EXPLAINED: Why your satellite receivers are leased, not owned

It’s been years since DISH and DIRECTV moved to a lease model with their equipment. When both companies started, everything from the dish to the remote was purchased, and you installed it yourself. Now, many new customers get their equipment at reduced cost or free. Existing customers who chose to upgrade themselves can buy the dish, the multiswitch, even the cable, but despite paying over $200 for a receiver or DVR, these items are considered leased. Here’s what you can’t do with a leased receiver:

You can’t open it or modify it. That means no changing out the internal hard drive. Luckily both DISH and DIRECTV allow for external drives.

You can’t resell it. You know all those receivers you see on eBay? If they’re advertised at significantly less than you see them at Solid Signal, they’re probably leased. Fewer than 1% of satellite receivers are owned and it’s very hard to get an owned one in the first place. If you “buy” a leased receiver, DIRECTV and DISH will refuse to activate it.

On the other hand, there are real benefits to the customer to leased equipment. DIRECTV and DISH will generally replace a leased receiver for only a small fee, and because you’re paying an acquisition fee rather than an outright purchase, you’ll generally get the receiver for a reduced price. Even the retail prices quoted at Solid Signal are lower than the cost to manufacture the hardware. The last time DIRECTV advertised a DVR for “sale” it was $699.

The biggest benefit, though, is to the provider. Businesses have long known about the benefits of leasing. When you lease a receiver, it counts as a depreciable asset in many cases (where state laws allow) and the lease fee is figured differently than a purchase. It’s all business mumbo-jumbo but the bottom line is that the providers are taking advantage of tax loopholes to stay profitable instead of passing costs along to the customer. Everyone wins there.

So sure, you can’t paint your receiver pink or overclock it, or anything like that, but you do get the benefit of the receiver at a much lower cost.