For some strange, I can't really figure-out reason, every study and survey shows that people (current subs and potential subs) want their local channels via satellite. This preference was the case long before the DVR revolution.
In the beginning, it was illegal for DBS to provide local into local (LiL), meaning they could not put local stations on the satellite to be viewed by subs. From the start, SD Dish STB's have always had an OTA analog input that would allow viewers to easily switch between local OTA and satellite. For me, I can't see that as being a deal-breaker, but it was to a vast number of people. Big deal! So, we press one more button to view our locals.
However, back in the late 1990's, the overwhelmingly number one reason, closely followed by people having to pay for the entire system themselves, people hesitated to subscribe to satellite was that their local stations weren't delivered by satellite. This is why Dish spent a lot of money and energy, and eventually dragged Direct TV along with them to Capital Hill, to get SHIVA passed (Direct TV finally saw the light and was key to getting the legislation passed). Offering LiL via satellite is without a doubt the primary reason satellite has become as hugely successful as it is today, along with the introduction of "Free/Leased Equipment" Cable TV business model first introduced to DBS by Charlie Ergan himself.
The law allowed, at first, for DBS to put up ABC, CBS, NBC, and FOX LiL's for viewing by subscribers, and Dish would have preferred that it stayed that way because of your very good point regarding the amount of bandwidht it takes to put up non-network locals. However, the law mandated that by January 1, 2002, Must Carry rules are in effect, meaning that DBS must provide all the local stations in any DMA where it provided even a single station. This part of the law was crammed in by the powerful NAB. (Local stations have the option of declaring "Must Carry" and must be provided by DBS, but the broadcaster receives no payment for retransmitting its signal, or they can choose to negotiate a price for DBS to pay to retransmit its signal to subscribers. If an agreement for payment cannot be reached, then DBS is NOT required to provide that local station).
The Must Carry rule meant that Dish and Direct had no choice but to allocate huge amounts of bandwidth just for LiL's. In fact, the primary purpose for Dish's 110 location was for local stations, almost exclusively, and it is still pretty much the case today, albeit with far more sophisticated satellites. Yes, almost an entire satellite's capacity just for LiL's. The recent spotbeam technology has helped tremendously to, not technically, but in effect increase bandwidth, or more accurately the more efficient use of the same bandwidth.
So, people want their locals and all the programming, even the infomercials and bad local news, sent up to the bird and bounced back to their dish at home. That's the way it is. Charlie and Direct have accepted it. I suppose we should, too.