FCC Report: DBS Has Impact on Cable Prices

[Gregg Lengling]

A report released Wednesday by the Federal Communications Commission found that consumers view satellite TV as a good substitute for cable when looking for a higher quality of service or when they face large cable price increases.

But the study, done by the FCC's Media and International bureaus, found that some factors - such as the availability of regional sports networks - could end up becoming be a positive for cable operators.

The research found that satellite TV penetration is lower where cable operators carry regional sports channels. And it suggested cable operators that limit access by satellite TV services to regional sports networks could be a factor in determining how many consumers enroll for service.

"If this is true, cable operators may be able to offset competitive pressures from DBS, and thus may be able to impose larger price increases without losing subscribers to DBS where they are able to transmit vertically-integrated regional sports networks terrestrially, or are able to reach exclusive carriage agreements with non-vertically-integrated regional sports networks," the commission report said.

Nonetheless, the FCC study found that satellite TV can act as a constraint on cable prices, "because sufficiently large quality-adjusted price increases result in increased DBS penetration," the report said. "Thus, large quality-adjusted price increases for the most popular or basic cable service may not be sustainable for cable operators."