[Nick]

DirecTV and EchoStar face slowing net adds and rising competition

With satellite services ending the year and counting on the seasonal fourth-quarter push to increase sales, some analysts are looking back over the year pulling the companies down to earth. Worse yet, some see a bleak future for satellite radio and television - and are warning investors to keep their feet on the ground when it comes to the sky-bound services.

One such analyst is Cowen and Company's Tom Watts, who said last week that satellite service's third quarter was dull, weak and anti-climatic. Watts called both Sirius and XM are merely "idling" until next year, WorldSpace is "sputtering" and both DIRECTV and DISH are "stalling."

"XM and Sirius continue to fend off jealous attacks from the music and broadcasting industries (and) royalty negotiations with RIAA (Recording Industry Association of America) are going to arbitration," the analyst said. Although "the NAB continues to try to use the FCC to hamper satellite radio's progress in any way possible... these issues (are) resolvable."

Watts also projects rising challenges for the satellite TV business as "DIRECTV and EchoStar face slowing net adds and rising competition." Free cash flow take-off delays, stalled buybacks and a lack of merger and acquisition activity could limit DBS' prospects in the future," he said.

www.SkyReport.com - used with permission

 

[Chris Blount]

I found this article interesting. While I think satellite TV will be around for many years to come, I believe that Dish and DirecTV are fighting an uphill battle against cable and the internet. Let's face it, satellite TV is showing its age with bandwidth limitations and larger dishes.

I firmly believe that we will see a complete migration to internet based systems much sooner than anyone thought.

 

[AnubisPrime]

I agree, but such a thing is far off in my opinion. I am one of the few people I know in real life that has minimal to no problems with my internet service.

Providers currently enforce the invisible caps on bandwidth. Internet that is fast enough to stream HD content is not available in a form that's affordable to most--and in some places such speeds are not offered.

How do we serve rural areas that kind of bandwidth? Many only have dialup available in their areas. Some rural places have government funded high-speed internet, but problems are rampant (I have a family member experiencing this "bliss").

Believe me, government-run/funded internet service stinks. The small company receiving the government funds has to use the backbone provider (oh, say Genuity) designated to them by Uncle Sam or the powers that be. If there's a problem that takes 6 months to fix for whatever reason--TOUGH, your subscribers are stuck with crawling speeds from 5pm to 12am every night.

So, back on track, I also hope satellite sticks around for a long, long time. As far as TV over internet--our country's broadband providers need to overhaul their deployment and service strategies to accomplish that. With the way the government runs things, I'd vote to keep them as minimally involved in the process as possible.

 

[kenglish]

Satellite may have to "reinvent" itself, just like Cable did.

They should have worked with local radio and TV stations to improve home reception, rather than fighting Cable's "Butcha can't git yer local stations!" campaign with so many L-I-L channels.

Having quite a few FTA channels (just buy the equipment without a subscription) would get them "a foot in the door" at your home. Then, they could sell you the primo programming. Satellite radio could have worked more with locals, to offer seamless integration with locallized content (other parts of the world have sat radio with "contribution channels" which allow uploading of regional content to the satellite....sort of like a "spotbeam").

Working with local Cable would have been wise. Satellite is far more efficient for carrying national channels, while Cable is better for local/regional stuff. Why couldn't they have "bundled" services and provided both?

 

[FTA Michael]

I like the FTA idea; it sounds like the way it works in Europe, if I understand it correctly. Imagine a low-cost channel (resurrect Bingo TV? music videos? cheap movies?) made available FTA with limited commercials -- all for Dish Network. It would be a new channel for everybody, selling upgrades to subscribers and Dish Network in general to FTA viewers.

Satellite bundled with cable? My kneejerk reaction is that it doesn't happen because both sides want the whole subcriber fee. For a paradigm shift, what if cable allied itself with somone such as GlobeCast, offering the zillion high-margin international channels that appeal to only a tiny fraction of any cable system's viewers?

