In its latest report to Congress on the state of the U.S. multichannel video program distribution (MVPD) sector, the FCC examined the impact of online video distributors (OVDs) for the first time. The agency declined, however, to draw conclusions about the extent to which competition exists in the MVPD marketplace. Issued last Friday, the report is the FCC’s fourteenth on the subject of MVPD industry structure and performance and covers developments in the video service marketplace between 2006 and 2010. Simultaneously with the release of Friday’s report, the FCC also issued a notice of inquiry requesting industry input on the fifteenth report, which would be released next year and would cover the 2011-2012 timeframe. While citing the emergence of OVDs in recent years as an alternative source of video delivery, the report notes that cable operators’ collective share of the U.S. MVPD market fell from 65% in 2006 to 60% during 2010. Direct broadcast satellite (DBS) providers experienced a similar decline in market share from 33% to “just over 29%” during that same period. Internet protocol-based video offerings such as Verizon’s FiOS service and AT&T’s UVerse service were reported to have picked up many of the subscribers who migrated from cable and DBS platforms during the 2006-2010 timeframe. With respect to OVDs, the FCC said that Netflix, Hulu and other OVD services “have emerged as significant providers of video content” and that the list of OVD providers “includes programmers, content owners/producers, and affiliates of online services, manufacturers, retailers and other businesses.” The report cautions, however, that OVDs face several key obstacles in achieving competitive inroads against traditional cable and satellite MVPDs, such as the high cost of acquiring access to content and ISP data caps. While asserting that MVPDs that also operate broadband ISP networks “have the ability and incentive to degrade the broadband service available to unaffiliated OVDs,” the report warns that what ISPs charge “to deliver online video traffic could have a negative impact on the ability of OVDs to enter the marketplace and compete.” In a press statement, FCC Commissioner Robert McDowell affirmed that the report “contains a wealth of information about the video market revealing just how dynamic and constructively chaotic it is” but remarked: “I would have preferred for this report to affirmatively conclude that the video programming market is competitive.” A spokesman for Public Knowledge, meanwhile, said the report should serve as “a useful resource for the Commission as it considers important issues like whether online systems can operate as MVPDs and whether ISPs are using data caps to discriminate against online video.”