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USDTV Grows Alternative Cable TV Service

3/17/2004 01:17:00 PM Eastern

New York – USDTV, a new multi-system subscription television service that uses the spectrum of local digital television broadcasters to transmit its channels, announced it has added Starz! and Fox News Channel to its service, which is gradually rolling out across the country.

Currently, the service is available to residents of Salt Lake City and Albuquerque, N.M., with plans to add Las Vegas shortly. With the two channel additions, the company is offering 12 cable channels in standard definition by taking a portion of the bandwidth four digital broadcast stations in each market it serves.

The model relies on a multicast arrangement whereby the broadcaster continues to offer its regular free over-the-air channel in standard definition, while USDTV leases enough of the remaining spectrum from each broadcaster’s 6MHz of DTV bandwidth to offer up to three of its subscription channels per terrestrial broadcaster.

USDTV, which is based in Draper, Utah, is targeting customers who are looking for a lower-cost alternative to cable or satellite TV services. The company charges $19.95 per month for 11 popular "basic cable" channels, including ESPN, ESPN2, Disney Channel, Toon Disney, Fox News Channel, Discovery Channel, TLC, HGTV, Food Network, Lifetime and Lifetime Movie Channel. Starz! is being added as the service’s first "premium channel," meaning it will require an extra monthly charge. That amount will be announced later.

The system requires a set-top box, which will tune in all of the over-the-air digital television channels in a market – including free HDTV channels -- and decrypts the paid USDTV channels for authorized subscribers.

USDTV is currently selling its hardware, which is manufactured by China-based Hisense, through Wal-Mart and R.C. Willey stores. The company is also recruiting additional retailers as it expands its territory.

Steve Lindsley, USDTV CEO, said his company is offering ongoing residual commissions to participating dealers, with terms roughly comparable to direct broadcast satellite services.

Because USDTV is targeting more frugal consumers, Lindsley said the company is initially looking at mass merchant and discount retail distribution channels, although it will entertain opportunities with specialty A/V retailers as well.

Currently, Wal-Mart sells the box for $98.76 with a subscription to USDTV or "around $200" for those who want the box only to tune free DTV broadcast channels. Plans are in place to add a step-up box with HDTV PVR functionality later in the year, the company said.

At Wal-Mart stores, USDTV is providing a demonstration kiosk manned by a team of dedicated commissioned USDTV sales people. The discount chain is expected to offer the set-top box at 3,000 stores nationwide "this summer," USDTV said. In markets that don’t have USDTV service, the set-top box will be sold as a tuner for over-the-air DTV reception, with the ability to add USDTV service when available.

Installation is available free of charge for those customers who require it. Alternatively, customers will receive two free months of service if they install their own system.

For support, USDTV has signed strategic partnerships with ServicePower Technologies and eWest Advantage to provide call center support, product installation and service center logistics.

The company is also selling optional antennas developed by Dotcast and Winegard. A new antenna design is said to enable strong reception through either rooftops or indoor mounts, depending on the reception conditions of each area.

The box will convert digital TV signal output to fit both analog and digital displays, making it another solution for consumers to continue receiving television once the government mandates the end to analog terrestrial broadcasting – tentatively scheduled for 2007.

Lindsley said USDTV is negotiating with broadcasters around the country to lease the needed spectrum to add additional markets. Additionally, the company is preparing a television ad campaign to promote its program in served markets.