 

[Hound]

I would agree in certain parts of the US, satellite growth is going to stall
because of the entry of Verizon Fios into the marketplace. Verizon and the local
cable company will be providing high speed internet bundled with telephone
and a very competitive high definition television offering including local
regional sports networks in high definition. With the triple play pricing,
the satellite companys are going to be underbid. If a customer signs
up for satellite and then phone and high speed cable separately, the
cost is going to be higher than triple play packages. Dish will no longer be
able to use its low cost advantage. The regional sports networks in high
definition are going to be very important in some markets. Dish has
been very slow to add them. With the roll out of Verizon Fios in NJ next year,
both Dish and Directv will suffer. Dish does not have a carriage agreement
with YES and still has not begun offering regional sports networks in
HD. Dish is the only multivideo provider that does not offer RSNs in HD.
HD penetration in the Pennsylvania, NJ and New York markets is starting
to really take off. Many subscribers look at RSN HD offerings in choosing a provider. Verizon this morning for the first time on its FIOS website for its southeastern Pennsylvania channel lineup lists Comcast Sportsnet Philadelphia in high defintion on channel 829. When Verizon rolls out in NJ, it will be allowed to offer this channel to the southern half of NJ. Unfortunately, Dish and Directv were precluded from this channel by the FCC in its Adelphia conditions and the terrestrial exception. The central part of New Jersey qualifies for five RSNs,
CSN Philadelphia, YES, SNY, MSG and FSNY. Cablevision provides four RSNs in
high definition and on in SD. Comcast provides a continuous feed in HD of CSN
and game feeds in HD of the other four RSNs. The Cablevision expanded basic
cable package is only $48 per month and includes all HD channels and HD RSNs. With cable there is no charge for hooking up the 2nd, 3rd, 4th, tv, etc. without a set top box. With triple play and HD RSNs, the satellite companys face very stiff
competition.

 

[jaywdetroit]

Does anyone want to comment on the claims by D* that they can have 100-150 HD channels by the end of 2007?

Isn't that going to be difficult/impossible for cable to compete with? And what about all the other services coming down the road on the HR20? I don't have the link but there is a PowerPoint presentation out there done by D* execs with some impressive goals outlined in it.

 

[Earl Bonovich]

Cable will have difficulty matching the "Bandwith" needs for 100-150 HD channels. But then again, for that to matter much... there has to BE 100-150 HD channels available.

FIOS should have that ability, but then again... FIOS and the IP style of TV transmission is SLOOOOOOOOOOOOOOWLY rolling out.

I am in a brand new subdivision... and forwhat ever reasons... it is not pre-wired for the next generation of broadband. So for people like me (and a lot of others)... this next transmission method is way off.

I have Cable-Broadband... but once everyone else on the block is using it to larger capacities... not only is the TV going to suffer, but the internet connection, and the phone, and everything else they are trying to cram onto that single line.

I think the next 5-10 years are going to be intresting to see how things pan out. and who is to say, that DirecTV and Dish network won't get into the "land based" transmission game. Just like there are multiple ISPs... why can't there be mulitple Content Providers over the IP method of transmission.

All will depend on what kind of rules, restrictions, ect... that the FCC and our elected officials pass and apply.

 

[dngrant]

Does anyone want to comment on the claims by D* that they can have 100-150 HD channels by the end of 2007?

Isn't that going to be difficult/impossible for cable to compete with? And what about all the other services coming down the road on the HR20? I don't have the link but there is a PowerPoint presentation out there done by D* execs with some impressive goals outlined in it.

If and I do mean IF D* can provide what they promise by the end of next year, then they will have a temporary competitive advantage. I agree with the others that until dish bundles its service with voice and internet, they are really going to be hurting. I only wish I could get FiOS where I am. I think that has the strongest future because of the bandwidth potential of fiber optics.

Another knock against the sats is the need for more than one dish to get TV and internet. It would behoove the providers to combine all of that into one dish. Customers want as clean an install as possible. Rural areas are not as much of a concern, but urban and suburban areas with limited outdoor space, and HOA bylaws, cannot support multiple dishes.

