By 1999, cable penetration had hit 70 percent. But direct broadcast satellite (DBS) services presented a big challenge to cable—especially in regions with rugged terrain and isolated homes, where the installation of cable wiring hasn’t always been possible or profitable. Instead of using wires, DBS transmits its signal directly to small satellite dishes near or on customers’ homes. As a result, cable penetration dropped to 44 percent by 2012. In addition, new over-the-air digital signals and better online options meant that many customers began moving away from subscribing to either cable or DBS services.

Satellite service began in the mid-1970s when satellite dishes were set up to receive cable programming. Small-town and rural residents bypassed FCC restrictions by buying receiving dishes and downlinking, for free, the same channels that cable companies were supplying to wired communities. Not surprisingly, satellite programmers filed a flurry of legal challenges against those who were receiving their signals for free. Rural communities countered that they had the rights to the airspace above their own property; the satellite firms contended that their signals were being stolen. Because the law was unclear, a number of cable channels began scrambling their signals and most satellite users had to buy or rent descramblers and subscribe to services, just as cable customers did.

Signal scrambling spawned companies that provided both receiving dishes and satellite program services for a monthly fee. In 1978, Japanese companies, which had been experimenting with “wireless cable” alternatives for years, started the first DBS system in Florida. By 1994, full-scale DBS service was available. Today, DBS companies like DirecTV and the DISH Network offer consumers most of the channels and tiers of service that cable companies carry (including Internet, television, and phone services), at a comparable and often cheaper monthly cost.