For those who care, here is a writeup on DirecTV's new policy:
"Directv Inc. has announced that they are migrating to an equipment lease only platform beginning March 1, 2006 in order to help reduce individual subscriber acquisition costs and increase subscriber retention. This will have an impact on new subscribers in that they will never own their equipment but will instead pay a monthly rental fee for as long as they subscribe to Directv. This model is identical to the cablevision industry, which has rented its converters and decoders to its subscribers, which is extremely lucrative over the long run.
The upside to this new plan is that it will allow customers to enjoy the latest technologies such as MPEG4 HDTV locals as well as high definition DVR's much more cost effectively as they will not be required to pay $800-$1000 for the special decoder. It will also allow future equipment upgrades and as well receiver repairs are all covered in the monthly lease. The downside is that subscribers over the long run may pay in rental fees much more than the receiver is worth. Additionally, the receiver will remain the property of Directv and the subscriber will bear the responsibility of keeping it in good condition and must be returned to Directv upon termination of their subscription.
Directv dealers are currently in the process of being advised of the change which will be in full effect as of March 1. After this date, it will no longer be an option to purchase new equipment outright as Directv will not compensate its dealers for sold equipment after this date, only leased equipment. In order to make a minimal impact on existing subscribers, Directv will be waiving the lease fee on a subscribers first receiver. All additional receivers will be subject to a $4.99 per month leasing fee. This fee will replace the $4.99 per receiver mirroring fee that multiple subscribers are currently already paying.
It is also interesting to note that all new leasing subscribers will be subject to a minimum programming commitment (contract), identical to those that new subscribers are required to sign into. Individuals wishing to subscribe to Directv without a contract will only be able to do so with existing owned equipment or by purchasing pre-owned equipment. Existing customers wishing to add additional receivers after March 1 will also be required to lease them from Directv. Directv has also indicated that they plan to continue to offer free standard installation to new subscribers.
This new policy will also have an effect on its DVR customers as well. A common modification for existing DVR subscribers has been to upgrade the DVR's hard drive. This however has tended to void the manufacturers warranty, so it is likely that new DVR customers under the lease policy will be prohibited from making any unauthorized modifications to their equipment as it will remain the property of Directv.
Directv has also indicated that they are not offering any guarantee of new equipment being provided to you at the time of your subscription. They are reserving the right to provide re-conditioned equipment to subscribers if new equipment is not available. This provision would allow them to recondition off-lease receivers and re-lease them to new subscribers. Because Directv is phasing out third party equipment, re-leasing reconditioned receivers would prove to be highly profitable."
When I read about this, I wrote DirecTV, but have yet to receive a reply. Although March 1 is only a few weeks away, it seems that the company is not ready to brief its customers.
