Another telco is hitching its wagon to DBS as BellSouth on Wednesday became the latest Baby Bell to team up with a U.S. satcaster to co-market voice, video and high-speed DSL services at a discount.
BellSouth announced it has teamed up with U.S. DBS market leader DirecTV to offer consumers a bundled video satellite package alongside its fixed and wireless communications services across its nine-state franchise starting early next year. Companies also said they are exploring plans to integrate digital satellite and DSL technology, including enhanced two-way networked solutions using BellSouth’s fiber optic network. Such high-grade capacity could help DirecTV compete on a more even footing with cable by shoring up its ability to offer video-on-demand or interactive TV.
‘Important first step’
“DirecTV sees this strategic relationship as an important first step in the evolution of telecommunications and entertainment that will put us in a leading position against our competitors in this rapidly changing marketplace,” said chairman-CEO Eddy Hartenstein.
BellSouth will offer DirecTV exclusively and will handle dish installation. All services — voice, data, mobile and pay TV — will be itemized on a single bill.
Deal is similar to a number of alliances forged recently between telcos such as SBC and Qwest Communications and DBS providers in search of new customers and new revenue streams. In fact, analysts says video is becoming a must-have among the Bells in competing with cable in the high-speed market.
In contrast to SBC’s recent deal with EchoStar, BellSouth will not be making an investment in DirecTV, while the satcaster will likely retain control of customer service and billing. Both companies are expected to share the costs of the discounts.
Oppenheimer analyst Thomas Eagan expects Verizon is also likely to announce a partnership with a DBS provider, mostly likely DirecTV, that has higher consumer penetration in Verizon’s core urban markets.
While the deals are intended as win-wins for both parties, Eagan is concerned that such tie-ups only confuse both customers and partners.