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EchoStar Dish Continues To Pressure DirecTV

8/20/2001 02:00:00 AM Eastern

When not plotting the takeover of DirecTV at the SBCA Convention, EchoStar chairman Charlie Ergen was finding new ways to pressure the DBS rival by announcing a handful of new price-competitive products and services.

As DirecTV talked about the advances it was making in selling new combination satellite receivers and personal video recorders from TiVo and Microsoft's UltimateTV, Ergen showcased a pair of receiver/PVRs for the DISH Network that require no extra monthly service fees. Both the TiVo and UltimateTV products ask a $9.95 monthly fee (in addition to charges for satellite programming) to record. TiVo also offers a $249.95 one-time charge for recording services.

Currently available is the DishPVR-501, which packs a hard-disk drive good for 35 hours of video recordings at one time inside an EchoStar satellite receiver. Being added to that later this year will be the new Dish PRV-721, which like the UltimateTV receiver and the earlier DishPlayer system from EchoStar and Microsoft, will offer a WebTV-like Internet browsing service, again with no monthly fee and broadband access capability through DSL. It will also include dual tuners.

Ergen said the company is working on a third model (Dish PVR921), which will ship next year at a price to be announced. That unit will add HDTV recording capability and will likely be one of the first EchoStar HDTV-capable receiver boxes to include the Digital Visual Interface (DVI), the company said.

Ergen explained that EchoStar is able to add the interactive services without charge because it is saving money by using a different operating system (Linux) and PVR middleware (OpenTV) that skirts some of the fees and agreements asked by Microsoft and TiVo.

Meanwhile, Ergen used his press conference to blast DirecTV for its failure to take meaningful action to curb its high piracy rate, which Ergen said also adversely impacts EchoStar's business.

He said some EchoStar subscribers are dropping his service to get illicit DirecTV equipment to steal programming.

While DirecTV chairman Eddy Hartenstein announced a new initiative to find and prosecute end-users with pirated DirecTV decoders and illegally altered security cards — the company sent warning letters to about 100,000 DirecTV users believed to be receiving programming illegally — Ergen called the effort little more than window dressing.

He criticized DirecTV's ongoing promotion with Blockbuster for fostering the ability of pirates to buy a box for next to nothing and then hack the security card or purchase an altered card from a vendor of illegal goods.

"You can walk into a Blockbuster and get a box for $9.99 with a year of free rentals thrown in," Ergen said. "We've done a lot of stupid things as a company, but nothing that stupid."

However, newly named DirecTV president and chief operating officer Roxanne Austin quickly dismissed that charge, saying Blockbuster customers must agree to programming service at the point of sale.

"They sign up for installation, and all of those systems are professionally installed," she said. "It's absolutely not true that Blockbuster is a source of piracy."

She added that DirecTV has started renegotiating its contracts with all retailers to adopt a payment-for-activation model to further prevent the signal theft issue.

But Ergen said to be truly effective DirecTV has to begin a system-wide swap out of access cards.

Hartenstein later said DirecTV is planning just such a swap out, but would not discuss the timing to avoid tipping off pirates.

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