Direct Broadcast Satellites

A Competitive Alternative to Cable Television?

by Leland Johnson, Deborah Castleman

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This report presents an economic and engineering analysis of direct broadcast satellites' (DBS) prospects for competing with cable television systems in the United States and, hence, alleviating the need for extensive reregulation of cable. The authors examine relevant technologies, some implications of the technological advances that can reasonably be foreseen, and the comparative costs of DBS and cable systems. They also consider the prospects for second cable, wireless cable, satellite master antenna cable systems, and home satellite dish systems as alternatives to DBS systems to assess whether they hold more promise than DBS as competitors to cable. They then address a number of policy issues, including the effects on local broadcasting, whether cable operators should be permitted to buy into DBS systems, and the problems posed by access to programming. The findings suggest that high-power DBS systems are more likely than are the alternatives to provide widespread competition to cable. However, the outcome is dependent on several interrelated economic and technical factors, including the cost of earth terminals, the degree to which video compression reduces the per-channel cost of satellites, and the level of operating expenses including program acquisition.

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