DTV Joins Forces with VSAT - Analyst Blog
November 26 2012 - 12:23PM
Zacks
DirecTV (DTV), the largest satellite TV
provider in the U.S., has launched a satellite and broadband
bundled service in collaboration with ViaSat Inc.
(VSAT), which will see the satellite provider distribute ViaSat’s
high-speed internet services along with its video packages. The
deal is mainly to focus on the rural areas where there is limited
access to wired broadband service.
ViaSat offers high speed internet service under its Exede
platform which provides maximum download and upload speed of 12 and
3 Mbit/sec, respectively. Customers can choose from different data
packages ranging from 10GB, 15GB and 25GB with the high end version
costing around $129.99. As it is a promotional offer, customers
will get a discount of $10 on all tiered data caps for the first 12
months and could avail a waiver of $49.99 set up fee if they sign a
2-year contract.
The new offering provides some relief to the surfing customers
as data consumed for surfing during the off peak hours is not
counted in the data used. Nevertheless, if the customers fail to
stay within the monthly data cap limit, then they can opt to buy an
additional 1GB data, failing which they may face reduced download
speed.
Despite impressive data speed and an attractive set up fee
discount, the data caps remain a significant downside for the
offer. This is for the reason that the offer will have less appeal
to the video streaming customers, as streaming generally consumes
huge amount of data.
ViaSat is already facing increased competition from
EchoStar Corp. (SATS) owned ‘HughesNet’ high speed
internet services. Distributing its service through DirecTV will
provide an incredible opportunity for ViaSat to popularize its
product within a wide range of customers.
DirecTV’s arch rival Dish Network Corp. (DISH)
offers similar bundled service with ViaSat under its DishNET brand.
However, DISH offers a 20GB data cap plan for a monthly cost of
$49.99 and the download speed is10 Mbit/sec.
Teaming up with ViaSat, will allow DirecTV to provide the most
robust bundled offering from any video provider in the mostly
underserved rural areas, where the demand for high speed internet
is enough. Furthermore, competing with DISH for the same market
will make DirecTV’s offering much more competitive.
We are maintaining our long-term Neutral recommendation on
DirecTV. Currently, the stock holds a Zacks #3 Rank, implying a
short-term Hold rating.
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
ECHOSTAR CORP (SATS): Free Stock Analysis Report
VIASAT INC (VSAT): Free Stock Analysis Report
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