Facing mounting competition from cable and telecom companies, it is no surprise that industry rumors resurfaced that AT&T may buy Echostar outright rather than merely reselling the satellite television company’s service. Despite the speculation, Echostar remained steadfast as we went to press that it will remain independent.

Such rumors are not new for the U.S. direct-to-home TV providers. In early 2003, when DirecTV was in the acquisition spotlight, one of the rumored bidders was SBC. The combination was attractive because of its potential to provide a triple-play offering of voice, video and data. However, as negotiations heated up, SBC dropped out of the bidding and News Corp. acquired DirecTV.

Even thought SBC’s bid failed, such a transaction has even more merit today. While AT&T and Echostar already are partners (In 2004, the companies launched a co-branded satellite TV service for SBC customers called the SBC/DISH Network), the joint venture has not made AT&T a serious player in video, which is why it is looking to acquire.

Echostar, with 12 million subscribers ranking it the second-largest satellite-TV service provider in the United States, also needs deeper pockets to compete with the News Corp.-owned DirecTV and the U.S. cable TV industry, which maintains a commanding share of HD content services. Even though Echostar unveiled several new HD television offerings recently, its long-term success in the HD field will require additional financial support. An acquisition by AT&T would provide Echostar with a more stable path for strategic growth, further enabling Echostar to compete more effectively in the HD market.

AT&T would gain a system with an existing infrastructure to offer more HDTV channels nationwide. Likewise, the telecommunications giant could continue to offer satellite television to its current customers, plus it could expand services to the rest of the Baby Bells, growing its communications market share with a quicker return on its investment – something that telecommunication industry analysts cite as paramount for AT&T, which has continually frustrated its shareholders with its business practices.

Satellite industry executives need to take note of such potential developments. The greying of transmission portal boundaries in the communications industry will continue to have a direct impact on global satellite endeavours. Convergence is underway, and customers do not care how content is delivered. What used to be market segments and services dominated by satellite for decades are now becoming more attractive to the terrestrial and wireless providers. If strategic partnerships were yesterday’s preferred method of market expansion, being acquired may become tomorrow’s reality.