Satellites Crave to Do More

DISH Network (Nasdaq: DISH  ) wants to be your new broadband provider.

The country's second-largest satellite television provider is expected to roll out dishNET next week, according to this morning's Wall Street Journal.

As you can imagine, a nationwide broadband service relying on satellites won't necessarily be fast. Satellites may serve DISH Network and DIRECTV (NYSE: DTV  ) well when it comes to television -- and Sirius XM (Nasdaq: SIRI  ) when it comes to radio -- but the connectivity speeds won't be in the vicinity of what fiber-laying cable and telco giants can offer.

DISH's service will offer speeds between 5 and 10 megabits per second. The prices will be reasonable, starting at $39.99 for DISH subscribers and $49.99 for non-DISH customers.

DISH is basically aiming for rural markets where it isn't financially feasible for cable or telecommunications companies to offer broadband service. It's not much of a market, obviously, but this is probably the same rationale that a good-sized chunk of DISH's 14 million subscribers use in going with the company as their TV provider.

The company can use the boost. Its latest quarter was a disaster. Revenue dipped slightly and profitability fell well short of what Wall Street was expecting, as the service once again lost more subscribers than it added.

Even DIRECTV -- the industry leader that shocked investors with its first net decline in domestic subscribers in more than a decade this summer -- is jumping into the market. DIRECTV plans to roll out its own nationwide broadband service early next year.

DISH Network can make a play in this niche now that sibling EchoStar (Nasdaq: SATS  ) has launched a new satellite that has more processing power than older satellites.

Why shouldn't the suite of services grow more dynamic as satellites become more powerful? Sirius XM announced this week that it would be entering the automotive telematics market, and that should evolve over time by bridging cellular and satellite access.

The rural market may be small. There may even be a bigger potential for urban DISH customers to sign up for dishNET as either a backup broadband provider or a secondary source now that companies are instituting usage caps.

It's still worth a shot, especially at a time when cord-cutters need better reasons to stick with their TV service providers.

Watch this space
I recently put out a premium report on Sirius XM Radio, detailing the challenges and opportunities that await investors that are both long and short the dynamic media giant. A year of updates is also included with the report. Check it out now.

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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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