AT&T Inc. is considering expanding its partnership with satellite TV provider EchoStar Communications Corp. to the southeast United States, which could come at the expense of an existing deal with DirecTV Group Inc.
The region is currently served by DirecTV through a multiyear marketing partnership with phone company BellSouth Corp., which AT&T acquired in January.
Analysts have said DirecTV could lose that contract because AT&T is expected to choose its existing partner, EchoStar, as its single satellite ally.
AT&T's group president for operations support, John Stankey, said on Tuesday the company was in discussions on the issue and would make a decision in the next couple of months.
"The relationship we have with EchoStar evolves constantly. I mean we are always looking at new business opportunities and certainly by adding the Southeast region -- and that's one thing we are exploring," Stankey told the Reuters Global Technology, Media and Telecoms Summit in New York.
"We're evaluating what we want to do with the legacy BellSouth territory going forward with DirecTV or EchoStar."
AT&T's rollout of its own advanced Internet and video service, called U-Verse, has also raised expectations that the top U.S. phone company would consolidate its satellite partnerships.
AT&T recently raised its spending plan for U-Verse to $6 billion to $6.5 billion for 2004 through 2008, up from $1.4 billion. At the same time, it trimmed its target of homes "passed," or those accessible to the service, to 18 million from 19 million.
Stankey said the increased spending forecast was due to various factors, including higher construction costs, but said the amount was still dramatically lower than what it would have spent on an all-fiber network.
Compared to rival Verizon Communications Inc. AT&T has taken a more cautious approach to infrastructure spending for its new video service, making use of some existing copper lines. Verizon boasts an all-fiber, or "fiber-to-the-home," network.
"The spend that we're doing is still substantially less on a per-home-invested basis than a fiber-to-the-home type approach, and we're still very confident that this is the right direction to go," Stankey said.
He said, on average, AT&T's network strategy costs about a third of an all-fiber network.
Spending per U-Verse subscriber was in the ballpark of analysts' estimates of $250 to $350, he said. "It would be within that range," he said.
Stankey also defended the U-Verse network's ability to cope with consumer needs, regardless of demands for multiple high-definition channels and other activities that require fast Internet speeds.
He expected AT&T would soon catch up with Verizon in its network expansion, saying it would be marketing and selling to more customers in the early part of 2008.
