Even though direct-broadcast satellite subscriber growth may be slowing down, cable operators say they will stick with their various dish win-back programs.
Confidence in their digital-cable offerings and the ability to bundle in other services — such as high-speed data and telephony — allow operators to more readily pitch to the consumers who have left cable's fold for DBS.
Win-back programs are just one of cable's promotional efforts, said John Adduci, director of sales and marketing for Adelphia Communications Corp.'s cable-services division.
"It's not our entire marketing plan," he said. "But we do feel there's a need for this."
Adelphia reclaims about 300 to 500 former DBS customers each week, Adduci estimated. In studying SkyTrends reports that track DBS homes by ZIP code, Adelphia has noticed a slowdown in satellite growth in some areas, though not across the board, Adduci said.
Adelphia typically offers DBS subscribers a $100 check and two free months of what Adduci calls "fully loaded digital-cable service."
Some Adelphia systems have experimented with $100 credits for service, or four payment coupons of $25 each.
"By and large, the check in hand is the most powerful tool," Adduci said.
Charter Communications Inc.'s Rocky Mountain Group bought back 2,853 DBS systems in the first half of 2001, said unit vice president of operations Dan Ryan.
"We get a one-year contract and the receivers back, plus the dishes if we can," Ryan said. "Getting the receiver out of the home is critical."
Dish buy-backs have been the No. 1 sales tactic for Charter's Rocky Mountain Group, Ryan said. Charter pays $150 to $250 to win back a customer, raising the incentive as needed depending on how receptive consumers are in a given market.
"The money entices them," Ryan said. "It's a risk-lowerer for the customer. They know the intrinsic market value of the [DBS hardware], which is in the $200 range."
Time Warner Cable's Raleigh, N.C., division typically pays up to $100 for a DBS system — $50 for the dish and another $50 for the receiver, vice president of marketing and sales George Douglas said.
Since the win-back program began in late 1999, the Raleigh division has shifted its focus from buying back the DBS equipment to converting households back to cable, Douglas said.
"We have a very solid and competitive product, and we believe people will like it," Douglas added. "In some cases, we have a better product in terms of programming, and we have more flexibility in terms of service in the home, especially to multiple televisions."
Time Warner's Raleigh division does most of its dish win-back targeting through door-to-door pitches, as well as about six direct mailings per year.
"We work pretty hard to identify satellite customers in our service area," Douglas noted. "It's not easy to do. There aren't lists you can buy."
The system audits non-customer homes to find DBS households to add to its database. Field employees also canvass their own Raleigh neighborhoods to identify addresses to add to the list of dish owners.
"The more information we have, the more effective we can be in our marketing," Douglas said.
Time Warner of Raleigh has won back 11,000 former DBS customers since the buy-back program began, Douglas added.
Success in Syracuse
In Syracuse, N.Y. — another Time Warner Cable market — DBS penetration is about 7.6 percent, or well below the national average, said director of sales Doug McCampbell.
The Syracuse division averages about 200 customer acquisitions a month through the dish win-back program, or 1,300 this year as of mid-July, he added.
To reward field employees who seek out the homes of DBS customers, Time Warner's Syracuse division stages a contest to reward workers who collect the most addresses. Installers are also encouraged to leave behind a door hanger when they see a home with a satellite dish.
The Syracuse division created a dedicated sales-team devoted to the dish win-back program, McCampbell said. The cable operator hosts 45-minute in-home demonstrations to pitch digital-cable service.
"I didn't imagine we'd be as successful as we are," McCampbell admitted.
To qualify for the win-back program, which offers either $200 in programming credits or deeply discounted service packages to customers who lock themselves into one year of digital service, Time Warner of Syracuse customers must show a copy of a current DBS bill. They also have to turn in both the dish and the receiver to participate.
The Syracuse win-back program dates back to before the operator launched digital cable.
"When we started the project, the majority of our sales reps were really afraid of talking to satellite-television customers," McCampbell said, but that's no longer the case.
"Once we rolled out digital and started talking to the satellite customers, we found we really are competitive, and our sales reps love to talk to them."
PLAYING RAIN-FADE CARD
Because Florida has heavier rain showers than other parts of the country, AT&T Broadband of South Florida plays on the DBS rain-fade issue when trying to win customers back to cable, said division vice president of marketing and sales Greg Symmes.
Since AT&T Broadband of Florida started its win-back program last October, it has bought back 1,057 dishes, said Symmes.
"There are a lot more of them out there," he added. "I want them all back."
The AT&T system offers $200 in programming credits to win back a DBS customer. Symmes said he plans to sweeten the offer within the next few weeks by adding $200 in coupons worth $2 off each PPV movie that a new customer orders.
"Some of our offers have to be bigger than life to cut through," Symmes said.
He added that the large number of PPV coupons should go a long way in training customers to order PPV on a regular basis.
"I'm willing to give up $200 in revenue to teach them a behavior," Symmes said.
In its win-back programs, AT&T of Florida takes back all the DBS equipment, receivers and dishes alike.
"We make a big pile, take pictures for public-relations purposes, and then destroy them," Symmes said.
AT&T Broadband of Southwest Washington and Oregon celebrated a dish "crushing event" last March in Portland, executive director of communications Lindy Bartell said. The operator plans similar events later this month in Eugene and Portland, she added.
"It's great for employee morale," Bartell said. Although the events are primarily staged for the local media, employees typically "stop what they're doing and show up," Bartell said.
Since its win-back program started in January, the AT&T division reclaimed more than 1,500 customers from DBS, Bartell said, through offers of $200 in programming credits to customers who commit to a year of digital cable.
AT&T Broadband's Denver region claims the highest number of dish win-backs among the MSO's systems, with 5,615 dishes reclaimed since its program was launched in May, 2000, spokeswoman Jeannine Hansen said.
"When we get the dishes back, we collect them, then turn them into a recycling plant," Hansen said. "Any money that comes from the recycling is donated to charity."
WHY PEOPLE SWITCH
Reasons for switching from DBS to cable vary, Hansen said, although the primary reasons given in the company's surveys include dissatisfaction with the picture quality, customer service or programming expense.
Other reasons for dissatisfaction can be more individual: Some homeowners switch when their trees grow larger and block the satellite signal from reaching the dish. Other DBS customers don't want to have to brush the snow off their dishes in the winter or sweep away leaves in the fall, Hansen added.
Like other operators interviewed for this story, AT&T Broadband of Denver's dish win-back program is ongoing, and the operator has no plans to discontinue it any time soon.
In a report issued on June 28, SG Cowen Securities Corp. analyst Gary Farber concluded that "there is an attractive business model to buying back customer satellite dishes via cash incentives or programming credits."
But Charlie Ergen, chairman of DBS company EchoStar Communications Corp., told analysts in a mid-July conference call that he didn't believe it made fiscal sense for MSOs to pay hefty cash subsidies to buy back DBS customers indefinitely.
Ironically, EchoStar itself was an early proponent of dish bounty programs, offering special incentives in the late 1990s to satellite dealers who stole customers away from the now-defunct PrimeStar Inc. service.