Seeking to keep pace with peers in the telecom and cable TV industries, DirecTV is building a network to offer its own wireless broadband services to consumers, according to two people familiar with the deal. These people say that DirecTV is working with EchoStar and seeking final bids from tower companies in a push to put the network together.
DirecTV, the satellite TV provider controlled by Murdoch's News Corp. (NWS), wants to profit from offering the so-called triple threat of television, telephone and Internet services that some rivals already dangle before consumers. Operators like the triple threat because it increases both revenue and customer loyalty. So far satellite companies have not been able to fully capitalize on this so-called bundling push because of their lack of two-way transmission capability.
If News Corp. is able to build out wireless data service through DirecTV, it could mark a large change in the competitive landscape.
"This could re-focus attention on satellite at a time when it is being largely ignored as a competitive threat to cable," said one analyst.
A News Corp. rep referred calls to DirecTV. DirecTV and EchoStar representatives weren't immediately available for comment.
News Corp. Chairman Murdoch said late last year that his wireless strategy would become apparent within the next couple of months. He said the company could invest $1 billion in such plans. One source said, however, that the deal could be even bigger.
While both DirecTV and EchoStar offer high-speed data services through co-marketing agreements with telcos, they are discovering the myriad advantages of in-house triple-threat service. Cable system operators like Time Warner (TWX), Comcast (CMCSA) and Cablevision (CVC) have been competing with big telcos like Verizon (VZ) and AT&T (T) on the triple-threat push.