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Directv Going To Lease Only 3/1/06


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#1 OFFLINE   boba

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Posted 12 January 2006 - 02:44 PM

Dealers are receiving notices their contracts expire on 2/28/06 they must sign a new contract for lease only by the end of Feb.:( Maybe DISH and Directv were prohibited from merging but they are sure looking like one company.

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#2 OFFLINE   carl6

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Posted 12 January 2006 - 07:03 PM

Does this mean customers will not purchase their equipment, but will lease it instead? Dealers will not sell receivers or dvrs?
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#3 OFFLINE   lee1203

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Posted 12 January 2006 - 07:28 PM

January 13, 2006

EXECUTIVE SUMMARY:

• DIRECTV will be migrating over to a new Lease Program on March 1, 2006, which will require you to sign a new agreement in order to continue working with DIRECTV. As such, this letter shall serve as the written notice required to terminate your existing agreement with DIRECTV. Please be advised that your existing agreement will terminate on February 28, 2006.

• In order for you to continue to act as a DIRECTV dealer, you must agree/accept/approve a new Agreement via the online acceptance method by February 28, 2006; the new agreement will govern our relationship under the Lease Program.

• Your current commission economics will not change other than starting March 1, 2006, commissions will now be paid only for leased equipment instead of purchased sales. Of course, commissions are subject to changes in the future in accordance with the terms of your Agreement.

• In addition, customers will continue to acquire their hardware from you under the Lease Program. Upon activation of the leased equipment, DIRECTV buys the equipment from you and issues payment. Please see details regarding the sale and purchase of leased equipment in the agreement, which will be made available to you shortly.

• Through the new lease model, standard, professional installation remains free for new customers and under the new terms of the lease model, it's free for existing customers as well!

• A Q&A sheet along with a more comprehensive outline of this program is included.

Countdown to the DIRECTV Lease Program!

On March 1, 2006, DIRECTV will be migrating over to a new hardware Lease Program. The Lease Program is designed to provide your customers with competitive offers and to help you continue growing your acquisition of quality customers. The DIRECTV Lease Program will be our primary hardware model to ensure our customers always have access to the most state-of-the-art, up-to-date equipment!

On March 1, 2006, all commission-based DIRECTV hardware transactions will be under the new Lease Program. It is important to note that your current commission economics will in no way change other than the fact that commissions will now be paid only for leased equipment instead of purchased equipment. Of course, your commissions are subject to change in the future in accordance with the terms of your new agreement.
It’s never been easier to have satellite television! With equipment replacement and upgrade offers through our DIRECTV dealers, the new Lease Program takes all the worry away from customers. In addition, leased receivers are backed by a convenient equipment replacement program. If the customer wishes to stop subscribing to DIRECTV service upon fulfilling their programming commitment, they are required to return the equipment to DIRECTV per the terms of the Equipment Lease Addendum.

Page 2 of 5

The new Lease Program requires customers to pay a nominal lease fee, some examples of which are highlighted below (please note that the following illustrations are for new customers only). Note that the monthly lease fee is in addition to applicable programming charges:

New Customer Hardware
Upfront Hardware Lease Fees
Total Monthly Costs to Customer
Commitment Period/Early Cancellation Fee
1 Standard Receiver
$0
$0 Lease Fee (no fee for first receiver)
+Monthly programming
1 Year/ $150 prorated
1 Standard Receiver + 1 DVR
$0 (after $100 mail-in rebate*)
$0 Lease Fee (no fee for first receiver)
+ $4.99 Lease Fee (for second receiver) + $5.99 DVR Service Fee (Whole House)
+ Monthly Programming
2 Years/ $300 prorated
2 DVRs + 1 HD
$197 (after $100 mail-in rebate*)
$0 Lease Fee (no fee for first receiver)
+ $4.99 Lease Fee (for second receiver)
+ $4.99 Lease Fee (for third receiver)
+ $5.99 DVR Service Fee (Whole House)
+ Monthly Programming
2 Years/ $300 prorated
1 HD DVR
$299 (after $100 mail-in rebate*)
$0 Lease Fee (no fee for first receiver)
+ $5.99 DVR Service Fee (Whole House)
+ Monthly Programming
2 Years/ $300 prorated

