Given the plethora of ads you'll see of DirectTV taking snipes at the cable company and vice-versa, you'd think they were being really competitive with each other. Cable always talks about its service, satellite always talks up its supposedly lower pricing. A closer look, however, reveals that satellite providers are offering second-rate service while not saving you a lot of green. As a result, they aren't able to be a real competitor to the cable stranglehold.
Satellite ads often talk up their lower pricing, quoting getting a package about the size of your standard digital cable package for around $30/mo. That sounds great if you've been shelling out about $50/mo for your low-end digital cable package. There are plenty of catches, though. After that 6 month introductory price, the costs jumps up to $45/mo. "Okay," you tell yourself, "I'm still saving $5/mo and I've got a few more channels." But wait. Don't you have your Internet service through the cable company? They usually give you a $10/mo discount for bundling services, so now you just ended up paying more for satellite.
You also have to consider the other downsides. One, you own the equipment. If something goes wrong with satellite, you're responsible for repairs, not them. Good luck getting the second dish for free. Second, weather still interferes with satellite and you have to have a clear view of the southern sky. If you're in an apartment or condo, it might be tricky or impossible to get an unobstructed view or obtain permission to install the dish. Satellite also requires a pesky contract, something cable companies often do not require.
This doesn't even get into the problems with doing Internet access over satellite. The installation costs currently run about $300 and a connection that's competitive with the slowest of DSL is over $80/mo. This might be an option for someone living in Podunk, but not for a mainstream Internet user. Satellite Internet access also has very high response times, a death knell for anyone doing Voice over IP (VoIP) such as someone using Vongage. You can also kiss gaming goodbye.
The short of it is that satellite might be a good option for someone who otherwise can't get service, but it is by no means competitive with cable TV. This spells not only problems for the satellite industry but for the phone companies who partner with them to offer a bundle of TV, Internet, and phone service, often at non-competitive prices. Since satellite can't provide competition, we now more than ever need municipal fiber systems like UTOPIA to restore competitiveness to our communications infrastructure.