Today's IBD. Dishes or cable, they all need set top boxes..........
Cable Vs. Satellite TV: Prices Are Murky
Date: 7/24/97
Author: Jan Stafford
Television viewers today have more suitors than Scarlett O'Hara ever did. Direct broadcast satellite networks are courting new subscribers, while cable TV is working to make sure it isn't gone with the wind.
Second of two parts
The competition is driving satellite TV prices lower, though the question remains: Is DBS cheaper than cable?
Folks in the industry concede the many variables change the answer depending on location, specific features and whether long-term or short-term costs are counted. Different variables give both sides a lot of fodder.
Emphasizing cable companies' poor customer service record, monopolistic tendencies and arbitrary price increases is the tactic used by the four largest DBS providers: DirecTV of El Segundo, Calif.; Bala Cynwyd, Pa.-based Primestar Partners; Englewood, Colo.-based EchoStar Communications Corp.; U.S. Satellite Broadcasting Co. of St. Paul, Minn.
Primestar is owned by six companies, including Time Warner Inc., while DirecTV is owned by Hughes Electronics Corp.
Cable companies are fighting back with ''a campaign to convince people that there are hidden costs in satellite TV,'' said Evie Haskell, managing director of SkyTrends, a Denver-based publisher of a DBS industry newsletter.
Both sides have a point.
Take the monopoly issue. Cable companies have to outbid others to provide service for a given area. Though all DBS services are available in all geographic markets, the satellite dish systems aren't interchangeable. Customers have to buy new hardware to switch providers.
Also complicating the issue is the cost of satellite TV hardware, an up-front outlay not required for cable.
Having to buy hardware can add from $199 to more than $500 to the cost of satellite TV. A recent DirecTV rebate cut equipment cost to only $60, if you subscribed for a year in advance at $360.
Cable providers give most hardware free, but they do lease equipment for about $3 a month for users subscribing to certain premium channels.
Depending on how long a person subscribes, the cost of leasing the cable equipment can be more than the cost of a DBS dish, points out Patrick Milan, USSB communications director.
Cable companies counter by saying that DBS equipment will become outdated. SkyTrend's Haskell discounts that argument. ''I have an early system, and it works just fine,'' Haskell said.
Professional installation of a satellite dish can cost $250, though USSB claims that more than half its subscribers install the dish themselves. Primestar, the only DBS provider that leases its equipment, requires professional installation.
If subscribers want multiple televisions playing separate channels, each TV must have its own DBS receiver. Prices per receiver start at $100, plus installation charges for those who don't hook up the receivers themselves. Monthly charges for additional receivers include $1.95 for USSB and $4.99 for DirecTV.
''Giving consumers access to affordable ervice) in multiple rooms within a home is a challenge for DBS today,'' said Jimmy Schaeffler, an analyst with Carmel Group, a media research firm in Carmel, Calif.
Still, DBS has the advantage of being able to offer more channels than cable. DirecTV offers more than 200 channels. But DBS providers admit that consumers won't get huge savings with satellite TV.
''Pricing on a channel-per-channel basis is just a little better with DBS than cable,'' said James Ramo, DirecTV executive vice president. ''We've priced our business to give people a lot more for only a little bit less than they pay for cable.''
Cable, though, has one major advantage.
''Adequate and affordable delivery of local channels is a big hurdle for DBS,'' said Carmel Group's Schaeffler.
DBS can't access signals for local channels, including the affiliates of ABC, CBS and NBC. Users must rely on antennas or subscribe to basic cable to get local channels.
''Antennas, though much improved, don't work well or at all in some areas,'' said Stephen Effros, president of industry trade group Cable Telecommunications Association, Fairfax, Va.
The RCA-brand Digital Satellite System that DirecTV and USSB unveiled in June has an embedded antenna designed to receive one or more local station signals. But prices start at $499, and RCA parent Thomson Consumer Electronics, a unit of France's Thomson- CSF doesn't claim it'll work everywhere.
Earlier this year, SkyTrends reported that 67% of DirecTV and USSB subscribers used a separate antenna and 13% used cable to receive local programming.
DBS providers are devising local programming options. Primestar, for example, this summer began broadcasting weather reports through 10 regional weather channels.
What's a consumer to do? Research.
''Frankly, there are so many variables that getting a clear comparison is hard,'' said SkyTrend's Haskell. ''It really depends on what services and what kind of reception are available where you live.''
Buyers who do their homework and ignore the hype can find good value in either cable or DBS. ''Both systems have their ups and downs,'' Haskell said. ''The good news for consumers is that now they have a choice.''
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