AT&T TV Streaming Service Going National in February

AT&T TV is getting ready for the big time.

In the wake of recent pilot launches in major markets such as New York City, the company's new OTT-delivered pay-TV product will debut nationwide in February, Jeff McElfresh, CEO of AT&T Communications, said Thursday at the Barclays Global Technology, Media and Telecommunications Conference.

McElfresh referred to AT&T TV as a "capex-lite" product, as acquisition costs for it are anticipated to be about half of what they are for the legacy DirecTV satellite TV business.

"The... programming lineup is every bit as good and the user experience is future-leaning," he said.

AT&T TV is being trialed in more than a dozen US markets. The OTT-delivered pay-TV service runs on a 4K-capable Android TV box and features a cloud DVR. AT&T TV currently offers a handful of service tiers (starting at $59.99 per month on up to almost $80 per month), allows for up to three concurrent streams and works on any broadband connection. AT&T is also expected to encourage those customers to bundle in HBO Max, a new premium SVoD service that will launch next May.

AT&T TV runs on a 4K-capable Android TV device that is integrated with Google Assistant, a voice remote and access to third-party apps.
AT&T TV runs on a 4K-capable Android TV device that is integrated with Google Assistant, a voice remote and access to third-party apps.

The company also believes that the new product will help it cut its steep pay-TV subscriber declines -- AT&T lost 1.3 million pay-TV subs in Q3 2019 alone. "2019 will be the peak year of subscriber losses on the legacy television platform," McElfresh predicted.

While AT&T TV will be available on a standalone basis under that bring-your-own-broadband model (the company recommends 8Mbit/s for "optimal viewing"), AT&T clearly wants to bundle the service where it provides its own broadband service.

Fiber fixations
On that bundling side, AT&T also wants to use the new streaming pay-TV service as an incremental add-on to its fiber-powered broadband offering, which, the exec says, continues to have success in snapping up market share.

AT&T, he said, is driving towards a goal to have 50% broadband share over a three-year period in its fiber footprint. As a proof point, he said AT&T is approaching that penetration mark in areas where the company planted fiber back in 2016.

"Where we have fiber, we win. And we win handily," McElfresh boasted.

AT&T appears to be beating itself in a sense. Back in June, industry analyst Craig Moffett found that a good chunk of new AT&T Fiber subs upgraded from the company's older DSL or U-verse technologies rather than customers who defected from cable or another broadband competitor.

And while AT&T will look to 5G to support fixed wireless services in some areas, it clearly prefers the price/performance blend of its FTTP platform.

"If you look at the economics of providing broadband to neighborhoods and households, the economics prove that fiber to the home is the best play," McElfresh said. "But as that [fixed wireless] technology evolves, we see an opportunity for all sorts of use cases with that 5G network."

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— Jeff Baumgartner, Senior Editor, Light Reading

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adamb60 12/14/2019 | 10:16:45 AM
Fiber to existing housing When is AT&T going to start installing fiber in existing housing? I'd love to have it, but we only have the U-Verse FTTN product and we are just far away from the VRAD that the service is not great. It seems like around me only the new apartments and developments are getting fiber. I doubt we will ever get it unless we build in a new development.

Also, it seems like they are going to abandon areas that are even further out but not quite rural that really only can get satelite service if they want television. The broadband offerings out there are terrible with the old DSL and maybe a cable provider if they are lucky.
Jeff Baumgartner 12/12/2019 | 7:31:36 PM
Re: Acquisition Costs That's a good question. They didn't break it down by all the specific line items that make up the SAC, but most of the decrease vs. the satellite TV option will be coming from equipment costs and the ability to support self-installation. I'd have to ask them if ATT also includes sales and marketing in that the equation that represents this big decline, but I would think that they are referring to all that goes into the SAC not just a subset of the SAC tied to just equipment and installation. But it's certainly worth checking to clarify that to know for sure. Thanks, JB 
brooks7 12/12/2019 | 6:09:52 PM
Acquisition Costs  

There was a line in the article was that acquisition costs were about 1/2 for OTT versus Satellite.  Does this mean just the capex or does it include the Sales and Marketing costs as well?


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