Technology

With Dallas, USDTV Cracks the Top 10

11/11/2005 7:00 PM Eastern

U.S. Digital Television LLC, the low-cost wireless-TV service, will launch commercially this week with a rollout in Dallas/Fort Worth, according to company executives.

In addition to the official debut in the nation’s seventh-largest TV market, USDTV will also begin actively selling in three locales where it offered its service as a pilot: Salt Lake City, Las Vegas and Albuquerque, N.M. USDTV is currently in about 4,500 homes in those three markets, and hopes to have several thousand subscribers in Dallas by year-end.

USDTV has tweaked its initial strategy somewhat. In addition to guaranteeing its video package for $19.95 monthly over two years, it is also offering consumers an accelerated dial-up Internet option for an additional $10 a month.

Backed financially by several major TV-station groups, USDTV had several reasons for picking Dallas for its first Top-10 market launch, according to CEO Steve Lindsley. First, cable’s penetration there is relatively low, under 50% of TV households, he said. But there were other factors as well.

“It’s a great reception market with great broadcasters, very strong broadcasters, in the market,” Lindsley said. “And the Dallas consumers are generally going to appreciative of USDTV’s more family-friendly offering. The capper would be we’ve got a lot of Wal-Mart’s there, which obviously is our keystone distribution.”

Right now, Comcast is the major cable operator in Dallas. MSO officials said they take all competition seriously, but they feel well-positioned in Dallas against USDTV, with a bundle of services such as video on demand, high-speed data, phone and soon, wireless.

“We are competing every day, and our product line supports a very strong position in the marketplace,” Comcast spokesman Jim Gordon said.

Time Warner Cable will get Comcast’s Dallas system as part of a swap following the two companies’ acquisition of Adelphia Communications Corp.

'CABLE-NEVERS’

USDTV’s strategy takes aim at “cable-nevers,” as well as consumers fed up with high cable bills, offering them a no-frills package of local TV stations and key cable networks such as ESPN, Fox News Channel, Disney Channel and Lifetime Television.

“Our belief is that cable and satellite are over-serving potentially millions of homes with their product, and USDTV is a tremendous low-cost alternative for those homes,” Lindsley said.

To sweeten the package — averaging 30 all-digital channels, with HDTV, in each market — USDTV is also guaranteeing its price for two years.

The service uses a USDTV set-top and an antenna, with the company transmitting its signals over the air on digital-broadcast spectrum leased from TV stations in the markets it is serving.

USDTV is selling its “start-up” kits in Wal-Mart and other select dealers, as well as through Web and phone orders.

In September, USDTV got a $25.8 million infusion from Fox Television Stations, Hearst-Argyle Television, McGraw-Hill Broadcasting, LIN TV, Morgan-Murphy Stations and Telcom DTV LLC.

USDTV will promote its $19.95 service, using the slogan “TV for People,” with print and local TV spots, direct mail and grand opening events to show the service running live.

“Our research has been very clear on this: People are confused,” he said. “They think that cable and satellite is expensive and confusing.”

DIAL-UP DOLLARS

USDTV has also created a bundled service. It acquired an ISP several months ago, and is offering consumers a dial-up option that is three to five times faster than traditional dial-up services, according to Lindsley. So for roughly $30, a USDTV subscriber can have a digital TV and Internet package.

“We can save the average Internet customer $50 to $60 a month on the bundle,” Lindsley said.