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Echostar CEO sees sub acquisition cost dropping

Discussion in 'General DISH™ Discussion' started by Nick, Aug 11, 2004.

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  1. Nick

    Nick Retired, part-time PITA DBSTalk Club

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    The...
    Subscriber acquisition costs expected to drop; Ergen credits SBC deal, lease plans

    NEW YORK (Dow Jones)--EchoStar Communications Corp. (DISH) said subscriber acquisition costs should go down as its partnership with SBC Communications Inc. (SBC) continues and more customers opt to lease equipment.

    "We...have a mechanism that we put in place that can lower our subscriber acquisition costs", Charlie Ergen, EchoStar's chief executive said during a teleconference call Tuesday.

    more...
     
  2. RAD

    RAD Well-Known Member

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    OK, I don't pretent to be an accountant but I'd like to know how he's doing this. He's gone to leasing hardware so he's picking up the cost for the hardware. He's gone to free installs and no commitments. Can someone shed some light on this? Thanks - RAD
     
  3. shilton

    shilton Godfather

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    As much as I HATE the idea of leasing equipment, since it is leased and if someone drops it, he can take the receivers back and reuse them again, yep that'd lower acquisition costs since he does not have to flip the bill for so many receivers. He can just keep using the same stuff over and over again.
     
  4. olgeezer

    olgeezer Guest

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    Which remain an asset of the company
     
  5. RAD

    RAD Well-Known Member

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    But I guess I'm still confused on how Charlie's making this look good on the books. Let's take a 811 STB for example, MSRP is $399, and Charlie's said that this price is subsidized (so the actual cost is even higher), that's why it needs to be connected to a Dish to make it work for OTA. At $5 per month for lease charge he needs to write the box off over 79 months. In over 6 years from now, do you think he's actually be sending out this same 811 to some new sub???
     
  6. james39

    james39 Legend

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    If it ain't broke, you better believe it! :lol:

    oh, and he'll probably charge back damaged receivers in full, to those leased customers. Yet another reason *I* would never lease!
     
  7. larrystotler

    larrystotler Hall Of Fame DBSTalk Gold Club

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    YOu guys are forgetting his biggest asset: The Tax Write-Off! Everything he "Gives" away free is a pure tax write-off for him. That's why the receiver and equipment prices stay so darn high.
     
  8. Mike123abc

    Mike123abc Hall Of Fame/Supporter DBSTalk Gold Club

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    The cost of referb of a unit is a lot less. They can change out the plastic shell if needed (i.e. scratched up) and ship it out to the next customer. It is just like the cable company... Take the boxes back, give to the next customer.

    I do not believe they lose money on any of the MSRP boxes. When they give you a 510 for $50 they are losing money, but hope to make it up in the monthly DVR fee. It used to be they would give you 4 boxes and free install with one year commit, then when you left you left with $400+ in hardware that you could sell on ebay. If you were an AT60 customer you may have only paid $360 (30x12 AT60 w/locals) for the entire year service. E* did not even get enough money from you to pay for the boxes, much less get any money for service. Now they get the boxes back and for a few bucks recondition them back to use again.
     
  9. Chris Freeland

    Chris Freeland Hall Of Fame

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    If you own the box and break it, if you want to continue receiving service from E* you will still need to replace it by buying a new one or pay to have it fixed, so why is owning it any different?

    On the current DHA plan, you do not pay for locals, so if you are getting locals from E* then the $5/mo for the first box is a wash and since the rental box's do not have the $4.99/mo mirror fee, this too is a wash and with 2 tuner receivers only available to lease customers it is actually cheaper for most to lease under DHA. Other then the ability to sell your equipment when you no longer need it or if you have a need to de-activate your account for a period of time with plans to re-activate it, what is the advantage to the consumer for owning their own equipment?
     
  10. james39

    james39 Legend

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    If it's broken, I can turf it in the garbage and forget about it. If it's still echostar's property I have to pay for it. Let's say I start as a new sub, things are fine, whatever.. and then 2-3 years later (or however long the warranty period would be) the receiver just stops working, power supply failed, whatever. I could then decide I've had it with dish and try someone else, or keep on going with dish, it's my choice. If I chose cable, I'd still then be liable to pay dish $200 or whatever the cost of that receiver is. If I owned the equipment, no such liabilities exist.

    I do not know all the specifics of dish's lease program, whether they charge you the full price of a new box or not when/if you cancel, but knowing how cable companies have treated people I know over equipment charges, and punishment fees for cancelling, I do not want to be roped into any contracts if I don't have to.
     
