Cable Television Reception
in Latin America

The most common form of multi-channel television distribution is through wired cable.  The various program providers forward their respective signals to a cable system operator, typically through a satellite link.  Since different program providers may use different satellites, the cable system operator may deploy several large satellite dishes to pick up these signals (see photo below).  The signals are then distributed from a "headend" through a network of cables or wires into subscriber households.  In the older cable systems, copper coaxial wires are used.  In newer cable systems, fiber optic cables may be used in parts of the system.

Cable Onda, Panama
Cable Onda, Panama City, Panama (photo credit: Nitzia Thomas)

Cable wires are usually laid underground.  If there are many competing cable companies in the same area, excavation may take place frequently.  To minimize inconvenience to the populace and to reduce costs to consumers, cable systems may be granted exclusive franchising rights in certain areas.  In this sense, cable companies have the same status as telephone and utility companies.

Cable franchise rights may be awarded as a result of competitive bidding, price guarantees and programming guarantees in the form of the number of channels or community services.  Cable franchising is not a universal practice.  In some countries, cable competition is allowed and indeed encouraged, so that all-out cable wars can break out.  

To initiate a subscription, a household signs up with a cable company.  The company sends an installer to hook up the household, with a convertor box for each cabled television set.  The household will pay a periodic (usually every month) subscription fee, on top of an initiation fee.  The amount of the subscription fee depends on factors such as the number of cabled television sets and the list of channels.  Typically, a cable household will be able to receive somewhere between twenty to seventy channels, including the regular broadcast television stations in the area.  When households discontinue their subscription, the convertor boxes are returned to the cable companies.  Failure to do so may result in a heavy monetary penalty.

TVC, Montevideo, Uruguay
TVC, Montevideo, Uruguay (photo credit: Pablo Verdin)

Financially, the principal costs for a cable company are for hardware (the satellite dishes, the "headends", the cables and the convertor boxes), operations (installation and de-installation), program acquisition and marketing.  The income source is derived mainly from subscription fees, with some advertising revenues.

To maximize profit, a two-pronged approach is required.  On one side, more subscribers must be signed up.  This means offering good program choices at reasonable prices.  If the viewing options are boring, then few people are willing to spend money for the service.  If the prices are unreasonably high, then few people can afford to subscribe.  On the other side, the costs have to be minimized.

According to the 1998 Los Medios y Mercados de Latinoamérica Study, there are 15,151,000 cable television households in Latin America.  By geographical region, they are distributed as follows:

Argentina: 5,096,000 cable households
Brazil: 1,745,000 cable households
Chile: 906,000 cable households
Colombia: 2,235,000 cable households
Mexico: 2,351,000 cable households
Venezuela: 536,000 cable households
Central America / Caribbean: 1,218,000 cable households
Balance of South America: 1,063 cable households

The growth of cable television has been very uneven across different countries.  When cable television is considered as a public service, there are many political factors as well as economic considerations that may promote or inhibit growth.

San Juan, Puerto Rico
San Juan, Puerto Rico (photo credit: Pablo Verdin)

We should note that not all cable television is of the legal variety.  Theft of service occurs in many countries in many ways.  In the simplest situation, a subscribing households refuses to pay the bill, but it takes several months before the service can be cut off.  One might argue that this is not pure theft, but reflects the operational inefficiency of the cable company.  In another situation, a household rigs up its own wiring to route the signal into the household (see illustration above); when detected, the household can be prosecuted for theft.  These kinds of theft are made easier when the signals are simply sent along the cable wires everywhere without any form of encryption.  If the cable system uses addressable convertor boxes (that is, each box has its unique identification number to which the cable headend directs only those signals that the household is entitled to), then such theft is much more difficult.


(posted by Roland Soong on 11/14/99)

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