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Dish, SBC Put Alliance on Hold

EchoStar Communications Corp. chairman Charlie Ergen said the direct broadcast satellite service provider’s relationship with telephone giant SBC Communications Inc. is on hold, adding that the union hasn’t been working for either party.

SBC and EchoStar announced the partnership in 2003, where SBC would sell EchoStar’s Dish Network service under its own brand — SBC Dish Network — in a bundle with voice and digital subscriber line service.

The partnership did reap some rewards initially — SBC accounted for 101,000 net new Dish subscribers in the second quarter of 2004 — but has fallen off after SBC announced its own voice, video and data initiative Project Lightspeed late last year.

In the second quarter, SBC accounted for only 10,000 net new subscribers for EchoStar’s Dish Network.

Ergen told analysts on a conference call the two companies continue to work well together and hope to continue some kind of relationship in the future.

Second-quarter results were strong for the No. 2 DBS service provider (behind DirecTV Inc.). EchoStar added a total of 225,000 net new subscribers, revenue rose 17.8% to $2.09 billion and cash flow increased 70% to $524 million.

Subscriber-acquisition costs rose to $667 each from $623 in the first quarter, as more customers are leasing equipment and using more boxes.

Overall, Ergen was optimistic, saying that after the launch of the Echo 10 satellite, Dish will be able to offer substantially more HDTV channels: up to 50 national channels and 20 local channels.

Ergen said he believes high-end HD customers will be drawn to satellite as those additional channels are available. He also said he would target those customers as well as those in rural areas that can’t get a cable triple-play bundle.