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Video Transmission Via Satellite Essay Research Paper (стр. 1 из 2)

Video Transmission Via Satellite Essay, Research Paper

Video Transmission via Satellite


Direct Broadcast satellite (DBS) delivers hundreds of TV channels to millions of people around the world. Satellite owners buy slots in space and lease assigned transponder frequencies to service providers. In this paper, I briefly introduce the history and development of DBS, the major vendors of the products, and overall market situation. In order to illustrate why DBS is such a popular technology, I also give out the comparison between DBS and the traditional cable TV. Both of them have advantages and disadvantages. But the competitive advantages of DBS will make it attract more subscribers thus gain larger market share in the future.

1. The History About Satellite TV

The Beginning

Most network and cable programs are transmitted on a series of C-band satellites and some Ku-band satellites. These two types of satellites use different frequencies much as VHF and UHF broadcast TV use different frequencies.

Communications satellites were originally designed for commercial purposes for sending telephone, radio, TV, and other signals across the country and around the world for retransmission to businesses and homes by local telephone companies, TV stations, or cable companies. Enterprising individuals soon learned to build satellite dish receivers to pick up these signals at their own home, and begin making and selling these systems to homeowners around the country, thus beginning the era of home satellite TV. During the 1980’s and early 1990’s, several million of these C-band systems were sold with dishes generally around the 10′ diameter size. One of the early pioneers in the C-band business was Charlie Ergan who founded Echosphere Corporation.

Modern Times

As home satellite systems became more popular, programmers such as HBO and others realized that they could not continue to give away their programs free to millions of home dish owners. A scrambling system was then developed so their signals were no longer broadcast “in the clear” for everyone with a dish to pick up without any payment to the program developers. The subscribers were addressable, so that the programmer could turn channels on and off by a code sent over the satellite signal, depending on what channel was paid for by the owner. A few channels were broadcasted on the higher frequency Ku-band satellites, and some hybrid C/Ku-band systems were sold, but Ku reception never became very popular due to the difficulties in receiving the Ku channels and to the lack of sufficient programming on these satellites.

In the early 1990’s four large cable companies launched a Direct Broadcast Satellite, or DBS system called Primestar using an existing medium power Ku-band satellite and a 36″ dish. In 1994, the GM Hughes DirecTV system was launched using a newly designed high power Ku-band satellite and an 18″ dish. These systems provided great pictures and stereo sound on 150-200 video and audio channels, and the small dish era began in a serious way.

Two years later, the EchoStar Dish Network system was launched. A forth DBS system, Alphastar, attempted to get started but eventually went out of business.

Since the beginning of the DirecTV satellite system in 1994, sales of these small dish systems has exploded, making this the most successful introduction of new technology ever. With the launch of a Direct Broadcast Satellite (DBS) system from EchoStar, and the continuing success of the DirecTV system, as well as the cable-owned Primestar system (now bought out by DirecTV), the choices can look bewildering.

Across America, more than one of every 20 homes has a satellite dish. Several states now boast satellite television penetration figures exceeding 10% of all TV households, with one state, Montana, having dishes in more than one out of every six homes. This explosion in the popularity of direct-to-home (DTH) satellite technology may surprise many casual observers since many Americans (and most of the media) have only learned about satellite TV in the last two years. Indeed, DBS represents the most successful consumer product introduction in history, easily outperforming CE stalwarts like the color TV, VCR and CD player. The industry survived not only because it has a good product but also because many of those early pioneers simply wouldn’t let the dream slip away. Those pioneers, carrying the scars of their battle, are now leading this industry into the “digital information age” of the 21st century.

2. DBS Manufacturers and Satellite TV Service Providers


Two service providers dominate the DBS industry in the United States. DirecTV, an El Segundo, California-based subsidiary of GM Hughes Electronics, holds the top spot with 4.8 million subscribers. Littleton, Colorado-based EchoStar Communications comes in second, with about 2 million subscribers.

Product Analysis


DirecTV became the fifth-largest pay television provider in the United States in its first five years of operation. In an effort to expand its subscriber base, the DBS giant signed marketing agreements with Bell Atlantic, GTE, and SBC Communications that allowed DirecTV to offer its satellite services to the companies’ customers. To gain greater channel capacity and further seal its lead in the market, the company bought United States Satellite Broadcasting for $1.3 billion in 1998 and Primestar for $1.8 billion in early 1999. Immediately after its buying spree, DirecTV carried all three brand name DBS services under its umbrella.

The DIRECTV service provides 175 channels from a cluster of three High Power DBS satellites. Its partner, United States Satellite Broadcasting (USSB) of Minneapolis, uses the same satellite cluster to transmit a complementary 25-channel premium movie option. About 2 million DirecTV subscribers have already signed on for the optional USSB movie package. DirecTV/USSB is the fastest-growing DBS service, adding some 50,000 subscribers each month. In addition to movies, the service’s programming includes extensive professional and collegiate sports coverage, cable channels, and CD-quality audio and pay-per-view (PPV) events. DirecTV plans to phase out Primestar service by 2002, adding 2 million mostly rural converts to the DirecTV subscriber list. The company had $1.8 billion of sales in 1998, a 42% increase over 1997.

