FCC Building New DBS Rules -- Will Operators Come?
The proposal on the FCC's Thursday agenda to update and streamline DBS rules comes as that industry's future is increasingly a question mark. An FCC official told us the vote (see 1909050043) is likely 5-0 and the item is seen is a housekeeping matter completing work of aligning DBS registration rules and procedures with other satellite services.
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At an analyst event last year, AT&T officials said it didn't plan to launch further DirecTV satellites, citing increased customer shifts from traditional MVPDs to over-the-top options. Asked about future launches, Dish Network didn't comment. In comments in the proceeding, AT&T didn't discuss the possibility of future satellites, focusing instead on preventing incumbent DBS services if it lifts the freeze on DBS licensing. Dish -- a MVDDS 5G Coalition member -- in its comments also said nothing about its plans but discussed protecting incumbent MVDD service in the 12.2-12.7 GHz band from interference from new DBS services potentially in closer-than-traditional orbital slots.
Dish and DirecTV have had subscriber declines, but they remain significant players in the pay-TV sphere, said Ampere Analysis analyst Daniel Gadher. DBS seems unlikely to be the route companies continue to invest in, he said. Another DBS entrant in the U.S. market is unlikely since even the major U.S. operators are drifting increasingly to OTT services, he said. He said subscriber losses could level off among pay-TV operators if they make it part of a quad play bundled with OTT and other services. That could be more difficult for Dish, and talk of it combining with a mobile operator has been relatively muted in recent months. Dish would become a mobile operator as part of the proposed T-Mobile buy of Sprint (see 1907260071)
Given those dropping subscriber numbers, it's tough to see anyone else entering the market, said Jimmy Schaeffler of Carmel Group. The analyst said the only possible option for DBS success is pairing the video service with a wireless or wireline service, and a DBS entrant might have to partner with a communications company. Schaeffler said the FCC should consider rules and procedures to incentivize such hybrids. He said the agency has been "silo-like" in its treatment of cable, satellite, wireless and fiber as distinct, separate areas instead of taking a more cross-technology approach.
AT&T ended Q2 with 21.6 million subscribers to its premium TV offerings, not counting the DirecTV Now streaming service, down from 23.6 million a year earlier and 24.7 million two years earlier. Dish ended Q2 with 9.56 million Dish TV subscribers, down from 10.65 million a year earlier and 13.3 million pay-TV subscribers two years prior, including Sling TV subscribers.
There's no sign of interest from international firms entering the U.S. DBS market or interest in providing DBS outside the U.S., S&P emailed, noting AT&T's canceling its IPO of DirecTV Latin America. It said the FCC proceeding might be more about aligning DBS with geostationary orbit (GSO) fixed satellite service (FSS) rules than enabling a new DBS provider.
Under the draft report and order, DBS licensing would adopt the same first-come, first-served approach used for GSO FSS, with the FCC saying there's little technical difference between the system types. It would extend the same GSO FSS milestone and bond requirements to DBS and the same 15-year license terms instead of the current 10 years for DBS. And it would adopt ITU criteria for allowing new DBS service with reduced spacing using orbital locations less than nine degrees apart.