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Cable television broadcasting industry

Satellite Systems Threaten Cable Industry's Market Share on the Infobahn

Strategic Insights

— 2 min read

The satellite industry is poised to challenge cable's dominance on the Infobahn, with DirecTv's DBS service expected to offer 150 channels of digital television direct to homes by the year 2000. This is in contrast to cable's 60 channels, and the satellite industry's digital signals will provide CD-quality sound and sharp video, outperforming cable in terms of picture quality.

Key Takeaways:

  • The Deloitte & Touche study predicts that at least one DBS satellite will be competing with hybrid, fiber-coax systems to the neighborhood level through cable and television systems by 1998-2000.
  • The study also predicts a fiber optic boom to come sooner than expected, with its wires being deployed by 1998-2000, and switched broadband services penetrating at least 40 percent of the residential and small business markets in the United States by that time.
  • The satellite industry argues that the expense of laying fiber will create a caste system of information haves and have nots, with satellites being able to do the same job cheaper and faster.
  • 58 percent of the respondents to the study believe that the National Information Infrastructure will gain widespread market acceptance much sooner than expected (between 1998-2000).
  • The study predicts the complete merging of the telephone and cable television industries by the end of the decade, with the telephone and cable industry running into sales resistance when they have fiber optic wires working.
  • The trend will be toward wireless devices in the mass consumer market, at the expense of local telephone company revenues, the study predicted.
  • The report emphasizes the importance of customer satisfaction, stating that customers will lose enthusiasm for even the most creative service provider if the company fails to deliver as promised.

Statistics:

  • 150 channels of digital television direct to homes expected by the year 2000 offered by DirecTv's DBS service.
  • 60 channels available on cable.
  • 10 million DirecTv satellite dishes predicted to be sold by the year 2000.
  • 40 percent of residential and small business markets in the United States expected to be penetrated by switched broadband services by 1998-2000.
  • 58 percent of respondents believe the National Information Infrastructure will gain widespread market acceptance much sooner than expected (between 1998-2000).
  • $1,000 predicted price threshold for HDTV to be successful, citing a vice president of a computer electronics firm.

Sources:

  • "Speeding Toward the Interactive Multimedia Age," Deloitte & Touche.
  • 1001 Pennsylvania Ave., Suite 350N, Washington, DC 20004, 202/879-5667 (contact information for Deloitte & Touche).

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