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DBS Operators Tap Clearwire As Broadband Solution

DirecTV and EchoStar, which have been under pressure for years to provide a broadband solution in order to better compete with cable's bundle of services, have both signed distribution agreements with Wi-Max provider Clearwire.

The deals will allow the satellite operators to offer Clearwire’s high-speed Internet service to their video customers, and Clearwire says that it expects in turn to be able to market the DirecTV and EchoStar video services to its wireless broadband customers. A launch is planned for later this year.

"Being able to offer services on the Clearwire network will give our customers another high-quality option to subscribe to broadband services with DirecTV’s video offerings," said Bruce Churchill, president of New Enterprises, DIRECTV, in a statement. "By choosing this bundle option, DirecTV customers will now be able to enjoy Clearwire’s fast, reliable and secure wireless broadband network that works great at home and on the go."

DirecTV and EchoStar were in the news on another front Wednesday after the Wall Street Journal reported that Liberty Media, which will soon control DirecTV, and EchoStar were forming a joint bid for fixed satellite operator Intelsat. While the motivations for an Intelsat bid remain unclear, says Sanford Berstein analyst Craig Moffett, the broadband deals with Clearwire make immediate sense.

"The Clearwire deal would appear to be a clear positive for both DirecTV and EchoStar," said Moffett in a research report, as it "fills a long-standing need for a broadband solution for the two companies." From an pure investment perspective, the Clearwire deal is encouraging on another front, adds Moffett: It makes it less likely that DirecTV and EchoStar will make a costly bid in the FCC's auction of 700 megahertz spectrum and then spend more to build out their own wireless network.