Everything has a price and, generally speaking, in our technology world the price reduces fairly consistently over the duration of time that the product has been released. Entering 2004 we now have the $29.95 DVD player, while DVD recorders are reaching price levels where they are going to threaten the VHS machine.
Yet, some consumer items never seem to come down in price: When did you last see a replacement model car be cheaper? And some prices increase for reasons that can only be defined as silly.
Cable advertises that satellite dishes are useless because the subscribers lose pictures in all kinds of weather. Living at about 45 degrees latitude with a winter climate where the rain is driven horizontally at rates that sometimes reach two inches per hour, I feel I represent a good test bed for the satellite companies' systems. In about six years, I have seen the weather take the picture out maybe twice — and that was with hail the size of golf balls coming down.
I'm probably not the average installation. The site selection for the dish is away from the worst winds with a coaxial cable run of less than 12 feet, and all the connectors are properly attached. It's also a little unusual because I do have a lightning rod connection in the cable run. I've seen what lightning can do at a broadcast installation. Still, I would hope that the professional installers that the satellite companies use are at least reasonably clued in on the basics. At my location, the choice is between cable and satellite; the only receivable terrestrial stations are two low-power transposers, both diplexed into a common antenna with one operating at 1W peak video. The local cable company is a joke, with the feed to my house actually spliced in the street. You can get good reception just by pointing an antenna at the nearest cable box, because they have continually pumped up the levels at the headend so they can expand the system without adding line amplifiers.
At a time when the satellite providers are hitting heavy with special offers and providing more and more local channels — albeit at the cost of bit rates on some other channels — where should the cable providers be spending their promotional money? What message should they be sending to persuade the average user that cable is better? How about by increasing their prices?
Yes, at a time when they are fighting for every possible viewer, when their competition is flaying the market with advertising and special offers, at least one of the cable companies, Comcast, decided to usher in the new year in at least one market with increases of about 5 percent across the board. There is a serious disconnect somewhere here, and I don't believe it is at my end of things. For the 40 odd dollars a month that my family spends to bring a 100-channel package, plus networks, plus the “SuperStations,” you now can have “standard cable” in the Portland, OR, metropolitan area.
Go digital with Comcast — and the satellite companies aren't pushing the “We're already digital” message nearly hard enough — and you can spend up to $95 a month before adding $35 for broadband, from a company that sends threatening letters to about one percent of its customers, telling them that they will suspend Internet service; the one percent, Comcast says, uses 28 percent of the company's bandwidth.
This is going to be a spectacular year for the broadcast industry. We have presidential elections and the summer Olympic Games out of Athens, Greece. And in a recent visit at a large transmitter manufacturer, it seemed clear that engineering money is available too. With the FCC cut-off year of 2006 looming closer, although unlikely to be held firm by the commission, there are a lot of full-power transmitter orders expected to be placed. Between the election advertising and advertising placed both during the Olympics' coverage and the competing channels' programs, engineering is going to get its much deserved share.
This makes the disconnect between services and hardware even more dramatic. Comcast believes that there is no consumer cut-off point for programming charges, and that is reflected in what they think they can charge for hardware. There may be $29.95 DVD players out there, but they think they can charge up to $450 for a non-returned set-top box. Everything does have a price.
Paul McGoldrick is an industry consultant based on the West Coast.
Send questions and comments to:paul_mcgoldrick@primediabusiness.com
