Multichannel Video Programming Distributors

Multichannel television in the United States has been available since at least 1948. The United States is served by multichannel television through cable television systems, direct-broadcast satellite providers, and various other wireline video providers; among the largest television providers in the U.S. are YouTube TV, DirecTV, Altice USA, Charter Communications (through its Spectrum division, which also includes the former Time Warner Cable and Bright House Networks systems), Comcast (through its Xfinity division), Dish Network, Verizon Communications (through its FiOS division), and Cox Communications. The Telecommunications Act of 1996 defines a multichannel video programming distributor (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", where a channel is defined as a "signaling path provided by a cable television system."

While multichannel television initially served as a means to provide local television stations to customers who could not receive them over-the-air, the deployments of communications satellites made it financially feasible for broadcasters to distribute channels of national interest to cable, and later satellite television providers, such as superstations and premium television services. By 1980, 15 million of the approximately 80 million television-owning households in the U.S. subscribed to a multichannel television service. In the 1990s, digital multichannel services, such as direct-broadcast satellite and digital cable, experienced a surge in popularity due to their increased channel capacity.

As of 2017, approximately 79% of American TV households had a television subscription; the market share of multichannel television began to erode in the mid-2010s due to the increasing popularity of subscription-based online video services, the increasing costs of these services due to the carriage fees demanded by major channels, as well as consumers intentionally dropping traditional television service in favor of alternatives such as subscription video on demand (SVOD) services, and linear television services that are delivered entirely over the public internet, or never subscribing to such a service at all. By 2023, the number of households with a subscription was down to 47 percent, or 62 percent if streaming services were included.

Platforms

Cable television

John Walson of Mahanoy City, Pennsylvania was credited with having established the first cable television service in the U.S. in 1948. He created the service in order to improve the availability of television stations to those with poor reception due to tall mountains and buildings.

The launch of communications satellites, such as Satcom I, enabled broadcasters to send out their programming nationally for hundreds of dollars per hour rather than costlier telephone lines and microwave relay systems. This development spurred the launched of prominent services intended for distribution by cable systems, such as HBO and fledgling Atlanta-based superstation WTCG. By 1980, 15 million of the 75–80 million U.S. homes with at least one television set had a cable television subscription, and one prediction was for that number to double by 1985.

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

Growth of satellite

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

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

On November 16, 1983, the first DBS service, with 50 customers paying $39.95 a month for five channels in the Indianapolis, Indiana area, was launched by United Satellite Communications Inc. (USCI), a joint venture of Prudential Insurance, General Instrument and investors that included Francesco Galesi. USCI did not wait for more powerful satellite technology, but instead used the Canadian Anik C2. The company also signed an agreement with ESPN and made programming arrangements with distributors rather than existing cable channels. Similar to British Sky Broadcasting (and its predecessors Sky Television and British Satellite Broadcasting) in the United Kingdom, USCI also maintained its own in-house channels: these included two premium channels – USCI Movietime (focusing entirely on feature films) and USCI Showcase (which offered a mix of films and specials similar to the formats of HBO and Showtime) – USCI TV Time (which featured a mix of children's and cultural programs, classic television series and movies) and Video Music (a music video channel similar to MTV). While cable could provide more channels at a cheaper rate, cable was too expensive to offer in rural areas. Also, cable was not yet available in larger cities such as Philadelphia and Chicago. USCI president Nathaniel Kwit stated that 30 million people would never be served by cable companies, and DBS would have 5 million subscribers by 1990. One prediction for USCI was for 2.4 million customers by 1986. With little success in Indiana, USCI began looking to Washington, D.C., Baltimore and Philadelphia. Early in 1984, USCI expanded into 15 markets in the Northeast and Midwest. At first, USCI leased its equipment because people might be reluctant to buy an unproven technology, but the company later sold its dishes. COMSAT planned to compete with USCI, offering lower prices, but lost its backing from CBS in June 1984.

