In this story: DirectTV, EchoStar start stampede Obstacles remain despite new law RELATED STORIES, SITES

November 30, 1999
Web posted at: 3:26 p.m. EST (2026 GMT)

WASHINGTON (CNN) -- Capitalizing on a new law that allows satellite providers to carry local programming, some of the nation's largest satellite TV companies are launching the service in major metropolitan areas.

President Clinton signed the satellite measure into law Monday as part of the long delayed federal spending bill. Federal officials hope the legislation will boost satellite as a rival to the cable industry and drive down prices.

"Competition remains our best hope of combating rate increases. This law is designed to keep cable rates in check by making satellite a real choice for consumers," said Bill Kennard, chairman of the Federal Communications Commission.

The legislation permits satellite companies to provide local signals right away. Almost immediately, the top providers began offering local ABC, CBS, NBC and Fox channels in certain markets.

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Analysts said the law would open new doors for satellite companies, which were losing customers that wanted local channels.

"It gives the satellite TV companies a way to compete with cable more strongly and equally," said Dwight Allen of DeLoitte Consulting in Washington, D.C.

DirectTV, EchoStar start stampede

DirecTV, the nation's biggest satellite company, introduced local signals Monday for customers in its New York and Los Angeles markets. It will soon add five more cities and expects to enter around 25 of the top markets by the end of January, ultimately offering local channels to 50 million households.

Local channels will cost $5.99 a month, on top of other services customers select. DirecTV satellite packages start at $14.99, but the average subscriber spends about $58 monthly, including pay-per-view programs, company spokesman Bob Marsocci said.

Littleton, Colorado-based EchoStar, the second largest provider, launched local channel service Monday in 13 markets, among them New York, Los Angeles, Chicago, San Francisco, Denver, Miami and Washington.

The company said its Dish Network would offer local channels in more than 30 markets within the next four months, enabling it to reach 60 percent of U.S. households.

EchoStar is charging $4.99 a month for its local channel package. The average customer bill is $40 monthly, EchoStar spokesperson Judianne Atencio said.

The majority of current satellite TV subscribers can access local programming without new equipment, DirecTV and EchoStar representatives said. But existing customers in smaller metropolitan markets may have to replace or upgrade their receiver and satellite dish for the expanded capacity. Those prices are still in the works, they said.

Obstacles remain despite new law

DirectTV and EchoStar together have nearly 11 million subscribers, compared to cable's estimated 70 million. Under the new law, however, analysts expect that within ten years subscriptions will triple for satellite TV, which generally provides better pictures and sound than cable.

Yet the industry still faces major obstacles. By 2002, companies that carry only one local broadcast station in a market will have to carry all of them. Satellite TV providers currently do not have the capacity to fulfill that requirement, according to a company representative.

"Unfortunately the bandwidth ... is not available to launch every metropolitan area in the United States, and we have some tough choices to make," EchoStar's Chris Clark said.

The new legislation also requires satellite TV providers, once they start offering local channels, to negotiate retransmission agreements with the networks six months later. Industry executives expect few problems for the required agreements.

CNNFN Correspondent Kelli Arena and The Associated Press contributed to this report.

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