U.S. DBS SATELLITE TELEVISION SUBSCRIBERS TOPS 20 MILLION MARK
1 in 5 Homes Now Receive TV Programming through Satellite Providers
ALEXANDRIA, VA, August 20, 2003 – The Satellite Broadcasting and Communications Association announced today that 20.36 million U.S. households – or one in five television households – now receive their television programming through direct broadcast satellite (DBS) television services, with the majority subscribing to the nation’s leading providers, DIRECTV and DISH Network. The milestone illustrates how an industry less than a decade old has changed the way Americans watch television and has raised the bar in offering advanced technologies, innovative programming, competitive costs, and superior customer service.
DIRECTV’s July second-quarter subscriber count of 11.56 million, combined with DISH Network’s (EchoStar Corporation) second-quarter announcement of 8.8 million subscribers, reported last week, equals 20.36 million subscribers to the all-digital, nationwide services. With second-quarter additions of 270,000 net new subscribers for DISH Network (averaging 1.67 percent churn) and 181,000 net new subscribers for DIRECTV (averaging 1.5 percent churn), new subscribers to the services are increasing by approximately 5,011 per day. Churn rates reflect the percentage of customers who disconnect their services each month. By comparison, a recent McKinsey & Co. study estimated that 4-5 percent of digital-cable customers per month drop their service.
In the first six months of 2003 the DBS industry had net additions of 1.01 million subscribers, while the top ten cable operators showed net losses of about 80,000 net basic subscribers, according to market research from the Leichtman Research Group of New Hampshire. In 2002 the DBS industry grew upwards of 13 percent, according to research by Banc of America Securities. This compares with an absence of growth among its cable competitors, as reported in a 2002 Federal Communications Commission’s study on video competition. Analysts at SG Cowen and Banc of America Securities predict satellite subscriber growth to reach 30 million by the end of the decade.
“This significant achievement offers testament to the many individuals and companies within the industry that have worked hard to deliver quality and innovation into the homes of tens of millions of Americans,” said Eddy W. Hartenstein, SBCA chairman and chairman and CEO of DIRECTV. “I recall the infancy of DBS when few could never have imagined the profound impact we have made to the television landscape. We reached this milestone in such a short timeframe because satellite TV provides the best picture quality, customer service, programming and value in multichannel television.”
The satellite television industry began with the growth in popularity of the C-Band – or “big dish” – market in the mid-1970s. Today the C-Band industry has more than 400,000 owners and offers more than 400 channels of video and audio programming (both subscription and free) through a dish that averages about seven feet in diameter.
Since its infancy the industry has sought to ensure that all Americans, including those in rural communities that are beyond the reach of cable and over-the-air television, benefited from satellite technologies.
“No household in America should be shut-out from receiving television signals,” said Bob Phillips, president and CEO of the National Rural Telecommunications Cooperative (NRTC), a distributor of DIRECTV through its rural utility members. “While satellite television is beneficial nationwide, it has had its greatest impact on underserved rural communities across the country by providing access to news, information and entertainment.”
As satellite TV’s low cost and emphasis on top-notch service became apparent to customers across the country, Americans in all environments, including cities, towns and suburbs, made the switch from cable.
Contributing to the growing popularity and broader reach of DBS is the ability of consumers through the Satellite Home Viewer Improvement Act (SHVIA) in 1999 to receive local network broadcast television programming. Currently, DISH Network and DIRECTV’s local packages reach more than 70 percent of the national television market, with plans to reach beyond 80 percent by the end of 2003.
“The DBS industry has achieved a significant level of popularity because it has always put its customers’ preferences first and has taken the lead in delivering innovations, such as HDTV, DVRs, and Interactive TV to the television experience,” said EchoStar Chairman and CEO Charles Ergen. “Our formula for success has been to listen to our customers and always strive to give them what they want at the lowest possible price.”
According to a new survey of current DBS subscribers released in May by the SBCA and Taylor Research & Consulting Group, the expanding product line, quality services and value continue to remain the keys to customer satisfaction and retention in the direct broadcast satellite industry. Half of the 1,500 DBS customers surveyed included subscribers that had recently switched to satellite services within three months. According to the survey, less than one in five new DBS subscribers gave serious consideration to digital cable – before deciding to go with a DBS provider.
“The satellite services industry also attributes today’s milestone to the Members of Congress who recognized the importance of introducing choice and competition to cable and supported DBS from the very beginning,” said SBCA President Andy Wright. “Both Congress and the FCC have helped establish the right of all American consumers to be able to choose a television service provider. The industry will continue to work with legislators and regulators in Washington as we strive to reach our true potential as a competitor to cable.”
History of Satellite Television
The satellite industry was developed from an idea first conceived by science fiction writer Arthur C. Clarke in 1945. Seventeen years later, the first satellite TV transmission occurred via Telstar I: an eight-minute experimental broadcast from France to the U.S. In that same year, the United States Congress approved the Communications Satellite Act and COMSAT was formed.
In 1976 Taylor Howard of San Andreas, California – considered the father of satellite television – became the first individual to receive C-Band satellite TV signals on a homebuilt system; two years later he published a do-it-yourself manual, “Low Cost Satellite TV Receiving System.” From 1976 to 1980 the satellite industry began to build steam, with the first signals broadcast from HBO, TBS, and the Christian Broadcasting Network (later The Family Channel). From 1981 to 1985, the “big-dish” C-Band satellite market began to take off. In 1986 the transition to encryption moved the industry from a hardware business to a software entertainment-driven business, and helped legitimize the industry. In 1992 General Instrument demonstrated the first satellite-delivered High Definition Television (HDTV) signal. In 1994 and 1996, respectively, DIRECTV and DISH Network were launched.
The Satellite Broadcasting and Communications Association is the national trade organization representing all segments of the satellite industry. It is committed to expanding the utilization of satellite technology for the broadcast delivery of video, audio, data, music, voice, interactive, and broadband services. The SBCA is comprised of DBS, C-band, broadband, satellite radio, and other satellite service providers, content providers, equipment manufacturers, distributors, retailers, encryption vendors, and national and regional distribution companies that make up the satellite services industry. SBCA oversees the industry’s National Standards and Testing Program (NSTP), a self-regulating training and testing curriculum for installation professionals. Additional information can be found at www.sbca.com.