DirecTV Inc. and EchoStar Communications Corp.’s search for the missing pieces of a triple-play bundle is leading them to explore new wireless technology that could allow them to add telephone and high-speed Internet services to their video offerings.
The two big direct-broadcast satellite TV providers have long sought a solution to counter the high-speed Internet services, via cable modem, marketed by cable operators. But EchoStar’s “SuperDish” Internet product and DirecTV’s DirecWay high-speed service have failed to gain traction with consumers, partly because of high equipment and subscription costs.
Now, DirecTV and EchoStar’s Dish Network are looking at using WiMax wireless broadband technology to not only offer two-way, high-speed Internet access, but also telephone service and video content that could be delivered to portable media players.
Sources familiar with the DBS companies’ plans said both DirecTV and EchoStar are in discussions with London-based WiNetworks Inc. on how best to use WiMax technology to offer satellite TV customers “triple-play” packages of video, voice and data.
“We have a solution that has been designed over a period of three years, in very close collaboration with EchoStar and DirecTV,” said Benjamin Finzi, president of Americas operations at WiNetworks.
“It’s more than talks — there are technological and more strategic discussions around the deployment of a solution,” Finzi added when asked about the company’s relationship with EchoStar and DirecTV. WiNetworks has signed nondisclosure agreements with both U.S. DBS firms, he said.
Officials at DirecTV and EchoStar confirmed that the companies are exploring the potential of WiMax technology, but they declined to comment on specific talks with WiNetworks or any other potential WiMax vendors.
Attendees at the International Broadcasting Convention technology trade show in Amsterdam earlier this month got a sneak peek of what an integrated WiMax-DBS solution would look like. DirecTV’s News Corp. corporate sibling NDS Group plc teamed up with WiNetworks at the convention to demonstrate the triple-play product, and WiNetworks got some favorable press afterward.
WHAT WIMAX MEANS
WiMAX is short for Worldwide Interoperability for Microwave Access — wireless technology that can transmit broadband content up to 30 miles from WiMAX transmitters.
Much of the development of standards and product certification in WiMAX technology is being led by companies that are members of the WiMAX Forum, created in 2001. Its board of directors includes executives from Intel Corp., Aperto Networks Inc., AT&T Labs, Samsung Corp. and Sprint Corp.
According to the WiMAX Forum, which began testing products for certification in July, certified WiMAX Forum systems would be able to deliver capacity of up to 40 Mpbs per channel for fixed and portable applications.
To use WiMax technology, DirecTV and EchoStar would need to attach WiMax antennas to satellite dishes on the roofs of subscribers. The WiNetworks prototype is a cylinder-shaped device that attaches to the back of a satellite dish and relies on existing wiring from the receiver.
In addition to allowing DBS customers to receive telephone and high-speed Internet access, Finzi said the WiNetworks product would bounce WiMax signals from rooftop to rooftop, extending the service coverage area from WiMax transmitters, and even allow consumers with WiMax-enabled portable media players to receive content.
“We can literally take any outdoor antenna that we install on the roofs and we can use that not only as a receiving antenna, but also as a hopping point to provide connectivity to other antennas that may be just out of this covered zone, or covered by some obstruction,” Finzi said. “Through this antenna, we will be able to get around obstacles.”
Both DirecTV and EchoStar executives have said they plan to eventually deploy portable media players. EchoStar chairman Charlie Ergen discussed the potential of WiMax and portable media players on a conference call with analysts last month.
“It’s not just broadband: People are going to want to be mobile, and we want to be portable,” Ergen said.
News Corp. chairman Rupert Murdoch discussed the potential of DirecTV using WiMax at Goldman Sachs & Co. conference in New York last week.
“We will certainly have voice-over-[IP],” Murdoch said at the Goldman Sachs Communacopia conference in New York last Tuesday. “We think one way or another, broadband is going to be ubiquitous, whether it’s wireless — WiMax, which is coming very fast thanks to Intel and the development of Wi-Fi.
“You’ve got DSL pushing at about half the price of cable and is signing up people faster than cable is. It is a problem that we’re facing. Within a measurable time, we’ll certainly be able to match that triple play.”
While some wireless phone companies have said they’re looking to incorporate WiMax, WiNetworks is one of the first companies to focus on using WiMax technology for hybrid products that could be rolled out by satellite TV companies.
“These guys are the first to develop a solution that addresses the exact needs that a satellite company would have, including how you would be able to do video on demand,” Yankee Group analyst Lindsay Schroth said.
SPECTRUM IS NEEDED
But before either DBS company can deploy products that rely on the new technology, they would need to acquire WiMax spectrum or cut deals with companies such as Sprint Nextel Corp., which owns WiMax spectrum in the 2.5-GHz band.
Finzi said WiNetworks also is exploring the use of another spectrum band that could potentially be used to deliver services to DBS customers via WiMax products, but he declined to elaborate.
Schroth said DBS companies may eventually be able to use Ancillary Terrestrial Component spectrum for use in WiMax services. The Federal Communications Commission could allow the ATC spectrum to be used for broadband wireless services like WiMax, she said.
Some analysts believe WiMax has potential, but that it might be several years before WiMax services could be widely deployed.
“It is too early to know whether WiMax technology will be a modest winner or a dud, and definitely too early to pick winners from a crowded field,” Sanford C. Bernstein & Co. analyst Paul Sagawa wrote in a research note to clients earlier this month, which addressed the threat WiMax services could pose to wireless phone carriers.
Mike Farrell contributed to this story.
