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DBS to add 6M subs by 2015; telcos to prosper at expense of cable

September 29, 2006 By Brian Santo, CED

DBS appears to have settled into a consistent share of 29% in the multichannel market, which if extended 10 years into the future, should translate into about 6 million additional subs for a total of 33.5 million by 2015, according to Kagan Research.

The telcos, as they introduce video, should succeed in large part at the expense of the cable industry. Kagan expects the telcos will find many of their customers by expanding the market and driving penetration deeper, however. That would mirror what happened 10 years ago when DBS entered the market. Cable currently holds a 61% share.

Kagan expects solid subscriber growth from DBS in the near term, waning a few years out as local-into-local and HD local penetration matures.

“Despite the lack of a competitive solution to the return path issue, DBS will continue to be a major player in the multichannel market through its established base and strategy of targeting underserved markets such as rural areas and international communities,” said Kagan senior vice president Derek Baine.

“In addition,” Baine said, “new technologies are making features such as VOD and interactive, once the sole domain of cable, available via satellite and narrowing the competitive divide. And with the launch of new satellites, DBS operators will have more capacity to offer more high definition channels in the near term than their counterparts.”

Other results of Kagan’s research include:

* In 2005, subscriber additions to DBS declined, and that should happen again in 2006.
* The multichannel pie has expanded significantly over the past decade, growing 38% from 68 mil. at end-1995 to 93.8 mil. at end-2005.
* Short-term, DBS has lots of capacity coming online and an advantage in beaming national channels. Telcos have only 20-25 Mbps for video, data and phone, limiting them to just one HD stream, and cable is already nearing capacity at recently upgraded plants.

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