Satellite versus cable: Competition heats up

Tuesday, July 20, 1999 | 11:10 a.m.

The 500-channel television system has arrived.

EchoStar Communications Corp. Chief Executive Officer Charlie Ergen told reporters in Las Vegas his company's new system was activated Monday morning.

The Dish 500 system, offered by EchoStar's Dish Network, offers consumers 500 channels via satellite, including high-definition television, Spanish-language programming, local channels, Internet access and interactive television capability from a single pizza-sized dish.

EchoStar has recommended retailers sell the system for about $300.

Ergen, in Las Vegas for the opening of the Satellite Broadcasting and Communications Association's national convention this week, said the satellite industry was the first to deliver a 500-channel system.

"Cable companies have been promising 500 channels for years but never delivered," Ergen said.

But Las Vegas' leading cable operator said it has been gearing for more channels and is close to offering its own system to compete with the satellite providers.

Cox Communications Inc. spokesman Steve Schorr said the company's digital system upgrade, due to be completed in early 2000, will be capable of delivering about 200 channels to subscribers.

"We look at satellite as a competitor," Schorr said of the companies that have installed about 75,000 dishes in the state. Cox has a subscriber base of more than 310,000 in the Las Vegas area.

"Our digital cable system is a response to improvements in their (satellite) systems," Schorr said.

Schorr pointed out that many of the channels satellite companies plan for their systems will be dedicated to pay-per-view channels, giving viewers several starting-time options over the course of an evening.

Cable's response has been to develop its broadband technology, Schorr said, to give cable companies the ability to deliver video on demand. That means a customer could call the company and order a movie delivered at any time the customer chooses.

"It's a difference of opinion," Schorr said. "We think the broadband pipe is going to be the future."

While there are differences in the delivery of the programming, there are many similarities in what satellite and cable plan to offer customers. Both are gearing up for high-definition television, which can offer multiple signals per channel or crystal-clear images in a wide-screen format.

Both plan to offer Internet access, with EchoStar working with Microsoft's WebTV subsidiary to provide an armchair portal to the World Wide Web.

Both plan to offer access to local channels, although cable has the upper hand in that area. Separate bills are pending in the House and Senate that would give satellite providers permission to offer local stations via dishes.

Schorr said cable operators won't stand in the way of the proposals as long as satellite providers conform to the same rules with which they must comply.

Cable companies are bound by must-carry and retransmission rules requiring them to offer local channels on their systems. Schorr said Cox has must-carry and retransmission agreements with local stations affiliated with the major networks.

Schorr said cable's competitive advantage always has been price point.

"Satellite systems have always had upfront equipment and installation costs," Schorr said. "Cable has no equipment costs and a one-time installation fee. We also are providing state-of-the-art fiber-optic technology."

But in the past year, the satellite industry has been turning up the heat on the price issue.

The Dish Network has been one of the most aggressive companies to offer rebates on equipment. The company has required long-term commitments to satellite program subscriptions as a condition for the rebate.

The cable industry also has pressed the aesthetic issue, although the satellite industry has shrunk the size of its dishes over the last decade to neutralize the cable argument.

Federal law prohibits homeowners associations from banning satellite dishes. But they can establish covenants, codes and restrictions regulating their location and appearance.

The Sun City Summerlin Community Association, for example, requires dishes to be ground-mounted, restricts their height to 50 inches and requires dishes to be screened by plants. In special cases, the association allows deviations from those rules when the dish can't be mounted on a line-of-sight with the satellite.

Nancy Ridgeway, community standards manager for Sun City Summerlin Community Association, said the association usually fields about two or three complaints a month on satellite dish aesthetic issues. Usually the complaints involve dish owners trying to improve their signal reception and a letter solves the problem. Ridgeway said she has never seen a satellite dish matter go to a hearing in Sun City.

Schorr said aesthetics is still an issue in the battle between cable and satellite providers.

"Some people who spend $100,000 on a home just don't want to have to see dishes in their neighborhoods," Schorr said.