TV providers advised to simplify, yet offer more

Jennifer Shubinski

Friday, Jan. 10, 2003 | 11:13 a.m.

The future of TV service, whether it's cable or satellite, will be about convergence and convenience.

"It's about making TV more fun at my house," said Laura Behrens, an analyst for the Connecticut-based research firm GartnerG2.

Behrens spoke Thursday at the International Consumer Electronic Shows on whether satellite television providers will kill the cable television industry.

The short answer: No.

But those in the satellite and cable industry are going to have to offer consumers more features and functions -- without the confusing boxes, chips, drop-down menu screens and remotes.

"(Consumers) don't live for technology, they don't live for gadgets and they don't live for this," she said, referring to the CES convention.

Behrens said the hype around High Definition TV, or HDTV, is attracting consumers, but said the TVs also are "the most confusing thing consumers are confronting."

"The guys that sell it can't even explain it," she said.

The future attractiveness and future of cable is in the bundling of services, Behrens said.

Broadband offerings like phone service, Internet and video on demand are being offered in many markets in packages for consumers.

"We will be bundling whatever consumers want," she said. "... We will be bundling services we haven't even thought of yet."

Behrens said cable has a 70 percent market share, which is getting harder to sustain as satellite, now in about 20 million households, becomes more common.

Tony Timmons, spokesman for Cox Communications Inc. in Las Vegas, said the company has been bundling services for a couple years.

In Las Vegas, customers can order cable along with high-speed Internet access.

Atlanta-based Cox Communications, which is in more than 60 markets nationwide, in some markets offers phone service and video-on-demand, an upgraded version of pay-per-view that allows people to fast forward, pause or rewind an ordered movie.

In Las Vegas, high-Definition TV hookups and high-speed Internet services are available.

"We are always trying to make it more convenient for our customers," Timmons said.

The company is always looking for new and different services, but there is no schedule for adding services in the Las Vegas market, he said.

DirecTV does not bundle services, such as phone or Internet access, with the satellite service, said Bob Marsocci, spokesman for the California-based company.

Internet service used to be offered with DirecTV, but that is being phased out because it wasn't economical for the company, Marsocci said.

But satellite companies such as DirecTV and Echostar Communications Corp., doing business as the Dish Network, are working to eat into cable's market share by offering local stations on satellite TV.

Many satellite customers, if they want local television stations, have to subscribe to cable to get those channels.

DirecTV and the Dish Network offer local programming in Las Vegas, and both companies offer local programing in about 50 other markets nationwide.

DirecTV announced Thursday that it would add an additional 50 markets by the end of the year.

"The absence of local channels has been the largest barrier that has kept prospective customers from leaving cable," Marsocci said. "The more markets we offer local programming in, the more competitive we are in those respective markets."

But as more features and programming are added, costs will rise.

EchoStar announced Thursday it plans to raise rates by $2 a month, effective Feb. 1. Rates range from $25 to more than $60.

Rising program costs and the addition of channels are responsible for the increase, the company said.

Cable rates in Las Vegas vary widely depending on the programming received and whether Internet service is included.

Behrens said there is a threshold to what people will pay, but that threshold is hard to pinpoint.

People will base their consumption of cable or satellite on product offerings, cost and customer service, she said.

Will satellite TV, along with services that allow viewers to pause movies and their favorite TV shows, be able to break into cable's market share?

"Cable is still the incumbent provider and it spent a lot of money to upgrade services," said DirecTV's Marcocci. "We brought a new, or the first level of competition cable has ever seen."

"We'll continue to see a very competitive marketplace."

The Greenspun family, owner of the Las Vegas Sun, is a minority investor in Cox's Las Vegas cable operation.