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DirecTV Plots PrimeStar Shutdown

DirecTV Inc. will shut down its PrimeStar by DirecTV medium-power digital-satellite service, now that the year-and-a-half-long process of converting former PrimeStar Inc. customers to DirecTV's high-power direct-broadcast satellite platform has been completed.

The last PrimeStar signals will be broadcast Sept. 30, about six months ahead of the schedule DirecTV originally projected when it acquired the platform's more than 2 million customers in the spring of 1999.

DirecTV's decision to shut down the PrimeStar signals early "was pushed on us by response from consumers," said DirecTV senior vice president and general manager John McKee, who oversees the Prime-Star conversion and the company's Home Services Network.

By the end of this month, DirecTV will have reached its goal of converting 60 to 70 percent of PrimeStar customers to the high-power hardware and programming lineup. McKee could not say how much the company spent on the transition, but noted that equipment and the installation were the only substantial costs.

A small number of subscribers may still not have responded to DirecTV's offer to swap out the equipment for free by the time the signal is shut down at the end of the week, McKee said. But it won't be for a lack of communication on DirecTV's part.

"There's no way, if you're a PrimeStar customer, [that] you haven't seen a message about the signal shut-down," said McKee.

The messages include on-screen bulletins at the beginning and end of each hour on every channel, on-air spots featuring DirecTV spokesman Drew Carey, bill stuffers, announcements on the cover of several consecutive printed PrimeStar channel guides, and even a limited amount of door hangers and telemarketing calls.

Inertia may have kept some PrimeStar customers from responding, McKee said. When the former General Instrument Corp. switched out descrambling equipment for C-band systems a decade ago, he added, some people waited until they lost their signal to accept the new hardware.

DirecTV installers offered to take away the old PrimeStar equipment, but some customers kept it. McKee said DirecTV disposed of the equipment it collected in the field in an environmentally sound fashion. He plans to do the same with the equipment that former PrimeStar customers had shipped to DirecTV headquarters, which currently sits in a California warehouse.

The Home Services Network that handled the equipment swap-out for DirecTV will not be disbanded. Instead, DirecTV will offer its installation services to its retail and other distributors, such as Blockbuster Inc. and some of its regional telephone company partners. The division will remain in Denver.

In addition, the Boise, Idaho, call center that DirecTV inherited from PrimeStar will be devoted entirely to DirecTV calls once the conversion is completed. McKee said he expects the company to continue to take calls from medium-power customers until October, after the signal has been shut down. Those customers will still be eligible for the free equipment swap-out for a limited time.

McKee admitted that DirecTV lost some of the former PrimeStar customers to its competition and to churn, especially early on. DBS rival EchoStar Communications Corp., for example, initiated a bounty program last year, in which dealers were paid a bonus to sign up the former PrimeStar customers that DirecTV had paid a premium for.

But DirecTV is pleased with the success of its PrimeStar conversions, particularly since the process didn't slow down its growth. In fact, the company saw its net subscriber base increase over the same period a year earlier, even with the PrimeStar conversions excluded from the count.

The company was able to keep its focus on new growth because DirecTV set up a dedicated team for the PrimeStar conversion, McKee said.

DirecTV will report how many PrimeStar customers were converted to high-power in its next quarterly report.