Houston Chron

Aug. 7, 2001, 11:49PM

Satellite challenging cable companies for TV viewers

Associated Press

NEW YORK -- Even as media titans wrestle for DirecTV, the nation's leading satellite broadcaster, a separate battle is raging between satellite providers and cable companies for TV viewers.

Satellite has proven a worthy competitor, shaking up the normally complacent cable industry by stealing away hordes of consumers with clear, reliable television service and more channels than you could watch in a lifetime.

In the seven years they've been in business, satellite providers have signed up an astonishing 16 million viewers.

"They were eating our lunch," acknowledges Mark Smith, a spokesman for the National Cable & Telecommunications Association.

Cable companies have responded with an expensive and frantic effort to upgrade their systems to offer digital services, which feature comparable numbers of channels as the two main satellite providers, EchoStar and DirecTV, but cost $10 to $20 more per month than regular cable and slightly more than satellite.

That effort, which has cost $50 billion so far, has made digital services available in 75 percent of the 69 million U.S. cable homes over the past two years, the NCTA said.

But at 12 million, the number of digital cable subscribers still lags behind the number of satellite customers.

Cable may be stymied in its game of catch-up because of some of the same problems that have always plagued it -- namely poor customer service, according to a survey from Consumer Reports magazine due out next week.

"Cable companies may ... be their own worst enemy," the survey found, since they received "among the lowest marks of any service providers we regularly evaluate -- even lower than those for technical support form computer manufacturers."

Users interviewed in several locations by The Associated Press also said they preferred satellite over cable, partly because of the clear pictures and variety of programming but also because of the better attention.

Rich Furuya, a software engineering manager in Fremont, Calif., a Silicon Valley suburb, said satellite companies were far more eager to sign him up when he was shopping and comparing installation services.

He said his local cable provider expressed "arrogance -- a we-dominate-the-market and a we'll-come-to-you-when-we-can attitude."

In addition to offering digital services, cable companies are also going after satellite converts in an effort to woo them back. In Austin, Texas, Time Warner Cable, a division of AOL Time Warner Inc., has been running ads showing local residents touting the claimed benefits digital cable over satellite, including parental controls.

It's part of what Time Warner Cable spokesman Mike Luftman calls "dish winback" programs, which the company is running in markets including Los Angeles, Houston and Raleigh, N.C.

The company often offers to buy back satellite equipment from customers who return to cable. Cable technicians also scout neighborhoods for homes with satellite dishes and leave promotional materials there.

Of particular concern for digital cable is that in some areas up to 60 percent of the customers who sign up cancel it later, compared to 25 percent for regular cable and just 18 percent for satellite, said Sean Badding, vice president of The Carmel Group, a market research firm.

Badding said a lot of consumers don't see the value in digital cable and a lot of people would rather just stick with regular cable and pay about $15 a month less.

Despite the inroads satellite has made, one major drawback remains the limited availability of local broadcast channels, a standard feature on cable.

EchoStar says it will have a greater ability to offer local channels if it can increase satellite capacity by acquiring DirecTV, which is owned by Hughes Electronics Corp. EchoStar has long coveted DirecTV and announced an unsolicited bid for Hughes on Sunday, but Rupert Murdoch's News Corp. is mounting a serious challenge. General Motors Corp. is Hughes' largest shareholder and corporate parent.

Speaking to reporters on a conference call Monday, EchoStar chairman and chief executive Charles W. Ergen said his services would not be "truly effective competition against cable" until they can make fuller offerings of local channels.

That drawback wasn't enough to deter Dennis Wallace, a resident of Bangor, Maine, and a devoted fan of the University of Maine hockey team. Satellite TV gave him access to college hockey games from across the country; to receive local broadcasts, he still tinkers with an old fashioned "rabbit ears" antenna.

"It really is an amazing thing. It puts Bangor, Maine, in touch with the rest of the world," Wallace said. "I'm lucky that my reception is good, but if you're off in the willywags, I'm not so sure."

-- Anonymous, August 08, 2001

Answers

Just couldn't let this one go by!!! OK..Direct pc did not---could not work for us... but they were extremely easy to contact and work with even though you are on hold and have many Techies not knowing anything.

We have dishnet tv..2 recievers and have had no problems with them ever. Got starband and the installer was very arrogant and had 2 teenage hooligans with him that day, (because they started a fire in a garage and had to be "with supervision"..(the little brats ran across my shingles, torn off the gutter guards and bent out the gutter.) They also got into my fish food and over fed the kio...I'd like to have drowned them! BUT the sat . worked! NOW..here is the poblems... 1. always one, but having slow uploads..this means the signal has to go to starband, then to where ever, then ask permission, then back to satrband then to me. the downloads are lightening fast.

now Dish net and starband are billed by the same co. bills from Echo star...one doesn't know what the other is doing.. I have had 2 hr stints on the phone trying to get help sometimes.

IF WE can get cable....I WOULD...screw satilitte connections, you pay 80.00 a month and it is no faster than the phone, but we just don't get kicked off any more!

-- Anonymous, August 08, 2001

We have DirectTV which used to be Primestar. When we first got Primestar, Dishnet wasn't even in existence and there was one other company that I think was bought by Dishnet when they got going. We never had trouble with Primestar and because we are so far from a major city, we get networks from both coasts which is neat. DirectTV has been fairly easy to work with as well and we are getting new channels all of the time and have had only a small increase in the monthly price in the past 2 years.

Some of the local stations (Des Moines) were complaining about us satellite people getting networks from the coasts, but the truth is they don't have news coverage for us anyway (and the reception sucks). When there is a severe storm warning, etc, we have to go to the weather channel to find out what is doing on because all the DM stations talk about is DM - unless of course you get hit by a tornado and then they might send someone down to view the damage. I wouldn't watch the nets from DM anyway. (Can you tell how much I like the Des Moines stations?)

-- Anonymous, August 08, 2001

Beckie, we have a station in Durham that rarely covers Durham news. It was particularly noticeabel after Fran, when by far the vast majority of the coverage concerned places other than Durham, especially Raleigh. Same thing when we had the 21" snowstorm. The main Raleigh station covers Durham better than the Durham station. Go figure.

-- Anonymous, August 08, 2001

OG, I guess I got spoiled growing up in eastern Iowa where the 2 Cedar Rapids stations and the Waterloo station realized that their area was a huge chunk of eastern Iowa. They all give the weather in 3 tiers (one for each section, north, central and southern) and have "bureaus" in some of the other towns to make sure of coverage. The minute there is potential bad weather, at least one of the stations will have constant live coverage until the danger is over and that is anywhere in their area not just the metro areas.

-- Anonymous, August 08, 2001

I've alwas noticed that the news stations here in Miami tend to cover the north Dade and Broward news more so than S. Dade.

S. Dade is from Flagler [First ST] to the Monroe county line in Key Largo, the beginning of the keys.

The weather guys tend to give detailed info on rain amounts in the N Dade neighborhoods, but refer to us as S Dade. The growth in Kendall is helping some to balance this, but it will be some years I think before they come to realize that a great many of their viewers are 'down south.'

Course, with the internet I can get more and better info faster and easier than listening to those talking heads, anyway.

-- Anonymous, August 08, 2001