• Associated Press via Kiplinger's, Wednesday, August 23, 2006 11:45 AM

Not long ago, satellite operators seemed about to beat cable companies for top slot in the pay TV market. But after the top two saw subscriber growth slow to 1990s levels, cable appears to have regained momentum. But does that mean DirecTV and EchoStar will always be niche players serving rural markets out of reach of cable companies? Cable's resurgence comes, in part, from its ability to offer customers a "bundled" package of TV, phone and high-speed Internet service. And most major operators began offering the last piece--Internet-based phone service--two years ago. Neither satellite company offers a nationwide broadband service, although both have local or regional partnerships with telecommunications companies. Without a bundle, satellite customers could defect to cable for ease of use and lower prices. While Comcast Corp. recently reported strong second-quarter results, bolstered by gains in subscriptions for phone services, publicly traded cable companies lost 77,000 net subscribers in that period. That was half as many defections as a year ago--but still a negative number.

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