May 21 AT&T Inc's planned takeover of
DirecTV has been touted as a deal that will redefine
video and broadband, but translating that to reality for a
potential 70 million subscribers could take a while.
Combining the second-largest U.S. wireless carrier with the
No. 1 satellite TV provider could give the merged company
greater leverage to negotiate prices with sellers of TV
programming. One exciting benefit to consumers, AT&T has said,
involves new service packages with DirecTV, Internet and home
phone on one bill.
"We all know from a customer standpoint the more you bundle
the more advantageous it is from a value standpoint, from a
pricing standpoint," AT&T Chief Executive Randall Stephenson
said on a media call on Sunday.
But SNL Kagan cable analyst Ian Olgeirson pointed out that
sale prices for new customers who sign up for combined services
tend not to last. "Where we've seen the industry be aggressive
is in the bundled promotions and not on regular rates and I
don't think this changes that," he said.
AT&T said it will offer a three-year price guarantee on its
standalone broadband service while DirecTV also pledged to keep
its service available for the next three years, but not at a
Bundles with DirecTV service, Internet and phone will only
be available where AT&T is planning to expand its network, but
not for every DirecTV customer. AT&T's U-Verse service, which
includes Internet, television and home phone, is available in 22
states including Texas, Louisiana, Florida, Connecticut,
Michigan and Ohio.
AT&T has 11 million Internet subscribers out of 25 million
homes in its service area, and has previously said it plans to
extend its total reach to about 57 million homes by 2015. After
the merger closes, AT&T would extend its broadband service to 15
million more homes within four years.
AT&T said the plan would bring its total broadband reach to
about 70 million U.S. households. Analysts said this would be
viewed as a major public benefit and help smooth the way for
regulatory approval of the merger.
OVER THE TOP
As for a video product that can be streamed over the
Internet, both Verizon and smaller satellite provider Dish are
several steps ahead of AT&T.
Verizon earlier this year acquired Intel Corp's
media technology, as part of its plan to create such a service.
Dish has said it expects to launch its personalized streaming
product by year-end, having already struck a deal for
programming from Walt Disney Co.
AT&T CEO Stephenson said it would take 12 to 18 months for
his company and DirecTV to come up with such a service, though
both companies have been exploring how to deliver video over the
Internet outside of a TV subscription known as an "over the top"
On a conference call about the merger on Monday, Stephenson
spoke about how AT&T customers will be able to see DirecTV
content on phones, tablets, in autos, in airplanes and many
other places after the merger.
DirecTV CEO Mike White pointed to a bigger research and
development budget on a conference call, but it remains unclear
whether that content would only be available via Wifi
connections or on AT&T's extensive wireless network. The latter
option has generally been a non-starter for mobile phone users
because of data restrictions, but AT&T could be in a position to
lift such curbs in the case of DirecTV programming, said Brean
Capital analyst Todd Mitchell.
More broadly, analysts said the merger could eventually
allow U.S. consumers, for the first time, to obtain video and
wireless service from one provider.
Liz Wile, a 26-year-old subscriber of AT&T's video and
broadband service in Burbank, California, said she does not
watch much video on her phone because of high data charges. The
entertainment marketer said she wonders if AT&T and DirecTV
could provide unlimited video without draining her data service.
"I'm definitely one of those mobile people who does things
on the go, so it would be nice when you're traveling to have
access to your Internet content without worrying about it," she
(Reporting by Liana B. Baker and Marina Lopes in New York;
Editing by Richard Chang)