Satellites soar, cable gets buried

[Nick]

USA TODAY NEW YORK —

The Founding Fathers might wince, but cable operators reeling from their worst loss in basic subscribers in the second quarter are struggling to convince Wall Street that all customers are not created equal. Operators say that the road to profits is for them to appeal to subscribers who'll buy digital TV and Internet and phone connections, even if it means letting satellite companies grab people who just want the best value on video.

more... (http://www.usatoday.com/money/media/2004-08-10-cable_x.htm)

[Cyclone]

Bah! Cable will come back strong in a year or two when they finally start to go "all digital". Once VOD and better CableCard hardware start to take hold. Bundling with Internet and Voice will help too.

DBS is destined to the $35/mo alternative. The days of better PQ are gone. The days of exclusively having 100s of channels are gone. The days of better Hardware with capabilites (IE DD5.1) exclusively are gone. Cable keeps coming back on these fronts. DBS will be reduced to a cheap Video service alternative, with not much for the high end customer. It will still be the preference for rural customers or subscribers to international programming.

The only thing left that DBS has over cable, is that they do not have to support the cost of maintaining the expensive "plant" or the cables on the poles and underground.

[Mike123abc]

The only thing left that DBS has over cable, is that they do not have to support the cost of maintaining the expensive "plant" or the cables on the poles and underground.

That is a pretty big advantage. You look at a satellite costing $250million. Well that breaks down to about $2.50 per household that it provides service to (since the satellite can do every household). Cable can pay upwards of $500-1000 per household to wire and maintain.

[bigbw]

HD will be the catalyst.. Who ever can offer customers the most HD including local channels will do well. D* offers
O/O locals, but that does nothing for those of us that are not eligible to get them. Which ever company that can offer me what I want to watch will get my biz..

[durl]

I get the feeling that the Boards of Directors of the cable companies around the country may not be as optimistic as you are.

When you deal with people and consumerism, hardly anything is certain. The tide could switch back to cable and away from satellite at any given time. DBS has been gaining market share year after year and even though satellite subscribers may switch back to cable, satellite is able to continue expanding their customer base by (1) reaching people that cable doesn't reach and (2) offering unique products such as NFL Sunday Ticket.

To me, the key point is that cable has a LOT of advantages over satellite but they are still losing customers. Why? Because of lousy customer service and constant rate hikes. Cable will not turn the tide until they correct those 2 points.

[Cyclone]

After seeing how boards acting during the dot com years, I no longer think that they are necessarily smarter that I am.

This is a bandwidth services game. The Players are the Cable Companies, The phone companies, the DBS companies, and if they decided too, the Power companies.

Cable has the best seat with their fiber deployment.

DBS has the best "reach", but are short on Bandwidth and use a "one way" broadcast technology.

The Phone Companies have been in the bandwidth game for years, but are at a disadvantge with the copper pairs. While they tweak DSL for every last bit, Cable doesn't even break a sweat at the same speed. What they lack is video service experience. They will bundle for a while with DBS because they pair well together at this time. But once the Phone companies get their fiber deployed, expect them to drop DBS for video service and keep as many "Bundled" customers to themselves.

I see the Phone Companies and Cable Companies becoming the largest video providers in the next ten years. DBS will still be around, but it won't be the high end choice. It will mostly serve those in rural areas, or who want the best "low end" plans. DBS internet will never be able to compete with Cable/Fiber or even Terrestrial wireless solutions. It will be abandoned as a poor use of Sat capacity.

[durl]

The heads of the dot-com companies themselves were geniuses. People were buying up their stock like it was going out of style even though the companies made no profit. When you can make people go crazy for your stock when your company is worthless, you've accomplished something. Of course, the smarter ones were those who recognized that the dot-com bubble would inevitably burst and sold out before they lost everything (example: Mark Cuban.)

I can see Phone and Cable companies making some technological moves during the decade. Mainly because they'll have to in order to survive. They've got a lot of capital, technology, and experience that will help them adapt to the new environment. But a lot of things can change in 10 years so who knows how we'll get our video by 2010? I'm sure that cable didn't expect to lose almost 20% of their market back in 1994.

