission assigns a community unit identifier (CUID) code to each registered operator for each
community that operator serves. See 47 C.F.R. § 76.1801. If two operators serve the same community, the
Commission assigns two CUIDs. A current list is downloadable from the Commission’s website. See FCC Media
Bureau, All Cable Communities registered with the FCC, .
28
See e.g., W. G. Cochran, Sampling Techniques, 2nd ed. (1977) at 87-107.
29
Low market penetration may have resulted from the presence of a second operator in the community. However,
we did not include the second operators in this low penetration stratum, because the finding of effective competition
was not made on that basis.
30
This is because there are no CUID codes associated with DBS or wireless operators. For the same reason, AT&T
U-verse service was not surveyed.
31
See B. J. Mandel, Statistics for Management (1984) at 258. See also, e.g., C. A. Boneau, Effects of Violations of
Assumptions Underlying the t test, Psychological Bulletin, 57 (1960) at 49-54.
22
Federal Communications Commission
DA 12-1322
of selections in each group among the group’s strata. Allocation methods generally emphasize two
criteria; selections allocated to a stratum increase relative to other strata in proportion to population size
and price variance. Thus, for each stratum, we multiplied its share of the group’s cable subscribers by the
standard deviation of price.32 A higher measure relative to the other strata resulted in a relatively higher
allocation. Further, we adjusted each allocation by a non-response factor.33 After completing this
process, 42 of the 800 overall selections remained to be allocated. We assigned these 42 observations
among the incumbent and rival subgroups since these strata were of particular interest to survey, yet had
been allocated relatively few selections. Attachment 1 reports the sample sizes for all strata.
4.
After determining the number of sample selections using the process described above,
we drew independent samples of communities from the strata,34 using probability proportional to size
(PPS) sampling without replacement.35 A PPS design is efficient for our survey because the relative size
of a community in terms of the number of subscribers is correlated with our primary survey study variable
(price).36 Using the PPS method of sampling, we assigned a selection probability to each community in
direct proportion to the relative number of subscribers. In a group and stratum, the higher the level of
subscribers relative to other communities in the strata, the higher the likelihood was of selection. PPS
sampling requires sampling selection probability not to exceed one (or 100 percent). Therefore, we substratified communities whose probability exceeded one into one-unit strata with probability equal to
one.37 The PPS sample design requires an estimate of the relative number of subscribers in each
community. We estimated the relative sizes using the FCC’s 1994 census of communities, the most
recent census of subscribers at the community level. If the service areas of two communities merged
subsequent to the census, we merged the subscriber counts accordingly. For newly registered
communities, not part of the census, we set the subscriber counts equal to the mean number of subscribers
for the municipality types, i.e., an incorporated city, private settlement, etc.
B.
5.
Data Quality Control
To improve the quality of the survey data and reduce the burden on operators, the survey
32
See G. W. Snedecor and W. G. Cochran, Statistical Methods, 7th ed. (1980) at 458-59. The allocation formula
equals NhSh / ΣNhSh, where in stratum h, N is the number of cable subscribers on January 1, 2010 and S is the finite
population adjusted standard deviation of price in the 2009 survey. (Snedecor and Cochran).
33
Because previous surveys suggest not all selections will respond to the survey questionnaire for various reasons -e.g., the system no longer operates -- the non-response factor adjusts selections by the expected number of nonresponses. Our non-response factor equals [1+ [NRh / (NRh + Rh)]], where in stratum h, NR equals the number of
non-responses and R equals responses to our 2009 survey.
34
To prevent sampling bias, the samples are drawn independently, including incumbents and rivals in locations with
a second cable operator; i.e., selection of an incumbent did not necessarily require that the rival would be selected
and vice versa.
35
This sample was generated using the SurveySelect Procedure, PPS Method without Replacement, SAS software,
Version SAS/STAT 9.2, SAS Institute Inc., Cary, NC (2010). (SAS Institute Inc.).