* New customers are eligible for one Advanced Receiver mail-in rebate ($100) per household; this rebate is subject to changes or termination.
Credit scoring at point of retail remains in effect with the new Lease Program, so the only change new customers will experience are the lower costs associated with becoming a new DIRECTV customer!
New Agreement Required for all DIRECTV dealers

This letter serves as written notice of DIRECTV’s termination of your agreement as required under your agreement with DIRECTV. Accordingly, your existing agreement will terminate on February 28, 2006. Because the lease program is an entirely new business model, it is necessary for every DIRECTV dealer to review and approve the new agreement no later than February 28, 2006. The new agreement will govern our relationship under the lease program. [Of course, both parties will continue to be responsible for any matters and issues from the terminated agreement after the termination date (e.g., payment of any unpaid commissions, chargebacks accruing in the future, any installation issues under the sales model, etc.)] To make this transition as easy as possible for our dealers, we expect that the new agreement will be available online in the next few days for your review and acceptance. Once the new agreements are available, when you log onto retailer.DIRECTV.com, you will be sent to the online agreement that is applicable to you. For your convenience, you may continue to go on to the dealer website without accepting the new contract, but be advised that you will be directed to the agreement each time you log on until you have agreed, accepted and approved. Please note that you have the right to review the terms of the new agreement before accepting it, but if the new agreement is not approved by the principal/owner of record by February 28, 2006, since your existing agreement will be terminated, you will no longer be able to continue as an authorized DIRECTV dealer after February 28, 2006.

By enabling all of our dealers to accept the agreement online, we ensure that our dealers have access to additional important information DIRECTV will post online in the future.

Page 3 of 5

Please note that on and after March 1, 2006, only hardware transactions under the Lease Program will be eligible for commission; any DIRECTV hardware sold by you will not be commissionable or subsidized in any manner or for any amounts whatsoever. All hardware subsidies will be subject to chargeback for sales made under the owned model. Further, under the new terms of the lease agreement, DIRECTV retailers are required to extend the lease offers to customers based on DIRECTV’s standardized lease transactions; see “Consumer Offers: Lease Transactions” in the online contract for full details. Dealers may not deviate from these lease transaction fees in any way since the lease offers are set and established by DIRECTV as the lessor.

We are excited to offer this new program to our customers and know that, with your help, it will be a success! If you have any questions, please contact your DIRECTV Area Sales Manager, Distributor Sales Representative, or DIRECTV Retail Services at 1-800-323-1994, or via email at RetailServices@DIRECTV.com.

Best Regards,
DIRECTV, Inc.

LSE_0106

Page 4 of 5

Q&A About the DIRECTV Lease Program
1. Q: Why is DIRECTV migrating from a hardware purchase model to a Lease Program?

A: Some of the most important reasons DIRECTV is migrating to the Lease Program are:

• To maintain a competitive offer in the market place by providing
DIRECTV customers a convenient receiver replacement program.

• Increase retention of DIRECTV customers, which should help reduce chargebacks.

2. Q: How is my commission affected by the Lease Program?

A: With the new Lease Program going into effect on March 1, 2006, dealers are paid commission only on those DIRECTV customers acquired under the terms of the new Lease Program. Some dealers may still sell receivers to customers, if they wish, but they will not be paid on those sales and the hardware will be in no way subsidized.

3. Q: How are mirroring fees impacted with the new Lease Program?

A: The bottom line is that a customer’s monthly bill will be nominally impacted. Although the term “mirroring fees” will go away in the Lease Program, customers will be subject to “monthly lease fees.” As with mirroring fees, the new “lease fees” are waived for the customer’s first receiver (lease fees are waived for the first receivers for new customers only; existing customers are subject to lease fees for any additional receivers they may acquire).