Of the eight original companies planning DBS service, none had a working system by the start of 1985. The expected cost of entering the market ranged from $200 to $500 million, with $100 million required to put a satellite in orbit. Only Direct Broadcast Satellite Corp., United States Satellite Broadcasting and Dominion Satellite Network still had plans to go ahead, while RCA was looking at changes in its system. Even USCI, which used a Canadian satellite that did not require FCC approval to use, was in trouble. The company had the capability to serve 52 percent of people in the United States but after a year, USCI had only 11,000 customers. USCI's inability to get channels such as CNN, along with a monthly cost of at least $24.95, in addition to the $400 to $700 for the receiver needed to pick up a still-weak signal, kept the numbers low. Another problem was that HBO and other channels used C-band while USCI was Ku-band. USCI needed a significantly higher amount of money and began looking at possible mergers. The company could not afford to expand and it had been unable to strike deals with other companies, so its service ended without warning on April 1, 1985. USCI filed for bankruptcy, and one company offered to convert USCI dishes to C-band. People were allowed to keep their dishes; half had bought them and half had leased them, however it was unclear who if anyone would provide the service.

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

In 1992, nearly all MVPD customers had cable television service. In 1994, PrimeStar, DirecTV and USSB began offering digital satellite service. With one million subscribers in 18 months, digital direct broadcast satellite set a record for the quickest acceptance of a new technology; by comparison, it took four years before the VCR sold one million units. EchoStar and AlphaStar debuted in 1996. 2.2 million people subscribed to C-band service requiring 6-foot dishes costing as much as $1,500; this number remained steady, while digital satellite service with 18-inch dishes experienced phenomenal growth, reaching 4.5 million subscribers by the end of 1996, up by about two million subscribers in a year. Cable television services had 65 million subscribers, but were already starting to see customers switch to satellite. Satellite television offered more channels than cable did at the time due to limited headend capacity, although broadcast networks were not allowed if their affiliates could be received with an antenna. DirecTV and USSB had 2.5 million subscribers, while PrimeStar, with 27-inch dishes that could be rented rather than purchased, had 1.6 million subscribers. Cable companies responded to the success of satellite by adopting digital cable services that offered more channels, and required the use of digital set-top boxes. They also owned a share of PrimeStar, because offering cable in rural areas was deemed to be too expensive.

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

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

By 2012, satellite dishes accounted for 30% of the pay television market."Cheer for the Chairman," ''Broadcasting & Cable'', 2012-05-28.

Wireline and broadband

In 2005, Verizon Communications launched FiOS, a new suite of television, internet, and phone services delivered over a fiber-optic infrastructure. In 2006, AT&T followed suit with the introduction of U-verse.

Virtual MVPD, TV Everywhere, and over-the-top media services

The subscription television market in the U.S. began to erode in the 2010s due to multiple factors. Some have cited higher costs due to deregulation of cable television and tied selling practices (which force subscribers to pay monthly for a large bundle of unwanted channels to receive a few desired programs). Over-the-top video on demand services, such as Netflix, have also appealed to changing viewing habits, such as the growth of mobile device usage for media consumption. The market trend of cord cutters has seen viewers cutting back or dropping their television subscriptions in favor of using a mixture of sources, such as terrestrial television and internet streaming services, as an alternative.

The multichannel television industry began to employ efforts to entice potential cord cutters, such as "TV Everywhere"—a concept which allows subscribers to participating television channels to access their on-demand and live programming through websites and mobile apps tied to a user account. In 2015, Dish Network announced a service known as Sling TV, a streaming, multichannel video service (virtual MVPD or vMVPD) offering a focused selection of popular cable networks, delivered via apps for mobile devices and other digital media players over the internet. By 2018, the service had reached 2 million subscribers, and prompted the launch of competitors from AT&T ( DirecTV Now, which had reached 1 million), Hulu, Sony (PlayStation Vue) and YouTube TV. By 2019 Q3, analysts estimated vMVPDs have nearly 9 million subscribers in the United States.

