Everywhere you look these days, you see chatter about a potential acquisition of Echostar/DISH Networks by AT&T. If you subscribe to the old adage, “where there’s smoke, there’s fire,” this must be a done deal. Of course we’ve seen this before. AT&T has been rumored to want to buy Echostar for years, and nothing has ever materialized. But if this deal does happen, it could take telecom competition into territory not witnessed before.
My main contention with this “unchartered territory” thesis is that should AT&T buy Echostar, they would immediately be in direct competition with Verizon and Qwest (among other incumbent telephone companies) for video services. Those of us who know telecom well understand that there has always been an unwritten rule about “baby bells” not entering each others incumbent territories to compete. The same rule seems to apply to large MSOs. But an AT&T/Echostar deal begins to soften this long held stance. Some would argue that AT&T and their telco peers began competing in each other’s territories long ago through wireless. That would indeed be true. But an Echostar deal could dramatically expand this growing competition between incumbent telcos, assuming there are no regulatory mandated divestitures in an AT&T led Echostar acquisition. Video has proven to be the “anchor tenant” for bundles. An AT&T owned DISH Networks could bundle video and wireless right out of the gate. Furthermore, as broadband wireless technology continues to evolve and mature, there is no reason why AT&T couldn’t soon offer triple/quad play bundles outside of their incumbent territory with broadband wireless powering the broadband and voice (using VoIP) portions of the bundle. This line of thinking synchs well with their recent purchase of Aloha’s 700 Mhz spectrum. I certainly recognize there are a lot of “ifs” in this analysis, and some may characterize it as wild speculation. But I would contend that it’s not too far of a stretch to suggest that we could soon see AT&T, Verizon, Qwest, and other telcos competing with each other in their incumbent territories for high value multi-play subscribers. Wireless, both terrestrial and orbital, will power this competitive evolution. AT&T’s potential purchase of Echostar may lead the way.