Market Player Owner StartupDate Satellites DishSize No. Of Channels Households

DirecTV GM Hughes 1994 GM HughesDBS1, DBS2, DBS3 18″ 200 4.80 million

EchoStar”Dish” Network Echosphere Corp. 1996 Echo 1, Echo 2 18″ 150 2.04 million

Primestar DirecTV 1990 GE-2 27″ 120 2.32 million


EchoStar Communications started its Digital Information Sky Highway (DISH) Network in March 1996. Like DirecTV/USSB, it is a High Power DBS provider. EchoStar’s market share rose from 20% to 24% from 1998 to 1999. More indicative of the company’s progress was its increase in subscribers, rising from 1 million in 1998 to 2.4 million in 1999, a 96% increase. EchoStar transmits more than 120 channels from a Full-CONUS orbital slot, and also owns rights to East Coast and West Coast transponders from which it plans to deliver local data services, foreign language programming and other channels via an additional antenna dish. EchoStar competes by offering lower hardware prices and monthly fees. Unlike DirecTV, EchoStar can deliver local broadcast channels in major markets. It also has the most “superstation” programming. A 6 ~ 10 channels Christian religious service from the East Coast satellite, SkyAngel, is partnered with EchoStar. Echostar had $983 million of sales in 1998, a 106% increase over the previous year.

3. Competitiveness for Choosing DBS


1. Cannot get cable service

If cable is not available and your off-air local reception is poor, or you want to get some of the cable type channels like CNN, ESPN, A&E, etc. DirecTV is the answer.

2. Hate the cable company

Many cable subscribers are reasonably well satisfied with their service, but many are unhappy with poor reception, frequent outages, limited channel selection, and high monthly fees for premium channels. DBS is now an excellent alternative.

3. Got to have those SPORTS!

Most cable systems just don’t have the channel capacity to compete with the huge selection of sports on DSS right now, and those scheduled to be on other DBS systems in the near future.

4. Looking for Specialty Channels

The Dish Network system is carrying many foreign language, religious, and other “niche” channels that are not available from cable providers.

5. Pay-per-View and Music Channels

There is a great selection of movies, sports, and concerts on DSS, and coming to other DBS systems. All DBS systems have many channels of stereo music that can be plugged into a home music system.

6. Quality of Picture and Sound

All DBS systems have excellent picture and sound via digital transmissions versus the “snow” or “shadows” frequently experienced with cable or antenna reception.

7. Technological Leadership

DirecTV is on the cutting edge of Home Theater technology. Some pay-per-view movies already been broadcast in wide screen format. Dolby digital sound output is available on some satellite receivers, and it can be sure that satellite will be the first to bring High Definition TV to the home.

Some Facts of DBS

In the process of signing up 4 million subscribers in less than 4 years as a national service, DirecTV has:

1. Registered more than 120 million pay-per-view movies and special event purchases.

2. Broadcast approximately 200,000 hours of professional and collegiate sporting events.

3. Consistently earned a customer satisfaction rating exceeding 90%

4. Maintained a monthly churn rate (percentage of subscribers who disconnect) of just 1% ? the lowest in the multi-channel video industry.

4. Comparison Analysis

Satellite TV vs. Cable TV

Satellite TV Cable TV

Channel capacity More (225)Up to 55 pay-per-view Less (50 or so)

Video quality Better Worse

Audio quality Better Worse

Service payment A bit less A bit more

Multi TV watch Need additional receivers$90/each No further requirement

Typical monthly cost $32Add $6 for ABC, CBS, NBC, Fox $30

Pros n Powerful signaln Crystal clear picture qualityn CD quality soundn No need to upgraden More channelsn Full sport packagesn Small 18-inch dish, no moving partsn Over 55 pay-per-view Channels n Most wide spreadn Extra outlets free except for installation cost $20n Low hook up fee, $20 ~ $30n Include the local channelsn Limited channels – 35 ~ 40n Reception is not as clear as satellite TV

Cons n Need an antenna or cable TV to receive their local stationn Extra TV set required an extra satellite receivern Affected by rain fade, loose image when hard rain or snown Need to pay additional for local channels n $20 per month just for cable, not including programmingn The rates never go down…only upn Wire to deliver signal, may have interruptions

Satellite TV vs. Satellite TV

DirecTV Dish Network

Manufacturer Hughes Echosphere

Channel capacity 200 channels31 CD quality music channelsUp to 55 pay-per-view 130 channels31 CD quality music channelsUp to 10 pay-per-view

Dish 18-inch 18-inch

Subscribers 8.7 million (2000/6) 4.3 million (2000/6)

Multi TV watch Need additional receivers$90/each Need additional receivers

Typical monthly cost $32Add $6 for ABC, CBS, NBC, Fox$5 for second satellite receive $5 for programming on second TV set receiver, $20 maintenance fee

International programming Unavailable Available

Sport packages More Less

Pros n More channelsn Full sport packagesn More pay-per-view Channels n Provide international programming

Cons u Do not provide international programming u Less channelsu No full sport packagesu Limited pay-per-view channels

5. Marketing Issues

Still Unprofitable

As of 1999, there were more than 10 million DBS subscribers in the United States, up from 8 million in 1998 and 6 million in 1997. Thousands of viewers sign on every day, and industry analysts predict more than 12 million by the year 2000. However, all the current providers are in heavy debt and operating at a loss. The providers ‘policy of subsidizing the cost of the customers’ receiving equipment down to exacerbates the operating losses as low as $100 in order to attract market share. Since none of the receiving systems is compatible, if a provider goes out of business, as AlphaStar has already, customers are left with worthless equipment.

