The Hidden Message Behind EchoStar's Potential Marriage To AT&T: U-Verse Sucks And Satellite TV Is Dying

from the gotta-make-the-deals-now dept

We were a little confused last month when EchoStar announced plans to buy SlingMedia. Such a deal made some sense for the investors and founders of Sling, looking to cash out -- but at a strategic level it didn't seem to make much sense. Locking Sling into EchoStar seemed unnecessarily limiting, and the benefits to EchoStar of being the sole owner seemed... not all that compelling. However reports quickly came out about the details behind the plan. Basically, EchoStar CEO Charlie Ergen seems to be realizing that the satellite TV business has gone about as far as it can go, and its opportunities for growth aren't all that interesting. However, some of the technology behind what the company is doing is quite interesting, and when you combine that technology component with Sling, you potentially get something very interesting. The problem, though, is that you need to shed the whole satellite TV albatross legacy business. And who better to dump a dying business on than a massive telco who has trouble understanding business trends. Hello... AT&T... step right up. Indeed, the talk is now getting much louder that AT&T plans to buy EchoStar shortly in order to get approval from a friendly DOJ before a change in Presidential administrations could perhaps make it less business friendly. If true, then this sounds like a great deal for Ergen and EchoStar, who ditch the loser part of their business to focus on the growth part.

As for AT&T, initially, I would say that it's a bad deal, but that might not necessarily be the case due to its own problems elsewhere. AT&T flirted with buying DirecTV in 2003 and EchoStar in 2005. The company did invest in EchoStar, and already offers a bundled package. However, as we pointed out during the original EchoStar rumors, the combination doesn't seem to make much sense. If AT&T is really pushing for a triple play offering, they should focus on doing that all through a single pipe (as with its U-Verse offering), rather than getting tied up with the limitations of satellite. So why would it make sense? If AT&T's U-verse plans aren't going particularly well. In such a case, AT&T could buy EchoStar to get its hands on all of the pay-TV customers and hope that those customers can easily be transferred over to IPTV when AT&T finally figures out how to offer it more broadly. It would be about buying customers, not technology (the good technology would stay with Ergen anyway), squeezing some life out of the legacy satellite business and then casting it off and transferring everyone over to fiber. At least, that's the only way the plan makes any sense -- and it would still require AT&T be able to successfully convert DISH customers to U-Verse, which may not be particularly easy.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Crue, Oct 17th, 2007 @ 4:17am

    Satellite is Dying?

    Isn't this a bit premature guys? You're trying to bury a warm body.

    Do you really believe satellite will go away? In a day when everything is going more mobile, why would users want to be tied to a cable? So many people have ditched their landline phone in favor of their mobile. Satellite TV direct to the phone may not be feasible now, but who's to sat what's in the future.

    Satellite is still the carrier of choice in many homes due to cable's crappy service and outrageous pricing. It'll be here for a long time before the birds fall to earth.

     

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  2.  
    identicon
    Haywood, Oct 17th, 2007 @ 4:45am

    If I want premium TV satellite is my only option

    I can see the pole with the cable from my drive way, but they will never bring it up this street until more then 5 families are living here. I did have a dish for a while, and it is good service unless it rains.

     

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  3.  
    identicon
    comboman, Oct 17th, 2007 @ 5:04am

    broadband penetration?

    For a site that's always ranting about the poor broadband penetration in the US, I'd have thought you would see the obvious advantages of satellite. In lots of rural areas, satellite is the only option for both TV and high-speed internet.

     

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  4.  
    identicon
    Boondocks, Oct 17th, 2007 @ 5:28am

    Dial-up doldrums

    Some of us live in the woods- no cable for miles. Waiting eagerly for the rumored merger of Dish Network or Direct TV and ATT, hoping for reasonably priced high-speed satellite internet and TV combo. Pie in the sky??

    On the other hand, dial-up is an excellent exercise in developing patience.

     

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  5.  
    identicon
    A1chemyst, Oct 17th, 2007 @ 5:37am

    fiber? where?

    Being at the end of the 3-mile limit for decent DSL, VOIP and TVIP is not an option for me. Neither is cable; they are at the street, but my house is 500 feet off the road and they won't bring it to me.

    Satellite is the only TV choice I have. Same with most people in my community. Satellite is here to stay for quite some time.

     

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  6.  
    identicon
    Brian, Oct 17th, 2007 @ 6:03am

    Slowing growth != Dying

    You guys are trying awfully hard to bury something. I can't pretend to understand why, but since there are currently only two ways to get non-OTA television -- satellite and cable -- I seriously doubt satellite TV is "dying." You might not be able to classify it as a high-growth industry, but that is emphatically not the same as "dying."

    IPTV is a non-factor, and will remain so for a long time yet.