4. Q: Under the current model, I can currently charge whatever I want for the hardware as long as I absorb the cost if I offer it at lower than what is subsidized by DIRECTV; will this continue?

A: No. DIRECTV will be the party who will lease the equipment to the customers under the lease program. Accordingly, DIRECTV controls, sets and establishes the terms of the new lease program, including the lease fees charged for equipment. If you deviate in any way from the lease program as established by DIRECTV, including the standardized lease fees, you will be subject to immediate termination, without an opportunity to cure.

5. Q: Will the customer be getting used boxes with the Lease Program?

A: Through the Lease Program, there is the possibility that customers may get reconditioned equipment. Please keep in mind that DIRECTV will take precaution to ensure that any reconditioned equipment leased to customers is in “like new condition.” Of course, whether the equipment is new or reconditioned, it is covered by DIRECTV’s receiver replacement program.

6. Q: Why do I need to sign a new contract/agreement with DIRECTV?

A: Because the primary business model that DIRECTV works with its dealers on is changing, we need to have a new contract in place to support the new Lease Program. This will also allow us to provide contractual amendments to you online in the future!

7. Q: What happens if I sell (not lease) my customer a DIRECTV system after 2/28/06?

A: While you are not prohibited from selling DIRECTV hardware at prices established by you, please be advised that after 2/28/06, you will not be eligible to receive any commissions or subsidies for sold receivers. Accordingly, you will be subject to chargebacks for any subsidies or commissions you may have received, including any amounts under the Buy-Down Program. Please also note that only leased receivers will be eligible for ODU/Multi-Switch Reimbursement and commission.

Page 5 of 5

8. Q: Do Early Cancellation Fees or Differentiated Offer Fees change with lease?

A: No; both of these fees will be generally handled in the same manner as they currently are.

9. Q: With the lease model, will new customers now have to pay for standard, professional installation?

A: A: No! New customers will continue to get standard professional installation for free. In fact the great news is that with the lease model, both new and existing customers are eligible for free standard installation.

10. Q: How are existing customers affected by the lease model?

A: They aren’t. Existing customers who have already purchased hardware will continue to own their hardware. New customers who sign up for DIRECTV will be leasing the equipment. However, if an existing customer wishes to add additional receivers to what they already own on or after March 1, 2006, the newly acquired receivers will be under the terms of the lease model and the customer will be considered a mixed household, in which case they will be charged a lease fee on their leased equipment.

11. Q: How does my advertising need to change in order to promote the new lease model?

A: There will be changes reflected in all advertising once we migrate over to the lease model on March 1, 2006. We will be providing you ad slicks for the upcoming Q1 offer, which reflects the new hardware positioning and advertises our great, new programming offer that starts March 1.

Advertisements will continue to promote the free standard, professional installation but the equipment will now be leased, not owned. You will need to update the legal block to reflect the new terms of the lease, and, as always, all advertising must be sent through DIRECTV for approval.

12. Q: How does the Lease Program affect a customer’s experience at my store?

A: The customer experience will not change in regards to coming to you to acquire the best and latest DIRECTV hardware. The customer still comes to you for their DIRECTV system, they are credit scored, and you provide them with the hardware they need to access DIRECTV programming! The only thing that changes is the terms of the hardware, which will now be leased instead of owned. Upon cancellation/disconnection/termination of their DIRECTV account, they are required to return the equipment per the terms of the Equipment Lease Addendum, which replaces the old programming commitment agreement. If they do so before they have satisfied the programming commitment, they will also be subject to the early cancellation fees. The terms of ownership change, but accessing the premier multi-channel provider remains the same! DIRECTV is making it easier than ever for customers to get the most up-to-date, advanced hardware on the market through its dealers.


http://www.satellite...?t=52395&page=2

#4 OFFLINE   mya23rd

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Posted 12 January 2006 - 08:49 PM

DTV has been talking about moving to a lease plan for awhile and its good that they are finally doing it. I read some of the details and I don't understand why they are still charging 200 bucks for the HD DVR and thats only after a 100 buck rebate so the initial up front cost would still be 300 bucks, if I read it correctly. I mena thats definitely better than paying a thousand bucks but I don't understand why its still pretty expensive, espeically compared to cable which has very little or no up front costs. This is not to mention the 2 year commitment that is required which is excessive in my opinion, I understand that they have to protect their investment but why not offer a 1 year contract instead.

