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this represents the central experience to be expected in the
In addition, a selected number of intermediate
sized systems have been analyzed using penetration rated 33%
greater than predicted on average.
Such increased penetration
is definitely atypical, and would be expected to occur in only
about one out of ten market situations, because of factors not
fully accounted for in the penetration equation.
Density, the number of homes per cable mile, can vary
considerably from one potential franchise area to another.
Comanor and Mitchell reported an average density of 95 within
major markets, and 79 outside, in their sample of Factbook
More recently available data for a number of munici
palities in the Dayton, Ohio and Boston, Massachusetts areas
tabulated in the appendix.
For systems in this study we have
assumed somewhat higher densities than considered by Comanor
Mitchell, ranging from 80 homes per mile outside of television
markets up to 200 homes per mile with 20% of plant underground
in the central areas of markets 1-50.
In practice, of course, both higher and lower densities
will be encountered.
But the tendency to
figure for any important number of similar systems is unlikely
in view of the FCC's emphasis that it will not authorize carriage
of broadcast signals by systems which do not serve all parts of
the community. 3
3 Federal Register, p. 3276, $180
THE EFFECT OF THE EXCLUSIVITY RULES
The new FCC rules require cable operators to "black-out"
numerous classes of programs on imported signals when those
programs are also shown by a local station.
The degree of pro
tection provided varies with the type of programming and may
extend up to two years.
For our purposes the primary effect of
these rules is to reduce the attractiveness of distant signals to
subscribers and thus reduce cable penetration.
Aside from pro
viding for one channel-switching device for each imported signal,
we have not allowed any additional costs of performing the blacking
out function itself, keeping records, etc.
At this writing, evidence on the magnitude of the exclusivity
effect is limited to a preliminary study by R. E. Park, "The
Exclusivity Provisions of the Federal Communications Commission's
Cable Television Regulations."
From detailed program listings for
four stations---two networks and two independents---plus partial
listings for ten other stations, Park synthesizes the expected
proportion of a broadcast week that a distant signal would be
A portion of his findings are reproduced in Table 2.
Park's results indicate, for example, that in those top 50
markets in which local service provides three networks and one
independent, the cable system importing two additional independents
will be required to black them out about 39% of the time.
imports a third independent (on a stand-by basis, since the rules
PERCENTAGE OF TIME DISTANT SIGNAL CHANNELS ARE BLACKED-OUT
R.E. Park, "The Exclusivity Provisions of the Federal
Communications Commission's Cable Television Regulations,"
Table 2, p.5.
allow only two distant signals at any moment
on the cable) and
"fills in the blanks" where possible, it can reduce the blacked
out time to about 24%.
Importing a fourth independent further
reduces this to 15%, etc.
The boxed-in figures represent the
expected effect when no stand-by signals are imported.
The impact of the exclusivity rules on subscriber penetration
is likely to be at least as great as the reduction in viewing
Programs receiving protection will be predominantly those
with large audiences, many of whom would value an earlier or
alternative viewing date or time which cable could otherwise
Nevertheless, lacking data to refine an estimate of this
effect, we assume that exclusivity protection is equivalent in
its impact on penetration to a proportionate reduction in the
number of full-time distant independents carried on the cable,
using the appropriate boxed figures from Table 2.
Will it be profitable for a cable system import stand-by
independent signals? The costs of additional imports will rise
as the CATV system must go further to find each additional inde
Concurrently, the proportion of time that can be filled
in with each extra signal is declining.
The exclusivity rules
thus place the cable firm in a situation of sharply diminishing
returns as regards additional penetration from distant signals.
Generally, the answer will be "no." Exceptions may occur where the