Multichannel video programming distributor

A multichannel video programming distributor (MVPD) is a service provider delivering video programming services, usually for a subscription fee (pay TV). These operators include cable television (CATV) systems, direct-broadcast satellite (DBS) providers, and wireline video providers including Verizon FiOS as well as AT&T U-verse and competitive local exchange carriers (CLECs) using IPTV.

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.

The Digital TV Transition Fairness Act

On January 7, 2009, independent U.S. Senator Bernie Sanders of Vermont introduced the Digital TV Transition Fairness Act. He introduced the idea in a September 19, 2008, letter to Federal Communications Commission chairman Kevin Martin 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 would provide 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.

On June 15, 2009, U.S. Representative Peter DeFazio, an Oregon Democrat, introduced the House version of Sanders' bill. It would require MVPDs to offer a $10 basic package to anyone who lost at least one channel to the DTV conversion (with broadcasters waiving fees), pay for outdoor antennas (including installation) and extend the converter box program beyond July 31, 2009.

Proposals to expand wireless broadband

Even after the DTV conversion made 100 MHz in new spectrum available for wireless broadband, a total of 800 MHz was needed. A Consumer Electronics Association (CEA) study claimed that $62 billion worth of spectrum could become $1 trillion for wireless, and one proposal would require all TV stations, including LPTV, to give up all spectrum, with subsdized MVPDs replacing over-the-air TV, even after viewers spent a great deal of money on the DTV transition. 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." 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 DTV transition. Any change could mean the loss of free TV to people in rural areas, broadcasters said, particularly "local journalism, universal service, availability of educational programming, and timely and reliable provision of emergency information."

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 HDTV only available from a MVPD. Although other spectrum was being considered, 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."

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.

Rep. John Dingell, a Michigan Democrat, in a letter to FCC chairman Julius Genachwoski, predicted "an adverse effect on consumers."

Another proposal was "geo-filtered WiMAX", which would allow HDTV 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.

Merging TV and Internet

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

On-demand services

At the January 2010 Consumer Electronic Show in Las Vegas, Sezmi CEO Buno Pati and president Phil Wiser showed a set-top box with a one-terabyte hard drive which could be used for video on demand services now offered through cable TV or broadband. A movie, for example, could be sent out once using a broadcast signal, rather than numerous times over cable or fiber-optic lines, and this would not involve the expense of adding many miles of lines. Sezmi planned to lease broadcast spectrum to offer a subscription service which National Association of Broadcasters president Gordon H. Smith said would provide a superior picture to that of cable or satellite, at a lower cost.

Cord cutters

Parks Associates estimated that in 2008, about 900,000 American households relied entirely on the Internet for TV viewing, and the company expected that number to increase. Leichtman Research Group found that six percent of Americans watched at least one show online each week in 2008, a figure that grew to eight percent in 2009. The number of Americans subscribing to cable increased two percent in 2008, but growth was slowing. Sanford C. Bernstein & Co. found that in fourth quarter 2008, the increase was seven-tenths of one percent, or 220,000 homes, the lowest ever.

A Centris report showed that due to the economy, eight percent of Americans expected to cancel their pay-TV service in third quarter 2009. About half of Americans tried to get a better deal. Netflix, Amazon.com, iTunes, Hulu and YouTube made cancelling service possible for those who would be unable to see their favorite programs over the air. Another option was BitTorrent. Sports programming was a big reason for not cancelling pay TV, though online options existed for many events. Another problem was the inability to watch many programs live, or at least soon enough in the case of series TV.

Leichtman found that the decrease in pay subscriptions was not happening in large numbers. One reason was that some sports events, as well as other types of television (such as cable TV series), could not be seen online. Sanford Bernstein said the number of pay-TV subscribers increased by 677,000 in first quarter 2010, and a New York Times/CBS News poll showed 88 percent of those surveyed had such a service, and only 15 percent had considered going exclusively to web services. People under 45, the survey said, were four times more likely to use the Internet only. To combat the trend, pay-TV providers were allowing people to see television on laptops, tablets and iPads. Craig Moffett of Sanford C. Bernstein still said high prices and other methods would eventually drive customers away, calling cord cutting "perhaps the most overhyped and overanticipated phenomenon in tech history."

Comcast reported a loss of 275,000 subscribers in third quarter 2010, bringing the year's total to 625,000. The company said most of these were not people leaving for another service. Moffett said the economy was a big reason for cancelling service, pointing out that cable companies needed to offer cheaper packages, but a Strategy Analytics survey revealed financial considerations were not the primary reason. People were not satisfied with what they could get, and online sources had so much more. The survey showed 13 percent of cable subscribers intended to cancel service in the next year. Sightly more than half were under age 40, and nearly all had a high school education. Two-thirds had or planned further schooling. And just over half earned at least $50,000 a year.

In second quarter 2011, Comcast lost 238,000 TV customers, compared to 265,000 a year earlier, though the company was making up for these losses with increases in services other than TV. Moffett said the slowing rate indicated that online sources were not making people drop cable as quickly. On the other hand, Time Warner Cable and Charter Communications lost more customers in the quarter than in 2010. For Time Warner the number was 130,000. Dish Network lost 135,000, while DirecTV gained 26,000, compared to 100,000 the previous year. In fact, Nielsen Media Research said the number of televisions decreased from 115.9 million to 114.7 million, while viewing by computer, tablets or smartphone was increasing. Services such as U-Verse were increasing their subscriber numbers by offering special features. My Multiview allowed people to watch four channels at once. Cablevision had iO TV Quick Views allowing up to nine channels at once.

"Cord-nevers"

On November 28, 2011, a report by Credit Suisse media analyst Stefan Anninger said that young people who grew up accustomed to finding shows they wanted to watch online would be less likely to subscribe to pay-TV services. He used the term "cord-nevers" for these people. And in 2012, Anninger predicted, the industry would have 200,000 fewer subscribers, for a total of 100.5 million. He blamed the economy but said consumers were not likely to return to paying for TV even after the recovery. In the case of land-line telephones, people believed young people would eventually get them, but now a large number of people have mobile phones. The same will be true for pay TV, Anninger predicted, and lower-priced packages with fewer channels will become necessary to reverse the trend.

See also

• Multiple system operator

External links

• FCC Report: Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming