Duopolistic Competition in Cable Television: Implications for Public Policy

Abstract

Most cable television systems in the United States operate as monopolies, typically obtaining an exclusive franchise from a municipality to exploit consumer demand within a specified service area. Unlike most traditional public utility regulators,' however, local municipalities cannot set the rates charged by the local cable monopolies that they establish. While exclusive franchises are the overwhelmingly dominant market structure in the cable television industry, direct competition between normally monopolistic cable television companies--a phenomenon referred to as an overbuild because both companies have placed cable systems in the same geographic area-currently occurs in at least three dozen jurisdictions nationally.