GAO Report: Satellite a Competitive Threat

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From our friends at SkyReport.com

On Friday, the General Accounting Office released its report on competition between cable and satellite, and the research suggested satellite TV may have some impact on cable rates, especially in areas where satellite-delivered locals are available to consumers.

In its report, GAO said DBS competition can be associated with a slight reduction in cable rates as well as improved quality and service from cable operators. In terms of rates, the GAO found that a 10 percent higher DBS penetration rate in a franchise area is associated with a slight rate reduction - about 15 cents a month - from the cable operator.

Also, in areas where satellite TV provides local stations, the GAO found cable operators offer subscribers about 5 percent more cable channels than cable operators in areas where satellite-delivered locals are not available.

"These results indicate that cable operators are responding to DBS competition and the provision of local broadcast stations by lowering rates slightly and improving their quality," the report said. "During our interviews with cable operators, most operators told us that they responded to DBS competition through one or more of the following strategies - focusing on customer service, providing bundles of services to subscribers, and lowering prices and providing discounts."

The GAO also tackled the issue of rising programming costs. The report said during the past three years, the cost of programming has increased considerably - at least 34 percent - driven by the high cost of original content, among other factors.

Robert Sachs, president of the National Cable and Telecommunications Association, said the GAO report recognized that the cable industry "faces significant competition from the two national DBS providers. As GAO notes, these competitors increasingly provide local broadcast signals as part of their offerings, further leveling the video playing field."
 

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