Losing a single customer to satellite rivals DirecTV Inc. and EchoStar Communications Corp. is bad enough for a cable operator, but imagine if an entire town agreed to drop cable for satellite.
That’s exactly what happened recently in rural Center, Colo., where officials that have operated a municipal cable system since 1984 decided to mothball the plant and recommend that locals switch to EchoStar’s Dish Network service.
While EchoStar only stands to gain about 500 new customers in Center, a farming community with a population of 2,300, EchoStar may use the town’s switch to satellite to bolster its anti-cable ad campaigns.
EchoStar hired a video crew to record a fleet of eight Dish Network field trucks and 12 installers that it sent to Center, and the company may use the footage in future marketing efforts, vice president of customer service Robert Kondilas said.
CABLE HUB
Although no major cable company was involved with the Center system — the town ran the system itself — EchoStar’s ploy is nonetheless a black eye for the cable industry, which has a long history in Colorado.
The state, once the base for former cable monarch Tele-Communications Inc. [now part of Comcast Corp.], is also the home base for Adelphia Communications Corp., Charter Communications Inc.’s leadership team and the National Cable Center and Museum.
EchoStar also announced its marketing triumph the week before top cable industry marketers were scheduled to gather in Boston for the annual Cable & Telecommunications Association for Marketing Summit, which runs from July 18 to 21.
Kondilas called the timing coincidental.
Cable industry officials downplayed the town’s switch to Dish Network.
“The situation is certainly not representative of the current competitive marketplace, because this particular municipal cable company has not invested money to upgrade its network and provide additional channels or advanced broadband services,” National Cable & Telecommunications Association spokesman Brian Dietz said.
Tim Ruggles, the superintendent of utilities in Center, said the town has been losing $2,500 to $3,000 monthly by operating the system, which he said runs on a 450-Megahertz plant.
Center charges its citizens $17 per month for the 22-channel lineup of basic-cable channels and local broadcast feeds, or $25 monthly for a package that includes Home Box Office and Showtime, Ruggles said.
Center will shut down the cable system for good on Aug. 15, he added.
Before cutting a deal with a local RadioShack outlet that retails Dish Network service, Ruggles said the town approached officials at Bresnan Communications-owned systems in Alamosa and Monte Vista, Colo., to see if they would be interested in taking over the municipal cable system.
“We did look at it,” Bresnan spokeswoman Maureen Huff confirmed. “We’re always looking for opportunities for growth. But in this case, we couldn’t justify it economically.”
After Bresnan passed, Ruggles said, Center cut a deal with the local RadioShack franchise, which is called InterMountain First Aid and Safety.
InterMountain owner Stephanie Steffens said EchoStar will pay her a bounty for every Center cable customer that converts to Dish Network service, and said she would split the fee evenly with the town.
Steffens declined to say how much EchoStar is paying her for each subscriber.
120 SOLD IN WEEK
After one week of marketing the service, Steffens said she had sold Dish Network packages to about 120 of Center’s roughly 500 cable customers as of last Tuesday.
“There’s some confusion, but most people, once they understand what’s going on, are very excited about it,” Steffens said. “Our cable service here was horrible. It was very inexpensive, but it wasn’t a good value for the money,” she added.
EchoStar and Steffens are offering Center citizens free installation of Dish Network service and a $29.99 monthly programming package that includes 70 channels and local broadcast feeds from Denver.
Naturally, Center citizens could choose to order service from EchoStar rival DirecTV. But Steffens, who sold DirecTV equipment until a few years ago, said she now sells EchoStar service exclusively.
According to Kagan World Media, there are about 228 municipally owned cable or telecom systems, either operating or proposed. Some of those systems are managed by cable MSOs, such as Charter Communications Inc., which manages a municipal cable system in LaGrange, Ga.
Kondilas said Center’s decision to abandon its cable system for satellite shows that DBS has a better offering for rural markets.
“We’re better positioned to handle rural markets where cable won’t go, but we are equally positioned to take cable head-on in the big markets,” Kondilas added.
EchoStar spokesman Marc Lumpkin said the company plans to supply other retailers with footage that it is shooting of the multiple satellite installations in Center, in hopes that other Dish Network retailers would pursue similar initiatives with municipal cable systems in their markets.
