Subscriptions for direct broadcast satellite and cable television in the US: an empirical analysis

Abstract

We identify factors that affected DBS (direct broadcast satellite) penetration, relative to cable penetration, in the US subscription television market. We found that regulation of expanded-basic cable services, which expired in 1999, may have unintentionally enhanced DBS penetration in noncompetitive cable franchise areas as cable providers charged ‘high’ prices. On the other hand, head-to-head competition from cable overbuilders or local exchange telephone carriers adversely affected DBS penetration as cable rates were lowered. Lastly, cable system upgrades limited DBS penetration since cable providers were able to offer high-quality services that are comparable to satellite transmission, even though cable rates were higher.