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.

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