DirecTV tests IP telephony

By Marguerite Reardon, CNET News.com
Published on ZDNet News: August 30, 2006, 10:55 AM PT

DirecTV is set to test an Internet phone service through its joint venture with Hicks Holdings as it tries to head off competition from cable operators using bundled services to attract and retain customers.

The joint venture, called DirecPath, will use voice over Internet Protocol equipment from Vistula Communications Services to run a six-month pilot program of the technology. If the trial goes well, voice services could be expanded to a larger portion of DirecPath's customers, Vistula said in a statement.

DirecPath was formed by DirecTV and Hicks in May to provide bundled services such as broadband Internet access, phone service and video to multiple dwelling units (MDUs) and gated-community residents across the United States. DirecTV has formed partnerships with phone companies Verizon Communications, Qwest Communications International and BellSouth to sell a bundle of broadband, telephony and TV services to single-family homes.

DirecTV spokesman Robert Mercer said the trial with Vistula will likely be one of several by the joint venture to test new services. But he emphasized that DirecPath's efforts don't reflect a wider agenda from DirecTV itself to enter the VoIP market.

"DirecPath is exploring one of many technology solutions to offer a competitive bundle in the MDU market and does not represent a broader DirecTV strategy to offer an Internet phone service to its customers," he said. "Vistula is one provider that DirecPath chose to try on a short-term trial basis; there will likely be others."

Satellite TV providers such as DirecTV are under pressure to bulk up their services as they face tough competition from cable operators, which can offer customers a triple-play package of TV, broadband and now telephony.

Currently, satellite companies offer only TV service and partner with phone companies to deliver broadband and voice services. But satellite TV providers could be in trouble down the road as phone companies such as Verizon and AT&T upgrade their networks to deliver TV service.

DirecTV seems to recognize the importance of the bundle. The company said it will begin marketing the package offered through its telephone partners, in addition to letting partners market the services. Until now, DirecTV has relied on the phone companies to sell its TV service in the telephone company's region.

But DirecTV is also looking at longer-term solutions to its bundle problem. Earlier this month, it teamed with EchoStar Communications, another satellite TV provider, to bid on wireless spectrum being auctioned by the Federal Communications Commission. But after only a week into the auction, the companies pulled out of the bidding process.