ecom Market Segments Chapter 8 insult to injury, this figure does not take into account in any way the cap- ital required to perform ongoing (and required) network upgrades. Cable analysts use a number of measures for assessing the financial health of cable companies, including operating income (EBITDA) as opposed to free cash flow; they also use return on capital as a good indi- cator. Today the number averages about 5 percent on a pretax basis, which is not a particularly impressive number. The top five cable MSOs serve 81 percent of the overall U.S. market, while the top ten serve 95 percent. There is still significant competition for cable from satellite providers: Consider DirecTV and the many ser- vices it offers. Their primary market is distributed, commercial video ser- vice with 80 percent market penetration and very slow growth (roughly 1 to 2 percent per year). They primarily serve residential markets and are motivated to (1) enter the enterprise space and (2) diversify their line of product offerings. (Readers may have seen the frontal assault on cable posed by the satellite providers in the voracious pig commercials that were recently aired.) Cable MSOs are not taking the attack idly, however. As the satellite industry pushes hard for customers, cable providers are striking back, keeping rates steady in markets that are most prone to attack by satel- lite providers and raising prices in markets where it is warranted. They are also relying on broadband Internet access and its high profit margins to bolster revenues and to provide a loudly proclaimed competitive advantage, since satellite providers cannot yet offer Internet access that provides equally satisfactory service. Others are aggressively advertising bundled service packages that offer distributive cable services, broad- band Internet access, and telephony for a small additional fee. Even though satellite prices are typically cheaper than cable for enter- tainment packages, the magnitude of the price difference is shrinking in many markets. As