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Despite Telco claims of the need for competition - it seems cable companies are already facing stiff competition - in the form of DirecTV and EchoStar.

from: MultiChannel News

Cable Penetration Hits 17-Year Low
By Steve Donohue3/19/2007 7:06:00 PM

Cable penetration dropped to a 17-year low of 61.3% in February, as pay TV competition from direct-broadcast satellite and telephone rivals continues to eat into the basic-subscriber counts of cable distributors.

The number of cable subscribers dropped to 68.3 million in February, down from 70.6 million in February 2005, according to an analysis of Nielsen Media Research data conducted by the Television Bureau of Advertising.

Combined DBS penetration from DirecTV and EchoStar Communications hit 25.2% in February, up from 21% this time last year, TVB said.

Dallas-Fort Worth, ranked the sixth-largest designated market area by Nielsen, was one of the hardest hit by cable competitors, with 48.5% of subscription TV households in the DMA ordering a pay TV package from an alternate delivery system, TVB said. Time Warner Cable and Charter Communications are battling Verizon Communications, AT&T, DirecTV and EchoStar in the market.

Other markets hit hard by alternate delivery systems -- which are comprised mostly of DirecTV and EchoStar subscribers -- include Salt Lake City, where 48.5% of pay TV subscribers buy an alternative to cable; Albuquerque-Santa Fe, N.M. (48.4%); Sacramento-Stockton-Modesto, Calif. (41.2%); Memphis, Tenn. (39.3%); and Los Angeles (34.3%).

Springfield, Mo., was the DMA hit hardest by cable competition, with 57.7% of pay TV subscribers going with an alternate delivery system, TVB said.

Executives at the Cabletelevision Advertising Bureau didn’t dispute the February 2007 numbers cited by their counterparts at the TVB. But CAB vice president of research and insights Ira Sussman said the February 2006 numbers reported by Nielsen didn’t include homes with digital-video recorders, which makes satellite growth in the past year appear greater than it actually was.

Sussman said CAB executives with met with Nielsen officials last month and the ratings company agreed to recalculate the number of cable and alternate-delivery-system subscribers from February 2006. While that report, which hasn’t yet been released, won’t impact this year’s numbers, it could offer a more accurate picture of DBS growth in the past year.

He added that he expects major cable operators to grow their basic-cable customer counts this year, and he maintained that local media buyers are more interested in the amount of time viewers spend watching cable TV, which has increased, than in the number of cable homes.

“Advertisers are buying viewership, not penetration,” Sussman said.