A FINANCIAL MODEL OF CABLE-TELEVISION WITH A SIMULATION ANALYSIS OF THE 1993 RATE REGULATIONS

As an illustration of how a widely accepted financial analysis format can be developed into a simulation tool to investigate economic issues for telecommunications systems, a pro forma cash flow model of cable television is developed using regression analysis of market demand and operating costs, and engineering analysis of capital costs. The model can be used to simulate financial performance for a cable television system to investigate the impact of different market conditions, syste m or service configurations, and pricing structures. Results of some m odel simulations indicate that cable systems significantly benefit fro m higher consumer density, benefit somewhat from system size, and may have some monopoly power with regard to price. Large urban systems see m to be favored by the FCC's 1993 benchmark prices.