DTV Transition Winners

As I expected, cable and satellite services will be big winners as a result of the transition to digital broadcast of television content when analog broadcasts ended on June 12. As over-the-air users discovered that their systems could not receive the same stations that they had received via analog transmissions — especially in fringe reception areas — their choices were limited to subscription-based services such as cable or satellite, or to make a large investment in antenna equipment, signal amplifiers, and other electronics in order to get the programming. It’s not a surprise that many people chose the easy way out, especially since the subscription services have been offering some attractive introductory deals. Customers in areas served by a cable company can pick either cable or satellite, but many customers live beyond where the cable feeds end, and thus are limited to the satellite choices.

According to an article in Multichannel News, a Wells Fargo Securities analyst estimated that about 653,000 U.S. homes will become new cable, satellite, or telephone company subcribers for video services this year. Nearly three out of four of these new subscribers will choose cable, with satellite picking up about 20% of the new subscriptions. (That leaves the phone companies with about 6% of the gain, but this is not surprising given the limited footprint of these services so far.)

I expect that some — if not most — of these new subscribers come from the ranks of the “partially ready” consumers, which would mean that the bulk of the couple million households that were “totally unprepared” on the transition date may still be without television service. According to an FCC survey, the average cable bill for expanded basic service last year was $49.65 per month, which is out of the reach for many low income households. Digital service with high definition support costs even more.