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BellSouth to Offer DirecTV As Service

Posted on: Wednesday, 27 August 2003, 06:00 CDT

BellSouth Corp. and DirecTV Inc. have agreed to add the satellite television service to the telephone company's bundle of local, long-distance and Internet options.

The offering is expected to be launched early next year throughout BellSouth's nine-state network. Financial terms of the deal were not disclosed, and prices for the new plan have not been determined.

"The ink is hardly dry, but we're optimistic about the ability to deliver this in our packages today and what it might mean for us tomorrow," BellSouth chief executive Duane Ackerman said in an interview Tuesday.

The plan calls for BellSouth and DirecTV to discount their respective offerings if purchased as part of a package of services. BellSouth will market, sell and schedule the installation of DirecTV for its customers, who will receive a single bill for all services.

The joint venture follows similar deals announced in July, including EchoStar Communications Corp.'s partnership with SBC Communications Inc. The deal calls for EchoStar's Dish Network satellite TV service to be bundled with SBC's telecommunications services. Qwest Communications International Inc. also struck partnerships with EchoStar and DirecTV.

SBC invested $500 million in EchoStar, but BellSouth is not buying an equity interest in DirecTV. BellSouth's hope is that DirecTV customers will sign up for BellSouth services knowing that they'll get a discount for buying a package.

"DirecTV sees this strategic relationship as an important first step in the evolution of telecommunications and entertainment that will put us in a leading position against our competitors in this rapidly changing marketplace," said Eddy Hartenstein, the company's chairman and chief executive.

These alliances between phone and satellite TV companies are arising in reaction to tough competition from the cable industry, which controls more than 60 percent of the high-speed Internet access market and is expanding its efforts to offer phone service to its customers as well.

Partnering with satellite companies could be a temporary TV measure for the regional Bell phone companies until they connect more American homes to fiber-optic lines. Fiber can carry blazing fast Internet access, high-definition television and video on demand.

Though the Bells have already connected a smattering of new residential developments to fiber-optic lines, bringing fiber to most homes will be a multibillion-dollar effort that is expected to take years, if not decades.

BellSouth executives say they're moving fast in that process. The company currently provides digital TV service to 60,000 customers in Georgia, Alabama and Florida who live in neighborhoods already wired with fiber-optic lines.

BellSouth said the company is looking at possibly letting those customers receive DirecTV through those existing digital TV lines, but that option will not be offered to start. For now, those customers will need to have the DirecTV box installed if they want that service.

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On the Net:

http://www.bellsouth.com

http://www.directv.com

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