Audio Video News

TV life used to be pretty simple: Stick a pair of rabbit ears on the set, and if you lived near a big city, pull in a dozen channels or so---more if you had a UHF tuner. Now we have cable as well as satellite dishes big and small. In the near future, even your phone company could get into the act with some form of digital subscriber line (DSL) service. But of all these choices, which offers the best value? Two recent studies attempt to unravel the choices facing consumers with an analysis of the options.

The Carmel Group recently released a study of pricing and services offered by cable and direct broadcast satellite (DBS) television. The report reveals that "cable represents the lowest prices per package, while DBS offers greater programming value per dollar spent." The number of US cable-television and DBS subscribers for year-end 1998 are predicted to be 68 million and 9 million, respectively.

"This study indicates that competition from the five-year-old DBS industry has forced the cable industry to catch up in terms of creating more flexible and attractively priced programming services," says Jimmy Schaeffler, chairman and CEO of the Carmel Group. "Yet satellite continues to hold the bandwidth advantage, offering many more channels. As the gap closes between the cost of hardware and content offered by cable and DBS companies, the real battlefield between these two entertainment and information providers will be fought attempting to increase bandwidth. This in turn will control how many new services (such as data, HDTV, and international programming) they will be able to offer and charge additional fees for in the future."

The study's findings also show that program value and consumer investment in cable vs. DBS vary enormously. The tradeoffs include a lower overall monthly payment for cable vs. more content from DBS services for a generally higher up-front cost but a lower cost per entertainment channel from beginning to end.

When comparing premium-service packages from both cable operators and DBS companies, cable subscribers in all six markets surveyed reap a $200 savings in the first year of service. In the comparison of medium-priced services, cable and DBS have nearly the same number of video offerings, but the cable subscriber spends less than $400 vs. the DBS investment of nearly $600 in the first year. The widest value gap became apparent when surveying basic services, with the cable household spending half as much as the $500 paid by a DBS household but also receiving less than half the number of channels.

Another recent report studied the future potential of the various services and concluded that the global broadband-access market is on the verge of a major expansion. According to Pioneer Consulting's latest report, no single technology is a clear leader, though broadband satellites fared quite well vs. competing technologies (cable modems, DSL, LMDS) because of their unique ability to address the goals of the Internet and a global information infrastructure. These goals include global availability, uniform technology, and a tiered pricing structure for different classes of service.

According to Scott Clavenna, senior analyst at Pioneer, "Our forecasts indicate that each technology will face significant competition from broadband satellites after 2002. Cable modems will lead the market in terms of total subscribers throughout the forecast period, but satellites are predicted to gain a larger revenue stream because of their ability to address residential and business customers equally well."