Registered: Oct 2000
Location: glen ridge, nj, usa
Originally posted by Quantu5:
I am sorry but removing the second satellite competitor is a bad thing? Look at the people in rural areas that can't get cable or digital cable? The satellite companies aren't exactly making money at this point. And you're telling me that the satellite companies are making money, will offer more channels, etc (and HDTV is gonna cost them tons of money in sat launches, compression, programs)? Nope! They will try and make the company profitable. What that means, less (or the same channels) and an increase in monthly costs. Then there are the satellite boxes that people bought themselves. I hope this deal fails.
I don't really buy this argument. Both DISH and DirecTV don't have two markets: Rural and urban. They have a national market. They don't charge rural customers any more than urban customers. True, rural customers are more likely to purchase local channels, but plenty of urban customers buy them also.
DirecTV and Dish's largest growth has been in urban markets lately. Since the addition of local channels, there has now been true competition between cable and DirecTV. I was one of those converts that switched once I got my local channels.
Currently, neither DirecTV nor Dish charges different rates for different parts of the country. One these reasons is that "enforcement" of such rates can get difficult. It is much easier from sales, marketing, billing, support etc to have a single national set of rates for all customers. Of course these rates have to be competitive with cable rates.
I am positive that Echostar will need to make this current status quo a promise to the FCC in order to get merger approval. And I think that given a promise to either set national rates, or even if they have regional rates, the "regions" need to be compromised of both rural and urban customers, in order to make sure that the rural customers rates are competitive with their closest cable providers rates.
There are significant benefits to merging the networks of DirecTV and Dish. Most of the channels that DirecTV carries, Dish carries. The new must-carry rules will actually benefit the satellite companies, since it may erase much of the competitive advantage cable companies still have for many markets. However the must-carry rules also have placed tremendous stress on both DirecTV and Dishes satellite networks. A merger of the two companies could have a tremendous benefit in the longer run.
I will make one prediction: If the merger fails, DirecTV and Dish may still decide to create a new DBS technology standard that would allow interchangeable receivers. The FTC and the FCC would probably allow such a thing, since it would probably INCREASE competition in the satellite business. Customers could switch providers without buying anything new.
DirecTV and Dish could still share satellites. They already share satellites, they just don't share spectrum and they use different encryption technologies. This means that for every channel that they both carry, must be transmitted twice.
There was resistance to this before, since a hardware purchase usually created a loyal customer. However with the stress of having to satisfy must-carry, the theft of DBS services, the demand for HDTV, etc, a new generation of DBS equipment could solve issues for both DirecTV and Dish.
If that sounds expensive, may not.
A new satellite can be a two billion dollar proposition. (a cost number that I made up!) That over $100 per current subscriber. Swapping out receivers may be just as expensive, but offer a lot more benefit for both carriers.
[This message has been edited by mishagray (edited 11-09-2001).]
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