EchoStar, DirecTV to Offer Broadband Internet Access

Targeting rural homes, satellite-TV providers EchoStar Communications Corp. (DISH) and DirecTV Inc. (DTV) will resell broadband Internet access via satellite from WildBlue Communications Inc., WildBlue said Friday.

The agreement is a big deal for WildBlue, a privately held company based in Greenwood Village, Colo. It has about 60,000 customers in the United States.

EchoStar and DirecTV have 27 million customers combined, many of them in rural areas with access to few, if any, choices for broadband Internet.

In addition to this newest distribution agreement, WildBlue inked a pact with AT&T Inc. (T) last month.

• Click here to read about WildBlue's deal with AT&T.

As part of the latest agreement, EchoStar and DirecTV agreed not to team up with any other satellite-broadband provider for the next five years. Other satellite services include HughesNet, which was formerly a part of DirecTV, as well as Starband and Ground Control.

The value of the transactions was not disclosed.

The recent flurry of deals shows just how far satellite broadband has come since its early days. In its earlier versions, satellite broadband was far too expensive to be practical, since equipment and subscription costs came to hundreds of dollars a month.

Prices have since come down, making the product appealing to a broader range of customers. However, prices are higher than cable or DSL service and speeds are lower.

WildBlue charges between $50 and $80 a month for speeds up to 1.5 megabits per second. The satellite dish and other initial equipment costs $300.

WildBlue spokeswoman LaRae Marsik said it will be up to EchoStar, DirecTV and AT&T to determine how to price their customer packages since WildBlue will be serving as a wholesale provider. The companies expect to offer service this fall.

For satellite-TV providers, the service is another way to offer a full line of products. Since undergoing a $100 billion makeover in the 1990s, cable companies have flaunted their ability to offer TV, Internet and phone service. Satellite TV, by contrast, has been more limited in its ability to expand beyond TV service.

Wildblue uses a satellite operated by BCE Inc. (BCE), Canada's largest phone company. BCE is also a major owner of WildBlue. Other investors include Intelsat Ltd., the National Rural Telecommunications Cooperative, venture capital firm Kleiner Perkins Caufield & Byers and Liberty Media Holding Corp. is owned and operated by News Corporation, which holds a controlling stake in DirecTV. Liberty Media Holding Corp., through its subsidiaries, holds a significant stake in News Corporation.