Satellites try thinking local

Sunday, February 15, 2004 | 12:00 a.m. CST; updated 6:01 p.m. CDT, Sunday, July 13, 2008

Brent Gardner enjoys watching MU basketball games. But because he subscribed to satellite TV instead of the local cable company, he couldn’t watch games aired on local channels. So, Gardner recently decided to subscribe to basic cable in addition to his satellite service from DirecTV.

Otherwise, he said, “I’d go to a sports bar or a friend’s house.”

Gardner won’t have to subscribe to cable for much longer. Local channels are coming to satellite TV, perhaps just a few weeks from now.

Dan Forss, owner of Best Satellite Systems and Services, said DISH Network could offer “local-into-local” service in 14 mid-Missouri counties by early March.

DirecTV, the other major Direct Broadcast Satellite system, is expected to begin offering local channels to its subscribers by summer. While still the leading DBS system, with 12 million subscribers, DirecTV has fallen behind DISH Network in offering local-into-local service. DISH Network has already reached 102 markets with local channels, while DirecTV needs to launch another satellite before it can expand beyond its 64 local-into-local markets.

The addition of local channels to satellite systems might be enough of an incentive for many cable subscribers to switch. This has been the experience for retailers in Springfield, Mo., and other areas where local channels are already available.

Forss has seen an increase in sales of the DISH Network system and has even been installing it for subscribers switching from DirecTV. Forss, who began hiring more installers to keep up with demand, expects the growth of local-into-local service to be “explosive.”

DISH Network and DirecTV began offering local channels in the largest U.S. markets immediately after the Satellite Home Viewer Improvement Act was passed in December 1999. Local-into-local service entered Missouri’s two largest television markets, Kansas City and St. Louis, four years ago.

In January, DirecTV announced plans to enter 18 new local-into-local markets, including Columbia. Robert Mercer, public relations director for DirecTV, said it was too early to say in what order the service will be available in those markets.

DISH Network, which has the technology already in place, is prepared to begin offering local-into-local service after signing retransmission agreements with local stations. That gives the company an advantage, said Marc Lumpkin, media spokesperson spokesman for EchoStar Communications, the parent company of DISH Network

“It is important to be first in a market with a lower cost,” Lumpkin said.

In Springfield, where DISH Network began offering local channels in December, satellite system retailers have seen an increase in business, and it’s not all from cable customers.

“Twenty five percent of our customers are switching from DirecTV,” said Joe Parrish, owner of Diamond Satellite.Mercer, of DirecTV, said that while his company is aware that DISH Network is a step ahead in the local-into-local competition, DirecTV’s main focus is competing with cable companies.

“We have patient customers,” he said, “and we are keeping them informed about when local channels will be available to them.”

Forss said his satellite customers hope to save money by switching from cablecompanies, which pass on increased programming costs to their customers. In January, Mediacom increased its rates by $1.05 per month.

But local-into-local service will come at a price for satellite system subscribers — $5 to $6 more than their current monthly satellite bill. DirecTV will also require the addition of a second satellite, while DISH Network subscribers will have to upgrade to the company’s Super Dish.

Both systems often allow new customers to receive free equipment and installation with their subscriptions, usually after agreeing to sign up for at least a year. And both systems offer roughly the same channels, although DirecTV features NFL Sunday Ticket, a premier sports channel.

Brent Gardner said the first time he had a satellite system installed, it was confusing. He called several different places before he found a retailer he could trust. He also had to deal with DirecTV to set up the service. Gardner said he prefers DirecTVto DISH Network, which he found harder to navigate.

But, he said, “Satellite has better picture quality and more features than cable.”

Joe Murphy, owner of Murphy Communications in Springfield, said local-into-local service creates an “even playing field for satellite providers.” And, he said, it offers consumers, especially cable subscribers, more choices.

Last year, according to research by InStat/MDR, a firm that provides assessments and business forecasts for communication markets, the cable industry grew only 3 percent worldwide, the slowest growth rate in a decade. In the United States, cable companies lost 500,000 subscribers last year, with most households switching to satellites.

Michael Paxton, senior analyst for InStat/MDR, said local-into-local service is an “enticement” for people who are frustrated by the limitations of both satellite systems and cable. However, cable systems still offer more services to their subscribers, including high-speed internet access and telephone service.

“If subscribers have a lot of services from cable, they are less likely to switch,” Paxton said. “They have a greater advantage over DBS with services DBS can’t provide. I don’t think [satellite systems] will ever move above cable.”

Randy Hollis, a spokesman for Mediacom, agreed. Cable subscribers get a public access channel, a local weather station, the Weather Channel and the Emergency Alert System, he said, adding that the impact on Mediacom since local-into-local service became available in Springfield has been “negligible.”

Gary Baugh, general manager of Mediacom in Columbia, said the addition of local-into-local service won’t change the company’s strategy. They will continue to educate consumers about the benefits of cable, he said.

“DBS systems are getting closer,” Baugh said, “but cable will still be the best value.”

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