Viewers Ride Satellite Waves to New Heights in Channel Surfing
Abrahms, Doug, Insight on the News
Fueled by entrepreneurial spirit and technological innovation as well as the publics desire to seize control of its viewing destiny, the satellite-dish industry is enjoying a surge in popularity.
One customer wanted a dish for his boat, to pick up signals while cruising the Gulf of Mexico. "We've just scratched the surface," says a salesman for Circuit City, an electronics retailer selling pizza-sized satellite dishes like, well, hot cakes. "Some [buyers] are mad at cable companies, and others just want control."
Consumers have bought 350,000 small dishes since their introduction in June, more than 10 times the first-year sales of videocassette recorders. The dishes cost about $700 and can receive 150 channels. Customers still must pay $15 to more than $30 a month for programs, but they come with high-quality digital sound and picture.
"This is the lowest-cost introduction of a major home appliance in history and the hottest introduction in consumer electronics history," says Stanley Hubbard, chairman of United States Satellite Broadcasting, or USSB, one of two suppliers of satellite television programming. "Cable's got a big problem."
Direct-satellite television is fast becoming the darling of telecommunications regulators and Republican congressmen, who see the technology as a way to foster competition in the entrenched cable industry. "There was a lot of skepticism out there," says Tom Bracken, vice president of DirecTV, a competitor of USSB. While phone and cable companies argue about funding and profits from fiber optics, satellite television has taken off.
But it was never a sure thing. Programming was one obstacle -- some of it produced by cable companies that don't want to help competitors -- until Congress passed the Cable Act of 1992, forcing programmers to offer their shows to satellite television as well as cable companies. "When that passed, it pretty much broke the logjam," Bracken says.
Money also was a factor. Comsat Corp. of Bethesda, Md., tried a direct-satellite venture in the mid-1980s that lost tens of millions of dollars. It wasn't until the late 1980s that compression technology improved enough to allow a single satellite to send enough channels to make the business economical.
Hubbard Broadcasting, which owns USSB, had been working on its own satellite venture, spending $25 million on research since 1981. When its main investment partner pulled out in 1992, Hubbard joined forces with Hughes Electronics, which owns DirecTV, to share development costs. …