EchoStar, which operates the Dish Network satellite television service in the US, gained over a third of a million subscribers in the last quarter. This has been seen as a further indication that satellite operators are becoming increasing competition to cable.

Reporting revenues up by 26% to $1.78 billion for the quarter, the company also announced that its board had authorised a further billion dollar stock buyback.

Shares in EchoStar stock rose 8% on the news, despite a 34% fall in net income, a very different reaction to that suffered by BSkyB in the UK.

EchoStar now has over ten million subscribers, putting it close behind Time Warner Cable, the third-largest provider of pay television in the US. Cable rivals Comcast and Cox Communications recently announced that they had lost subscribers, while EchoStar’s satellite rival DIRECTV reported 455,000 additional customers.

Unlike DIRECTV, which slipped into the red on higher costs to acquire and retain customers, EchoStar managed to hold on to a profit, albeit less than in the same period last year.

In a conference call with analysts, EchoStar’s charismatic chairman Charlie Ergen complimented DIRECTV on its “pretty incredible performance” in adding subscribers, but pointed out that EchoStar spent only a fraction of that spent by DIRECTV to retain old customers. He said he was more interested in luring some of the remaining 67m US cable subscribers than in pursuing DIRECTV customers. It was clear that he regarded cable as the real competition.

“The consumer is voting with their pocketbook and saying they prefer satellite,” he said. He declared satellite the “superior” platform for delivering TV and questioned whether multi-billion-dollar infrastructure investments in cable would ever pay off, saying “The fundamentals of the satellite business are that is a more efficient way deliver zeros and ones to the home.”

Ergen said he has a “much better relationship” with the new management installed at DIRECTV by News Corporation and could envisage sharing broadcast spectrum to bring high-definition channels into local markets.

He also hinted that MPEG-4 compression could be coming over the satellite horizon next year, which he said would be the last tenable technology upgrade for a long time.