[SuperJack]

All of you make good points. I agree that DBS won't (and isn't) enjoy the same technological superiority it has had over cable the past ten years, which will mean eventually the only difference in cable and satellite may be aesthetics and price. Cable certainly has earned itself a bad reputation when it comes to price, but I think market competition and the continued loss of customers will force cable to rethink its constant rate hikes. At the same time, a local cable company is just that -- local. This is very good in terms of providing unmatched local programming, but bad in terms of limited resources to maintain all of that cable and equipment. With satellite all customers get the same service, an upgrade for one generally means an upgrade for all. The economies of scale is amazing as it really costs nothing to add a new customer. There are not millions of miles of cable to maintain. Sure satellites are expensive, but as one of you has already mentioned, the same satellite serves all 13 million customers. Satellite definitely has an advantage in this area. Bandwidth won't be a significant factor in cable or satellite's future ability to provide television service. Satellite technology is improving all the time and I doubt satellite companies will be bottlenecked in the long run. Who had heard of spot-beams ten years ago? DirecTV's Spaceway satellite, if successful, could theoretically serve all 200+ TV markets in HD! This will not be the deciding factor. Where satellite companies struggle is two-way communications, making it tough for them to provide telephone and internet service. But for those of you who think that everyone will choose a provider who bundles such services are very shortsighted. I personally think that satellite, cable, and telephone companies will all be around for years to come. They each have unique strengths and weaknesses. A final word -- DBS is only ten years old; avoid limiting your vision of its future based on current satellite technology -- where there's a will, there's a way.

[Mike123abc]

Cable will definitely trounce DBS in some markets. They do it right now in some markets. But the problem with cable is that every single town, and even neighborhood (in large cities) is different. There will always be bad cable companies.

I have TWC here in Wichita Falls, in some areas of the country they provide great service. In my area they still do not have HD, and they say well we are going to do on demand first then maybe in a few years we will do HD. They also charge significantely more for their channels than DBS. Yes someday they could change, but right now they are making money and why work at it? This is the attitude of a lot of the country.

Quite frankly why lower prices and compete with DBS when cable can keep 80% of the customers and charge them a premium? Let the bottom feeders go to DBS they probably generate more service calls and have poorer credit ratings.

[Steveox]

But Local communities like homeowners assn, wont allow DBS cause cable is funding the homeowners assn and when you get cable the homeowners assn robs you blind!

[SimpleSimon]

But Local communities like homeowners assn, wont allow DBS ...
That's illegal. Go look it up:
http://www.fcc.gov/mb/facts/otard.html

[Mike Richardson]

But Local communities like homeowners assn, wont allow DBS cause cable is funding the homeowners assn and when you get cable the homeowners assn robs you blind!

They HAVE to allow DBS. It is the law.

EDIT: bah, you beat me, SimpleSimon!

[catman]

I know . I live in oshkosh ,wisconsin . as long as there is no satellite dishes . cable is free . I found that out from a couple that are going through a divorce . I think stevex is right . Cable companies are paying your condo's NOT to put dishes up in turn get free cable .

[Visitor]

Cable will come back strong in a year or two when they finally start to go "all digital".

I agree, although I think it will take a bit longer. Cable companies have been able to be complacent for many years, with their monopoly status. Now that they are facing real competition, they will have to wake up and fight back.


Bundling with Internet and Voice will help too.

I hate the fact that cable companies force you to buy their TV service if you want Internet access from them. I work from home, via a DSL connection. Cable internet is not available yet where I live, but where it is, our local cable company requires Internet subscribers to also have a basic TV contract. I have satellite TV service, and have no interest in the inferior offering from my cable company. This kind of forced bundling should be illegal.


The only thing left that DBS has over cable, is that they do not have to support the cost of maintaining the expensive "plant" or the cables on the poles and underground.

Yeah, but cable companies don't have to build and launch hundred-million dollar satellites, either!

[Cyclone]

Good post Vistor, you should register here. We can use more participation from someone like you.

Yeah, but cable companies don't have to build and launch hundred-million dollar satellites, either!True, but the satellite serves the entire continental U.S., where the hundreds (or even thousands) of miles of cable only serve a single county.

[Lyle_JP]

In my mind, cable will not be able to compete with satellite until their hardware is greatly improved.

Even Dish Network's much maligned boxes are in an entirely different league than the featureless Motorola crap that Comcast subjects their subscribers to.

When the cable companies start giving us full-featured dual-tuner PVRs with S-Video, Dolby Digital, and a menu design not done by Gemstar, then maybe they'll be considered "competition".