In Broadcast - September 2013 - 24

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WWW.INBROADCAST.COM | ISSUE 23 - SEPTEMBER 2013

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InUSA

FCC Report Shows Lag In US Rural Viewing
In 2012, online video distribution subscriptions reached $4 billion-a-year in the US,
but access problems continue to exclude millions of rural Americans…

By Michael Grotticelli
Contributing Editor

T

24

he recently released 15th
annual report from the Federal
Communications Committee
(FCC), the agency that oversees
television and radio broadcasting
in the US, offers a window into the
current state of video consumption
preferences in America and a “digital
divide” when it comes to rural areas
of the country.
From the government’s perspective,
the highly anticipated report (which
covers 2011 and 2012) measures
the American market’s progress and
grades the FCC’s performance in
spurring competition and diversity
in multichannel video programming
distribution.
The 185 page report is a part of
the FCC’s mandate to annually
report to Congress on the status of
competition in the market for the
delivery of video programming.
Among the more disturbing results:
television markets containing rural
populations tend to have fewer
local full-power stations than those
in urban areas. Consumers in
smaller markets may also rely more
on multicasting than those in large
markets for the delivery of major
network programming such as that
of ABC, CBS, FOX and NBC.
As of November 2012, 49 of the 210
television markets had three or fewer
full-power commercial broadcast
stations assigned to them. All of
these markets are ranked below 100.
Combined, all 49 markets with three
or fewer stations represent about
4.57 million television households,
or 4% of the estimated 114.2 million
television households nationwide
as of the 2012-13 television season.

The report noted that consumers
need high-speed Internet access in
order to have access to OVDs’ (online
video distributors) video content.
Acting FCC chairwoman Mignon
Clyburn expressed concern that not
all citizens could realise the promise
of these competitive benefits.
“Nearly three out of ten rural
Americans do not have access to
high-speed Internet that is sufﬁcient
to receive online video distributors’
services, and I sincerely hope that
these consumers are not forgotten
as these services become more
popular and offer more extensive
programming.”
The report on video competition
shows the steady climb and
movement toward online video
viewing. It is also loaded with a wide
variety of information about the state
of video competition in America. For
example, it ﬁnds that cable’s share of
subscribers is falling – while satellite
and Telcos are gaining – while
traditional over-the-air broadcasting
is holding steady and – perhaps not
surprisingly – online video viewing is
increasing rapidly.
“Viewing of OVDs’ video
programming on television sets is
becoming increasingly prevalent,”
the report said. “For example, one
source, SNL Kagan, estimated by the
end of 2012 the number of Internetconnected television households …
would have grown to 41.6 million, or
35.4% of all television households.”
Among multichannel video
programming distributors (MVPD),
subscribers grew from 100.8 million
to 101.0 million households between
year-end 2010 and June 2012.

Consumers need high-speed Internet access for quality video

FCC report voices concerns over rural access in US to online video services

However, during this period, cable’s
share of MVPD subscribers fell from
59.3% of all MVPD video subscribers
at the end of 2011 to 55.7% at the
end of June 2012.
Between year-end 2010 and June
2012, Direct Broadcast Satellite
(DBS) MVPDs and telephone MVPDs
gained both video subscribers and
market share.
O v e r- t h e - a i r
television
broadcasting remained pretty
much unchanged. “Since the last
report, the number of households
relying exclusively on over-the-air
broadcast service has remained
steady at approximately 11.1 million
households, although the percentage
of all households they represent
increased slightly from 9.6% in 2011
to 9.7% in 2012,” the report said.
The report said that in addition
to HD content, broadcasters
are using multicasting to bring
more programming to consumers
by expanding the availability of
established networks and adding
new startup digital networks
(including networks targeting
minorities and programming
targeting niche audiences) and
Spanish language offerings. “As of
the end of 2011, 1,501 (82.2%) of fullpower stations were broadcasting in
HD, up from 1,036 stations in 2010,”
the report found.
However, the signiﬁcant change
comes in the adoption of online
video. “OVDs continue to expand
the amount of video content available
to consumers through original
programming and new licensing
agreements with traditional content
creators,” the report said. “A few
MVPDs now offer OVD services
to non-subscribers. Some OVDs
have invested in their own servers,

content delivery networks and other
infrastructure to facilitate the delivery
of video programming.”
The report said that several
technology companies, notably
Amazon, Apple, Google and
Microsoft, are delivering end-to-end
solutions of Internet infrastructure,
software, devices and video
programming. Viewing of OVDs’
video programming on television
sets, the report found, is becoming
increasingly prevalent.
OVDs account for an increasing
portion of Internet trafﬁc during peak
hours. The report found that during
the ﬁrst half of 2012, most major
cable multiple system operators
(MSOs) formalised bandwidth caps
or usage-based/metered pricing.
Several telephone company MVPDs
also are implementing bandwidth
caps and usage fees. This could be
a problem area for the FCC in the
future as the carriers continue to
block bandwidth.
So, what to make of the latest
report ﬁndings? It depends upon
whom you ask, but it’s clear that
consumers are the real winners, with
new access to more content on more
devices than ever before.
FCC Commissioner Jessica
Rosenworcel concluded that
“traditional video models are still
strong, but new ways of watching
are gaining a toehold”.
“The ways we create, distribute,
and consume content are changing,”
Rosenworcel said.
“We are no longer limited to what is
on, we look for video content when
we want it, where we want it – on
any screen handy.
“It is an exciting time, with
enhanced possibilities for consumers
– and creators.”
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