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News Analysis
DIRECTV's Net Is Still a Loss
By Swanni 

Washington, D.C. (May 17, 2012) -- DIRECTV yesterday announced that it can now offer Broadband Internet and video service bundles to all consumers "no matter where they live in the United States."

Based on that statement, the satcaster should expect to enjoy a major increase in orders of its Net-based Video on Demand service. As of now, less than 10 percent of DIRECTV's subscribers have their set-tops connected to the Net. But with the blanket Internet coverage now promised by DIRECTV, the number should jump along with the VOD orders. Right?

Not so fast.

The news that prompted DIRECTV's bold statement was that it had signed agreements with satellite Broadband services Hughes and ViaSat. DIRECTV is expected to market the two services, which promise speeds of 10 Megabits per second, largely in rural areas.

The satcaster hopes that the rural coverage coupled with its 'triple play' partnerships with several telco operators will enable it to deliver Internet and video service to anyone, which in turn would increase subscribers' use of DIRECTV's Net-based services such as VOD.

"We look forward to offering every single DIRECTV customer access to fast, affordable broadband options through DIRECTV, no matter where they live," Oswin Eleonora, senior vice president for DIRECTV's emerging market, said in statement. "With greatly improved capacity and speeds, satellite broadband services provided by ViaSat and Hughes will fully support our customers' connected home experience, enabling them to access a host of features like YouTube, Pandora, social TV apps, and more than 7,000 VOD titles."

But here's the problem. The Triple Play partnerships with the telcos is having limited success in getting DIRECTV subscribers connected, as evidenced by the pesky fact that only 10 percent of its subscriber base have hooked up. There are many reasons for this, from competition from other Internet service providers such as the cable operators to some consumers being unwilling to purchase a Triple Play package, which can be more costly.

Another problem: Even if they have a wireless Internet installed in their homes, some DIRECTV subscribers are uncertain how to connect their set-tops to their home networks. DIRECTV's set-tops do not have a wireless feature, which means subscribers have to buy a wireless adapter and install it to their boxes. This extra step is likely causing some subscribers to hesitate.

Their other option would be to connect the Internet cable directly to the back of the set-top but that's not always convenient.

To give you some understanding of how unsatisfactory the Triple Play program is, DIRECTV had planned to partner with Verizon for a service that would
include a satellite dish to get DIRECTV's video service and a rooftop radio antenna that connected to Verizon's LTE 4G Broadband network. This would have made it particularly easy for the average subscriber to get connected.

But Verizon ditched the plan when it decided instead to partner with three cable operators on a wireless spectrum service. (The blow was a bitter one for DIRECTV, which recently complained to the FCC about Verizon's cable partnerships, reports FierceCable.)

And now DIRECTV is trying to improve Internet coverage in rural areas with its new partnerships.

Well, the new deals might help. But coupled with the Triple Play partnerships, it still will not give DIRECTV a serious Internet plan, much less one that could theoretically go in any U.S. home.

So with those 7,000 VOD titles still sitting in DIRECTV's menu, the satcaster needs another announcement that would truly allow it to proclaim that it can offer Internet service to anyone.
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