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Satellite TV Prices Drop Below Cable

By | August 25, 2003

      The average price difference between cable and satellite TV service has narrowed significantly over the past five years, with the average monthly expenditure for satellite service falling below cable for the first time, according to the J.D. Power and Associates 2003 Residential Cable/Satellite TV Customer Satisfaction Study.The study finds that the average monthly expenditure for satellite TV service is $48.93 – up 8 percent from 1998. However, cable spending has increased 41 percent in the same time period, moving from an average of $35.15 per month in 1998 to $49.62 per month in 2003. Accounting for much of the spending increase among cable subscribers are upgraded and/or additional services such as digital TV, video-on-demand and high definition TV, which are being actively marketed to consumers. While cable continues to be the dominant provider, satellite subscriptions are steadily growing. Currently, 60 percent of households surveyed subscribe to cable service, down from 68 percent five years ago, while satellite subscriptions have increased from 7 percent of households in 1998 to 17 percent in 2003.”Digital cable hasn’t turned out to be the solution the cable industry needed to stem the tide of migration to satellite providers,” said Steve Kirkeby, senior director of telecommunications research at J.D. Power and Associates. “Although digital cable subscribers report higher satisfaction than do analog cable subscribers, both groups dramatically trail satellite subscribers in overall customer satisfaction, with cost of service being a key issue.”

      Bundling ServicesOne area where cable providers may have an opportunity to stem this migration to satellite is in bundling telephony and Internet access with cable TV service. With growing consumer desire to combine multiple services in a single bill, the study finds that 34 percent of cable subscribers want to combine their cable service with some other telecommunications product or service.Both satellite TV providers in the study receive the top two customer satisfaction rankings among the 13 major providers of cable/satellite TV service. DirecTV, a Hughes Electronics [NYSE: GMH] unit, ranks highest in overall customer satisfaction performance for the second consecutive year, followed closely by EchoStar Communications’ [Nasdaq: DISH] DISH Network.

      Among the six factors that contribute to overall satisfaction, DirecTV receives top ratings in performance and reliability, cost of service, billing, and offerings and promotions. It also performs near the top in the remaining two factors: image and customer service.Following DirecTV and DISH Network in the rankings are cable providers Cox Communications [NYSE: COX], WideOpen West, Cable One, RCN [Nasdaq: RCNC] and Time Warner [NYSE: AOL], respectively. The 2003 Residential Cable/Satellite TV Customer Satisfaction Study is based on responses from 7,340 U.S. households that evaluated their satellite or cable TV providers. — Fred Donovan

      (Michael Greywitt, J.D. Power, 805/418-8000)

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