Our take...
The deal was originally struck as a defensive measure by the two companies, which individually were not able to offer the range of services made available by the cable companies they were competing with. The agreement ensured that AT&T could offer TV bundled with broadband and telephony, also giving Dish Network a subscriber addition boost; however, AT&T has since launched its own TV service, U-Verse TV, to which a Dish Network triple-play bundle is a direct threat. Consequently, the giving of notice by AT&T can be seen as a move to protect its nascent IPTV service.

The giving of notice does not necessarily spell the end for the Dish-AT&T partnership, however. Under the terms of the agreement, AT&T was contractually obliged to give a six-month notice period of termination in the event that it wanted to renegotiate the deal. As U-Verse is only available in portions of the phone company's network, and rollout will only ever see 30m homes passed (AT&T has roughly 60m wireline customers), an agreement that gives precedence to the marketing of U-Verse in deployed regions, but reverts to Dish-only in non-U-Verse territories could well be implemented.

Furthermore, AT&T's move casts a shadow over a similar reselling agreement between Verizon and DirecTV. Verizon currently acts as reseller for DirecTV TV packages, bundling them with its own broadband and telephony services. Verizon, however, like AT&T now has its own, successful TV service, and as with AT&T, its satellite partner's TV service is now looking like competition. Consequently, it would be unsurprising if Verizon made a similar move toward terminating or at least modifying its deal with DirecTV.

Interestingly, the move from AT&T could signal the beginnings of the first significant impact of IPTV on the US satellite business. To date, only cable has seen a drop in pay-TV customers, with satellite seeing only a slight decrease in net additions since the launch of U-Verse TV and FiOS TV. If both Verizon and AT&T were to drop their agreements with the satellite firms, net satellite subscriber additions would suffer even further. As such, both Dish and Verizon would be best advised to keep some form of marketing agreement, even one with limited geographical coverage, in place with the telcos.