CABLE STILL HOLDS BIG LEAD ON SATELLITE BROADCASTERS, FCC REPORT SAYS [Dow
Jones Online News, 466 words]
WASHINGTON -(Dow Jones)- Competition to cable television is growing,
but cable still has most video-service subscribers, according to the
Federal Communications Commission's annual video-competition report.
The report, released Friday, compares subscribership in cable to
other so-called "multichannel video program distributors," primarily
direct-broadcast satellite, or DBS, and some emerging technologies, such
as wireless cable.
Overall, it found that through June, cable's share of the market
dropped slightly to 82% of all subscribers from 85%. Cable's loss came
about largely because of the gains enjoyed by DBS, whose subscribers now
represent 12.5% of the market.
The recently enacted Satellite Home Viewer act, which allows DBS to
provide local television signals in local markets, should make the
service even more competitive with cable, the report said. The more than
10 million DBS subscribers as of last June represented a 39% increase.
Cable rates continued to rise faster than the rate of inflation,
although the difference wasn't as great as last year, the report said.
Between June 1998 and June 1999, cable prices rose 3.8%, while the
Consumer Price Index rose 2%.
However, the report said the cable industry spent more than 13% more
for upgrades, more than 14% more for license fees and more than 16% more
on programming. Increases in labor rates were also higher than the
national average.
But the evidence also showed that when a cable operator faces
competition, it responds by either reducing prices, adding channels or
improving services, the report said.
Noncable video suppliers continued to report some difficulties in
obtaining programming, both from cable companies who produce programming
and from unaffiliated programmers who have exclusive contracts with
cable companies, the report said.
Consolidation in the cable industry continued, the report said, with
the seven largest operators now serving almost 90% of all subscribers in
systems that are increasingly formed in regional clusters. However, DBS
providers Hughes Electronics Corp. (GMH), a unit of General Motors Corp.
(GM), and Echostar Communications Corp. (DISH) now rank among the top
ten providers in terms of subscribership, along with eight cable
systems.
By virtue of a spree of acquisitions, AT&T Corp. (T) is poised to
become the nation's largest cable operator. Time Warner Inc., which
recently agreed to be acquired by Internet-service provider America
Online Inc. (AOL), is No. 2, followed by Comcast Corp. (CMCSK, CMCSA)
and Microsoft Corp. (MSFT) co-founder Paul Allen's Charter
Communications Inc. (CHTR).
FCC Chairman William Kennard said that while Americans still need
more choices, he is "encouraged by the growth of competition to cable on
a number of fronts."
The satellite industry "offers the most meaningful competition to
cable," he said. Kennard said the FCC is implementing last year's DBS
bill ahead of schedule to help make DBS a more viable competitor.
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