Although the digital broadcast satellite (DBS) providers' gains equate lost revenue for cable operators, the cable industry is pointing to the growth of companies such as EchoStar Communications, Primestar, DirecTV, and U.S. Satellite Broadcasting (USSB) to ward off regulations. And federal regulators appear to agree.
"I don't think there's any consumer in America that doesn't have a choice," FCC Commissioner Harold Furchtgott-Roth said at the four-day cable industry trade show in Southern California. "They have more choices than they did a year ago, five years ago, and 20 years ago."
EchoStar announced Monday that it will buy the satellite assets of News Corporation and MCI WorldCom, a move that some in the cable industry think proves there is plenty of competition. The purchase still is subject to regulatory approval.
Industry analyst Gordon Crawford, senior vice president at Capital Research and Management, said the DBS market grew by about 2.5 million subscribers last year, while cable operators only added about 1.5 million new customers.
The FCC has noted growth numbers like these. "DBS is a real competitor," said Helgi Walker, Furchtgott-Roth's senior legal advisor. "They're more than real [competitors] they're strong competitors."
Other FCC staff members agree.
"We see a lot of competition in the multi-channel video market?so one of the things we're trying to do is figure out ways that we can step back on regulations and let competition take hold," said Jane Mango, senior advisor to FCC Commissioner Michael Powell.
Others see competition increasing, but not as fast as they had hoped.
"Clearly DBS is becoming more of a presence in the marketplace," said Rick Chessen, senior legal advisor to FCC Commissioner Gloria Tristani. "I still think competition to the marketplace is coming very slowly and is not quite what they'd hoped when the '96 [telecommunications deregulation] Act was passed."
Furchtgott-Roth said he doesn't think the FCC has the authority to require cable companies to open their broadband pipes to competitors, a process known as unbundling.
Many companies, including Internet giant America Online, are pushing for access to Tele-Communications Incorporated's cables as part of the merger between AT&T and the large cable operator. Most observers expect that deal to close by the summer of 1999.