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Technology Stocks : Echostar Comm.

SATS 69.11

-0.9%

Nov 19 3:59 PM EST

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To: Noel who wrote (799)	5/13/1998 9:56:00 AM
From: Goodboy	Read Replies (2) of 1394

good analysis. I agree with you, but Primestar will be a loser 2 years from now if they do not come up with a plan to offer small dish service beyond their back-up plan with 119 slot. That will be a 110 channel small dish value service. it is not very exciting, but with their back against the wall, they will offer small to medium cable companies a new box that will accept their cable basic programming (including all local signals) and the small 110 channel dish from primestar would provide the premium programming (sort of like the relationship between USSB and direct TV). This could be a blockbuster backup biz for Primestar, but they would prefer to compete against DTV and ECHO straight up with a similar offering (200 channels). On logic alone, the real loser here is the consumer. For DBS to really be competitive with cable they need two things. The ability to deliver a limited amount of local signals to each market (Congress should be focusing on that rather than having the DOJ attack Primestar)and competition that will force the three to drive down price and finance the equipment cost to the consumer (bad for balance sheet, but good for consumer. Primestar is the only one who leases the equipment to those who can't shell out $300 up front). DBS is not competitive with cable on price. They are not even close because of the up front costs. They compete on channel capacity and content. That alone will bring converts, but it will not lower cable rates. It will not keep rates from going higher because there is no price competitor. Must have competition between DBS players to drive down prices and increase service and innovation. That is where Klein is just way off base. He is just focused on the breakup of the ECHO/AskyB deal and the influence of the cable companies. He can fine them for that, but a court will find that this deal will increase competition in the DBS marketplace and will do it faster than any other alternative.

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