The Satellite Home Viewer Improvement Act: Price and Quality Impact of Direct Broadcast Satellite Companies’ Provision of Local Broadcast Networks
21 Pages Posted: 10 May 2012
Date Written: September 20, 2003
In the subscription video industry, cable-based companies – the dominant firms – face competition from a competitive fringe – satellite-based companies. Prior to 1999, satellite-based companies operated under a government-created competitive disadvantage. These companies were generally not permitted to deliver local broadcast networks (such as affiliates of ABC or CBS) to their subscribers; cable-based companies did not face this constraint. With passage of the Satellite Home Viewer Improvement Act of 1999, the Congress removed this asymmetry and created a more level competitive environment. We estimate a three-equation structural model to test the impact of direct broadcast satellite (DBS) companies’ – the primary satellite-based companies – provision of local broadcast networks. We find that when both DBS companies provide local broadcast networks, cable-based companies improve the quality of service they provide to their subscribers, although we find no impact on the price for cable service.
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