The future of cable television has never been more up in the air.
Once no match for the mammoth cable TV industry, the two largest satellite TV operators–DirecTV and the Dish Network–are promising lower prices, better picture quality and superior customer service to carve out a larger piece of the pay-TV pie. And many Chicagoans are beginning to make the switch.
Cable still is dominant in the market, though, according to accounting and consulting firm PriceWaterhouseCoopers, and is expected to have nearly three times as many customers as satellite companies in four years.
However, DirecTV and Dish Network have picked up 1 million new subscribers in the last six months–mostly ex-cable customers –while the 10 largest cable companies, including Comcast and AT&T Broadband, have lost 500,000 subscribers, according to Leichtman Research Group, a New Hampshire consulting group. There are about 67 million cable subscribers and 17 million satellite subscribers in the United States.
“We continue to steadily chip away at [cable’s] market share,” DirecTV spokesman Robert Mercer said. “It’s no secret cable has managed to build up a pretty good amount of ill will among consumers. They were a monopoly for many, many years and behaved like a monopolist, and they kicked their customers around.”
Philadelphia-based Comcast’s $29.2 billion purchase of AT&T Broadband, Chicago’s largest cable service provider with 1.6 million customers, became official in November. In early December, Comcast announced a 6.9 increase in the average rate for cable subscribers in the city of Chicago. RCN Corp., another local provider, announced last week it will increase its standard rate to its Chicago cable customers by 13 percent starting March 1. RCN officials said higher programming license fees are driving the increase.
But watchdog groups Consumer Federation of America and Consumers Union, the publisher of Consumer Reports magazine, believe cable rates have skyrocketed because cable companies are taking advantage of their monopoly position. According to Consumers Union, cable rates have gone up 45 percent since Congress passed the Telecommunications Act in 1996, which deregulated the telecommunications industry.
Because satellite companies send their signal through the air and don’t need to dig on public land, they aren’t regulated like cable companies, which has become a source of frustration for cable companies as competition has increased.
“They’ll say, ‘You don’t regulate them, why do you regulate us?’ ” said Joyce Gallagher, administrator of cable for Chicago. “They’re not our focus. Our focus is the companies we regulate.”
Cable regulations became more stringent in September when the Chicago City Council passed a consumer cable bill of rights. The ordinance requires, among other things, that cable companies provide a $25 credit for a missed appointment and shorter appointment windows, down to three hours from four.
Comcast and Wide Open West, another Chicago cable service provider, have been issued two notices of deficiency for failing to send subscribers a notice by Jan. 5 that the new ordinance is in place, officials said. Gallagher said Wide Open West has indicated it will comply by a Feb. 3 deadline.
Comcast, however, is fighting the ordinance. Comcast spokeswoman Patricia Andrews-Keenan said the cable company sent a letter to the city outlining their concerns that the ordinance will be a “burden” on Comcast and the city because it will cost them money and manpower. She added that Comcast has a self-imposed rule to award $20 for missed appointments.
Gallagher is hopeful Comcast will comply with the ordinance and believes the company will “come to their senses” rather than face fines of at least $750 each day it is not in compliance.
Michael Silverman, 34, was a cable subscriber for 10 years before his 7-unit condo building in East Village made the decision to buy a DirecTV dish. He wasted no time in signing up for the service.
“I hated cable,” Silverman said. “I always got poor reception with certain channels that they never seemed to be able to correct.”
In the end, it was poor customer service that persuaded Silverman to switch.
Andrews-Keenan said Comcast is addressing those issues and has hired 500 new customer contact representatives in the last year. She also argues that cable is superior to satellite because the reception isn’t contingent on the weather. In addition, Comcast adds to the local economy by employing 4,500 people, she said.
Marc Cook, who manages Abt Electronics in Glenview, remembers how a few years back, when customers wanted satellite, they sometimes were less inclined to switch because it didn’t offer local channels, and the price of equipment and service was much higher than cable TV.
But with the arrival of DirecTV in 1994 and Dish Network two years later, satellite TV became more accessible. When the Satellite Home Viewer Act was signed by President Bill Clinton in 1999–making it possible to bring local stations to customers in most major cities–the satellite industry started competing on the same playing field as cable.
“A lot of people are just angry with the sort of monolithic figure cable has become,” Cook said. “With all of them swallowing each other up, it’s not like customer service has gotten better. That’s the primary complaint.”
Common questions about satellite service
How do I know if my home can get satellite?
The spot where your dish will be placed must have a direct line to the south.
Doesn’t satellite equipment cost a lot?
DirecTV and Dish Network almost always have special offers that will give you a dish plus a receiver for a nominal fee, usually around $50. This often includes installation too.
Can I install it myself?
Sure, if you want. But the place you buy it from will usually arrange installation for a nominal fee or no cost.
Can I get local channels on satellite?
Both DirecTV and Dish Network offer Chicago’s local channels as part of a package or as an added cost.
Can I get satellite if I’m renting?
Yes. You can get a stand to place the dish inside your home, but if it gets bumped, it may need adjusting by a technician. If you want to install it on the outside of your building, you need permission from your landlord.
Digital front lines: comparing the monthly costs
$56.99: AT&T Broadband (Comcast) Digital Cable:
200 channels, plus HBO, Encore and Starz!
$49.99: DirecTV, Total Choice:
115 channels, plus HBO.
$51.97: Dish Network: 100 channels, plus local stations and HBO.
