Wall Street is still waiting to see whether AT&T was strategically brilliant with last year’s $49 billion deal to buy DirecTV — or foolishly just doubled down on satellite TV, which has been in decline.
So they’ll have a lot to weigh this morning with one of its first major initiatives to help the merger deal pay off: AT&T says that starting tomorrow it will offer unlimited wireless streaming to customers who also subscribe to either DirecTV or its U-verse wireline service. The AT&T Unlimited Plan will cost $100 a month for a smartphone, plus $40 a month for additional ones.
The company also has several one-time sign-up incentives. For example, AT&T wireless customers can add DirecTV for $19.99 per month for a year — providing they sign up for two years.
AT&T calls this “the first of many integrated video and mobility offers the company plans to announce in 2016. Also, AT&T plans to launch a wide-range of new video entertainment options later this year.”
Users will get “a high-quality video streaming experience from the start,” AT&T Mobile and Business Solutions CEO Ralph de la Vega says. “No compromises in video quality.”
Well, at least for those who use less than 22 GB of data during the billing cycle. After that the company “may slow data speeds on that line during periods of network congestion,” it says in a footnote to this morning’s announcement.
AT&T appears eager to avoid the kind of controversy that T-Mobile faced after it launched its BingeOn service in November. The No. 3 provider offers unlimited streaming for dozens of video services including HBO, Netflix, and ESPN. The Electronic Frontier Foundation and Google are among the net neutrality supporters who say that this was tantamount to throttling other video services — a charge T-Mobile rejects.
AT&T’s unlimited plan applies to all the video that customers stream, not just particular services.
Although the announcement is aimed at consumers, the announcement is sure to be closely scrutinized by investors wondering whether the AT&T and DirecTV marriage makes sense.
“The main risk is that consumers do not regard the two platforms as interchangeable,” Bernstein Research’s Paul de Sa says in a report this morning. “We expect AT&T will be quite aggressive in terms of promotions and cross-subsidies from other products (e.g., via bundles with higher-margin wireline broadband/voice and mobile) to support its reported video-subscriber metrics and hence avoid suggestions that the DTV acquisition was a strategic mistake.”
Last month AT&T CEO Randall Stephenson told the Street that the company planned to “turn some heads” in January by offering “new capabilities, integrated products, and pricing” that will build on DirecTV, and rights to 40 Mhz of contiguous airwave spectrum.
“Putting together a bundle of DirecTV content they can acquire over a mobile device or a single screen in the home: that is something we are very interested in,” he said. “You should assume we’re doing something.”