Here is a simple experiment for those of you who have an investment in your home entertainment system. If you have a set top box for your cable system, it is likely that you have a mixture of analog and digital channels. Disconnect the box and run the cable directly into your TV. Carefully study the images of a few channels that you can receive (it is likely that most of the network TV channels are analog and will work). Now reconnect the box and look at the same channels. Do they look the same?
I did this with a General Instruments (now Motorola) DCT-2000 class box and was startled to see how much the analog signal was degraded. I wouldn't be very happy if I had a $2000 TV and added a $70/month cable service to find my non-digital channels were being degraded. The box must be poorly designed and/or out of spec.
A very interesting question for investors is "how recession proof is cable?" Historically cable use has grown through recessions, but cable is nearly at saturation levels at this point. The recession in the early 90s saw cable subscriber growth, but a rather steep drop in premium channel subscription. Cable rates have increased dramatically in the past decade and it will be interesting to see where consumers draw the value line. Basic cable is clearly cheap entertainment, but will people keep $1000 a year subscriptions if they are worried about their jobs?
Locally we may be seeing a bit of a potential future. My township has been battered by heavy layoffs in several industries. I'm involved with the town's cable TV board and we have seen a strong move to satellite TV as well as to the basic service from the local operator. The local operator has been doing a less than stellar job, but it is possible that these moves are driven by the declining economy.
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