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DBS wakes up cable
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December 11, 1996: 5:28 p.m. ET
Direct Broadcast Satellite pushing cable companies to upgrade systems
From Correspondent Sean Callebs
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NEW YORK (CNNfn) - Cable television providers are upgrading their systems to digital partly because they can, but also because they face competition from direct broadcast satellite, or DBS.
TCI and Time Warner recently announced plans to upgrade their cable systems to digital. Digital lets the cable companies compress more channels through current wiring.
Analysts say their urgency to convert was inspired by something they've rarely known…competition.
With a smaller, cheaper dish than the old backyard behemoth, DBS offers digital picture quality with more channels than cable, at about the same monthly rate.
"DBS has taken either potential growth from cable, or in some cases, actual subscribers," said Arthur Gruen, a media consultant for Wilkofsky Gruen Associates. "But the problem is less that DBS is up and coming, although it certainly is, but that cable is in on a policy of trying to price itself out of the market and put their subscribers into the hands of DBS."
Cable still has more than 60 million viewers wired. But the number of DBS customers grew 50 percent in 1996 to more than three million. Direct TV, owned by the Hughes Division of General Motors, and U.S. Satellite Broadcasting share the lead as well as the same satellite. Primestar, run by a consortium of cable operators, follows closely behind.
The biggest hurdles for DBS:
- Laws prohibit satellite providers from carrying local stations.
- Homes with more than one television cannot watch different channels without buying more hardware.
- There is often a delay when changing channels.
Right now the biggest benefit to DBS may be that it is encouraging cable companies to improve their service.
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