And one thing I don't understand about the lease plan is, will there be another 5 buck monthly lease fee per receiver on top of the 5 bucks already paid for additional receivers, meaning that it would now cost 10 bucks a month per receiver? I'm confused on that. If this is the case doesn't that mean customers are worse off because they will have to pay an extra five bucks per receiver a month? Compared to the previous deal where you got all the equipment for free and only had to pay the 5 buck additional receiver fee? I hope that makes sense. But from the looks of it it doesn't seem like DTV is setting this up right. Plus it seems like they are giving dealers less of an incentive to offer good service. Am I right about all this?

#5 OFFLINE   Smthkd

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Posted 12 January 2006 - 09:05 PM

I just hope this dosent apply to those with the HR10-250 HDTivo's that are waiting to get their upgrade to the HR20 HDDVR. Because Ill be _____ if I have to trade in my HR10-250 for a leased HR20 model!

#6 OFFLINE   bidger

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Posted 12 January 2006 - 09:13 PM

I mena thats definitely better than paying a thousand bucks but I don't understand why its still pretty expensive, espeically compared to cable which has very little or no up front costs.

With cable you'll still pay $15-$20/mo. for equipment and DVR costs for as long as you're using the equipment. Personally, I'd rather pay an upfront fee and have my monthly charges be for programming only. Plus, if I want to upgrade my equipment as far as expanding the recording capacity, that's up to me.

Ceton 6 tuner eth, Cisco Tuning Adapter 1520, TWC Digital Explorer Pak and Standard Internet, TiVo HD (upgraded to 500 GB) for OTA,TC-P50U50, SONY NSZ-GT1 BD player and Google TV box, Yamaha RX-V373 A/V receiver, Squeezebox Duet music streaming device, Xbox 360 

 

 


#7 OFFLINE   GunnySpook

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Posted 12 January 2006 - 10:18 PM

Looks like Weaknees will be going out of business now.

The Gunny

#8 OFFLINE   HIPAR

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Posted 13 January 2006 - 12:19 AM

Will distributors such as Solid Signal still be allowed to sell equipment directy to DTV subscribers?
But I don't want to go among mad people

#9 OFFLINE   Kheldar

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Posted 13 January 2006 - 01:22 AM

Will distributors such as Solid Signal still be allowed to sell equipment directy to DTV subscribers?


The answer was in the original post:

7. Q: What happens if I sell (not lease) my customer a DIRECTV system after 2/28/06?

A: While you are not prohibited from selling DIRECTV hardware at prices established by you, please be advised that after 2/28/06, you will not be eligible to receive any commissions or subsidies for sold receivers. Accordingly, you will be subject to chargebacks for any subsidies or commissions you may have received, including any amounts under the Buy-Down Program. Please also note that only leased receivers will be eligible for ODU/Multi-Switch Reimbursement and commission.


-------------------------

I mena thats definitely better than paying a thousand bucks but I don't understand why its still pretty expensive, espeically compared to cable which has very little or no up front costs.

Also don't forget that E* charges a $250 "lease upgrade fee" for their HD-DVR.


This is not to mention the 2 year commitment that is required which is excessive in my opinion, I understand that they have to protect their investment but why not offer a 1 year contract instead.

Didn't you just answer your own question? "they have to protect their investment"

#10 OFFLINE   jfalkingham

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Posted 13 January 2006 - 07:58 AM

And one thing I don't understand about the lease plan is, will there be another 5 buck monthly lease fee per receiver on top of the 5 bucks already paid for additional receivers, meaning that it would now cost 10 bucks a month per receiver?


