DirecTV 'close to wireless strategy'
Rupert Murdoch, chairman and chief executive of News Corp, said on Monday the group's DirecTV satellite television arm was close to deciding a strategy on how to enter the wireless high-speed internet market, with a plan due within two months.
Context & Ripple Effects
This lands mid-arc for News Corp. In December 2005 alone, Murdoch appeared alongside eBay's Meg Whitman predicting that voice calling would soon become nearly free, and DirecTV paid a record $5.34 million settlement to the FTC over Do Not Call rule violations — the largest civil assessment the agency had ever obtained. A wireless high-speed internet decision is therefore about more than bandwidth: it is about whether a satellite distributor can assemble a full communications bundle while its cheapest customer-acquisition channel sits under regulatory constraint.
The significance is partly the public deadline. By committing to a plan within two months, Murdoch converts an internal review into a measurable promise, and puts News Corp's capital-allocation choices for DirecTV — build, partner, or buy connectivity it does not own — under investor scrutiny.
First-order effects
- DirecTV faces a two-month clock to pick an entry path into wireless high-speed internet, deciding whether News Corp's satellite arm can compete beyond standalone video.
- DirecTV enters that push hampered on the sales side: its December 2005 FTC settlement over Do Not Call violations restricts the telemarketing engine behind its subscriber additions.
Second-order effects
- If DirecTV attaches data to its satellite video base, it plays into the thesis Murdoch and Whitman advanced in December 2005 — that voice becomes nearly free once it is bundled as a line item rather than sold standalone.
- Any carrier or spectrum holder DirecTV partners with gains access to a large installed satellite household base, shifting bargaining leverage between connectivity suppliers and the distributor that delivers them customers.
Third-order effects
- If satellite distributors need to own or rent a broadband pipe to stay competitive, the pay-TV industry sorts into companies controlling both content and connectivity versus those exposed as single-product assets.
- The FTC's Do Not Call action signals regulators extending oversight from how pay-TV firms market to how their converged communications offerings behave.
The trend: Pay-TV distributors are being pushed to bolt broadband onto their bundles, turning satellite operators into connectivity companies or candidates for consolidation.