AT&T Expands IPTV With Satellite

Keep your friends close and your enemies closer? You might say in this case.

In what is clearly an extension of a strategic agreement signed last fall between EchoStar and AT&T, the telephone giant has launched Homezone, a service that will allow customers to download movies and other content via the Internet and watch it on their televisions, along with content from satellite provider EchoStar.

AT&T &hbsp;and EchoStar  are already testing Homezone in several states.

But this relationship is founded on mutual rivalries with the cable companies rather than long-term compatibility.

Brad Mays, a spokesman for AT&T, acknowledged that Homezone is an answer to Comcast , Time Warner  and other cable providers.

“For a long time cable companies have dominated the TV and entertainment market,” he said. “Not only are we delivering another choice, but we are also delivering it through new technologies.”

According to Mays, Homezone will “provide video on demand (VOD), digital video recording and Internet content through a new set-top box.”

The original agreement was mainly a joint-marketing effort, with consumers able to qualify for discounts if they subscribed to DSL and voice services from AT&T and cable TV from EchoStar, all on a single bill.

“That was AT&T’s answer to the triple play offering from the cable companies,” noted Joe Laszlo, an analyst with Jupiter Research.

Homezone moves the relationship from the purely abstract to a more tangible integration of the companies’ respective services.

According to Laszlo, AT&T has to be satisfied with the fruits of their relationship thus far. The phone company has attracted 500,000 satellite subscribers through the first quarter of this year.

While the number of telephone subscribers dwarfs that number, it nevertheless represents “good progress,” said Laszlo.

But this figures to be a transitional offering until AT&T gets its Internet Protocol television (IPTV) efforts, known as Project Lightspeed, off the ground, at which point AT&T will be competing directly with EchoStar.

That said, the transition may last quite a few years, given how long it will take for AT&T to boost their wire capabilities sufficiently to enable the IPTV offering.

AT&T bills Lightspeed as its “next-generation IP-based network.”

Mays said he couldn’t speculate on whether Lightspeed will eventually eclipse Homezone, but said that where available, it would be “the primary video solution offered.”

Which would put EchoStar in the same bucket as analog telephones and live operators.

In the meantime, though, AT&T and EchoStar have a lot of interest in putting off their battle for the time being.

Or, as Laszlo put it, “this may be a case of ‘the enemy of my enemy is my friend.'”