To Dish or Not to Dish

By Chris Taylor

If you own one of those dangerously addictive devices known as televisions, chances are you get your fix from a hole in the ground. Of the 106 million TV households in America, 63% are cable subscribers. But that percentage is going in the same direction as the coaxial cable: down. A new study by J.D. Power & Associates identifies a clear trend: every year cable loses another 2% of total viewers, and satellite picks up the slack. In 1996 only 5 million viewers owned a dish; today the number is closer to 17 million.

At the same time, however, the world of satellite TV has got itself in a bigger mess than Oscar Madison's bedroom. The only two U.S. providers--DirecTV (owned by Hughes) and DISH Network (owned by Echostar)--want to merge. But the Federal Communications Commission has blocked the marriage on the grounds that it would create a monopoly. It's possible that Hughes and Echostar will resolve that impediment by selling some of their business to a third company, Cablevision, which would then enter the satellite market, but that's far from certain.

Meanwhile, what's a multichannel-TV addict to do? Junk his cable box and join the switchers? Or steer clear of the stormy satellite business until the skies clear?

The answer depends mostly on the situation in your local TV market. Prices and channel packages vary wildly. Cable companies are in the midst of multibillion-dollar fiber-optic upgrades, which means that some places have better service than others. Meanwhile DISH and DirecTV say that unless they merge, they can't offer local channels--NBC, ABC, CBS, the WB and Fox affiliates, for example--to every American.

That may be true, but it's mostly a negotiating ploy and not necessarily a reason for you to hold back on satellite. As long as you live in or near a city, it's more likely than not that you can already pick up local channels via satellite. DISH offers them to 60% of Americans; DirecTV does slightly better, at 67%. (As for your chances of picking up the satellite signal, that's more like 99%, unless you live in a canyon or in the shadows of skyscrapers.)

In the past, consumers balked at the high monthly bills that came with a dish. But these days cable and satellite costs are practically indistinguishable. The average monthly cable bill is $47.08--and rising about $3 a year--according to J.D. Power. Satellite sets you back an average of $50.71 per month, but that number is holding steady. If the trend continues, the price difference will disappear by next year.

Then there's the issue of quality. Every pixel that crosses your satellite dish starts and ends its life as a digital signal. A lot of cable channels are still transmitted in lower-quality analog; you usually have to pay extra for digital channels. As someone who has spent the past year hooked up to both DirecTV and AT&T cable, I can testify that shows on satellite are better-looking than the same broadcasts on cable, even on digital channels. (Then again, AT&T has yet to seed my block with fiber optics.)

The two industries are also at odds on the technology that drives TiVo and its imitators. These services allow you to record any show by name, zip through commercials and pause live TV. DISH and DirecTV have embraced the concept, but most cable companies prefer something similar called VOD (video on demand). Unfortunately, VOD is available in only a handful of markets right now and is mostly just for movies.

Cable does have its advantages. If you're interested in high-speed Web surfing, cable modems are significantly cheaper than any satellite-based alternative. DirecTV offers a speedy two-way satellite Internet service called DirecWay, but it costs nearly $600 for installation, plus $60 a month for service. And when a technician visits, according to the J.D. Power study, cable customers are more likely to be pleased with the result. Last year the dish guys were ahead in customer satisfaction; they need to try harder.

But don't let uncertainty in the satellite business faze you. DISH and DirecTV are both well-funded services. They aren't about to disappear. Where I live, in San Francisco, they offer better value and a better signal than cable. To get the lowdown in your town, just ask your neighbors.

Comments? Queries? You can e-mail Chris at [email protected]