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United States General Accounting Office GAO Report to Congressional Requesters July 2000 TELECOMMUNICATIONS The Effect of Competition From Satellite Providers on Cable Rates GAO/RCED-00-164 Contents

Rate Model 46 Appendix V: Summary of Methodology and Additional Observations for the Cable Rate Model 56 GAO Report to Congressional Requesters June 2000 SATELLITE COMPETITION AND THE SUBSCRIBER AGREEMENT: TECHNOLOGY CONSOLIDATION IN THE SATELLITE INDUSTRY INITIATIVES AND GROWTH IN THE SUBSCRIBER AGREEMENT IN THE U.S. The United States Government Accountability Office (GAO) conducted a review of the effects of competition from satellite television providers (SOD) on cable prices. A satellite provider is a company that offers TV service that uses orbiting satellite transponders. A satellite provider typically offers high definition video programming to a wider variety of subscribers than a cable television operator, but does not provide television service to the customers of the cable operator. In the past, many households in the United States subscribed to satellite broadcast TV services. The satellite providers have offered several new services since this review was conducted: Sling TV, a cable-delivered SOD service; Hulu, an SOD service that streams all major live TV channels in an Internet-based interface provided by a third party; and DirecTV Now, a television service offered by a new company and expected to be available in the second quarter of 2017. Other services based on cable technology are likely to emerge in the future, and the cost of these services may be competitive with current SOD services. Several changes occurred after this review was completed. First, the satellite services and services offered by their new competitors are expected to attract more consumers to high-speed Internet access. To address this trend, in December 2015, the Federal Communications Commission (FCC) issued a rule that requires cable operators to carry the full range of broadband Internet services—broadband ADSL, cable TV, and fiber. Second, competition from SOD providers is also expected to increase cable rates. The FCC and Congress may consider new regulations or subsidies to improve the level of competition in the satellite marketplace. GAO believes that policymakers are less concerned that SOD providers will directly or indirectly compete with the cable operator in the sense that the satellite provider's presence in the marketplace will reduce the demand for cable services. Instead, it is more important to examine how SOD providers are competing to provide broadband Internet access to subscribers, particularly where high-speed cable broadband services are available.

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