Cable television was originally seen as a means for isolated rural areas to experience the benefits of television then enjoyed by city dwellers. From a slow start in the late 1940s, it grew into a huge industry in the 1990s that touched the lives of many people. In the late 1990s, it was estimated that about 70% of American homes had cable access.
However, the 1990s saw the introduction of satellite television and the beginning of the decline of cable television. Satellite television providers made a very aggressive attack on the television industry and very quickly gained a large share of the market. Since then, the position of the satellite companies has been strengthened at the expense of the cable companies.
While cable delivered a signal to every home through an underground cable, the signal for this new innovation came from satellites located over the Caribbean Sea. The reception of each subscriber was done through a small circular dish usually placed on the roof of a building. As long as the dish had an uninterrupted view of the southern sky, a television could display a perfect picture and sound.
Like cable, satellite TV providers’ packages are available through a monthly subscription and a 1-year contract. Most channels shown on cable are also available from satellite companies, so a family switching to satellite TV from a cable provider will still be able to enjoy their favorite shows.
The rise and rise of satellite television penetration in American homes has come at the expense of cable television. Cable is in decline at an ever-increasing rate, and while its demise may take some time, it will happen eventually. Not only is this an example of superior technology replacing inferior technology, but cable television’s decline is being accelerated by the overtly aggressive promotional policies of satellite television providers.
So what are the problems facing the cable TV industry? These can be divided into two: first, the technological problems, and second, the threats from assertive satellite competitors.
Technological problems facing cable television
1) As the TV signal is delivered to subscribers through cable, bad weather conditions can affect these cables. Cable television is not as reliable as satellite in this regard.
2) Cables cannot deliver the much higher number of channels than satellite transmission. Therefore, cable cannot match satellite when it comes to the variety of channels on offer.
3) Picture and sound quality with cable is inferior to that of satellite: Satellite television signals are in 100% digital format, something that cable companies cannot easily provide.
4) The nature of satellite television makes it easier to incorporate new technologies into the system.
Threats from aggressive competitors
1) As satellite companies seek market share, they keep their subscription fees as low as possible. Cable companies’ rates have been increasing at a faster rate than those of their satellite competitors.
2) The two major players in the satellite TV industry offer new subscribers free equipment and facilities, such as a satellite dish, a decoder, etc.
3) Satellite system installers offer a range of free gifts, and satellite companies offer special deals and prices for new customers.
4) The satellite signal allows the delivery of a greater number of channels. This factor alone is encouraging a large number of families to ditch the cord.
5) Numerous industry surveys indicate that satellite TV companies put more emphasis on customer service than cable operators.
6) The growing number of satellite television subscribers encourages families to switch.
Over the years, cable television companies have provided an important service to the community, but unless they can match the level of service provided by their satellite competitors and at a similar price, then their future is to operate in a market in constant decline.