 

[Cholly]

Our area is served by Windstream (wired service spun off from Altell, which is now strictly a wireless provider). I recently switched to Windstream DSL from Time Warner cable. There doesn't seem to be any FIOS in the offing from them. Although I'm in a new subdivision, I don't think the distribution system is fiber. Certainly, the feeds to the homes are copper.

 

[jaywdetroit]

Cable will have difficulty matching the "Bandwith" needs for 100-150 HD channels. But then again, for that to matter much... there has to BE 100-150 HD channels available.

FIOS should have that ability, but then again... FIOS and the IP style of TV transmission is SLOOOOOOOOOOOOOOWLY rolling out.

I am in a brand new subdivision... and forwhat ever reasons... it is not pre-wired for the next generation of broadband. So for people like me (and a lot of others)... this next transmission method is way off.

I have Cable-Broadband... but once everyone else on the block is using it to larger capacities... not only is the TV going to suffer, but the internet connection, and the phone, and everything else they are trying to cram onto that single line.

I think the next 5-10 years are going to be intresting to see how things pan out. and who is to say, that DirecTV and Dish network won't get into the "land based" transmission game. Just like there are multiple ISPs... why can't there be mulitple Content Providers over the IP method of transmission.

All will depend on what kind of rules, restrictions, ect... that the FCC and our elected officials pass and apply.

I was just reading over the wiki post on FIOS. It costs verizon $1000 to do an install. When they do, if you move your phone over to them, they will rip out the cooper in your home. Which means you could never switch to DSL and another phone service if I am not mistaken. This would keep me from ever moving over to fiber, unless everyone was doing it.

It looks to me that FIOS has a huge uphill battle.

As for the TV over IP. Wouldn't that require a pre-existing broadband account? Or would that be completely separate?

 

[Larry Caldwell]

I found this article interesting. While I think satellite TV will be around for many years to come, I believe that Dish and DirecTV are fighting an uphill battle against cable and the internet. Let's face it, satellite TV is showing its age with bandwidth limitations and larger dishes.

I firmly believe that we will see a complete migration to internet based systems much sooner than anyone thought.

I certainly hope not. As a rural subscriber, there will never be cable or DSL within miles of my house. I went to WildBlue for more bandwidth, but no way will satellite internet ever allow enough bandwidth for unrestricted video on demand.

Satellite TV has been hamstrung by the FCC and its licensing restrictions. The big dishes are required because no satellite provider is allowed to broadcast all its programming from one orbital location. The limitation is only secondarily technical. The primary problem is the lack of planning on the part of the FCC. E* or D* could easily launch satellites that would handle their programming from one orbital slot.

 

[Steve Mehs]

The big dishes are required because no satellite provider is allowed to broadcast all its programming from one orbital location.

You sure about that? Sky Angel is only on 61.5, Voom was only on 61.5, before the Primestar purchase DirecTV only had 101.

 

[tiger2005]

I was just reading over the wiki post on FIOS. It costs verizon $1000 to do an install. When they do, if you move your phone over to them, they will rip out the cooper in your home. Which means you could never switch to DSL and another phone service if I am not mistaken. This would keep me from ever moving over to fiber, unless everyone was doing it.

It looks to me that FIOS has a huge uphill battle.

As for the TV over IP. Wouldn't that require a pre-existing broadband account? Or would that be completely separate?

I have FiOS in my home and they don't rip out the copper in the house. They remove the outside copper line running from your house to the pole and replace it with a Fiber line that connects to the ONT on the outside of your house. If you ever wanted to go back to copper it wouldn't be that difficult for the phone company to run a line back to your house from the pole. Although, I can't imagine why anyone would ever want to do this. After moving from DSL, to cable, and then to FiOS I can definitely say that FiOS wins over these other options BY FAR. Cable was more expensive and slower (most of the time) and DSL was A LOT slower than either of them and not that much cheaper.