  11. garypen

    garypen Hall Of Fame/Supporter DBSTalk Gold Club

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    That's because with "Free Dish", and other such ownership plans, Dish gives away that $399 box for free. With DHA, they still own it, and can reusue it. That's a savings of $400 per sub, no? (That is, if you believe the BS about Dish subsidizing an 811, even at $400. There is NO way it costs them $400 per 811.)
     
  12. larrystotler

    larrystotler Hall Of Fame DBSTalk Gold Club

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    E* doesn't give the boxes anything other than the standard 1 year warrenty. That's why they off the DHPP for $5.99/month. If it breaks after the first year, you either get the DHPP or you threaten to disconnect, and they MIGHT go ahead and give you a new one. Of course, if you diconnect, and return the bad box, then ythey can technically charge you for it since it wasn't returned in redeployable condition. So, how is that a better deal? At least the DHP carried a $5/ month warrenty on the boxes and switches/lnbs. WIthout the DHPP, you get no warrenty.
     
  13. larrystotler

    larrystotler Hall Of Fame DBSTalk Gold Club

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    That's what I have been saying! And it's not like they pay $99 for a 311. MAYBE $20. Keep the price up, and tax write-off. WHat's happened is that they have to support more TVs now to atract subs, and they are getting back less of what they WERE making. And keep in mind that the retailer gets a $300-$400 commision, so it takes more than a year to get back what they have put out. They would make more money if every sub only needed 1 box.
     
  14. garypen

    garypen Hall Of Fame/Supporter DBSTalk Gold Club

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    OK. Now I'm lost. Can you tell me how to get back on the freeway?
     
  15. Mike123abc

    Mike123abc Hall Of Fame/Supporter DBSTalk Gold Club

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    This is right from Dish web site. If your box goes bad you can mail it back for $14.95 for exchange. If you need a service call it is $99. IF you want free shipping and low cost service calls you can opt for the DHPP.

    There is no issue about the box going bad unless you take a hammer and smash it.
     
  16. RAD

    RAD Well-Known Member

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    Dripping...
    Unless Mother Nature smashes your house and the box within it ;)
     
  17. Cholly

    Cholly Old Guys Rule! DBSTalk Club

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    Indian...
    Maybe not, but they still aren't cheap to build. Development costs for hardware like this are HUGE. And even if the motherboards are made in China, they still aren't cheap. These babies are more complex than a P4 motherboard, and the custom chipsets don't come for free. The OTA tuner kicks the cost up a bit as well. You can't equate the cost of a set top box to that of a low end stereo receiver or 19 inch TV set. It takes time to recover costs. Look at how long it took before the Hughes DirecTV HD receiver had a price break.
     
  18. Chris Freeland

    Chris Freeland Hall Of Fame

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    On the DHA lease if the box breaks because of normal wear and tear or a defect, if it is after the first 90 days all you have to pay is the $14.95 S&H charges unless you want or need in home service, then it is $99 for as long as you are renting using the box for E* programing. If you own the box, this warranty is for only the 1st year. All that the DHPP $5.99 fee does is make the S&H Free and the in-home service $49 (I think), however at this time you can wait until their is a problem to add DHPP and you can drop it at any time and this applies weather you own or lease the box, I know I just did this with a very old box. Also their is no commitment for new subs who go with DHA and they can cancel at any time, however they can get the better DHPP warranty for Free if they agree to a 2 year commitment, this option is not available on other E* plans in which you own the equipment.

    Under the current DHA plan if you cancel service for what ever reason you simply ship back the receiver to E*. If you get angry and through the box across the room or off a balcony unto a concrete floor then yes you would have to pay for it on a lease
    :D . If your whole house gets blown away in a storm I would hope that you have good insurance ;) .
     
  19. Jacob S

    Jacob S Hall Of Fame

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    Dish is doing the lease for their benefit, not the customer's benefit. They get to charge and reuse hardware that they previously couldnt have under Free Dish. Dish Network reducing retailer's commissions on the nonDHA promotion also helps reduce their acquisition costs. That dont mean it will be more profitable for them, but perhaps makes up for some of the costs of the extra churn that may happen because of the no commitment.
     
  20. larrystotler

    larrystotler Hall Of Fame DBSTalk Gold Club

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    IN home service calls with the DHPP carry a dscounted rate of $29. As for the cost to replace a leased box after 1 year without the DHPP, I'm willing to bet mots people will just get the DHPP and leave it on their bill.
     
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