Sloan Commission on Cable Communications, Or the Cabler The Television of Abundance. McGraw Hill, New York, 1971.

Weinberg, Gary, "Cost Analysis of CATV Components: Final Report, RMC Report UR-170. June 1972. prepared for the Office of Telecommunications Policy.

Federal Communications Commission, "Cable Television Service: Cable Television Relay Service," Federal Register. Vol. 37, No. 39., Part 11, (Feb. 12, 1972), pp. 32543341.

Federal Communications Commission, "Cable Television Service: Reconsideration of Report and Order," Federal Register. Vol 37, No. 136, Part II (July 14, 1912. pp. 13848-13910

Television Digest, Inc.. CATV and Station Coverage At. 1971-1972. Washington, D.C..

Television Digest, Inc.. Television Facebook

Services

Volume, Washington, D.C.

Modified Costs and Revenues

Several cost items in the Comanor-Mitchell Report have been modified for this study, either to take account of the FCC rules as finally adopted or as a result of the availability of more recent information. A brief summary of those costs which were modified for all systems investigated in this report is presented below:

7.

The previously proposed % "public dividend tax
for support of non-commercial broadcasting has been
eliminated.

Bate of, 1-basi ber# arv wth over time. Park's recent
research on cable penetration completed after the
publication of the Comanor-Mitchell Report, indicates
a more rapid maturation of cable growth than was pre-
viously assumed. While the precise growth path has
not been definitively established, for this study we
have increased the rate of subscriber growth so that
the typical system reaches its mature size in the fifth
year. Thereafter, some additional growth occurs as real
incomes of potential subscribers are assumed to rise
at a rate of 7% per year.

As compared with Comanor-Mitchell, the effect of these
modifications is to increase the size of typical systems
in two ways:

a) study systems gain subscribers more rapidly in

early years;

b) the size of a study system is measure! in its fifth year, rather than its size after twelve to fifteen years.

Figure Al provides a graphical comparison of the growth curve used for this study and the earlier ComanorMitchell study.

As in the Comanor-Mitchell Report, financial internall rates of return are calculated for a firm of indefinite life by assuming that the firm reaches an equilibrium of revenues and costs after one 15-year lifetime, or generation, of equip. tent. Thereafter, the plant is rebuilt periodically, while #ubscriber penetration is held constart at the mature level. The rate of return is generally robust with respect to exact assumptions about conditions in later generations. Anther solution to this terminal value problem is to assign the firm a value at the end of its first generation, based on operating characteristics such as revenues, subscribers, etc. For an example of this method see L. L. Johnson, "Cable Communications in the Dayton Miami Valley, Basic Reprt.*