DirecTV, EchoStar too reliant on telcos

America's DirecTV and EchoStar are likely to see their customer growth fall significantly over the next five years, a new report from Pike Fischer suggests.

The DTH providers, which together have more than 30 million subscribers, may be relying too heavily on their partnerships with telephone companies to gain new customers according to the report 'DBS-Telco Partnerships: Strategic Forecast'. The phone companies and the DBS companies sell a co-branded bundle of phone, high-speed Internet and satellite TV service.

Over the last year, telephone company partners have been responsible for about 25 per cent of the new subscribers that the satellite TV companies have secured – as many as half of the new subscribers to DirecTV and EchoStar’s DISH Network came from telephone companies in the second quarter. But these partnerships are likely to scale back over time, which will suppress the ability of DirecTV and EchoStar to capture new customers says the report.

This is due to telephone company partners – primarily AT&T and Verizon – developing their own video services over fiber-optic lines, according to Tim McElgunn, of Pike Fischer. “The satellite TV vendors will see customer growth rates decline by an average of 13.5 percent per year as digital cable and telco on-net TV services, both typically delivered as part of a “multiplay” service, expand,” McElgunn says.

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