DBS Duo Adds WiMax
The deal, announced Thursday, gives both direct broadcast satellite (DBS) providers the green light to resell Clearwire to their video subs as a bundle or on a stand-alone basis. In turn, Clearwire can sell DirecTV and EchoStar video services to its sub base. Financial terms were not disclosed, but the marketing foray is slated to get off the ground "later this year."
The Clearwire deal, and a report in The Wall Street Journal Thursday morning that Liberty Media Corp. (NYSE: LMC) and EchoStar are considering a joint bid for Intelsat, "hint at what might be a cozier working relationship going forward" between the DBS competitors, according to Sanford C. Bernstein & Co. Inc. analyst Craig Moffett, in a research note. John Malone's Liberty is in the process of becoming DirecTV's new parent.
Although the deals could spark speculation of an EchoStar-DirecTV marriage, "we still view the possibility of a merger as untenable from a regulatory perspective," Moffett adds.
Merger speculation aside, the agreement with Clearwire marks just the latest attempt by DBS to bolt on a much-needed broadband service and offer a quasi-bundle that competes with cable's video, phone, and Internet service packages. Clearwire also markets a phone service, but the partnership with DirecTV and EchoStar concentrates solely on the high-speed Internet offering.
A Clearwire spokeswoman said the partnership with DBS will focus initially on the data service, but could evolve to include other Clearwire products.
DirecTV and EchoStar forged a similar co-marketing agreement last June with WildBlue Communications , a satellite broadband provider based in Greenwood Village, Colo., that uses technologies that share some traits found in cable's Docsis platform.
DirecTV and EchoStar officials confirmed that the partnership with WildBlue remains active, but neither was ready to discuss any specifics about how their companies might market one broadband partnership over another.
"It's something we're still talking about," says an EchoStar spokeswoman.
But it could make sense for DBS to tap into Clearwire only in its still-limited service areas and to leverage WildBlue everywhere else, particularly in more rustic areas.
That's partly because WildBlue is still viewed more as a rural play, specializing in regions of the U.S. that remain relatively untouched by high-speed cable, DSL, and, of course, fiber-to-the-home networks.
Clearwire, meanwhile, says it offers service in 39 U.S. markets in 13 states, touting a wireless footprint covering 9.9 million people. It had 258,000 customers as of March 2007. When all of Clearwire's potential spectrum purchases are combined, that footprint could expand to 223 million people, according to the company.
Although Clearwire and WildBlue use different technologies, the speeds they offer are similar. The high-end tier for both services, for example, cap the downstream at 1.5 Mbit/s.
The deals were the first solid piece of good news for Clearwire investors in several months. Clearwire's shares got hammered after its IPO but rocketed up over 23 percent, or $4.63 a share, to $24.50 on the news today.
— Jeff Baumgartner, Site Editor, Cable Digital News