PrimeStar's cable backers seek FCC reversal

Electronic News, June 5, 1995

WASHINGTON--Backers of the PrimeStar digital broadcast satellite system as expected (EN, May 15) have asked the Federal Communications Commission to reverse a decision that could stall their plans to upgrade PrimeStar's capabilities.

Primestar Partners, a consortium of cable TV operators and GE Americom, is seeking to compete more directly with Hughes' DirecTV DBS system as well as United States Satellite Broadcasting (USSB). The appeal to the FCC was made by PrimeStar, General Instrument, Advanced Communications Corporation (ACC), Tempo DBS and the Cable Telecommunications Association (CATA).

Cable operators have been eyeing with some concern the progress of DirecTV. According to a recent survey by TeleCommunications Inc., which was released by the industry research consortium CableLabs, non-subscribers are more likely to purchase satellite TV dish systems than cable subscribers. The survey data, CableLabs said, "lends credence to reports from DBS retailers that about half their initial sales went to unpassed households. However, this trend may change as time remedies DBS equipment shortages, particularly IRD manufacturing shortfalls, and the market for satellite service to non-passed, rural areas becomes saturated."

In seeking an expedited ruling, the companies said PrimeStar would need to spend a minimum of $25-$35 million to obtain emergency satellite service to continue its existing mediumpower DBS service in 1997.

PrimeStar currently has only 425,000 subscribers nationwide, while Hughes is on track to have about 1 1/2 million subscribers by the end of this year. According to PrimeStar, upgrading its DBS system would enable it to provide up to 200 channels of service to 3 million to 4 million customers by the year 2000.

The FCC last month had denied an extension to ACC's license to build an upgraded DBS system; TEMPO was under contract with ACC to launch two satellites by mid-1996.

"This delay will prohibit a viable competitor from entering the marketplace, and will further restrict DBS competition by ensuring that the two existing DBS operators become entrenched," PrimeStar said in its appeal. The companies have asked the FCC to reverse its staff decision by Aug. 15, which would still enable PrimeStar to upgrade its services in 1996.