RealTime IT News

Teaming Up To Beat Cable

SBC Communications and EchoStar Communications are teaming in May up with a satellite TV/broadband Internet combo to deliver a service only cable networks can provide today.

Officials announced Wednesday the beginning of a marketing alliance beginning in May when SBC sales teams start offering EchoStar's service to its customers as a stand-alone product. Later this summer, SBC officials say, the satellite TV will be bundled with its digital subscriber line (DSL) service for a $10 monthly savings.

"This is an opportunity for both companies to provide a service that competes with cable," said Jason Hillery, SBC spokesperson. "This alliance is designed to offer an alternative to cable for our customers, we will also be offering other wireless packages in the coming weeks."

A SBC/EchoStar matchup looks good on paper (taxes not included) compared with my old AOL Time Warner cable bill: SBC's DSL service runs $49.95, while the standard satellite TV package at EchoStar runs $22.99.

Time Warner Cable, on the other hand, runs $44.95 for Road Runner Internet service and $23.64 for the standard cable TV service. Throw in the monthly $10 credit at SBC and you have a product that costs less than cable.

Voila! Instant competition.

In case you haven't noticed, cable and telephone carriers are locked in a vicious battle for broadband subscribers in the U.S. Cable has taken an early lead with its obvious ability to bundle nearly ubiquitous cable TV with cable Internet services. DSL providers have spent the past two years fighting provisioning and support issues, as well as the collapse of many of the competitive local exchange carriers (CLECs).

The alliance today is a boon for both companies, who are looking to cut into cable's dominant position with TV and broadband.

SBC, looking for a TV offering to pair with its DSL, and EchoStar, a TV offering looking for a broadband Internet service, are a perfect match. Combined, the two can offer what alone they have been unable to accomplish.

Video over DSL (VDSL) has long been a pipedream, though recent equipment advances have made it slightly less expensive and more palatable to carriers. The technology is still years from commercial adoption and SBC (and other telephone companies) needs TV now.

EchoStar has its own Internet service, via a 30 percent ownership of StarBand. The satellite Internet service is expensive and lag-prone, making consumer adoption slow in all but the most remote areas of the county (where DSL and cable aren't provided).

Reports show EchoStar has stopped selling the StarBand service and will focus instead on small businesses, some say to win merger approval of its DirecTV buyout.

Mark Jackson, EchoStar senior vice president, said a combined SBC and EchoStar offering makes a lot more sense than working alone to beat the cable companies.

"The combined reach of both companies' sales forces and retail affiliations will expand the availability of the bundled services and make it easier than ever for consumers to take advantage of the best of high-speed Internet and digital television," he said.