The cold war between DirecTV Group Inc. and EchoStar Communications Corp. has thawed as the two are joining forces to bid in the Federal Communications Commission's auction of 1,122 wireless spectrum licenses. The two satellite TV providers have formed a venture called Wireless DBS reportedly to bid about $1 billion for spectrum. Both are seeking the highly sought after prize to remain competitive with rival cablers and the Bells, who are beginning to roll out TV service. Satellite TV service is a one-way technology preventing the two companies from branching out into broadband Internet or voice communications giving both the cablers and Bells an upper hand. As a matter of fact, News.com reports that both satellite TV providers have seen new subscriptions trail off since cablers introduced phone service a few years ago. It is too early to tell if AT&T's and Verizon Communications' nascent TV services are affecting DirecTV or EchoStar, but odds are good that once the services reach critical mass — rather than the current pockets of service in the Mid-Atlantic and South — they will further erode the market for satellite TV. The detente between the two rivals could lead to future discussion of a possible merger. Unlike the last attempt that was thwarted by antitrust concerns, another merger could breeze through the approval process assuming regulators consider the Bells' new TV service as rivals to satellite TV. Obviously, if new subscriptions are already slowing because of cable's phone service push, then the two companies may have a potent new argument to support a merger — especially if they win enough wireless licenses to offer voice and broadband. Besides, agreeing to merge after winning wireless licenses would mitigate the problem of divvying up the licenses. —Matthew Wurtzel
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