Is the Canadian Cable Television Industry a Natural Monopoly

Chapter Outline
Preface

Chapter Title Page
Preface Outline 1
I Introduction 2 A The Canadian Cable Television Industry 2
II Details 3 A Model 3 B Data 4
III Externality Effect 10
III Comparison with Telephone Industry 12
IV References 14

Table Title Page
1.1 2003 Market Share of Canadian Cable Companies. 2
2.1 Canadian Cable Industry 5
2.2 Rogers Communications Incorporation 7
2.3 Shaw Communications Incorporation 8
2.4 Cogeco Cable Company 9
3.1 Marginal Private Benefit 11
3.2 Marginal Private Cost 11
3.3 Demand Schedule of the market 12

Figure Title Page
1.1 2003 Market Share of Canadian Cable Companies. 2
2.1 Conventional Depiction of Natural Monopoly 4
2.2 Measurement of Possibility of Natural Monopoly 5
2.3 Canadian Cable Television Indusry 6
2.4 Rogers Communications Incorporations 7
2.5 Shaw Communications Incorporation 8
2.6 Cogeco Cable Company 10
3.1 Externality Effect of Regulation of Cable Industry 12

Chapter Introduction
1

A. THE CANADIAN CABLE TELEVISION INDUSTRY

It all started back in 1981 when Vidéotron Ltée and La Presse introduce the first electronic newspaper via cable in Montreal. One year later, The Canadian Radio-television Commission licensed Canada's first pay services and 58% of home televisions were connected to the cable television.

The majority of industry members have formed an association the CCTA – Canadian Cable Televisions Association, to have a unified word when facing regulators, help promote the industry's services. Table 1.1 and figure 1.1 show that CCTA have through its members a control over more than 70% of the Canadian cable services.

Table 1.1 Market Control (2003)
ROGERS 30.30% SHAW 27.20% COGECO 11.20% EASTLINK 3.20% ACCESS 1.00%
MONARCH 0.80% OTHER* 26.40% TOTAL 100%
*less than 50,000 customers each Figure 1.1 2003 Market share of Canadian Cable Companies

Since its inception, cable television service has been