Measuring data envelopment analysis efficiency in cable television network facilities: What are appropriate criteria for determining the amounts of governmental subsidies?

Recent technological developments have transformed the cable television industry (CATV) from a simple retransmitter of terrestrial broadcasting to a provider of a broader-band information infrastructure. With cable operators facing an undesirable market situation while operating a fiber optics network vital to the creation of an information-based society within Japan, the Japanese Government has introduced several supportive measures for the industry. Such governmental intervention should desirably be justified not only from a political viewpoint but also from an economic one; otherwise such measures may distort economic efficiency. In this article, using Data Envelopment Analysis, the authors identify the deficiencies of an accounting-based intervention scheme and propose an alternative framework with no disincentive side effects.