36
See, e.g., F. Yates and P. M. Grundy, “Selection without Replacement from Within Strata with Probability
Proportional to Size,” Journal of the Royal Statistical Society, 15 (1953) at 253-261; and B. K. Som, Practical
Sampling Techniques, 2nd ed. (1996).
37
We applied the following algorithm to identify, remove, and sub-stratify community units whose selection
probability exceeded one in a stratum, where Z = number of subscribers in the stratum, z,i = subscribers in
community unit i, n = sample size, πi = n (zi /Z) = selection probability of unit i, k = number of units for which Pi
is greater than one: (a) Sub-stratify the unit with the highest Ph,i which exceeds one; (b) reduce sample size to nh
minus one; (c) reduce, kh by one; (d) recalculate Ph,i for the remaining units; and (e) repeat steps a-d until kh =0. An
alternative would be to set maximum Ph,i =1 and not sub-stratify; however, to a degree, Ph,i would no longer be
proportionate to subscribers.
23
Federal Communications Commission
DA 12-1322
questionnaire is web-based.38 After the samples were drawn, operators serving the communities selected
were notified and instructed on how to complete the survey questionnaire on the Commission’s website.
Steps were taken to ensure the reliability and accuracy of the data collection. Computer programming
checks notified respondents in real time of inconsistent answers. In addition, we asked a responsible
party within each company (other than the person who completed the survey) to certify the completeness
and accuracy of the company’s responses. The survey response rate (the ratio of completed to requested
questionnaires) equaled 99 percent (790 of 800). Of the 10 non-responses, 6 operators no longer provided
cable service to the community and 4 operators had yet to commence service.
6.
We systematically examined all questionnaires submitted using a computer program
designed to identify answers which appeared to be inaccurate. When a particular response fell outside of
its expected reasonable range or was inconsistent with the answers to other questions in the survey, the
computer program automatically flagged that response and we contacted the operator and asked that
operator to re-check and verify the flagged answer, or make a correction if needed. In all cases, the
operators we contacted cooperated with these requests and, where necessary, submitted revised data.
About 15 percent the operators in the sample were asked to review at least one answer. Each of these
operators replied with either a data correction or reasonable explanation as to why a particular response
was plausible. In the case of missing data, some operators provided these data and others explained that
the operating company did not collect the particular information.
C.
Estimation of Means
7.
After the responses were collected and checked, estimates of the population means and
variances were calculated from the samples based on the response to each survey question. We estimated
the means and variances on a basic subscriber basis rather than a cable community basis. We choose this
level of analysis because we are interested in understanding the price paid by the average subscriber
rather than the price charged in the average community. These two methods of analysis yield different
results when the number of subscribers in a community is correlated with the response. To estimate the
per-subscriber means and variances of those means, we use the Horvitz-Thompson ratio estimator.39 This
estimator is a well-known, unbiased method of estimation applicable to probability sampling designs.
The Horvitz-Thompson estimator estimates the ratio of two totals.40 By appropriately selecting those
totals we are able to weight the response from each cable community by the number of subscribers and
estimate the per-subscriber mean of the responses. The numerator of our ratio estimator is the estimate of
the industry total of the value of the response of the cable community multiplied by the number of basic
subscribers in the community. The denominator is the estimate of the industry total of basic subscribers.
For example, in estimating the mean basic price the numerator is the estimate of the industry total of the
basic price in the community multiplied by the number of basic subscribers in the community. This
resulting total is an estimate of total revenues from the purchase of basic service. The denominator is
simply the estimate of the total basic subscribers. The resulting product is an estimate of basic service
revenue per subscriber. Formally, the estimator of the per basic subscriber mean of variable X is
38
Our web-based questionnaire includes several features which ease the respondent’s filing burden. For example,
the questionnaire pre-fills some survey questions based on information already on file with the Commission, and
asks the respondent to verify the information.
39
We began using the Horvitz-Thompson ratio estimator with the 2009 report. Prior to the 2009 report, we
calculated the arithmetic mean in each stratum.
