Satellite Firms Hope Digital Delights

Get ready for a blitz of information about the dazzling new features your TV should deliver, but almost certainly doesn't.

At least not if your TV programs arrive via cable or traditional broadcast.

Satellite TV companies are ready to deliver digital television, and they're readying a fall marketing blitz to sing its praises and lure new customers to their small but growing ranks.

Rather than compete with cable TV on price, satellite companies are selling the benefits of digital television: better pictures, clearer sound, huge channel capacity, and interactive features, such as online programming guides and, eventually, shopping.

But despite the flashy features, evidence suggests most Americans will flick the digital switch at a more leisurely pace.

Cable and broadcast TV - the television most people watch - are at least two years away from a major roll-out for digital. And the satellite-TV companies, while growing fast, have seen growth rates slacken. Consumers want the service, say officials, but the industry has been throwing the wrong marketing pitch.

"There was a major price war that occurred this past year and sometimes that hurts an industry," says Harry Thibedeau, of the Satellite Broadcasting and Communications Association in Alexandria, Va. "The true value of satellite television was being lost in the consumer's mind."

With digital, television is making a leap similar to the music industry's jump from records to compact discs. A computer grabs the picture and sound and breaks them down into bits of data.

This digital information is then transmitted to your home - via satellite, cable, or broadcast - and reassembled for your TV.

The technology is flexible, so it can create one channel with super-sharp pictures and sound or several channels with lower video and audio quality.

The picture is less clear when it comes to consumer demand, and broadcasters, for one, have been slow to tune in.

Likewise the cable industry, just beginning to roll out its digital systems, doesn't appear keen to dramatically improve quality. That leaves satellite TV companies, which already deliver higher-quality video and sound, as the test case.

"People, once they get into it, really like it," says Denny Wilkinson, senior vice president of marketing and programming at Primestar Partners, the nation's No. 2 satellite TV company.

The challenge, he says, is getting people to try it. The three-year-old industry is so new that consumers know little about it. And initial installation and equipment can cost hundreds of dollars.

Although satellite TV started with a bang, growing to more than 5.3 million customers in three years, growth rates have slowed this year. "People thought we could double or triple the audience," Mr. Wilkinson says. "We don't have the infrastructure to do those type of things."

By contrast, more than 65 million Americans subscribe to cable. And cable-TV officials say they are confident that once they upgrade to digital, they will have an easier time defending their customer base against satellite.

For satellite TV, the early gains were also the easy gains. Many subscribers were rural customers not served by cable. The satellite companies also went after cable subscribers who wanted additional TV channels, says Mark Tauber, head of the communications practice at law firm Piper & Marbury in Washington, D.C. "They're getting a piece of the market that didn't exist before."

But to keep growing, he adds, satellite companies must target mainstream cable customers.

Last year, the industry tried to compete with cable on cost, offering its pizza-size satellite dishes for a heavily discounted $199. But those deals are getting scarce (see tip sheet). The new emphasis on digital's advantages will have some breathing room because cable is taking its time.

As of March, fewer than 10,000 TV sets received digital cable, according to the National Cable Television Association.

That means about 42 million cable customers across America must wait another four years for digital.

TIP SHEET

Although satellite companies are trying to wind down their price war, keep a sharp lookout for discounts:

* Through September, EchoStar's Dish Network will trim $100 off installation. It offers one of the best-priced programming packages: 40 channels, $19.95 a month.

* Through Oct. 27, Thomson Consumer Electronics is giving away satellite dishes to consumers who buy its large-screen RCA sets. (All dishes are tied to specific services. RCA's work with DirecTV and USSB.)

* If up-front installation and equipment costs worry you, try renting from Primestar. Through October, it's charging a $99 installation fee and about $30 a month for equipment rental.

* Beware: Hooking up a second TV to a satellite dish is costly.

Digital Digest

* What is digital TV?

An improved TV signal that uses computer-like data bits.

* Why would I want it?

It offers more channels, clearer pictures, and better sound than today's analog TV, as well as on-screen guides to easily find programs and buy movies using a remote control.

* Who offers it?

All three direct-broadcast satellite companies - DirecTV, Primestar Partners, and EchoStar's Dish TV - as well as cable TV companies in a few locations.

* What equipment do I need?

A satellite dish about the size of a pizza pan and a decoder box. Or, in the case of cable operators, only a decoder box.

* Do I need a new TV?

No, the decoder translates signals for your current set.

* How much does it cost?

About $5 to $60 a month depending on how many channels you want. For satellite systems, installation and equipment cost an extra $300 to $500 on average.