Uncommon Wisdom

Oct 16 2007   1:03PM GMT

AT&T to buy EchoStar to bolster U-verse?

Tom Nolle Tom Nolle Profile: Tom Nolle

AT&T is reported to be preparing to make an offer for EchoStar, the DBS company with which it partners for its Homezone service. We believe this to be a clear indication that AT&T recognizes that it cannot make U-verse available for a large population of its customers and that they will instead have to rely on a satellite partnership for the broadcast program delivery, reserving IP for VoD. The challenge AT&T faces is that its relatively low demand density makes it difficult for AT&T to push fiber to the home, and without FTTH the mapping of broadcast channels to DSL delivery (U-verse) adds network complexity and cost at the metro level. The decision may induce Verizon to accelerate its own FTTH plans to reduce its reliance on satellite partnership.

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