KEY POINTS:
Sky Television insists customers are not switching off pay-TV for the new Freeview digital service launched in May.
Freeview is competing with Sky's basic package for free-to-air channels, but chief executive John Fellet says subscriber numbers for its most vulnerable package are going up, not down.
The number of subscribers for Sky's basic package, which costs $18.29 a month, had increased by about 1000 to about 19,000. But he acknowledged this may have been seasonal - subscriptions go up during winter.
Sky said in June it had passed 707,000 subscribers in total. Freeview will not release sales figures for its set-top box until the middle of this month.
Although Sky's customers pay a regular subscription, Freeview users pay an initial fee of about $300 for a set-top and more for a satellite dish if needed. After that, the service is free.
Freeview is already offering a new motorsport channel - TVNZ Sport. New family channel TVNZ 6 and general interest channel Triangle Stratos are scheduled to start later in the year.
News and information channel TVNZ 7 and a second Maori channel are set to start in March next year.
The marketing campaign for Freeview has focused on people who want to use satellite-delivered digital TV to improve their reception.
Hilly terrain causes a disproportionate number of reception problems in Wellington and some Aucklanders get a bad signal.
Last week Freeview general manager Steve Browning was confident the new channels would boost sales of set-top boxes.
He declined to give details on the box sales but said they were running ahead of targets.
The growth of new channels, with six now, eight by October and 10 by March, indicated Freeview would have no problem meeting targets for 12 to 15 channels by the end of next year.
Credit Suisse analyst Sarndra Urlich has indicated that Freeview does not pose any threat to Sky in the near term.
In a note issued last week, Urlich said the target market for Freeview included people who would refuse in principle to pay for television and those who could not afford to pay.
The cost of installation for Freeview would be a barrier to rapid take-up. Urlich said sport was another key factor in luring customers to Sky.
