Satellite TV Gaining Vs. Cable In Pay TV, But Bundling Is Issue; One-Provider Communications; Most profitable customers want broadband, phone, along with video services.(INTERNET & TECHNOLOGY)

Byline: BRIAN DEAGON

Satellite TV is besting cable in customer satisfaction, value and loyalty, which should let it continue pulling customers away from its cable rivals, says a report released at this week's Digital Hollywood trade show.

The source of that report, the Satellite Broadcasting & Industry Association of America, isn't exactly a neutral party. But an August report from J.D. Power & Associates also said that satisfaction among satellite-TV subscribers outpaced that of cable customers.

There are other numbers to show the impact satellite-TV firms DirecTV and EchoStar Communications, owner of the Dish Network, have had on cable. Cable's share of the pay-TV market has fallen to less than 75% from 95% in 1994, says the Federal Communications Commission. The SBCA's new survey says more than half of new satellite customers are former cable customers.

Cable firms haven't stood by idly. Since 1996, when the Telecommunications Act deregulated much of the communications industry, cable firms have invested $85 billion on upgrades. They've added new digital services, including phone and high-speed Internet access, giving them weapons to ward off satellite.

"Cable has one trump card over satellite and that's high-speed Internet," said Bruce Leichtman, president of Leichtman Research Group. "They have been tremendously successful with that."

Still A Competitive Market