40
See, e.g., D. G. Horvitz and D. J. Thompson, “A Generalization of Sampling without Replacement from a Finite
Universe,” Journal of the American Statistical Association, 47 (1952) at 663-685; W. S. Overton and S. V. Stehman,
“The Horvitz-Thompson Theorem as a Unifying Perspective for Probability Sampling: With Examples from Natural
Resource Sampling,” The American Statistician, 49(3) (1995); and Cochran (1977) at 259.
24
Federal Communications Commission
N
1
åp
i =1
N
X i × Subi
i
1
åp
1=1
DA 12-1322
Subi
i
where Xi is the response from cable community i, Subi is the number of basic subscribers in community i,
and πi is the probability of community i being selected into the sample.41
8.
For expanded basic service, we report the overall mean as reported in previous survey
reports, and we also report time-series indices of the cumulative percent change in price, number of
channels, and price per channel. There are two data series each for channels and price per channel. The
2010 price survey collected data on a more expansive set of cable channels for 2009 and 2010. As shown
in Attachments 4 and 5, both the 2009 and 2010 value for Series 2 are from the 2010 survey and the 2010
index value reflects the 2009 to 2010 change in Series 2. The data in series 1 is from prior surveys and
forms the basis of the 1995-2009 index values. The index, in effect, links the percent changes of the two
series by re-basing the newer series (Series 2) which began in 2010 to index base year 1995. For variable
X, the index value (I) of mean (x̄) in time series (s) in year (t) is
It = It-1(x̄s,t / x̄s,t-1)
where It =100 in base year 1995 and the time series (s) is 1 (s=1) if t<2010, and s=2 if t>=2010. The
mean price per channel of expanded basic service in a community (i) is
x̄,t
= ((Pi,t + Ei,t ) / Ci,t)
where Pi,t is programming price, Ei,t is equipment price, and Ci,t is the number of channels. Equipment
refers to the most commonly leased set-top converter or other digital gateway leased with expanded basic
service. The equipment price is zero if equipment is pre-bundled into the programming price or if it is
unnecessary to view any of the expanded basic channels.
D.
Survey Accuracy
9.
Because our survey is based on a sample of communities rather than a 100 percent
census, the price averages in this report are subject to sampling variance. Expanding the survey to
include all communities might increase accuracy, but would also increase the burden of collecting the
information. Our sample results are likely to be different from results that would be obtained if we were
able to collect prices from all communities nationwide. The attachments report estimates of sampling
variance or statistical “standard error” for each price mean. Standard errors can be used to express the
degree of confidence that the true mean falls within a range around a sample mean. This is usually
expressed as assurance that in 95 out of 100 similar samples, the true mean will fall within the stated
range (the “95 percent confidence interval”).42 Standard errors can also identify whether or not price
differences are statistically significant at a 95-percent confidence level. The discussion above refers to
within-sample variance. To prevent random variance which may occur across samples when measuring
annual percentage change, the survey collected two years of data rather than comparing estimates over
two different surveys. The exception is the historical time series table which reports means from each
survey year.
10.
In addition to the sampling variance discussed above, changes in the composition of
41
We generated tests of differences in the mean values of the sample groups and subgroups by using the SMSUB
macro algorithm and the Ratio and Contrast parameters, SAS Institute Inc. (2010).
42
This “95 percent confidence interval” is a range surrounding the sample average plus or minus 1.96 multiplied by
the standard error.
25
Federal Communications Commission
DA 12-1322
sample subgroups affect means.43 The composition of communities making up the subgroups changes
from year to year as a result of operators starting, ceasing, merging, or transferring operations. Further,
the composition changes as a result of findings of effective competition and, therefore, migration of
operators in the communities from the noncompetitive group to one of the effective competition
subgroups.
43
See, e.g., D. Holt and C. J. Skinner, Components of Change in Repeated Surveys, International Statistical Review,
57 (1989) at 1-18.
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| File Type | application/pdf |
| File Title | 124136.doc |
| File Modified | 0000-00-00 |
| File Created | 2012-08-10 |