The second DTH service, and the older of the two, was originally referred to as TVRO (for “television receive only”), but now it is more commonly known as “C-band” service. C-band households (of which there were approximately 1 million in 2001) receive programming via a satellite dish that measures between six and eight feet in diameter; this programming is transmitted from a satellite transponder at low power (10-17 watts) in the 3.7- to 4.2-GHz frequency range, a range that occupies a portion of the frequency spectrum known as the C-band. C-band customers receive some unscrambled programming but may also subscribe to a package of scrambled (called “encrypted”) program services for a monthly fee. some 250 program channels  provided by about 20 satellites were available to C-band customers in 2001.

DBS is the newer DTH service and by far the most popular, comprising a U.S. customer base (in 2001) of nearly 16 million households. Two DBS providers- DirecTv, owned by Hughes Electronics, and the DISH Network, owned by EchoStar Communications- provide similar program packages to their customers, all available via a receiving dish that measures about 18 in in diameter. DBS programming is delivered by satellite transponders operating in the 12.2- to 12.7- GHz portion of the frequency spectrum (called the Ku Band) and transmitted at a power range that may exceed 100 watts. The higher power allows a more directed satellite-to-receiver signal and thus, requires a much smaller receiver dish than is required for C-band reception.

The origins of DBS date to 1975, when Home Box Office (HBO) first utilized a satellite to deliver its program service to local cable television systems. Numerous individuals, especially those living in rural areas beyond the reach of cable television, erected TVRO dishes on their property and accessed whatever programming they wanted as it flowed from satellites. Program suppliers soon objected to free receipt of their product by TVRO owners. As a result, HBO and similar services began scrambling their signals in 1985. TVRO owners thereafter were required to pay a subscription fee to receive such programming.

The first ever to create a true DBS service in the United States occurred in 1980, when the Satellite Television Corporation (STC) proposed such a service to the Federal Communications Commission (FCC). The FCC approved STC’s proposal and invited other companies to propose DBS services. Of the 13 companies that responded to the FCC, proposals from eight of them (including such electronics industry giants as Western Union and Radio Corporation of America [RCA]) eventually were approved. By the early 1990s, however, the high start-up cost of establishing a DBS service (estimated at more than $1 billion) had forced many of the original DBS applicants either to delay or to abandon their projects altogether. DBS companies were uncertain that program suppliers that heretofore had provided programming exclusively to Cable Systems would extend their services to DBS. That matter was settled when the Cable Television Consumer Protection and Competition Act of 1992 prohibited cable program suppliers from refusing to sell their services to DBS operators.

FCC permission to launch DBS Services included satellite transponder (or transmitter) assignment and DBS orbital slot assignment. Satellites providing a DBS service are allowed to occupy eight orbital slots positioned at 61.5, 101, 110, 119, 148, 157, 166, and 175 degrees  west longitude.

A consortium of cable television system owners launch the first-generation DBS service, called Primestar, in July 1991. Ten years later and after the appearance and subsequent merger of several upstart DBS companies, only DirecTV, serving some 10 million customers, and DISH Network, serving some 6 million customers, were operating. However, the customer base of these two DBS services combined now accounted for a nearly 16 percent share of the national multi-channel video program distribution (MVPD) market. Cable TV systems controlled about 80 percent of that market, but cable has been losing market share over the years to its more aggressive DBS competitor. DBS subscribership, in fact, grew at nearly three times cable’s growth rate between June 1999 and June 2000. DBS growth has been most pronounced in rural areas where cable has not yet penetrated and among disenchanted former cable customers or customers new to the MVPD  marketplace. significant numbers of C-band customers also have been moving to DBS in recent years.

The cost for DBS service will vary somewhat, but the cost of equipment purchase and installation (in 2001 figures) is about $300, and the monthly subscription fee is approximately $55 for a 130-channel program package. Both DirecTV and DISH Network subscription fees and program packages are comparable. DBS customers also have access through broad-band capabilities to high-definition television (HDTV) as well as high-speed connection to the World Wide Web. DBS does offer pay-per-view (PPV) programming, but it is not yet capable of providing video-on-demand (VOD). As a VOC substitute, DBS services began offering customers a personal video recorder (PVR) service in 1999. A PVR functions similar to a computer hard drive, allowing customers to record up to 35 hours of DBS-delivered PPV programming for viewing at the customer's convenience. DBS customers must either purchase their PVR at a cost of roughly $400 or lease the PVR from their DBS provider.

Since the industry’s beginning, DBS has suffered in the inability of DBS providers to carry the signals of local broadcast television stations to DBS customers living in markets where the stations were located. DBS customers had to either use “rabbit ears” (antenna on top of the TV set) or subscribe to a separate cable television service in order to receive the signals of these stations. The problem was rectified in November 1999 with a passage of the Satellite Home Viewer Improvement Act.

This act finally allowed DBS providers to carry local signals in a process known as “local-into-local.” Whether a local station’s signal was carried was optional with the DBS provider, but the FCC ruled that, as of January 1, 2002, DBS providers must honor signal-carriage requests of all local broadcast television stations in markets where the DBS provider elected to carry the signal at least one station. The FCC rule, known as the “carry one, carry all” rule, did allow DBS providers to decline carriage of a local station’s signal if the quality of that signal was deemed unacceptable. The FCC also allowed some local stations, generally those associated with the four major broadcast television networks (NBC, CBS, ABC, and FOX), to request payment for carriage by DBS providers. By early 2001, either DirecTV, or DISH Network or both were providing local-into-local service in at least 40 major television markets.

The DBS industry’s corporate structure stood on the brink of major change as 2001 near an end. Earlier in the year, DISH Network owner EchoStar tendered a $30 billion offer to acquire its rival DirecTV. The virtual monopoly that would result from such a merger raised significant concentration-of-control issues that the U.S. Department of Justice would have to resolve. Opponents of the DISH Network/DirecTV merger claimed that consumers would be poorly served by such lack of competition among DBS providers. Proponents of the deal countered that the merger would result in less program duplication among competing DBS providers serving the same Market and more efficient use of scarce frequency spectrum space. In the Autumn of 2002, the FCC failed to approve the merger.