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Satellite TV Providers Search for Broadband

Reuters reports that satellite television provider DirecTV Group may test delivering high-speed Internet service through power lines in a major U.S. city within the next year, its chief executive said.

DirecTV and others are talking to companies that specialize in providing broadband through the electrical grid, Chief Executive Chase Carey said at the Reuters "Global Technology, Media and Telecoms Summit" in New York.

"We're not the only ones talking to them," Carey said, in response to a question on whether DirecTV would consider a test in a major city. "I think you'll see some meaningful tests in this arena."

DirecTV would like to test delivering Internet access on power lines in a "top 50 city where you're covering at least half the city." While DirecTV and fellow satellite TV operator EchoStar Communications Corp. have managed to keep increasing their subscriber base in the face of stiff competition from cable operators, Wall Street analysts have long questioned what broadband strategy the satellite operators will employ to counter competitive pressures.

"We think it would be a good thing to have a third, a fourth or a fifth entrant in broadband and if we can be helpful in pushing that forward and if there's an opportunity for us to intelligently invest in doing so, we would," said Carey.

I believe that this telling comment suggests that the current broadband service duopoly in the U.S. market is the single most important restraint of trade issue within the technology sector. With the FCC's regulatory backing, the tightly controlled environment ensures that services are limited and prices remain high -- when compared to other developed nations.

Controlling ownership of DirecTV will change hands to media mogul John Malone's Liberty Media Holding Corp. from Rupert Murdoch's News Corp. before the end of the year. Liberty Media is also a founding shareholder in broadband-over-powerline company, Current Group.

Carey said the company has looked at Wi-Max technology for high-speed Internet access, such as offered by Clearwire Corp. He also said another potential partnership with EchoStar on a broadband initiative was still in the works, as were discussions with other companies to bring new broadband options to market.

Carey said satellite pay-TV operators have benefited from the rivalry between phone companies and cable operators. Phone companies have aggressively priced their DSL broadband products in packages with telephony and satellite TV to compete with cable.

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