 

[harsh]

I firmly believe that we will see a complete migration to internet based systems much sooner than anyone thought.

I firmly believe that you are wrong. There are large portions of many states that aren't served by terrestrial broadband Internet. While talk of wireless cities is fine in populous areas of California, Florida and the Northeast, it isn't happening the areas that only satellite currently serves.

The bandwidth issue isn't over yet with DBS. As inroads are being made into Ka band, the DBS companies will hopefully find a whole lot more breathing room.

I think that clumping Dish Network with DirecTV and Sirius with XM is flawed logic too. From my limited view of the purchasing public, I see both of the second place companies gaining more market share than number one. Sirius is verily clobbering XM in terms of new subscribers (although some of that may be via Internet subscriptions).

 

[scottchez]

I predict Satellite will reinvent itself many years from now with 100% MPEG4 only and 10,000 HD only channels. Cable and the Internet cant do 10,000 HD channels.

In other words they will phase out all the old receivers and cut over someday when the receivers are cheaper and cut to 100% MPEG4.

"Satellite may have to "reinvent" itself, "

 

[cornflakes]

I have FIOS too, and tiger2005 is right in that they remove the copper from your house to their pole. However, when I installed FIOS, they made it very clear that this is permanent. They will not come out and reinstall the copper, they said.

And I can see Verizon not wanting to switch me back to copper since they can sell me and future residents of this home more services with FIOS in the future.

FIOS Internet is great, blazing fast and I don't have to worry about signal levels or distance limitations (although I suppose the service area of FIOS is a distance limitation).

But I do love my satellite, be it D* or E*. Cable has always been crap to me because many of the channels are still transmitted in analog and I see snow or ghosting. A lot of times they'll blame it on the amplifier being set too weak or too strong. Other times they'll just ignore me. My parents have cable and when they come over to my place to watch TV, they're amazed at how clear the local channels (in SD) can be. No ghosts, no snow.

I also added up the cost of cable for me (Time Warner), and I would have to pay much more to get fewer channels.

There are benefits that cable and FIOS can offer that I will wish I had with satellite, such as true video on demand and more local channels in HD (CW, UPN, PBS).

I think satellite still has to work hard to compete with cable and future technologies, and that's just fine with me. Working hard to compete means better products and better prices.

 

[jonsnow]

With the advent of family packages, it has become clear that satellite companies like echostar are no longer in the business of innovations or gaining subscribers. Instead their offerings are meager at best and aimed at babysitting. Instead of offering a low cost entry level bundled package or standing up to congress and demand la carte reform, Charlie in his ignorance caved in to pressure by special interests and offered a low cost, but highly censored and unwatchable package. With decisions like these now wonder any potential new subs are going to the net/cable bundles, where innovations and choice, not forced censorship and limited options rule the day.

 

[Stewart Vernon]

Business is always (if the company stays in business long enough) subject to diminishing new customers. Over time, your acquisition of new customers will slow to a crawl simply because there aren't enough people left!

The bean-counters and wall-streeters go nuts when they don't see huge new subscriber counts each year... but it is simply impossible to grow a company more than there are people to grow with... and I suspect this is much of the reason for the panicking in regards to satellite.

If people would look at the actual profit margins of the company instead of how many new customers acquired... I think there would be less panic.

 

[dtv757]

i work at a booth where we promote verizon FiOS service. and all i can say is there data service is amazing. FiOS is offering 80megs or higher in parts of NY, and NJ and its simply amazing. here in VA we have 30 megs and it still faster than any other cable company can think of.

as for video, i'm not sure as we wont have the video station ready until late winter but from what i have heard the PQ really clear and there is no compression.

i personaly believe that FiOS and D* will become the HD leaders in TV.


about the phone issue "one you go to verizon FiOS you cannot be switched back to VERIZON COPPER" that means if you wanted some other bogus land based phone service than you can be connected to there COPPER line. but not back to verizon copper.

from my understanding FiOS also increases the value of your house.