A new service that distributes cable channels over the air claims its subscribers are more satisfied than cable and DBS customers.
USDTV says its first customer-satisfaction survey will help expand its service, which uses broadcasters' digital spectrum. Currently available in Salt Lake City, Las Vegas and Albuquerque, USDTV will roll out in 18 markets beginning in September.
The survey, conducted by Dever-based Ritter/Braden, builds on a study of cable and DBS customers by American Customer Satisfaction Index. On a customer-satisfaction scale of 1 to 100, USDTV earned a 72—and a slight edge over DirecTV and EchoStar (71) and Cox Communications (63).
USDTV President Steve Lindsley notes that 83% of respondents said they would recommend the over-the-air subscription service to friends or family. But while good customer response is important, response from broadcasters is even more critical.
LIN Broadcasting is a believer in USDTV's proposal. Now others are beginning to take a serious look. The service can be launched in any market, provided enough stations are willing to lease part of their digital spectrum so SD channels can be sent to subscribers, who pay $19.95 per month for the service.
One recent development: USDTV is working on incorporating fifth-generation DTV receiver chips and tuners into its next-generation set-top box. The boxes will be available by December and bring such benefits as improved outdoor and indoor reception. It also will make it easier for subscribers to do self-installs; they won't need to attach an external receiving antenna.
"Studies show the chipset improves reception by 20%-30%, and the chipset proves that receiver technology is improving," says Lindsley. "Going forward, this business is sustainable."
Sinclair has been following the USDTV developments as both participant and observer. Says Technology Vice President Nat Ostroff, "Zenith's fifth-generation receiver makes their business model technically feasible and their proposal more interesting."
But could the next-generation receivers be too good for USDTV?
Ostroff says, as over-the-air receivers improve, the free-HDTV model becomes more interesting. "More spectrum will be used," he says, "and that may limit the multicast applications."
That's why USDTV will also incorporate the Microsoft Windows Media 9 (WM9) technology into the new boxes. The WM9 technology is more efficient than MPEG-2 compression, making it possible to fit more channels into less bandwidth. Lindsley says there are three pillars of technology that will help broadcasters compete: reception, compression and storage. DVR functionality is expected to be available from USDTV early next year.
Lindsley is confident that USDTV's future is sound, even in the wake of competing plans, like Emmis CEO Jeff Smulyan's, which was quickly endorsed by 12 station groups at NAB in April. Since then, the plan has stalled in the "vaporware" phase, while USDTV has picked up about 8,000 total subscribers in its three markets.
"Some people have suggested doing a deal with Smulyan, and we've done our due diligence. Right now, we don't see that his plan has any traction or deals of substance," says Lindsley. "We have confidence that the leadership of the broadcast industry is coalescing behind us."
Retailers are as well. Wal-Mart has manned kiosks in stores within the three markets. The effort nets about 20% of the subscriptions.
Lindsley is excited about the rollout. USDTV will go to both coasts. "It's not going to take us five years to get to Miami."
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