Page 176 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

166 Communication, Commerce and Power

neighborhood. Moreover, if the DBS subscriber decides to stop
receiving signals, the reception unit can be removed and, at minimal
cost, can be installed again at another location. Moreover, given its
continent-size coverage area, DBS systems, unlike most cable services,
are not dependent on their successful deployment in pre-specified
territories. If a DBS service fails to 'catch on' in Canada or Florida,
for example, the same DBS operator can shift his or her marketing
efforts toward any number of alternate locations - perhaps Mexico
and California. Cable, on the other hand, must succeed in pre-estab-
lished markets. This extraordinary flexibility also enables DBS opera-
tors to 'poach' from cable company subscribers, whereas cable's
capability to do the same to DBS is limited.
All of these relative advantages are largely the result of cable's
physical limitations, the fragmented and localized character of most
cable markets, and the fact that in North America DBS, in the 1990s,
has a relatively small clientele from which cable can lure away sub-
scribers. One study estimates that the cost per channel of reaching
14
all US television households through cable is $378 million, whereas
for DBS the cost is just $3.7 million. 15 Given the size of the North
American market, the price for a DBS system essentially to 'wire' the
continent works out to US $1.67 per household. 16
After just one year in business, the most successful North American
DBS enterprise, DirecTV, had 1.3 million household subscribersY
While this penetration into homes probably will not continue far
beyond 15 million by the year 2000 - due largely to the efforts of
terrestrial-based systems to provide digital video technologies to their
existing subscribers- it constitutes an unprecedented growth rate for
any post-1945 in-home technology. In Britain, as of 1996, after seven
years in service, 5.5 million households receive DBS signals. 18 In
Europe, the Astra system (the telesatellites carrying BSkyB services
and many others) was received by more than 65 million homes at the
end of 1995, up from just over 20 million in 1990. 19 As the cutting-edge
transnational and digital communications technology, corporate in-
vestors of DBS developments now include practically every TNC
directly involved in information and communication commodity
activities, including AT&T. 20
Until1994, the only operating DBS system in the United States was
Primestar - a company owned by a partnership of the country's
largest cable television companies. Originally called K-Prime Partners,
its participants have included Comcast, Continental, Cox, New
Vision, 21 TCI, United Artists, 22 Viacom, 23 Warner Cable and the