Judging by the SkyForum conference in New York earlier this week, the satellite broadcasters are expending as much time and money arguing amongst themselves as they are fighting their nemesis, the cable industry, or attracting consumers to their DTH direct- to-home services. EchoStar Communications Corp, USSB Inc, DirecTV Inc and Primestar Inc do have genuine regulatory and pricing concerns to do with their ability to re-broadcast local channels and fees they must pay to transmit copyrighted material. They are also confronting a myriad of local zoning laws which regulate the attachment of satellite dishes to the outside of buildings. However the consumer must these days jump an increasingly more complicated set of hurdles to get the kinds of services – on 400 channels or more – not available from their cable provider (if they have one). Once potential subscribers are confident they’ll have access to the local channels they are accustomed to – seven out of ten prospects decide not to get satellite TV because they think they won’t be able to receive local channels – they’re confronted with a confusing choice of C-band, Ku-band, DBS Direct Broadcast Satellite, DSS Digital Satellite System, digital TV, 24 dish, 18 dish, combined dish and antenna products just to make sure they really really want the service. And at what cost? The SBCA Satellite Broadcasting and Communications Association which organizes SkyForum believes more channels is the reason why subscribers are signing up for satellite services at the rate of 4,000 to 5,000 per day while very a small minority give their dishes back. And by the admission of SBCA president Chuck Hewitt, the industry’s prime target are the 25 million US homes that are not currently served by the cable companies, homes that at the moment can only receive broadcast network channels, not the 65 million cabled-up homes. Sounds like a licence to print money? So why is the satellite sign-up curve flattening out? Growth despite confusion, is Hewitt’s observation.
Collective strengths
Although DTH can claim to be digital TV and high-speed internet- ready, it’s doing little to press home even these advantages. It’ll cost the cable industry an estimated $300 per subscriber to upgrade set-tops to receive digital pictures. There were no more than a couple of sentences uttered about DTH’s data delivery capability, such as DirecTV’s DirecPC. (DirecPC’s out at 30 beta sites and is expected to be available sometime early next year on a limited basis). EchoStar chairman and CEO Charlie Ergen is the industry’s most outspoken advocate, urging the companies to capitalize on their collective strengths: digital TV-ready, clearer picture, massive choice of programming. For the record, EchoStar is hoping Washington will relieve the satellite companies from planned copyright constraints which would mean they have to pay $0.27 per subscriber per month to transmit copyrighted material, versus $0.09 per subscriber for the cable operators. Primestar, owned by a bunch of cable concerns, and viewed as a ringer, thinks a dish for satellite and an antenna for local services is the way to go. USSB and DirecTV are hedging their bests. SBCA estimates between 4,000 and 5,000 new satellite subscribers are being added each day in the US, a rate expected to rise to 7,000 per day in the fall. It hopes there will be over 8 million subscribers by the end of the year. At the end of August subscribers to the older C-Band services totaled 2.16 million, down from 2.3 million a year ago. DirecTV’s subscription base is up from 1.78 million to 2.8 million over the same period. Primestar (currently absorbing, pending Federal approval, News Corp’s US-based ASkyB assets), up from 1.4 million to 1.8 million and EchoStar from 0.1 million to 0.7 million. The total stands at 7.47 million and counting, though more slowly already.
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