3. Q: How are mirroring fees impacted with the new Lease Program?

A: The bottom line is that a customer’s monthly bill will be nominally impacted. Although the term “mirroring fees” will go away in the Lease Program, customers will be subject to “monthly lease fees.” As with mirroring fees, the new “lease fees” are waived for the customer’s first receiver (lease fees are waived for the first receivers for new customers only; existing customers are subject to lease fees for any additional receivers they may acquire).


I take that to mean the mirroring fee will be replaced with the lease fee. Considering the mirror fee is $4.99 and the lease fee will be $4.99 sounds like they will just be renaming that. I doubt you are going to be paying around $10 for an extra outlet.

#11 OFFLINE   Bobman

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Posted 13 January 2006 - 09:53 AM

I wonder, should we all rush out and buy what we need before that deadline ? Is it better to own or to lease ?

#12 OFFLINE   msmith

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Posted 13 January 2006 - 10:10 AM

I wonder, should we all rush out and buy what we need before that deadline ? Is it better to own or to lease ?


How long do you typically keep a receiver?

How much does it cost under the new program? How much under the old program?

This decision will be highly dependent on your situation.

#13 OFFLINE   westwood wizard

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Posted 13 January 2006 - 10:22 AM

3. Q: How are mirroring fees impacted with the new Lease Program?

A: The bottom line is that a customer’s monthly bill will be nominally impacted. Although the term “mirroring fees” will go away in the Lease Program, customers will be subject to “monthly lease fees.” As with mirroring fees, the new “lease fees” are waived for the customer’s first receiver (lease fees are waived for the first receivers for new customers only; existing customers are subject to lease fees for any additional receivers they may acquire).


I take that to mean the mirroring fee will be replaced with the lease fee. Considering the mirror fee is $4.99 and the lease fee will be $4.99 sounds like they will just be renaming that. I doubt you are going to be paying around $10 for an extra outlet.


100% sure this is a change in terms of the legal definition...ownership of equipment will be with Directv rather than the customers. The bottom line cost will not change. Obviously, nobody will pay $10 for each additional outlet. I would stick with cable in that case until FIOS comes to my neighborhood and tell Directv to take a hike.

Leasing the equipment is no big deal as the receivers and technology change so much that I want to upgrade to the newest equipment anyway.

#14 OFFLINE   JcT21

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Posted 13 January 2006 - 10:24 AM

I wonder, should we all rush out and buy what we need before that deadline ? Is it better to own or to lease ?


i would prefer to own my equiptment.

maybe i dont quite understand how all this is going to affect me as a customer but to think that D* would charge a mirroring fee and a lease fee is just crazy. if that is the case me and my 5 receivers are going bye bye. but i think that means the mirror fee will be renamed to a lease fee for new customers only. i think it said current customers will continue to own their equiptment, but if a receiver is added after 3/06 they will become a mixed household and subject to a lease fee for that particular piece of equiptment. it also said something about all receivers are covered by a replacement program. does that mean the current directv protection plan will be going away? but again, for new customers only? i assume our current bills will inrease slightly like it said. the mirroring/lease fee will possibly raise from 4.99 to a new rate. so some of you wise D* professionals correct me if im wrong when i say ... i assume current customers will remain under the old rules with the exception of adding new equiptment?

*whewww*

#15 OFFLINE   westwood wizard

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Posted 13 January 2006 - 10:42 AM

i would prefer to own my equiptment.

maybe i dont quite understand how all this is going to affect me as a customer but to think that D* would charge a mirroring fee and a lease fee is just crazy. if that is the case me and my 5 receivers are going bye bye. but i think that means the mirror fee will be renamed to a lease fee for new customers only. i think it said current customers will continue to own their equiptment, but if a receiver is added after 3/06 they will become a mixed household and subject to a lease fee for that particular piece of equiptment. it also said something about all receivers are covered by a replacement program. does that mean the current directv protection plan will be going away? but again, for new customers only? i assume our current bills will inrease slightly like it said. the mirroring/lease fee will possibly raise from 4.99 to a new rate. so some of you wise D* professionals correct me if im wrong when i say ... i assume current customers will remain under the old rules with the exception of adding new equiptment?

