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Survey of Sub Satisfaction Could Set Stomachs Churning

Cable World, June 2, 2003

Byline: K. C. NEEL

Cable operators who think they can easily win back satellite customers may have to adjust their expectations, according to research from SG Cowen.

The Wall Street firm interviewed 2,697 households in February that were subscribing to systems owned by Comcast Corp.'s pre-rebranded AT&T Broadband, Comcast, Cablevision Systems, Charter Communications, Cox Communications and Time Warner Cable, as well as to DirecTV and EchoStar Communications' Dish Network. The research concluded satellite customers are more satisfied with their service than cable customers; satellite customers also have a higher perceived value of their service than cable customers have of theirs.

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Some 77% of the satellite respondents were satisfied with their service, but only 60% of cable customers said they were satisfied; 51% of satellite respondents said they were "very satisfied," nearly double the 25% of cable subs who fell into that category.

"We believe convincing those very satisfied satellite subscribers to switch to cable will prove quite difficult," says SG Cowen analyst Thomas Watts.

More than 16% of the cable customers told researchers that they plan to switch to satellite within the next two years, while only 8.2% of satellite customers said they plan to ditch their service and subscribe to cable. That translates into a loss of about 10 million cable customers to satellite and a gain of about 1.6 million satellite customers going to cable, according to Watts.

"It looks like satellite's growth run has not run out yet," he says.

Don't count cable out of the game, counters CTAM president Char Beales.

"Cable has invested $75 billion in rebuilding a mega-capacity, two-way broadcast plant," she says. "Cable's superior technology platform offers products satellite cannot provide, i.e., high-speed Internet and on-demand, as well as superior versions of products that satellite has, i.e., digital video recording and HDTV service."

Price is a big factor in SG Cowen's survey. The average cable bill that includes a digital package is around $66, Watts says. DirecTV's comparable package is 25% less, at $50, and Dish Network charges $43, or 35% less than the comparable cable package.

Those price differences correspond with respondents' level of satisfaction with the value of their services, Watts says. Some 60% of satellite customers were "satisfied" with the value provided by DBS, while 33% of cable subs voiced similar satisfaction.

THE NEXT QUESTION:

*Can operators - already counting on additional services to grow revenue - make up for revenue lost if 8.5 million customers defect in the next 24 months?

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Survey of Sub Satisfaction Could Set Stomachs Churning

Cable World, June 2, 2003

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