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Blockbuster's Ready to DISH Out Some Payback

Dan Radovsky
November 8, 2011

Revenge is a dish best served cold, the saying goes. So it must have been savory, indeed, for Blockbuster to watch Netflix (Nasdaq: NFLX  ) -- the company whose paradigm-shifting DVD mail order business help put it into bankruptcy -- go through its recent self-inflicted injuries.

And to sweeten its Schadenfreude, DISH Network (Nasdaq: DISH  ) , the company that acquired Blockbuster out of bankruptcy earlier this year, is thinking about having Blockbuster fly the flag for its proposed live cable-channel streaming service, becoming -- it would hope -- the brand with the clout that Netflix once had.

Going this route gives DISH greater flexibility in packaging channels for its subscribers, offering them more flexibility. Right now, cable TV bundles channels together in a way that forces its customers to pay for many they don't want just to get the ones they do. Broadband-only live video streaming could let DISH offer channels on an a la carte basis. This would put pressure on cable channels to do the same or risk losing even more customers than they have already.

Ground control to LTE
DISH has also proposed its own mobile broadband wireless network. This one would use 4G LTE technology delivered by a satellite/terrestrial combination similar to the network that LightSquared has proposed. Both of these networks will need FCC approval, which may not come so readily.

LightSquared's LTE network has already come under fire from the GPS industry, which claims that LightSquared's signals would interfere with GPS systems.

DISH's proposed LTE network, on the other hand, has received support from the U.S. GPS Industry Council. But DISH had planned on using spectrum and other resources it would get from its proposed acquisition of two other bankrupt companies: satellite operators TerreStar and DBDS. These deals haven't completed yet, and it wasn't until recently that DISH settled with Sprint Nextel (NYSE: S  ) over TerreStar's and DBDS's unpaid bandwidth fees.

Kansas cities, here I come
DISH is not the only company seeking live streaming broadband-only rights or working to create a proper streaming delivery system.

Google (Nasdaq: GOOG  ) has been building an experimental 1Gbps fiber-to-the-home -- similar to Verizon's (NYSE: VZ  ) FiOS but much faster – in Kansas City, Mo., and next-door Kansas City, Kan. That network will be ready for at least partial operation in early 2012. The Wall Street Journal reported that Google will use that high-speed network as a laboratory for its own live video-streaming venture.

Apple (Nasdaq: AAPL  ) , of course, has the device right at hand -- literally -- to take advantage of a full cable operator's content by streaming, at least on an individual basis: the iPad. For the full living room/theater experience, I guess we'll have to wait for a real Apple-worthy TV to finally show up.

If you can't fight 'em, join 'em
The cable-company industry is gazing into its crystal ball and seeing its own predictable, if not irreversible, fate. Operators are watching their TV customers slip-sliding away to streaming-video-land. Comcast (Nasdaq: CMCSA  ) and Time Warner Cable, for example, lost 238,000, and 128,000 customers, respectively, in the second quarter. But they have also been watching their broadband su