Rolling the Dice at CES

[Gregg Lengling]

By Chuck Crabtree and Bill Gerski

As satellite retailers and dealers attend the Consumer Electronics Show in Las Vegas this week and roll the dice for 2005, what can they expect?

What is most apparent is that the satellite providers will be more aggressive than ever in 2005. They were pretty aggressive in 2004, selling off assets not related to programming, providing additional high-definition (HD) programming, and consolidating the manufacturers and dealers.

We believe that they will run harder and faster for subscribers than ever, but can they keep up their pace? For instance, how will the providers keep up the production of inventory such as digital video recorders (DVRs), high definition, switches for the dual dish combos, etc.? What happens when the additional HD channels launch at the same time that satellite providers continue trying to sell new customers at a frantic pace? We all believe that satellite will be the leader in HD, but will there be obstacles for the dealers?

What happens when the satellite operators start giving away everything (four rooms, DVR, VCR, DVD, etc.) for free? Competition drives sales, but it also drives up cost. Who's going to lose here, the dealer, retailer or operator? We do know that the customer comes out a winner in any case.

As satellite providers continue to push for more sales from the dealers, the dealers are under pressure to meet compliance standards issues. Providers heavily scrutinize installations, churn and advertising compliance. However, we believe the dealers are better positioned than ever to meet all the challenges set in front of them.

In addition, there is cable to consider. A recent article in SkyREPORT mentioned that the cable companies have enjoyed a 13 percent increase in digital video growth over the past year, while also building out their fiber optic network to the point that they can now provide broadband digital video to 91 percent of their subscribers. Couple these statistics with the equally aggressive movement by telephone companies and you realize that all of the "low-hanging fruit" has been harvested. If the satellite providers and retailers are going to grow beyond their current 22 percent U.S. market share, they will have to continue to provide additional services to their subscribers, while aggressively educating potential new subscribers about the advantages of DBS.

It is time for our industry to crank up our sales and marketing efforts and remind the public why we love this business ... it does not get any better than satellite television. Current DBS subscribers have chosen satellite over cable because of:

*NFL Sunday Ticket *Better Customer Service *DVR Option *Lower Cost *Better Selection of Channels *Better Picture and Sound Quality *More HDTV Channels

This list, it appears to us, provides all of the selling points and positioning that we need to be successful in 2005. While leveraging these advantages, we must also make sure that we continue to provide the latest interactive capabilities that our cable or telephone competitors will be touting. We will have to continue to expand our reach with local channels, more HD channels, advanced DVRs, a successful broadband platform, and bundling options. The great news is that the two major providers are working on all these initiatives. Our research also shows that bundling with telephone is only of minor interest currently, but bundling with broadband is gaining popularity quickly amongst our target market. We will also meet this need through providing new technologies and creating strategic alliances with other service providers.

We wish you luck as you head out to Las Vegas, but you won't need luck if you play the right cards.

Chuck Crabtree is Marketing Manager for National Rural Telecommunications Cooperative. He can be reached at ccrabtree@nrtc.coop. William J. (Bill) Gerski is a Principal with Atlas Business Development. He can be reached at billgerski@msn.com.