The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Satellite TV and Internet streaming “are not effective substitutes” for Cable Bahamas’ TV service, a survey finding less than 10 per cent would switch to then if the BISX-listed provider increased prices 5-10 per cent.

The Utilities Regulation and Competition Authority (URCA) said it had reached this conclusion based on a survey of 600 Bahamian households, which it commissioned from the Public Domain Research and Strategy consulting firm.

The findings, it indicated, added to its belief that Cable Bahamas can raise its cable TV prices “profitably” by 5-10 per cent without suffering any loss of consumers or market share, thus giving it Significant Market Power (SMP) in this product.

Detailing the survey findings, URCA said that with just 7 per cent of respondents currently subscribe to satellite TV, indicating this had “only a small share of Bahamian households”.

“The results of URCA’s consumer survey show that there would be limited switching from Cable Bahamas’ services to satellite TV services if prices for the Cable Bahamas package increased by 5 per cent to 10 per cent,” the regulator said.

“ For example, as part of the consumer survey, 8 per cent of Cable Bahamas’ pay TV customers stated that they would consider switching to a satellite TV provider given a 5-10 per cent increase in Cable Bahamas’s price.

“The probability of switching is further reduced given that approximately 20 per cent of Cable Bahamas’s pay TV customers subscribed to pay TV and broadband bundles (with the latter service commonly not provided by satellite TV providers),,” URCA added.

“Based on the evidence available, URCA believes that satellite TV services do not represent an effective substitute for Cable Bahamas’s pay TV services, and therefore do not form part of the same relevant product market. URCA notes that, given the low take-up of satellite TV services in The Bahamas, this exclusion has limited bearing on URCA’s preliminary competitive assessment of the pay TV service market.”

URCA added that prices for satellite TV suffered from high start-up and hardware costs, with one provider charging $199 for the dish and a $100 activation charge.

“Customers can then choose between two TV packages offering 210 TV channels for $69 per month and 285 TV channels for $99 per month. As such, even when ignoring the set-up costs, this makes this provider’s pay TV offerings more comparable to Cable Bahamas’s mid to upper range packages,” URCA said.

As for Internet streaming as a competitive alternative to Cable Bahamas’s pay TV and video-on-demand products, URCA said: “The results of URCA’s consumer survey show that there would be limited to no switching from Cable Bahamas’s pay TV services to internet streaming if prices for the Cable Bahamas package increased by 5-10 per cent.

“In particular, when asked about their potential response to a 5 per cent or 10 per cent increase in the monthly charge for their current Cable Bahamas package, none of the consumer survey respondents stated a potential switch to an internet based TV provider (such as Netflix).

“This also holds for Cable Bahamas’s video on demand services, for which URCA’s consumer survey revealed limited willingness to switch to an internet-based TV services if prices for Cable Bahamas’s on demand services increased by 5-10 per cent,” the regulator added.

“In particular, when asked about their potential response to a 5 per cent or 10 per cent increase in Cable Bahamas’s price for video on demand services, only 3-5 per cent of the consumer survey respondents stated a potential switch to an Internet based TV provider. Given the limited availability of local content online and the barriers to consumers subscribing to a US based service, this lack of switching is not surprising.”

In conclusion, URCA said: “URCA remains of the view that internet streaming is not likely to render a 5-10 per cent [price rise] on Cable Bahamas’s pay TV packages unprofitable, given the differences in product characteristics and the consumer survey evidence discussed above.

“URCA, thus, continues to believe that these services are unlikely to present an effective substitute for Cable Bahamas’s pay TV services, and so, will not constrain Cable Bahamas’s ability to profitably raise its prices by 5-10 per cent.”