The direct broadcast satellite industry in the U.S.: Development and economic concerns

Throughout 1992 and 1993, announcements by DirecTV and USSB promised the initiation of Direct Broadcast Satellite service in the United States would occur before the end of 1994. The two services were indeed launched in 1994 and a new industry is emerging. This industry is different from the traditional wire‐based and terrestrial broadcast means of television program delivery to individual homes since DBS is space‐based. DBS is also different from the TVRO industry which is space‐based since, unlike TVRO, DBS services are specifically and solely designed and intended for home reception. This paper first reviews the evolution of American DBS in the 1980s and 1990s. Later an analysis explores some economic concerns with respect to American DBS ventures. This paper concludes that key economic determinants of success include: 1) the presence of a large‐enough subscriber base to justify the investment of at least one DBS provider; 2) the absence of excessive and predatory barriers to entry created by the alternative media; 3) the absence of extreme and predatory behavior among firms in the DBS industry; and, 4) the degree to which at least one DBS enterprise can sustain preliminary losses.