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Bibliography

Comanor, William S. and Mitchell, Bridger M., "Cable

Television and the impact of Regulation," The Bell
Journal of Economics and Management Science, Vol. 2,
No. 1 (Spring, 1971), pp. 154-212.

Comanor, William S. and Mitchell, Bridger M.. "The Lost

Generation: A Correction,“ Bell Journal of Economics
and Management Science, Vol. 2. (Autumn 1971), pp.
704-705.

Comanor, William S. and Mitchell, Bridger M., "The Costs

of Planning: The FCC and Cable Television," Journal of Law and Economics. Vol XV (1), April, 1972, pp. 177-206.

Foundation 70, "Cable in Embryo: Economic Considerations for

Urban Franchising." Wellesley, Mass., processed.
September 1971.

Halle and Stieglitz, Inc., "The Cable Television Industry."

October, 1971.

Johnson, Leland L., et al. "Cable Communications in the

Day on Miami Valley: Basic Report," Rand Report
R-94 3-KK'FF, January 1972.

Mitchell, Bridger M., "An Economic Analysis of the Ability

of CATV Systems in Top 100 Markets to Pay Copyright Royalities, “ Washington, D.C., processed May 15, 1972.

Park, Rolla Edward, "Prospects for Cable in the 100 Largest

Television Markets," Bell Journal of Economics and Man-
aqement Science, Vol. 3. No. 1, (Spring. 1972), pp.
130-150.

Park, Rolla Edward, "The Exclusivity Provisions of the

Federal Communications Comun i ssion's Cable Television
Regulations," Rand Corporation, R-1057-FF MF, June 1972.

Seiden, M.H. and Associates, CATV Report, 1970.

APPENDIX

Sloan Coma ission on Cable Communications, or the cati

The_Television of Abundance, McGraw Hill. See 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 Ser

vice: Cable Television Relay Service, * Pedere it'ef. vol. 37, No. 3 , Part II, (Feb. 12, 1972, pp. 125.. 3341.

Federal Communications Commission, "Cable Television Ser*

vice: Reconsideration of Report and order," Federa: Register. Vol 37, No. 136. Part 11 ( July 14. 12. PP. 13848-13910

Television Digest, Inc., CATV and $3 ion Coverage Aar.

1971-1972, washington, D.C..

Television Digest, Inc.. Television Factbooks Service

Volume, Washington, D.C.

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the previously proposed 5% "public dividend" tax ter support of non-commercial broadcasting has been

ated.

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Several cost items in the Comanor Mitchell brort have been modified for this study, cither to take a of the FCC rules as finally adopted or as a resuit availability of more recent information. A brief snar) of those costs which were modified for a: 1 systems investigated in this report is presented bei:

10 m bscribers growth over time. Park's recent resears or cable penetration completed after the pub.cation of the Comanor-Mitchell Report, indicates à ant rapid saturation of cable growth than was preTuy ass szed. While the precise growth path has not been definitively established, for this study we bave xreased 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 ..nes of potential subscribers are assumed to rise * & cate of 2% per year.

1. Local Franchise Tax. 5% of gross revenues anuais).

2.

PCC Fee annually.

$ 35 initial fee plus $0.JC per subscriber

3. Channel switchers. One switcher included in cap.ta.

equipsent costs for each imported signal.

As compared with Comanor-Mitchell, the effect of these

afications is to increase the size of typical systems

Pole rens. All results reported here incluse pole rent of $25€ per aerial male in top 10C markets, $175 in other markets.

study systems gain subscribers more rapidly in early years: the side of a study system is measured in its fifth Year, rather than its size after twelve to fifteen

Years.

Local Olgination. We assume the creanor-Mime ::

tani Yes, with capital costs & S. *** annual operatat exjerses of $43 we ard for sa..ef systems a in

t en, with capitai costs. $11,1.( and operating expense, or $2 per year it live origination. All syteas are assed tc pt.3 a time-and-weather channel.

Public service channess. The final FCC ruies remune CAR Systems to provide ) non-bral'ast s nel. 86 non-Costnercial public assess, e sateradies., 2.23 government access respectively. The pubia se.. channel is to be provides without arte, ...te other two channels Vill be free for five years. Costs or meeting these pris. of.. are taket. ti be additional 75% of the capital costs assed fci & origination, plus $4075 per year for part-time to nician salaries.

Pigure Al provides a graphical comparison of the growth curve used for this study and the earlier Comanor

Kitche Stady. de sano: -Mitchell Report, financial (internal) ***** tears are calculated for a firm of indefinite life 12. that the fin reaches an equilibrium of revenues

a!ter one 15-year lifetime, or generation, of equipTorta Fereaster, the plant is rebuilt periodically, while BEST.: penetration is held constant at the mature level.

* retarn is generally robust with respect to exact tai p. about conditions in later generations. Another

20. this terminal value problem is to assign the firm 11. # the end of its first generation, based on operating

****.tics such as revenues, subscribers, etc. For an ARE this sethod see L. L. Johnson, "Cable Communications

*** Parts Nani valley: Basic Report."

7. The previously propred public dividendo tax

for support of non-commercial broadcasting has been
.liminated.

K** 1. I X2 V OVEL SAD. Park's recent
researsh of salio penetration in ieted after the
pabrication of the Conanor-Mitteil Mert, indicates
• Mere ragad maturation of cabe gr.th than va. pre-
viously asse. While the precise growth path has
not been definitively established, for this study we
have increased the rate of subscriber growth sc that
the tydsalaystem reaches it. mature wire in the fifth
year. Thereafter, malitional greuth occurs as real
Ince. O petent ia arribers are assed to rise
at a rate of 2 per year.

As compared with comanor Mitrhell, the effect of these
modifications is to increase the size of typical .ystems
in two wayst
a) study ayatens gain subscribers more rapidly in

early years!
b) the oise of a #t y system is measures in it. fifth

year, fatter than to ze after twelve to fifteen years.

Figure Al provides a graphial cumarinun of the growth curve used for this study and the earlier Cimanor Mite! 1 otty.

As in the crearrtre 11 Report, financial finternal) rates nt return, are calcia.ed for a firent inte finite life try as in the 1.1 rahe. an eiiabria reverse. andct. after one 15-year lifetime, u yenera! , o po test. Therealtor, the piant , retriit per uw & y. Wie # criber penetration i. hold constant at the mat-se level.

e rate of return i. generally robust with react to exact a...mpe ions about conditions in later generations. Anther

ition to this terminal value pr blom is to ass in the form .value at the end of it. Piret gereration, based up aserati ratoriotis

26 reve wes. Satorers, etc. Pof an orang le of this methods. L. 1. 3. ** *.*. *cabie C hede at in la u Dayu Mama Vainyi Ba.ie komt."

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