SBC to Add Branded EchoStar Satellite TV into Service Bundles

SBC Communications Inc. intends to add branded EchoStar Communications Corp. satellite-based DISH Network TV services into its product bundle starting early next year. The move will enable SBC to deliver unparalleled one-stop customer service and a single bill for bundles including video, wireless, local, long distance and broadband Internet services, according to SBC Chairman and CEO Ed Whitacre.

“That’s a package our telecom and cable competitors can’t match,” says Whitacre.

The two companies have begun joint development work on integrated order entry and billing tools. SBC affiliates will manage customer relationships including ordering, provisioning, customer care and billing, and will provide customers will a single monthly bill for bundled services.

EchoStar will continue to offer DISH Network satellite TV service, which today reaches more than 8.5 million customers nationwide, in SBC areas through its established retail channels.

The move has answered the long-time question of what SBC would do to add video services to its bundle in a significant way. SBC reportedly made a pass to buy satellite TV company DirecTV this spring, but those talks apparently broke down when Rupert Murdoch’s News Corp. ultimately agreed to buy the direct broadband satellite company.

SBC has also had a long-standing relationship with EchoStar, in which SBC has agreed to make a $500 million investment in the form of convertible debt. The companies in April of 2002 announced a deal to bundle SBC’s DSL and EchoStar DISH on a standalone basis in select markets. But the companies have been reticent to provide information on availability or success of their combined offerings under that deal. This new deal is a broad expansion of that effort – including a wider palette of services targeting SBC’s entire territory, the companies explain.

With Murdoch’s purchase of DirecTV, EchoStar is the only other major DBS player in the market. Whitacre says that SBC has chosen to partner with EchoStar on this venture because EchoStar is a “strong, well focused company” with “industry-leading sales figures.” The deal enables SBC to get to market with video quickly in a way that “is financially smart,” Whitacre says.

SBC says its relationship with Yahoo! will serve as a model for this new alliance with EchoStar. In November of 2001 SBC inked a comarketing agreement with Yahoo! Inc. to provide DSL and dial-up Internet services within the telco’s 13-state territory. The cobranded offer, called SBC Yahoo! DSL Internet, also includes a suite of customized products and services, many of which are optimized for broadband connections.

The cobranded SBC DISH Network satellite television service will offer SBC customers access to hundreds of popular, all-digital television channels, including movies, sports, news, music, international and high-definition TV programming. Pricing for the service has not yet be announced.

Over time SBC and EchoStar also plan to develop cobranded set-top boxes to support DISH, DSL and possibly home networking.

Study after study has shown that most residential customers prefer a bundle of services from a single provider. Offering a broad range of services has also been shown to decrease customer churn. Steve Kirkeby, senior director of telecommunications studies at J.D. Power, says: “We see that a lot of consumers are appreciating fact they have a choice and more and more are wanting to have a single source for multiple services.” He says local and long distance services are the two most frequently requested services for a bundle. Internet is the third most desired service. Next is cable TV services, then cellular, and then satellite TV, he says.

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