Expand Services

DBS firms are seeking to expand the business by serving new categories of customers.


Business Vision, partnered with EchoStar, and Member Direct Television, in cooperation with DirecTV, are providing business television to thousands of receiving sites. The programming includes tailored business news and information, training programs, industry-specific material, and proprietary packages for large firms.

More Product Choices


DBS companies venture into new business areas, America Online partnered with DirecTV, Hughes Network Systems, Philips Electronics, and Network Computer to work on developing “AOL TV.” DirecTV and AOL planned to work together on a service that would combine digital satellite television programming and AOL TV’s enhanced interactive TV Internet service. Hughes Network Services planned to design and build a dual-purpose set-top receiver, complete with an advanced set-top box for AOL TV provided by Philips. Network Computer’s contribution was to provide a complete software platform for the new service through the company’s TV Navigator software.

Strategic Partnership


AOL TV/DirecTV plan to market the AOL TV/DirecTV service to a combined base of 24 million subscribers. The service will provide AOL content in addition to satellite TV programming in one platform. The deal also boosts the broadband ambitions of both companies. Hughes’ planned $1.4 billion Spaceway geostationary broadband satellite system will benefit by being able to tap into this customer base well before the satellites built. AOL also said to be considering additional investment in Spaceway.


EchoStar appeared to have the jump on DirecTV when it came to interactive services. EchoStar still will be first to market with an interactive offering. High-speed, interactive Web-like channels are much more alluring than semi-high-speed cable modems.

Brad Beale, DirecTV’s vice president of advanced products, says interactive services fit his company’s strategic aims: “With the introduction of our interactive services, we’re taking television entertainment to the next level by bringing varying levels of interactivity to a consumer’s television viewing experience.”



EchoStar plans for DirecTV’s Internet product, EchoStar’s offerings are similar enough so that many subscribers will not really decide based upon any differences. The money and the marketing clout behind the DirecTV-AOL partnership will put EchoStar at a disadvantage once AOL TV/DirecTV gets rolling, unless EchoStar can find a similar partnership.

Sell out

AOL’s DirecTV investment in the form of $1.5 billion placed in an interest-bearing GM security that is convertible into GM Class H common stock in three years will be used for marketing, public relations and to subsidize entry into the new services. These services will be sold under several brand names: DirecTV, DirecPC, AOL TV and AOL-Plus high-speed Internet service.

The marketing expenditures planned for the venture are in the neighborhood of $1.6 billion. This amount includes $500 million to market AOL-Plus through DirecPC; up to $500 million for DirecTV marketing, including $100 million to market to AOL members; $400 million for combined AOL TV/DirecTV services, and $100 million for DirectDuo, a single dish for both TV and Internet access.

6. Market Share and Growth

The tremendous growth of DBS as a video provider was a reason to consider that industry a threat to the dominance of cable broadband. In the last year, the number of DBS subscribers grew to 13 million homes from 10.1 million, vs. 67.7 million cable homes. More than 15% of all multi-channel video subscribers are DBS customers, and DirecTV and EchoStar are among the top 10 video providers in the United States, joining the ranks of AT&T Broadband, Time Warner Cable and Comcast Communications.

Cable operators spent billions of dollars on preparing to offer glitzy interactive services. However, a lot has changed over the past year. The number of satellite players has shrunk from four to two: DirecTV and EchoStar. They are doing surprisingly well in rounding up new subscribers and revenue since the federal government gave them the right to retransmit local stations, which they do for an extra fee. Moreover, over the next few months, satellites will take the lead in offering interactive digital TV services, as well as two-way high-speed Internet connections, coast to coast. That has made Hughes Electronics, parent of DirecTV deals with power players including America Online, Microsoft and Blockbuster, and programmers from the National Football League to Walt Disney. They are attracted to DirecTV because its 8.7 million subscribers account for about two-thirds of the satellite market. It expects to end this year with nearly 10 million customers, up 20% over last year. As a result, it reaches more homes than anyone except AT&T and Time Warner, and it is on pace to pass the cable giants around 2005. About 70% of DirecTV’s new customers come from areas served by cable. No wonder investment bankers are so tantalized by the possibility that General Motors, which owns Hughes, is ready to fundamentally change the media landscape with an outright sale of the property. Analysts say it would cost a buyer about $50 billion.