Cowboy Maloney’s to Bundle dishNET Broadband with Dish TV

"Most people say that lightning can never strike twice in the same place,” said Clayton. “The fact that we're here in Jackson, Mississippi, today dispels that belief,” he said. At the time of the DirecTV launch at the same Cowboy Maloney’s store June 17, 1994, Clayton was a top executive at Thomson/RCA, which sold DSS receivers for that service, and he was CEO at Sirius when that service launched at the same store Feb. 14, 2002. Clayton has been a “great friend” of the Maloney brothers over the years, said Cowboy Maloney’s President Eddie Maloney.

Cowboy Maloney’s never carried Dish TV before now, largely due to “loyalty” to DirecTV over the years, Maloney told us. But he said DirecTV has mostly been focused on direct sales to consumers for more than a couple of years. The retailer, which will sell Dish TV and dishNET at 11 of its 12 Jackson-area stores, removed DirecTV’s already limited presence from its sales floor last week, he said. The retailer’s decision to take on Dish products was mostly because of its strong relationship with Clayton, he said. The 12th location of Cowboy Maloney’s, in Ridgeland, Miss., is a Viking Store that sells only appliances. Maloney estimated that about 40-50 percent of Mississippi residents can’t access high-speed Internet now, creating a huge market opportunity for dishNET there.

"There'll be a lot of folks up north that say” broadband isn’t new, said Clayton. “Of course it’s not a new thing if you live in metropolitan L.A., Chicago, New York and even right here in Jackson,” he said. But he said if you live in “secondary, tertiary markets” -- even 30-40 miles outside Jackson -- people can’t access high-speed Internet service. There are 10-15 million U.S. homes -- mostly rural -- that have “at best slow-speed DSL,” he said. Those consumers not having good, high-speed Internet service for entertainment and educational purposes is “simply un-American,” he said. Dish is going to provide such service to these consumers with “faster speeds, lower cost and more capacity,” he said. Those were the three things that consumers in rural areas indicated to Dish that they wanted most from a high-speed Internet service, said Dish Chief Marketing Officer James Moorhead.

In rural and outlying suburban regions nationwide, dishNET will start at $39.99 a month (plus equipment fees) for 5 Mbps/1 Mbps download/upload speeds and a data plan of 10 GB, when bundled with Dish’s America’s Top 120 or higher satellite TV programming packages and with a two-year agreement, Dish said. “Most satellite customers can upgrade” to a 10 Mbps/1 Mbps plan available with 20 GB of data for $49.99 a month as part of a bundle with Dish TV, it said. As part of a “good,” “better” and “best” strategy, Dish will also offer a high-end plan with 10 Mbps/2 Mbps and 30 GB of data at $69.99 a month if bundled with Dish TV. DishNET will cost an extra $10 per plan for customers who don’t want to bundle it with Dish TV, making it $79.99 for the most expensive plan, Dish said. The speeds that dishNET provides are “up to 3x faster than DSL,” Dish said.

DishNET “seems competitive,” Wells Fargo analyst Marci Ryvicker said Thursday. With or without the bundling, the pricing “compares favorably to current service provided” by Starband that offers 0.5-1.5 Mbps downstream for $50-$100 a month, she said. “We see only upside potential here” for Dish because the company “will now have a double play product,” she said, predicting it’s “likely to expand to a triple play” product via VoIP. Dish, however, said nothing about VoIP service at the launch.

The speeds that dishNET will be offered at are “fast enough for typical Internet applications,” including social media, telecommuting, music streaming, online video streaming and VoIP services, said Dish. But spokesman Dave Arland said the service’s small latency could be problematic for multiplayer online gaming. Also, while it can be used for movie streaming including Netflix or Dish’s own Blockbuster service, dishNET’s monthly data cap could become a factor for customers planning to view multiple movies each month, he said. They would have to pay for additional data if they go over the cap.

With dishNET, the “14.5 million underserved rural residents” of the U.S. will “no longer need to wait for broadband build out,” Dish said. The service is “ideal for rural residents underserved, or unserved, by wireline broadband,” and offers “4G-level speeds that are about 50 percent faster than the typical residential broadband connections in American homes,” it said. Almost one of four rural U.S. residents lacks a high-speed connection, so “reaching these underserved markets is vital,” said Clayton. Dish pointed to the FCC reporting in August that 19 million Americans lacked access to high-speed Internet. The FCC highlighted that 23.7 percent of rural residents lacked broadband access, said Dish.

The new service will help “close” the “digital divide,” allowing families in rural areas to access high-speed Internet service,” Jackson Mayor Harvey Johnson (D) said at the launch. “This is a very big deal,” said Jeffrey Joseph, CEA senior vice president-communications and strategic relationships, paraphrasing a comment that Vice President Joe Biden (D) once made about the Patient Protection and Affordable Care Act. The U.S. CE industry will ship more than 350 million products with some degree of Internet connectivity this year alone, he estimated. The Internet is a “tremendous growth engine” and “high-speed access is a super highway,” but “sadly, too many of our fellow citizens have been left waiting at the on ramp,” he said. The U.S. now ranks only 18th globally in fixed broadband penetration, he said, citing the findings of a recent ITU report.