     

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  7.  
    identicon
    Witty Nickname, Oct 17th, 2007 @ 6:12am

    Satellite

    I live in the Houston test market for U-Verse. Comcast and AT&T are both begging me to leave DiSH Network and I wouldn't do it if they paid me. I have heard from U-Verse customers that the service is great UNLESS you have HD, the HD picture is coming through a limited pipe, you can only watch HD on 1 TV at a time, and even then the HD is lower quality than cable or Dish HD.

    Also, DiSH network is the only service I have found that offers a DVR that controls two rooms (I can DVR something in the bedroom and watch it in the living room).

     

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  8.  
    identicon
    Witty Nickname, Oct 17th, 2007 @ 6:13am

    I should point out that the above comment was posted from my AT&T DSL. Should you never hear from me again AT&T pulled my internet for critcizing U-Verse.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    wrk, Oct 17th, 2007 @ 6:15am

    Satellite's not dead

    I switched to satellite a few months ago because I was fed up with the horrible HD service that my local cable monopoly provided, only 13 channels. Now with satellite I've got over 30, with HDDVR, for less than I was paying for cable. Let's not forget that unless cable starts upgrading their networks very soon they're not going to be able to keep up with increased demand for HD channels, while satellite has much more bandwidth to play with currently.

     

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  10.  
    identicon
    Tosoontotell, Oct 17th, 2007 @ 6:17am

    new wi-fi works better with Satellites for

    GPS Tracking for e-911 and They claiming it's sales will hit 100 million
    in there first year in services. starting in spring 2008 1 tower covers
    33 miles 360 degrees 20 feet deep and 33 miles high. T-1 with voip
    under $30 a month. It has taken 6 years to build and is backed by 7 investment banker, up to 13 billion $. The services will also by pass
    Cell sites by using the bluetooth to connect to there network

     

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  11.  
    identicon
    Doug B., Oct 17th, 2007 @ 8:00am

    Re: new wi-fi works better with Satellites for

    33 miles high? That's 174,240 feet. Very impressive, but useless. I wonder if it's possible for them to shape the coverage to keep it closer to the surface. Otherwise, it seems like a shameful waste of resources.

     

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  12.  
    identicon
    Rick S, Oct 17th, 2007 @ 8:10am

    Re: Re: new wi-fi works better with Satellites for

    He didn't say 33 miles high smarty pants.
    He said it COVERED 33 miles (around the tower).

    Lear2Read.

     

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  13.  
    identicon
    Tbone22, Oct 17th, 2007 @ 8:13am

    Re: Re: Re: new wi-fi works better with Satellites

    No, dumas... it says "1 tower covers
    33 miles 360 degrees 20 feet deep and 33 miles high"... 33 miles HIGH.. Who needs to LearN2Read?

    TB

     

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  14.  
    icon
    christopher (profile), Oct 17th, 2007 @ 8:23am

    So long to DISH then

    DISH has great customer service, technical support, and the best DVR you can find from a content provider. Plus, their packages are cheap and stocked with goodies.

    Once AT&T buys it, that will all go away. AT&T will screw up the customer service, raise the prices on all bundles, add surcharges, and limit content. AT&T has something of a reverse Midas touch: everything it buys turns to shit.

    -C

     

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  15.  
    identicon
    Captain, Oct 17th, 2007 @ 9:11am

    I have had Satellite, Cable and now I use Fiber.
    Satellite is so far behind now that they will never come back.
    The lack of two-way communications is the barrier and by the time they design new antenna's to support bi-directional, Fiber will have surpassed any plans a satellite company may have. Forget the fact that the picture is lousey when weather is bad, the service is so limited that it will be used only in very remote areas.. I can see that niche existing for quite some time but how can these guys be profitable? Good bye Sat TV.. hello fiber

     

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  16.  
    identicon
    Jhendrx, Oct 17th, 2007 @ 9:41am

    Release the hounds and Cable/Satellite are done

    Basically, the enviable "big IP pipe" has not been delivered. It could be fiber or WiMax but until the infrastructure is in place, there will be no mass roll out of IPTV - content has to reach its destination. On the plus side, Cable and Sat are making it more and more appealing to look at alternatives via high pricing and poor customer service. Would love to see WiMax crush them.

     

    reply to this | link to this | view in thread ]

  17.  
    identicon
    Mike B, Oct 18th, 2007 @ 12:10am

    fiber and dish

    Captain -
    I'm glad fiber is good for you, but it's not an actual choice for the majority of people in the country yet.

    As for Dish, dear god why didn't someone tell me ATT was gonna buy them when I signed up last month? We use ATT for our cell service at work, and they were great when Cingular, then ATT bought them, now I can't get customer service to save my life.

    Christopher - You ain't kidding, everything they touch DOES turn to shit.

     

    reply to this | link to this | view in thread ]


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