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From Thursday's NY Times.

(Don't worry, the HD stuff is in the final several paragraphs.)

Satellite TV Spreads Its Signals Across the Landscape

By ERIC A. TAUB October 14, 2004

THE satellite TV business owes at least a bit of its success to a connection to America's favorite food.

A decade ago, when "digital" meant little to most people, DirecTV launched the nation's first high-power satellite service that used the ones and zeros of digital code to transmit television signals. Unlike the analog service provided by cable companies, digital technology could always produce sharp, ghost-free channels.

But what sealed the deal for many consumers was that all they needed to get such crystal-clear signals was a set-top receiver and a small dish antenna about the size, it was often said, of a pizza. Before DirecTV, consumers interested in satellite TV needed to install a dish the size of a small trampoline to pick up the lower-power signals that were then available.

In 10 years, those pizza-size dishes have sprouted on homes all over the country. Satellite TV now has 23 million subscribers, or about 22 percent of American households. The main competitors, DirecTV and Dish Network, have more customers combined than the 21.5 million subscribers to Comcast, the nation's largest cable provider. However, the cable industry as a whole, with 73.7 million subscribers, still dwarfs satellite.

The technology's success was far from assured when it was first marketed in 1994. Satellite companies were forbidden to offer most customers local broadcast channels. And satellite receiving equipment cost hundreds of dollars. Cable subscribers, by contrast, either needed no additional gear or could rent a converter box for just a few dollars a month.

In addition to the typical package of channels found on cable TV, such as CNN, Discovery, HBO and Showtime, DirecTV carved out a niche with its NFL Sunday Ticket, a package offering subscribers virtually every Sunday N.F.L. game. Its satellite competitor, Dish Network, specialized in international programming; it now offers programs in 17 languages, including French, Italian and Urdu, as well as the same standard channels available from its competitor. And years before the cable industry had the digital technology to do so, both satellite services featured scores of themed audio channels.

A big break for satellite television came in 1999, when Congress passed the Satellite Home Viewer Improvement Act, giving the industry permission to offer local broadcast channels, leveling the playing field with cable. Until then, to get local channels a satellite TV subscriber had to also subscribe to cable TV or get the channels the old-fashioned way, using an antenna.

For the satellite companies, offering local channels meant a change in satellite broadcasting technology. The main signal feeds from TV satellites are sent in a broad beam to cover as much of the country as possible. But to provide local channels to specific markets, the companies use spot-beam satellites that can focus a signal to cover a relatively small area. Spot-beam satellites are often used by international satellite companies when they have to beam signals into one country without spilling across borders.

In response to the broader channel offerings of satellite companies, cable has begun installing digital technology to offer more channels, better reception and such two-way services as video on demand. It believes that it can attract and keep subscribers by offering what the industry calls a triple play of video, telephone service and broadband connectivity, all transmitted through the same cable.

As a one-way technology, satellite cannot easily match these services. Instead it has forged alliances with local telephone providers to allow customers to pay for satellite TV, phone, and DSL services with a single bill. And it has pushed the benefits of TiVo-like personal video recorders, or PVR's.

"We believe that PVR is a better product than video on demand," said Bob Marsocci, a spokesman for DirecTV. "Video on demand is primarily for movies, while a PVR gives more control over all types of programming."

Both cable and satellite have embraced high-definition television, or HDTV. Because advanced cable systems now have greater channel capacity than satellite, many cable companies have been able to offer subscribers not just high-definition versions of pay and basic cable services such as HBO, Discovery, and ESPN, but also the HD feeds of their local broadcast channels as well. (Dish Network and DirecTV offer the national feeds of the CBS and NBC broadcast networks in certain markets only.)

HDTV has also caused the battle over local channels to heat up once again. Last month, DirecTV announced that it will launch four new satellites, with the first two operational in 2005, to transmit 1,500 local HDTV broadcast channels.

HDTV is also the raison d'être for VOOM, the newest satellite service, which is owned by the New York cable operator Cablevision Systems. VOOM offers a package of standard cable channels, plus 35 HDTV channels, more than any other provider. But one thing that VOOM doesn't offer is local broadcast channels transmitted from its satellite. In a throwback to the early days of satellite TV, subscribers can only get them by using a separate antenna or through cable TV.
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