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one educational station. These signals are imported by microwave. averging 3 hops of 35 mi.es each per charnel.
Within five years the system is assumed to reach maturity, apare
from further growth due to rising incomes or enlargement of its
Penetration is predicted to be 28.1% 18 the disege
signals are fully available, but 27.2% as a result of exclusivity
protection on the independent channels.
Part B summarizes the growth of penetration, subscribers, and system revenue (including advertisingl over the first 10
In Part c we may assess the impact of copyright lees on pro
For each of the four fee schedules described earlier
we report two rates of return--one assuming a 10 year average lite
time of capital, the second assuming 15 years. If fixed capi.al
equipment is replaced about every 15 years, this system will earn a 10.4% real rate of return on total invested capital absent any copyright fees. Alternatively, the statutory schedule inabor : reduces the rate of return to 9., and the flat 16.9% fee lovers
returns sharply to 5.5%. A shorter lifetime for equipment reduces
these returns by 2.5 to 3 percentage points.
in the analysis below we report rates of returns based only
on 15-year lifetimes. Fifteen years represents a compromise ben tween somewhat longer physical lifetimes for some parts of the cable plant and rather shorter economic lifetimeof currently operating
systems experiencing technological obsolescence. It appears
from about 22-27%
prospects for cable under present rules, even without copyright
below the 10% rate of return needed to attract investment funds,
Intermediate-sized systems in middle markets are decidedly
systems when one network is missing from the local signals.
kets there is great variation, with profitable. 55% penetration pally because of reduced density, while in the lowest ranked marsystems in the second 50 middle markets earn lover returns, princi.
are no copyright fees. Despite somewhat higher penetration rates
and rates of return from 1.5 to 10.4% when there
with somewhat different sets of local signals. Penetration ranges
detail above. Lines 2 and 3 are for similarly situated communities
Line 1 of Table 4 restates the example system discussed in
middle markete of large and intermediate sized systems respectively.
for particulars. Tables 4 and 5 report the expected experience in
the major findings here, the reader should consult the tabulations
in the seven tables which follow. While we shall briefly review and the impact of alternative copyright fee schedules are contained
The financial prospects for cable under the final rec rules
7. INV, 2N 8. ZNU
IN, 11, IE
In these tables, N means network, I means independent, E means educational,
v means NHF, U means UHF.