Satellite TV guys say: Why not WiMAX?

WiMAX gets some love as DIRECTV, EchoStar, and Clearwire announce a plan to …

WiMAX is about to get a prominent boost as a serious broadband alternative. At least that's what DIRECTV, EchoStar (owners of DISH Network), and WiMAX provider Clearwire hope will result from a deal announced today. DIRECTV and DISH Network will begin offering Clearwire's WiMAX service to their satellite TV customers, while Clearwire will be able to offer satellite TV to its WiMAX customers.

DIRECTV and EchoStar have struck similar deals with broadband providers in the past, as both companies lack the infrastructure to offer high-speed Internet themselves—Qwest customers and AT&T Homezone customers can currently order satellite TV as part of a triple-play service bundle. It marks the first deal of its kind for Clearwire, which has until now focused exclusively on wireless broadband service in the markets it serves.

So far, Clearwire's service covers 9.9 million people in 39 US markets, and the company had 258,000 WiMAX subscribers as of the end of the first quarter of 2007. Given those numbers, the deal isn't going to give DIRECTV or EchoStar any significant additional exposure. It will help Clearwire compete better against local cable companies and telecoms that are able to offer bundled services.

At the same time, this deal could give a huge boost to WiMAX's fortunes in the US, especially if DIRECTV starts promoting WiMAX as heavily as it has advertised satellite broadband (and if it marks the end of those annoying satellite broadband commercials, that's even better).

Both DIRECTV and EchoStar have been of the opinion that they need to be able to offer broadband service of their own. The companies made a play in last summer's spectrum auction, but the action got too expensive and they dropped out fairly early in the process. More recently, DIRECTV has considered broadband over power line as a possibility, but the partnership with Clearwire is likely intended to give both satellite TV companies a better idea of how attractive WiMAX really is as an alternative to wired broadband. If consumers respond well, DIRECTV and EchoStar may end up making a significant investment in the technology, either with Clearwire or Sprint—whose own WiMAX plans are now coming under increased scrutiny (subscription) from investors due to its high cost.

With its WiMAX service, Clearwire targets two markets: those who are out of the reach of wired broadband service and those who are looking for an alternative to cable and DSL providers. The bundled service is inteded to make its offering more attractive to the latter group.

Clearwire plans to expand its reach into the southeastern US using a significant chunk of unused 2.5GHz spectrum recently acquired from AT&T. Clearwire's service is competitive in terms of speed with lower-tiered DSL offerings, but it's priced a bit higher—the company offers a 768Kbps/256Kbps Value tier for $29.99 per month and a 1.5Mbps/256Kbps tier for $36.99 per month. It's cheaper—and slower—than most cable Internet service. Then again, it's not going to be competing with FiOS or U-Verse in the near term.

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