The war for your remote: Satellite gains on cable

From the Wall Street Journal:

"Now satellite, which has long been associated with rural areas where cable was out of reach and with sports fanatics who want access to games in other cities, is catching up. By finally finding a way to include local channels in their packages — and by offering lower prices — satellite companies are starting to convert a sizeable number of cable subscribers. Last year, satellite companies signed up 2.3 million new subscribers, while cable started losing customers for the first time.

Cable has been fighting back with beefed-up features such as video on demand and is managing to hang onto its biggest-spending customers.

But one of the biggest reasons for satellite's recent gains is that cable companies, which still have three times more subscribers than satellite, have lost what has long been one of their most compelling competitive advantages: the ability to offer local channels. That includes the local affiliates of networks such as CBS and Fox, and popular shows such as the local news. In recent years, the two major satellite providers, DirecTV and EchoStar, have added enough satellite capacity to accommodate these extra channels in most major markets. EchoStar offers them to more than 92% of U.S. households.

Satellite providers also recently have recruited a critical ally: local telephone companies. Most major regional phone companies — including Verizon Communications Inc. and SBC Communications Inc. — have struck alliances with satellite operators to offer phone, TV and high-speed Internet services at a single discounted price. Those packages have been a hit thus far. Already, more than 200,000 households have signed up for satellite service through their phone companies, according to industry estimates. (Cable companies don't have such alliances because they compete with the phone companies.)"