Chapter 6 Cable Regulation in the Satellite Era ∗

The market for multi-channel video programming has undergone considerable change in the last 10 years. Direct-Broadcast Satellite service, spurred by 1999 legislation that levelled the playing field with cable television systems, has grown from 3 % to 25 % of the U.S. MVPD (ca-ble and satellite) market and now accounts for virtually all net new subscribers. This chapter considers the merits of regulation in cable television markets in light of this development. It surveys the (dismal) empirical record on the effects of price regulation in cable and the more encouraging (but incomplete) evidence on the benefits of satellite competition. It concludes with a consideration of three open issues in cable markets: horizontal concentration and vertical inte-gration in the programming (input) market, bundling by both cable systems and programmers, and regional concentration (”clustering”) by cable systems. While potential market failures in distribution have clearly lessened, concerns regarding bundling and the programming market remain