A local family received a preview of the new service ahead of its launch, said Dish. Jeff Thigpen, a high school athletic director in Ridgeland, Miss., got to try dishNET and the Dish TV service with Dish’s Hopper Whole-Home HD DVR, it said. His kids go to school in nearby Jackson and frequently have to use the Internet for homework, but the only way they were able to get Internet access at home before dishNET was by “tethering” their iPhones to a computer, Thigpen said at the launch. Tethering a cellphone to a computer is now the only way that many rural U.S. consumers can get Internet service, with the only other options until now being slow satellite service or dial-up, said Dish.

DishNET represents an expansion of Dish’s satellite services. The focus on bundling dishNET with Dish TV was designed, at least in part, to avoid it competing with EchoStar’s Hughes Communications and ViaSat, Vivek Khemka, Dish vice president-product management, said last week (CED Sept 19 p4). “Our objective is to bundle,” Clayton said Thursday. In addition to generating more money, bundling “mitigates the chance of churn,” he said.

Dish will use EchoStar’s EchoStar-17 and ViaSat’s ViaSat-1 satellites at 107.1 and 115 degrees west to deliver dishNET, it said. It will use the EchoStar-17 satellite for the Jackson market, Khemka told us Thursday.

The company will back the dishNET launch with a “multi-million dollar” marketing campaign that Moorhead said “will surround consumers 360 degrees” with TV, radio, print and online ads, including social media. There will be “millions” spent on the campaign in Q4 this year, said Clayton. But, unlike past Dish campaigns, “I'm not going to advertise in midtown Manhattan or downtown Chicago or L.A. or Dallas or San Francisco,” he said. The focus will be on advertising in “more secondary, tertiary markets,” and the TV spots “will mostly be on our own Dish network,” he said.

Cowboy Maloney’s will run its own ads also, including a TV spot that started airing late last week, said Maloney. The retailer will also run newspaper ads and host promotional events including the launch event where American Idol contestant Skylar Laine was to sign autographs late Thursday, he said. He expected a large turnout for the event. DishNET was prominently displayed at the front of the store on Thursday and he said it will likely remain in that spot “for a long time."

"Our first priority is with residential consumers,” but Dish is looking to offer a business-to-business version of the broadband service also, said Clayton. There would need to be a “higher data cap” for such a plan, he said. It’s ready to offer such a plan now, but Dish wants to see how much demand there is for it first, he said.

Regional retailers like Cowboy Maloney’s tend to “provide a greater level of customer service” than large national retailers, said Clayton. But he told us Dish has had discussions with national retailers including Best Buy and Walmart to get its products into those stores. If it does get Dish products into those stores, though, it will “probably” be with different products than regional dealers carry, he said. “We think we can get into Best Buy probably with something like” the Tailgater antenna and receiver that enables portable HD TV service, he said. “We have talked to them about that. We talk to all the major retailers,” he said. “It’s tough to unseat DirecTV” because they've had a national retail presence “for a long time,” he said. “We're really looking at different alternatives/methods of distribution,” he said. There’s “ongoing discussions” with Walmart also, he said.

Dish will possibly add dishNET to at least some of its Blockbuster stores, Clayton told us. There are now 850 Blockbuster franchise stores and a total of about 1,000 Blockbuster stores combined, he said. If it does sell dishNET at Blockbuster stores, it likely won’t be in major metro markets, he said. “If I had a Blockbuster store here in Jackson, the answer would be yes,” it'll sell dishNET there, he said.

The dishNET bundling won’t include a terrestrial wireless service. Dish spent $3 billion to acquire 40 MHz of wireless spectrum in buying assets of TerreStar and DBSD, industry analysts have said. It also bought 700 MHz licenses in 2008 for $712 million. Dish sought a waiver of satellite spectrum rules from the FCC that would allow it to operate the wireless service in the 2 GHz band. As a condition for its approval, the FCC has sought a 5 MHz upward shift at 2000-2020 MHz. Dish has criticized the FCC’s suggestion for “needlessly injecting serious regulatory and technical obstacles into Dish’s planned deployment” of the wireless network. Any wireless service that Dish offers “depends on” its “ability to repurpose satellite spectrum,” Arland, the Dish spokesman, said Thursday. “Such a service is probably a few years away,” he said.

Customers who buy dishNET will have to agree to a 24-month contract, just like with its Dish TV service, said Clayton. A customer who breaks the contract would have to pay a $420 fee, although it’s prorated based on how long the person has had the service, said Khemka.

Meanwhile, there was a hearing last Friday in Fox Entertainment’s bid to get a preliminary court injunction barring Dish’s PrimeTime Anytime service. A U.S. District Court judge in Los Angeles “heard arguments and said she would rule on the question of an injunction later,” said Arland. PrimeTime Anytime, which became available in May via Dish’s Hopper satellite receiver, is available to Dish subscribers with AutoHop, which strips out commercials from copies of TV networks’ programs, Fox has claimed. Fox, CBS and NBC Universal each sued Dish separately in May, with NBCU arguing that the satellite service operator didn’t have the authority to tamper with broadcast replays. Dish also has filed suit against the networks, including ABC, seeking a court ruling that AutoHop doesn’t violate copyrights since fast-forwarding through commercials has been available since the VCR’s arrival. Dish has gone full-speed ahead with its Hopper sales and seen little impact from the suits, Clayton told us. “I haven’t found one consumer who told me he didn’t like skipping commercials,” he said.