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DBS romances the phone

Sun, 08/31/2003 - 8:00pm
Staff

In a move that could hasten cable's foray into IP telephony, EchoStar and DirecTV have gained the ability to bundle video and voice services via recent telco partnerships.

Essentially moving its VDSL plans off the backburner and completely off the stove, Qwest Communications will offer services from each DBS provider, depending on location. It will co-market Echostar initially to single-family homes in Colorado and Nebraska, and DirecTV in Phoenix, Tucson and Seattle. Qwest hopes to bundle DBS services in more markets in its midwest territories later this year and into 2004.

SBC Communications, meanwhile, entered a deal with EchoStar to market a service called "SBC Dish Network." After completing the integration of their respective order entry, customer service and billing platforms, EchoStar and SBC expect to offer the service early next year.

The agreements could cause cable operators to accelerate their plans for IP telephony, predicted Salomon Smith Barney, in a research note.

"While this partnership does not change our fundamental view on the cable industry, we believe that it raises the stakes in the cable/RBOC bundling battle and will further accelerate cable's push into IP phone service," company analyst Niraj Gupta wrote.

RBOC/satellite alliances, he added, "are the lesser of the two evils in that potential fiber builds by the RBOCs are a substantially greater competitive threat, in our opinion."

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