The Federal Communications Commission yesterday gave seven more companies the go-ahead to set up high-powered satellite systems to beam television signals directly to homes.
The FCC's continuing expansion of these revolutionary broadcasting services -- expected to be in operations by 1986 -- comes amid growing concern in the financial community about their economic viability.
By a 5-1 vote, the commission ruled that it was in the public interest to allow these companies to establish the first phase of their services, which would transmit television programming to homes equipped with receiving dishes, bypassing local television stations.
Among the firms that were granted permission to begin building their DBS systems were: CBS Inc., RCA American Communications Inc., Western Union Telegraph Co. and Graphic Scanning Corp. A local firm specifically created to offer this new service, Direct Broadcast Satellite Corp., also received FCC's approval, as did United States Satellite Broadcasting Co. Inc., which was set up by the Minnesota-based Hubbard Broadcasting Inc. in an effort to become a competitor to the nation's three television networks.
"Direct broadcast satellites will make possible the greatest program service ever for all the American people," Stanley S. Hubbard, president of USSB, said yesterday after receiving FCC approval. "For the first time, it will be possible for all Americans, no matter where they live, to have equal access to national television service," he added.
Another company, Satellite Television Corp., a subsidiary of Communications Satellite Corp., received the FCC's permission to launch the first phase of its three-channel, pay television six weeks ago.
With the FCC's action yesterday, the DBS battle now shifts to Wall Street, where the companies will be seeking financial support for their very costly systems, which range from $200 million to more than $1 billion. However, given the apparent qualms on Wall Street about this revolutionary broadcasting service, financial support may be difficult to find.
"We're not that bullish on the DBS market," said Bill McKeever of Dean Witter Reynolds. "It's quite a bit of risk, given the tremendous investment involved. I don't think there's room for more than one or two DBS operators."
McKeever and other financial analysts base much of their pessimism on the belief that by the time DBS gets started, the bulk of the nation's households will have access to cable television systems, which will provide more channels of service for the same or lower price. In addition to cable, many homes will be wired for pay-television systems, which may provide almost identical service to that proposed by many DBS applicants.
As a result, analysts predict that at most one quarter of the nation's 81.5 million TV households would be interested in DBS.
And of those households, analysts wonder how many will want to pay an estimated $300 for the receiving dish and related equipment before they are even eligibile to receive DBS--for which many operators plan to charge about $25 a month for first run programs.
Complicating matters, they add, is the difficulties these new systems will have in obtaining first-rate programming that is different than what is already offered by cable and pay-television systems. "There isn't a lot of programming to go around as the cable industry has already found out," says Edward J. Atorino of Smith Barney. And what's there may cost more for DBS operators as producers find they may have underpriced their services for cable, analysts say.
What's more, analysts say the DBS contenders may be hurt by a proposal by U.S. Television to launch a lower powered satellite broadcasting system next year. Although the system would not operate on the same frequencies as DBS systems and would require larger and far costlier earth stations, USTV's entrance could "cream skim" the market, said telecommuncations consultant Carroll Bowen of the Cambridge, Mass., firm Kalba Bowen.
Yet despite this skepticism, DBS venturers are optimistic their systems will profit and, in fact, cause the greatest revolution in home entertainment technology since television.
"It is the least expensive, most efficient means of delivery television program ever devised by man," said Hubbard, who believes it will soon become the only way television signals are sent to homes.
At least one FCC commissioner, however, expressed doubts about the service yesterday. "It's much too premature to devote this much spectrum to something whose time has not yet come," complained Anne Jones in voting against granting the applications.
But the other commissioners felt the agency must go forward in granting the applications -- even though they may not all prove profitable.
As FCC Chairman Mark S. Fowler commented last week, "Either they are viable or they won't be . . . But it's not our place to assure that anyone succeeds. We should only assure them of the right to try."