AT&T thinks Christmas in July

AT&T celebrated the July 4 holiday early last week by declaring its independence from satellite TV partners, at least for now. Our early impression (see related post) of AT&T's decision to end its partnership with Dish Network at the end of this year was that perhaps AT&T had decided it no longer needed a satellite TV partner at all, since it had ended a similar partnership with DirecTV a few months earlier (a relationship that had come to AT&T through its acquisition of BellSouth). AT&T has yet to surpass 400,000 IPTV customers, but the telco's ongoing IPTV progress bodes well.

A week later, we still feel pretty much the same way, but fireworks smoke and heat from the backyard grill have baked some additional impressions into our skulls:

For starters, several analysts have observed that AT&T's affair with satellite TV is not ending, only changing, and the telco is positioning itself to get a better deal with its future satellite TV partner. Those observations suggest AT&T is likely to let both Dish Network and DirecTV duke it out at the end of this year for the right to be AT&T's partner going forward. Both satellite TV companies have had their ups and downs, so maybe AT&T will wait, gauge how both are at standing on their own at Christmas-time, and pick a winner to take forward.

Fair enough, but what about that satellite TV acquisition AT&T was said to be mulling around Christmas-time last year? Industry observers had the company this/close to a possible acquisition of EchoStar or its (then) Dish Network subsidiary, but it never materialized. EchoStar later restructured and spun off Dish Network. In announcing its decision to end the Dish partnership last week, AT&T said it was merely providing the notice required in advance of the partnership's scheduled five-year expiration date this December. Could its notice actually be the precursor to the long-anticipated acquisition?

And finally, with IPTV expanding rapidly and becoming more successful, we may tend to forget IPTV is not for everyone. There might be AT&T markets in which, for a variety of reasons, rolling out IPTV does not make economic or engineering sense. AT&T currently has far more satellite TV customers than it does IPTV customers, and in order to be a national provider of TV services, it may continue to need satellite as an option for years to come.

Whether it makes more sense for AT&T to own satellite TV or to resell it is something we likely will find out this December. One way or another, AT&T is set to unwrap a big present, and it might even already have a good idea of what is in the box.     

-Dan              

For more:
- read this analysis at Telephony                                                 

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