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DBS Is Top Topic at Co-Op Conference

Albuquerque, N.M.— Small cable operators from America’s heartland last week gathered and got intelligence on how to compete with the rival that is now the dominant provider of video services in the rural United States, direct-broadcast satellite.

The National Cable Television Cooperative, a buying co-op for smaller cable systems, held its two-day Winter Educational Conference here, offering members sessions on the latest marketing strategies of DirecTV Inc. and EchoStar Communications Corp., tips on how to roll out voice-over-Internet Protocol phone service and video on demand, and how to cost-effectively transport the signals of broadcast-TV stations.

There were roughly 340 attendees, with about 220 NCTC members, as well as exhibitors represented.

Right off the bat, during the first panel last Monday, analyst Bruce Leichtman told attendees the number of DBS subscribers outpaced cable subscribers in rural America in 2005.

“What we see is that in rural America, the No. 1 provider of multichannel video is now DBS,” Leichtman said. “And that was for the first time ever in 2005.”

Of those who subscribe to cable or DBS in rural areas, 42% take satellite versus 37% who buy cable, according to data compiled by his Leichtman Research Group Inc.

Some of those rural DBS subscribers have no choice: 28% of satellite customers live in areas where cable service isn’t available. Currently, 55% of EchoStar subscribers say they live in rural areas, compared with 45% of DirecTV subscribers, according to Leichtman.

The data about DBS’s inroads didn’t daunt NCTC president Jeff Abbas. Only a very small segment of the NCTC’s members are tiny systems whose owners don’t want to invest in upgrades, Abbas said. Their “strikingly small number of subscribers” are being picked off by DBS, according to Abbas.

“At the other end of our membership spectrum are people who have introduced high-speed data, are people who have introduced VoIP, and we get to look at their subscriber numbers month after month out,” Abbas said.

“And those people are actually winning back customer from DBS,” he continued. “So there is a lot of upside for the people who are re-engaging and reinvesting in the business. Those are the people who are here.”