*whewww*


The fees will not change because of the transition from "mirroring fees" to "lease fees". It will remain $4.99 per month. But, obviously, this may eventually increase over the course of time but not because of the change in ownership terms. Eventually, even mirroring fees would have increased at some point.

#16 OFFLINE   RAD

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Posted 13 January 2006 - 10:50 AM

I'd like to see if D* can now justify the $4.99 mirroring fee for hardware we purchased, they said it was for the extra expense of supporting the box, but now they lease you a box for $4.99 and no mirroring fee. Doesn't it cost just as much to support that leased box vs. owned, if not more?

See post My Setup for configuration info.


#17 OFFLINE   westwood wizard

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Posted 13 January 2006 - 02:01 PM

I'd like to see if D* can now justify the $4.99 mirroring fee for hardware we purchased, they said it was for the extra expense of supporting the box, but now they lease you a box for $4.99 and no mirroring fee. Doesn't it cost just as much to support that leased box vs. owned, if not more?


I have always been a fan of Directv but they will eventually get stomped on by cable and the telco fiber optic services when two way cablecard tuners come into the market. The rental rates for these cards should hopefully be less than $4.99 or at some point even free with the service. Directv will then have to revisit the issue of mirroring fees or lease fees or whatever they want to call the fee that gets added on for additional outlets.

#18 OFFLINE   harsh

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Posted 13 January 2006 - 03:37 PM

I wonder, should we all rush out and buy what we need before that deadline ? Is it better to own or to lease ?

That depends on whether what you need will be available before March 1st. If you lease, you can return the unit if it doesn't work out. If you buy, you're stuck if it dies after a year or something you need requires an updated receiver (both D* and E* are doing some funny stuff here with their interactive content).

Here's another way to look at it:

Pros:

o $4.99/month probably looks better to most budgets than $99-299 up front.
o If the next "must have" feature shows up this summer (or next), you're not stuck with a unit that can't offer it.
o Apparently you're paying the $4.99 fee either way.

Cons:

o You're beholden to D* for two more years.
o You may get a "pre-owned" receiver.
o D* could theoretcially replace a perfectly good receiver with one that better suits their business plan (ie huge storage set aside for ads and/or on demand).

Thoughts:

o You've got six weeks to decide
o There aren't any "to die for" receivers that are likely to show up between now and March 1.
o The rate at which receivers get retired seems to be increasing each year. Some models are offered less than a year before being discontinued.

#19 OFFLINE   harsh

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Posted 13 January 2006 - 03:41 PM

I just hope this dosent apply to those with the HR10-250 HDTivo's that are waiting to get their upgrade to the HR20 HDDVR. Because Ill be _____ if I have to trade in my HR10-250 for a leased HR20 model!

Leasing applies EXCLUSIVELY to those acquiring new or additional equipment. It does not change anything that you already have.

#20 OFFLINE   harsh

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Posted 13 January 2006 - 04:01 PM

I have always been a fan of Directv but they will eventually get stomped on by cable and the telco fiber optic services when two way cablecard tuners come into the market.

That's a big when. First you have to get everyone to agree on a standard and then get it deployed at both the customer end and the head ends.

The rental rates for these cards should hopefully be less than $4.99 or at some point even free with the service.

The current numbers for the one-way cards are around $3-7. Its easy to imagine that they will be able to ask $5 or more for a two-way unit that offers demand programming and perhaps some limited interactive capability. Then there is the rumbling about monitors with integraded DBS receivers...

Directv will then have to revisit the issue of mirroring fees or lease fees or whatever they want to call the fee that gets added on for additional outlets.

Probably not. As long as it is less than the monthly rent on a cable box, it will be called "fair".




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