[Satellite News 12-18-08] Some satellite TV providers are approaching the Feb. 17 transition to digital television in the United States as an opportunity to expand their customer base, while others disagree and see little value in the switchover.
    Dish Network has developed an aggressive DTV transition campaign, said spokeswoman Francie Bauer. “We’re mostly on the ground, in what I would call a guerilla warfare strategy,” Bauer told Satellite News. “I just returned from Hawaii, where the switch is going to happen a month early. The state has a large elderly population that is completely in the dark about what’s going to happen. I think we have a steep learning curve to overcome and it’s going to be one of those things where people wait until the last minute to do something about it.”
    Dish Network is hoping that the effort it puts into consumer education will lead to a boost in pay TV subscribers. “We’re working with the FCC [U.S. Federal Communications Commission] at a lot of different events to educate consumers on their options,” Bauer said. “It is certainly our hope that those people subscribe to pay TV as one of those options, but we understand that monthly billing is cost-prohibitive for some people.”
    DirecTV also making efforts to educate the public but does not take as much stock as Dish Network in the opportunity, spokesman Robert Mercer said. “Our first order of business has been making sure those DirecTV customers who are not receiving local channels from us are well-educated on the subject and clear about what their options are,” he said. “While it’s likely we will acquire some customers as the analog world begins to unwind, we aren’t looking at this as a huge marketing opportunity. Yes, it’s an opportunity but not a major one.”
    Some analysts disagree. In a Dec. 12 column, Marketwatch columnist John Dvorak put satellite pay TV providers on a list of DTV transition beneficiaries. “The big winners will be the cable companies and the satellite folks who help people bypass the [over-the-air] problems by delivering a universal analog signal from their set-top boxes,” he wrote. But Dvorak also believes the transition will create various customer-related problems — an opinion that is shared by those who have worked extensively with the switchover.
    In a presentation to investors at the ISCe symposium in October, David Donovan, president of the Association for Maximum Service Television, discussed the problems his organization realized from the Wilmington Test, where several broadcasters and the FCC pulled the plug on analog television for the Delaware city of 100,000 residents. “Wilmington was the guinea pig, and we learned our lesson from it,” said Donovan. “A well-coordinated transition will require the sufficient availability of transmitters, antennas, transmission line and tower rigging services, in addition to dealing with customer confusion and supply side issues.”
    One of the biggest problems, according to Donovan, was confusion over how to operate converter boxes. “When you buy a converter box, you have to have the box scan for local signals. When people first activated these boxes, a lot of them thought it didn’t work or that they weren’t getting channels. This was a big problem on the first day,” he said. “Satellite users need to make sure their receiver sites are converted to digital.”
    Dish Network is the only pay-TV provider which is selling converter boxes, said Bauer. The $40 box, which is free after redeeming a government rebate coupon, should lead to customer growth. “We hope it spreads awareness to what options are out there for people who will be affected by the transition.”
    Dvorak said the rebate coupon program was “a mess” and that the government has not handled the program efficiently on its end. “The coupons were sent out before these set-top boxes were available and were only good for 60 days. I requested two coupons over a month ago and have received nothing. My wife got hers perhaps six months ago but could not get a box before the coupons expired. Why do these coupons expire before the Feb. 17 date? This is an indication of a poorly thought-out program,” he said.
    Dish Network generally disagrees with analyst opinion, Bauer said. “If you know [Dish Network CEO] Charlie Ergen, you know he doesn’t usually listen to what analysts have to say. He makes his own decisions based on his own instincts.” Despite the concern over potential problems, Bauer remains optimistic about the opportunity and said Dish Network experienced a spike in pay-TV subscriptions the day before, during and after the Wilmington switch. “If Wilmington is a microcosm of the United States, than I do think we’re going to see a spike in subscriptions once that transition occurs,” she said.
    DirecTV also experienced a boost from Wilmington, Mercer said, and both companies expect to launch DTV advertisement campaigns in the near future.

Satellite Today hosted a webinar, “Digital Switchover – What It Means For Broadcasting,” Dec. 16 featuring Christer Bohm, CTO and co-founder of Net Insight;
Joseph Widoff, executive director of the Satellite Broadcasting and Communications Association; Brad Gillen, director and senior counsel of Dish Netwok; and Alan Stillwell, deputy chief of the FCC’s Office of Engineering and Technology. For more information on how to listen to this webinar visit www.satellitetoday.com/webinars