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Local stations carry viewers to satellite TV
Dish companies' recent ability to offer area channels further challenges cable competitors.
By David Eggert
Indianapolis Star
August 9, 2000
When Mike Maxis signed up with the DISH Network in February, the balcony at his
high-rise apartment was the only one equipped with a satellite dish. Now, when he scans the Summit House Apartments at Meridian and 38th streets, he sees five more.
What happened since February? DirecTV and the DISH Network brought local channels
to Indianapolis viewers. "It's the same cost as cable," said Maxis, a retired executive who immigrated to the United States from Greece 27 years ago. "I get 100 percent more channels, and the digital quality and sound are better." Maxis gets more than 100 channels. For him, receiving local channels is just an added perk, but many experts say it is the weapon that satellite programming companies needed to break cable's stranglehold.
"Local programming has been one of the key selling features in cable television and key
detractors in satellite television," said Rob Frieden, a professor of communications at
Penn State University. A change in federal law last year cleared the way for the satellite programming companies to begin offering local channels. Littleton, Colo.-based EchoStar
Communications has carried four Indianapolis stations on its DISH Network since April. El Segundo, Calif.-based DirecTV began offering local channels in late July.
The change, along with aggressive promotions that have brought the monthly cost of satellite TV in line with cable TV, has triggered explosive growth. In the first half of this year, DirecTV signed up 857,000 customers, up 28 percent from the same period a year earlier. In the 30 metro areas where it offers local channels, subscriptions have increased by 50 percent, said Rob Mercer, spokesman for DirecTV. The boom has begun here. Tim Leber, owner of A-One Satellite in Indianapolis, said his firm's sales have increased 75 percent in the past year. "I've sold 45 dishes in two months," said Leber, who's been installing satellite systems for a decade. "Before the local stations came on, I was selling 15 in the same period."
Satellite and cable companies are sparring. Cable companies point out that satellite signals can deteriorate during severe storms. They also emphasize that current DISH
subscribers must replace their existing dish with a slightly larger one to pick up local
channels. While DirecTV does not require a larger dish, it and DISH charge subscribers an extra $5.99 a month to receive local stations. They don't get all the local stations, though. WTTV (Channel 4), for instance, hasn't worked out a retransmission agreement with either satellite service.
"$5.99 -- that's expensive," said Comcast spokesman Mark Apple. "And they don't have
Channel 4. A lot of people aren't going to be able to get IU basketball games." The lack of all local channels is temporary, however. Under federal law, the satellite companies must carry all of them by 2002. The satellite companies also boast of digital video, which results in a higher-quality picture. The feature is available to only some Indianapolis-area cable customers.
In addition, the satellite companies hope to benefit from ill will some customers feel
toward their cable companies, which operated in exclusive service territories for decades. "There are people who have been waiting to drop their cable connection," said Ken Beckley, executive vice president of electronics retailer H.H. Gregg, which sells satellite dishes. The competitive landscape has changed dramatically for cable companies in just the past year. In addition to battling satellite firms, Marion County's two cable companies, Comcast and Time Warner, soon will be confronted with new rivals.
Philadelphia-based Digital Access and TotaLink of Indiana plan to spend more than
$250 million apiece to build fiber-optic networks in Indiana, and AES Corp., a Virginia
firm that is buying Indianapolis Power & Light Co., is plotting its own fiber-optic network.
The newcomers will offer an array of telecommunications services, including local and long-distance phone service, cable TV and high-speed Internet access. They also will offer big discounts to customers who sign up for multiple services. While the competition should give greater leverage to customers frustrated with escalating cable TV prices, prices are unlikely to plummet, said Frieden, the Penn State professor.
"Nobody wants to start a price war," he said. "This just levels the competitive playing field. "The real key now is that everyone wants to get in a triple-digit financial relationship with you," Frieden said. "They want it to be a one-stop shop. The more you buy, the greater the discount." Comcast already offers high-speed Internet access in central Indiana and gives customers a $10-a-month discount if they sign up for that
service and cable. The company also is considering including its digital service -- which costs an extra $9.95 per month -- in bundling discounts, Apple said. This month, Comcast added 33 digital networks, giving customers access to more than 270 channels. By the beginning of next year, Time-Warner also plans to offer digital TV and high-speed
Internet access in Indianapolis, said spokeswoman Shari Johnston. "We still think we're very competitive," she said.
Gary McCormick, president of Ovation Audio-Video, believes that no matter what cable companies do, they must work harder at providing superior customer service. "I think cable providers are realizing they're not the only game in town."
© 2000 Indiana Newspapers Inc. AP materials © 2000 Associated Press. All rights reserved.
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