Telephone company ownership of rural cable television companies
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In rural communities, cable companies owned by telephone companies supply basic service at a lower price than comparable cable companies not owned by telephone companies. The lower price (approximately $1.20 per month) appears to be due to lower costs and economies of scope rather than to any anti-competitive actions or cross subsidies. In addition, the monthly price of basic service is positively related to the total number of channels contained in basic service and, in particular, to the number of major channels contained in the basic package. The evidence also suggests that customers purchase basic service to gain access to pay channels.
Key wordsCable television telephone companies economies of scope
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