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Smaller towns could become major battlegrounds for one-sided wars
between cable TV & DTH.
Direct to Home (DTH) broadcast satellite
Also called Direct Broadcast Satellite (DBS), DTH has emerged as
an recent option to cable services (during the past decade).
DTH technology is based on Ku-band satellites that send digitally-compressed
TV & audio signals to small (45 cm) dish antennae. Because of the
combination of bandwidth & compression, DTH systems can deliver
hundreds of channels.
And because the transmission is digital, DTH offers advantages over
traditional analog cable TV - advantages like superior picture quality,
many more channels, on-screen program guide, pay-per-view options,
digital video recording facility, HDTV, surround sound .. and of
course, Internet access.
The larger cable TV operators have already started introducing digital
cable services to match DTH advantages. But it is the semi-urban
cable TV operators who cannot afford to do so.
And this is where DTH penetration is expected to score.
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DTH
Services - An Overview
The world's 1st DTH service was launched in the U.K. by Sky
Television in 1989 (now Murdoch controlled), starting with
4 channels & evolving into a vast, pan-Europe service.
Another pioneer was PrimeStar who began broadcasting in the
U.S.A. in 1991 - using Ku-band satellite.
DirecTV, the world's 1st high-powered DTH system, was successfully
launched in 1994. (So successful that it acquired PrimeStar
in 1999.)
Echostar launched its DISH Network in 1996 as DirecTv's direct
competitor. Its many attempts to buy DirecTV were unsuccessful
because of the U.S. Govt.'s monopoly concerns. (Finally, DirecTV
was acquired in 2003, by Murdoch controlled News Corporation.)
Recently launched "niche" DTH services focus on specific features
like HDTV channels and ethnic communities.
Even developing countries like India already have 2 DTH services
with 2 more underway.
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DTH Penetrates into Local Cable TV Markets
Given its high quality of digital services over analogue cable TV,
DTH is clearly the better option. And given that rural cable TV
operators are not in a position to make large investments to upgrade
their services, there is a gradual penetration of DTH services in
small towns, worldwide. The progress is silent, but steady, leading
to expectations of intense competition between DTH and cable TV
in small towns & rural areas.
Small cable TV operators do not have the funds to upgrade as their
ad revenue is comparatively low. So most of them continue to rely
on old technology, which is unable to distribute the hundreds of
channels that DTH offers. Not to mention other features like superior
quality, Internet access & online EPG.
As DTH connectivity increases in semi urban & rural areas, advertising
will also shift to DTH. This will naturally have an adverse impact
on local cable TV advertising revenues - with cable operators gradually
losing market share.
Larger cable companies, having much ground to cover in urban areas
- are expected to remain focused on urban & suburban locations.
Bottomline
U.S.A.'s largest DTH service provider DirecTV has declared increase
in net subscribers by half a million along with a 26% increase in
revenue in 2005 - Q1. Similar growth has been reported by U.K. based
DTH service provider Sky.
Does this signal that the vast, semi-urban & rural areas are ripe
for the plucking - for DTH?
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Cable
TV and DTH penetration in local U.S. markets
Rural areas in the U.S.A. have more DTH subscribers than cable
subscribers.
Springfield, Montana was one of the 1st U.S. towns where DTH
penetration surpassed cable TV. DTH penetration has crossed
40% in Meridan, Massachusets.
DTH subscription is maximum where cable has not upgraded its
offerings.
71% of rural U.S.A. subscribe to cable TV compared to 96%
of urban U.S.A.
Cable TV operators in semi-urban & rural areas are not upgrading
services.
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Based on survey & reports by Horizon Media & Leichtman respectively
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