Sky Cable Will Launch in '93
OPTIONS, options, and more options. And maybe just as many questions. That's what industry observers, technological gurus, and consumer-interest groups see in the announcement this month of a new television service that will be bouncing dozens of channels off satellites into American homes by late 1993.
The acronym is DBS (direct broadcast satellite), and the new venture is called Sky Cable, a $1 billion enterprise that will rely on napkin-sized receiving antennae, which can be placed on a windowsill, rather than the large satellite dishes now in use. The antennae price of $300 and monthly fees of about $25 will buy access to 108 channels, the possibility of high-definition television once broadcast standards are agreed upon, and digital sound.
The key word for the moment seems to be potential.
``The potential for such a system is very exciting because it could open a new era of niche programming and subscriber-supported special events,'' says David Voltmer, a professor of electrical engineering at Rose Hulman Institute of Technology in Terre Haute, Ind. Voltmer, reached by phone by the Monitor, sees a possible proliferation of specialized channels that could parallel the growth of specialty magazines: bodybuilding, running, crafts, bicycling, canoeing. The technology also paves the way for nationwide broadcast of events not otherwise carried - operas, concerts, theater.
``Now if someone in California wants to subscribe to all the New York Knicks basketball games or see one New York City Ballet [performance] per month, he will be able to,'' predicts Tom Bracken, spokesman for Hughes Communications, one of the four media and communications companies announcing the new plan.
``This has been dreamed about for a decade,'' adds Voltmer. ``Now the advent of this higher-power, higher-frequency satellite could make it all financially feasible.''
DBS systems have been tried in the US but failed to gain wide acceptance because of dubious financial backing and technology that proved too large and expensive for many consumers. The possibility of success now, observers say, is heightened by the stronger power of new satellites and the quality of the firms joining to launch the service. Cablevision Systems Corporation, NBC, and the News Corporation Limited are joining Hughes Communications in announcing long-term joint-financing commitments.
``The companies that tried this before were mostly technology companies with no feel for programming,'' notes Paul Marsh, a television industry analyst at Bateman, Eichler, Hill, Richards in Los Angeles. ``I can assure you that won't be the case with these four.''
NBC will be looking to offer new kinds of programming on Sky Cable, but none of the network's existing broadcast fare.
The immediate attraction to possible subscribers in the 20 percent segment of the country lacking access to cable is the size and cost of receiving equipment. Current satellite broadcasting services beam low-power signals that require huge, backyard receivers - 12 feet in diameter and more - which cost $2,000 to $3,000 and are banned in some areas because they are considered unsightly.
``Sky Cable is a major step forward ... for US viewers,'' says Stephen J. Petrucci, president and CEO of Hughes Communications Inc., which is providing the satellite system. ``For the first time, rural Americans will be afforded the opportunity to enjoy truly broad-based cable services like those available by cable in urban communities. The new service will give Americans a taste of the next century's boundless range of video choices, sharply enhanced picture reception, and more realistic sound.''
BUT observers wonder whether there is really a need for DSB. Also on the horizon are improved cable services with more channels and higher-quality pictures over fiber optic broadcast lines. Other companies such as K-Prime Partners and a subsidiary of the TCI cable group are in various stages of offering high- and medium-powered DBS.
``This new system will be in for major competition from all sides,'' notes Mitch Shapiro, a cable industry analyst for Paul Kagan Associates in Carmel, Calif.
The Sky Cable announcement also run into early skepticism.
``There is not enough interesting programming to put up on such a satellite,'' contends Marvin Sirbu, professor of engineering and public policy at Carnegie-Mellon University in Pittsburgh. In a telephone interview, he adds that not one cable system in the country with 108-channel capacity has them all filled, ``and if you examine what those with 50-plus channel capability [viewers] actually watch, research shows that 95 percent of their viewing is limited to 10 channels.''
``At the moment, this is like someone announcing they have built a wonderful new building with 108 apartments. The question is, who will be the tenants,'' says Bateman's Mr. Marsh.
``If it's going to be more of the same kind of fare we already have in cable, then I'm not excited about it,'' adds Hulman's Professor Voltmer.
Officials at the four partner companies counter that the advent of such a system will bring programming players into the arena that do not now exist.
``We have no intention of putting on the same shows that cable is now putting on. says Hughes's Mr. Bracken. ``That's why we see them as our partners.''
Other questions surrounding Sky Cable include the costs of additional programming in addition to the basic monthly charge. Whether consumers will feel secure in purchasing their own antennaes from local electronics outlets and installing them - along with a special decoder box about the size of a VCR - is another unknown.
``If the company has to go out to all these rural areas and install this stuff, somebody's going to have a sizeable distribution and marketing cost,'' notes Carnegie-Mellon's Sirbu. And will customers want to forgo their local cable in exchange for the new service or pay for both?
Not the least of concerns is that many of these opportunities lie far down the road. The first of three satellites will not be launched until late 1993, and Sky Cable initially will offer only 36 operating channels. The promise of HDTV is still years away, and even when broadcasts begin, the costs of sets will be so high that less than two percent of subscribers are expected to purchase them.
But one side benefit of Sky Cable may be in freeing cable companies from threats of re-regulation by Capitol Hill. ``The influx of all these new channels makes the industry appear to be much more competitive,'' adds Shapiro. ``That eases up their rush to regulate.''