DBS Shows Off HDTV, Interactive Gear


Las Vegas -- Five years after its market launch,
direct-broadcast satellite continued to draw crowds of retailers at the annual Consumer
Electronics Show here last week.

Market-leader DirecTV Inc. displayed
high-definition-television and interactive-television products at its booth. The company
counts nine manufacturers that support DirecTV-compatible HDTV sets or receivers.

Panasonic Consumer Electronics announced at the show that
it plans to introduce a set-top box this spring that can deliver digital-terrestrial
broadcast signals, as well as DirecTV signals. The company said it is the first
"DirecTV Plus" set-top box to incorporate a new advanced programming guide that
will integrate channels from multiple sources.

Samsung Telecommunications America Inc. also said last week
that it would ship a DirecTV Plus HDTV set-top box sometime in the third quarter of this

Thomson Consumer Electronics, Zenith Electronics Corp.,
Hitachi Ltd., Mitsubishi Digital Electronics America Inc., Hughes Network Systems, Sony
Corp. and Toshiba America Consumer Products also showed DirecTV-compatible HDTV equipment

EchoStar Communications Corp. last week unveiled its own
DBS/HDTV set-top box, which it plans to start selling in the second quarter at a suggested
retail price of $499.

Neither DirecTV nor EchoStar used their respective press
conferences last Thursday to commit to the two new HDTV feeds that Showtime Networks Inc.
plans to launch Jan. 23. Showtime said last Thursday that its first HDTV programming will
be Star Trek: Insurrection from Paramount Studios.

Web products built into DBS set-top boxes continued to gain
attention on the CES floor. DirecTV showed its "AOL-TV" set-top boxes for the
first time, which it plans to launch around midyear. DirecTV will send video-caching
services to the AOL-TV box, but subscribers would need separate phone connections to
access e-mail and the Internet.

DirecTV president Eddy Hartenstein said the company is
investigating whether to incorporate digital-subscriber-line technology in its
second-generation AOL-TV boxes, adding that both DirecTV and America Online Inc. have
relationships with regional companies such as Bell Atlantic Corp. and Southwestern Bell.

EchoStar chairman Charlie Ergen also hinted at the
possibility of strategic or marketing alliances with DSL-service providers.

"A killer product would be to add DSL and MSN [The
Microsoft Network, Microsoft Corp.'s Internet-service provider] on our
'DISHPlayer,'" which already incorporates Microsoft's WebTV Networks
Internet-over-television service, plus personal-video-recording features.

Although Ergen could not announce any specific DSL plans,
he did say DBS and DSL providers do have common competition, "so it would make sense
for us to do something together."

Both DBS companies bragged about the industry's
increasing share of the multichannel-television market.

DirecTV ended 1999 with 8 million customers, after adding
225,000 net new subscribers in December alone. The company added more than 1.6 million
subscribers for the year, a 39 percent gain over 1998 acquisition figures.

Hartenstein said he won't be satisfied until DirecTV
has more subscribers than any other multichannel provider, including Time Warner Cable and
AT&T Broadband & Internet Services.

EchoStar added 160,000 subscribers in December, ending 1999
with 3.41 million. The company added 1.47 million net new customers for the year, a 63
percent increase over year-earlier numbers.

Both Ergen and Hartenstein are aiming for further increases
in 2000.

Not content to wait for the next holiday selling season,
EchoStar launched an aggressive promotion last week designed to eliminate a common hurdle
to signing on new customers: the upfront costs of hardware and installation.

Through the end of March, EchoStar is targeting cable
customers, offering free "Dish 500" systems plus free installation to consumers
who show recent cable bills and commit to Dish Network programming at $39.99 per month for
one year.

A similar offer is available to noncable subscribers, who
must pay for the hardware upfront before receiving rebates after paying their first
programming bills.

EchoStar started promoting the offer through newspaper ads
last week, primarily in the first 18 markets where the company offers local-to-local
broadcast packages.

Hartenstein said DirecTV would initiate a concerted effort
to market local-to-local services within the next few months. But he declined to follow
EchoStar into the free-hardware arena, saying that doing so would jeopardize relationships
with DirecTV's primary distribution channel, large consumer-electronics retailers.

At a satellite panel here last Thursday, rivals Ergen and
Hartenstein made a show of togetherness, with both claiming that cable is the real enemy.
And neither would rule out the possibility of working together in the future on a joint
orbital platform for delivering local channels, although Ergen said later that the two
companies were not currently in such talks.

Since DirecTV is beaming most of its first local-to-local
signals from the 101 degrees west orbital spectrum that EchoStar doesn't share,
Hartenstein speculated that it may make more sense for the two companies to share spectrum
for local-to-local in secondary markets at either 110 or 119 degrees.

In other DBS news from the show, EchoStar unveiled the
first combination DVD player/DBS receiver.

EchoStar also plans to introduce a new programming package
this spring called "America's Top 150," which will add such channels as
Scripps Networks' Do It Yourself, plus new Showtime plexes such as Showtime Beyond.

And DirecTV plans to change the names of its "Total
Choice Silver" and "Total Choice Gold" programming packages to "Total
Choice Movies" and "Total Choice Sports," respectively, effective Jan. 30.