EchoStar adds telco in alliance vs. cable.(Business)

In a deal that expands the alliance between the regional phone companies and satellite TV, EchoStar inked a deal with Century-Tel that will allow the telco to sell Dish Network service in 22 states.

CenturyTel, the nation's eighth-largest fixed-line telephone company, will begin offering its customers Dish Network service along with phone and DSL service on a single bill beginning at the end of the year, a deal that could place some additional pressure on cable operators in those regions.

It's the second deal EchoStar has signed with one of the regional phone companies, which are seeking to enter new businesses as their traditional fixed-line phone business dwindles and cable companies push into their territory with their own broadband-based phone service.

EchoStar has deals with SBC Communications and CenturyTel, while DirecTV inked Verizon and Bell South. Qwest signed distribution pacts with both satellite operators.

EchoStar has signed up 121,000 additional customers since March through the venture with SBC, and the companies are developing a unified set-top box that would both receive satellite TV and provide a high-speed Internet connection that would allow consumers to download movies.

Like the SBC deal, CenturyTel will provide the single point-of-contact and billing for the service. But Monroe, La.-based CenturyTel, with 2.3 million access lines, is a much smaller player than SBC, and its subscribers skew rural, leading some analysts to predict fewer subscribers will result from the venture.

But the venture could give EchoStar a stronger position as DirecTV acquires a million rural customers from Pegasus Communications. It's a valuable way to shore up the franchise at a time when DirecTV is likely to be a more significant competitor than it has been in the past" said Craig Moffett, analyst at Sanford C. Bernstein.

EchoStar topper Charlie Ergen said the deal gives the company "additional leverage" in satellite's fight with cable.

CenturyTel made a $25 million investment in EchoStar in the form of a note that can be converted into EchoStar stock at $62.70 per share or redeemed for cash.