Rural Electrification:

REA Borrowers' Investments in Cable and Satellite Television Services

RCED-93-164: Published: Jul 29, 1993. Publicly Released: Aug 10, 1993.

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Pursuant to a congressional request, GAO reviewed Rural Electrification Administration (REA) borrowers' cable and satellite television investments, focusing on the extent of: (1) REA borrowers' investments in cable and satellite television businesses; (2) competition between REA borrowers and other satellite and cable service businesses; and (3) regulation by federal and state agencies to control nonutility investments.

GAO found that: (1) of the 416 REA borrowers that provide cable or satellite television services to customers, 152 provide only cable television services, 231 provide only satellite television services, and 33 provide both cable and satellite television services; (2) telephone utilities provide over 95 percent of the cable services and electric companies provide 77 percent of satellite services; (3) survey respondents reported that their investments in cable and satellite businesses totalled more than $357 million; (4) REA borrowers with satellite television services face greater competition than cable service providers; (5) independent cable and satellite businesses believe that REA borrowers have a competitive advantage because they have greater access to loans and utility resources; (6) regulatory oversight of REA borrowers' activities is limited; (7) state regulation of REA borrowers varies and is contingent upon whether the borrower is a cooperative or investor-owned; and (8) although REA places restrictions on borrowers' nonutility investments and utilizes accounting and auditing controls to protect loan security, REA authority is limited by statute.

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