With its new ability to offer local TV signals, the direct broadcast satellite industry is poised to become "a more important competitor to cable in the coming years," reports the General Accounting Office.
Under orders from Sens. Patrick Leahy (D-Vt.), Russell Feingold (D-Wis.), Herb Kohl (D-Wis.) and Mike DeWine (R-Ohio), the agency completed a study on whether DBS has become a competitor to cable. But GAO used numbers from 1998, which is the last year for which the FCC had cable-rate data.
GAO found that increased DBS penetration correlated with higher cable rates but also with increased programming choices. "The greater number of channels may contribute to the higher prices in these areas," GAO wrote.
GAO also reported that a second cable operator provides more effective price competition than DBS to an incumbent cable company and that rates of cable operators owned by large, national cable companies were higher than those of smaller, independent operators.