Comcast introduced a streaming television service as a lower-cost alternative to their main service, delivered through managed networks as part of their internet services. Similarly, Time Warner Cable trialled the use of Roku devices as a set-top box in 2015. In October 2015, TWC began to trial a service under which subscribers are given a Roku 3 digital media player to access their service via the supplied TWC app, rather than a traditional set-top box. A TWC spokesperson emphasized that this offering would provide "the same TV and same packages delivered to the home today", but delivered over TWC-managed internet rather than a cable line.

With the mass proliferation of over-the-top subscription services intending to compete with legacy players, analysts have argued that the market is becoming too fragmented, and giving consumers "fatigue" over the sheer number of options.

A 2019 Leichtman Research Group study involving 6,715 households showed that 43 percent of vMVPD subscribers changed from a traditional MVPD. 17 percent dropped their previous vMVPD for another one, 25 percent also had a linear service, and 15 percent had never used a traditional MVPD. 71 percent of vMVPD users, the study said, were in the 18-44 group, in which 16 percent used a vMVPD. Only 6 percent of those over 45 used a vMVPD.

The introduction of ATSC 3.0 broadcasting in the 2020s led to trials of vMVPDs carried via OTA signals; startup company Edge Networks began operating a multichannel service known as Evoca in markets such as Boise, Denver, and Portland, which utilized set-top boxes that aggregated internet-delivered channels with channels delivered via encrypted signals on ATSC 3.0 stations (including offers to bundle other services such as Sling TV on the same boxes). The company closed in 2022, citing a lack of growth and "coordinated refusal" from the major networks to license content to the venture.

Regulation

In 1972, the Federal Communications Commission (FCC) established basic regulations for cable providers, including franchise and technical standards, and requiring them to register for a certificate of compliance before operation.

The Cable Communications Policy Act of 1984, otherwise known as the Cable Act, enacted further policies for the regulation of cable systems. The act established standards for the operational standards and development of cable systems, and gave municipalities the authority to grant and renew cable system franchises based on compliance with them and stated plans for future development. It stated that cable systems should reflect the needs of local communities in order to provide "the widest possible diversity of information sources and services". It recommended that local and state authorities encourage the establishment of Public, educational, and government access networks. The act also prevented the FCC and states from regulating the cost of cable service if they had "effective competition" from a large number of unique broadcast services (however, all existing cable systems qualified under this criterion, which allowed them to raise their prices).

In 1992, Congress passed the Cable Television Consumer Protection and Competition Act that was designed to promote competition and consumer protection in the cable television industry. The act mandated that cable providers carry all local full-power or otherwise qualified broadcast television stations on their service. However, commercial stations have the option to opt-out of must-carry, and require financial compensation for their carriage instead. It also required cable networks operated by cable companies to offer their carriage to competing satellite providers at reasonable rates if they used satellites as part of their distribution path. The act also narrowed the standard required for prohibiting rate regulation, requiring the provider to serve less than 30% of their franchise area, or two unaffiliated providers, serving at least 50% of the area, serve at least 15% of the market.

The Telecommunications Act of 1996 amended Section 602 (13) of the Communications Act of 1934 to define a "Multichannel video programming distributor" (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", where a channel is defined as a "signaling path provided by a cable television system."

Certain cable provider-owned regional sports networks worked around the program access rules by deliberately excluding satellites from their distribution path. This allowed them to restrict the carriage of these lucrative networks by competing providers, thus providing a selling point for their service. In 2010, the FCC removed this particular exception to the program access rules. The action was based on a complaint by AT&T that Cox Communications was unduly affecting the marketability of their services in San Diego, by not allowing them to carry the Cox-owned 4SD—the local rightsholder of San Diego Padres baseball.

Regulation of set-top boxes

Under the Telecommunications Act of 1996, the FCC was instructed to develop a means for television providers to offer a standalone conditional access module for digital cable services, in order to allow third-party devices to access the services as an alternative to a proprietary