Tag Archives: DirecTv

Is AT&T too big and scattered to succeed?

by Steve Blum • , , , ,

Att vans

With the acquisition of Time Warner’s movie and TV production companies, AT&T theoretically has the assets to become a vertically integrated content creation, packaging and delivery behemoth. But not all of its assets – including its management team – are necessarily well suited to the task.

AT&T’s challenge is to avoid outrunning its ability to manage three very different types of businesses: entertainment production, subscription-based linear video distribution and a huge heterogeneous telecoms network. Two of those businesses – subscription video and telecoms – are changing rapidly, and AT&T needs both vision and capital to stay in the game.

So far, it appears to be short on both. There’s a limit to what you can do with a satellite video network. DirecTv will never be interactive, so it can’t leverage its distribution investment to create on demand services that mimic over the top (OTT) providers in the same way cable companies can.

AT&T’s telecom business is also showing the strain. It’s holding back on 5G and fiber upgrades, and increasingly relying on its existing 4G infrastructure and technology. AT&T is replacing copper networks in rural and other less lucrative communities with 4G-based fixed wireless service , in part by relying on federal public safety and universal service fund subsidies. It’s also investing in marginal 4G upgrades and labelling it 5G. Well, 5Ge. But, as AT&T intends, it’s easy to miss the little e.

Outside of the limited areas where it’s investing in fiber upgrades, AT&T’s networks are taking a back seat to more specialised players in its footprint. Cable companies can deliver faster broadband service more widely and have a plausible chance of creating OTT-like video services that are only available inside a provider’s own network, via fast lanes that are isolated from the public Internet. OTT companies are sucking up consumer viewing hours and pure play, or near pure play, mobile companies could move more quickly towards true 5G service (although Verizon has put its early and much hyped pre–5G deployments on hold).

It will take an exceptionally talented and diverse executive team to pull these ill-fitting assets together into a unified programming and telecoms juggernaut. AT&T’s “fix” for HBO, for example – simply telling everyone to start producing more great stuff – and its disingenuous, if not downright deceitful, mislabelling of 4G service indicates that it doesn’t yet have the management and vision it needs to prevail over the long run.

For AT&T, success might end up defined as simple survival.

AT&T gets a contract with California landline, DirecTv workers

by Steve Blum • , ,

AT&T and the primary union representing its employees – the Communications Workers of America – finally crossed the finish line in their marathon negotiations in California and Nevada. The rank and file voted to approve the latest deal by a 58% to 42% margin. That comes after the first deal they struck was rejected by the membership in July, on a 53% to 47% vote.

According to Fortune, the deal was sweeter the second time around…

Like the original agreement, the revised contract included wage hike totaling 11% over four years and some job security promises, but also increased employees’ healthcare contributions to cover insurance premiums to 29% by 2020.

Since last year’s seven-week strike at Verizon (VZ, +0.08%) led to workers there getting a better contract offer, labor tensions have been rising across the telecommunications industry. Increasing healthcare costs and job security against outsourcing have been among the most difficult issues.

It was a long and difficult process, with the union and AT&T going 16 months without a contract. At one point in May, CWA members walked off the job for three days to protest the slow pace of talks. Wireless employees also joined that mini-strike, but they’re not covered by the agreement that was ratified this week – that only takes in landline and DirecTv workers. Negotiations on a contract for the wireless workforce continue.

It’s the first time that employees who came in to AT&T via the DirecTv acquisition have been covered by the contract. Bringing them in under the CWA/AT&T umbrella was just one of the challenges. Over the years, AT&T and CWA have built up a structure that treats different groups of employees differently, even ones that do similar, or in some cases largely identical, jobs. Those splits within the workforce were one of the major factors behind the rejection of the first contract in July.

Landline, mobile and DirecTv workers walk out on AT&T

by Steve Blum • , ,

It’s a warning shot, not a full on strike, but even so thousands of AT&T employees left work yesterday and don’t plan to come back until Monday. According to the Los Angeles Times, 17,000 members of the Communications Workers of America, which is the primary union representing AT&T employees, walked off the job in California and Nevada, where they’ve been working without a contract for 13 months.

They’re part of a total of nearly 40,000 workers that went on strike Friday. DirecTv techs and AT&T store employees are among them, according to the Times

The strike includes about 2,000 technicians who work in California and Nevada installing and repairing equipment for the satellite television service DirecTV. The union said the walkout marked the first time that AT&T wireless workers in 36 states have gone on strike, which they said could result in some closed retail stores this weekend. Only company-owned stores, not so-called authorized retailers, would be affected…

The two sides have been laboring over a new agreements to replace ones that expired in April 2016 and earlier this year. Workers have complained that AT&T has cut sick leave and disability benefits and asked them to to pay more for their healthcare. Union members also have been worried about the stability of their jobs, contending that AT&T has cut more than 10,000 call center workers since 2011 and moved those jobs to countries with cheaper labor.

The three-day mini-strike came as frustration grew over contract talks that don’t seem to be going anywhere. It follows a one-day strike here in California in March, the result of a dispute over work rules, which was quickly ironed out.

But so long as the big questions remain unresolved, the threat of a indefinite strike, like the 45-day walkout against Verizon last year, remains.

AT&T offers $10 service to low income homes lucky enough to have wireline service

by Steve Blum • , , , ,

Oops. There goes the $10 a month service.

AT&T is rolling out its low cost Internet access program for low income households. It’s one of the conditions attached to the FCC’s approval of AT&T’s purchase of DirecTv last year.

It only applies to homes where Internet access service “is delivered to a fixed location over a physical wire or cable“. In other words, the wireless service AT&T wants to use to replace wireline service in rural and inner city California isn’t eligible. When AT&T pulls out the copper, the low cost broadband service disappears too.

If one person in a household is eligible for food stamps – now known as the Supplemental Nutrition Assistance Program – and no one owes AT&T any money for fixed Internet service (at least, no debts have been incurred in the last six months) then AT&T’s Access program offers service at $5 to $10 per month. AT&T’s online explanation is a little convoluted – not unusual for programs like these that aren’t exactly top of the incentive list for the sales department – but what it seems to be saying is this:

  • If 10 Mbps service or better is available at a qualifying home, then the cost is $10 per month. If not, then 5 Mbps service can be had for the same price.
  • If 5 Mbps isn’t possible, then a 3 Mbps package is available for $5 per month.
  • You don’t get to pick and choose which level you get, whatever the highest (and, consequently, most expensive) speed is available, that’s what you get.
  • If AT&T can’t deliver 3 Mbps to your house via wireline, sorry, you’ll have to pay market rates or do without.

That’s just one of the catches, though. The biggest potential gotcha is in the fine print regarding data caps. There’s a monthly limit of either 150 GB or 250 GB – it doesn’t say which applies where, but I’m guessing the caps correspond to legacy DSL or Uverse-based service, respectively – and a steep hit if you use more data. The cost is an extra $10 for every extra 50 MB or fraction thereof. So, if your limit is 150 MB and you use 151 MB, your low cost service doubled from $10 to $20 for that month.

Where it’s available, AT&T’s low income Access program would be a good deal for eligible households that keep an eye on data usage. It matches Comcast’s Internet Essentials price and is less than similar programs in the works for Frontier ($14 per month) and Charter ($15 per month). The question still to be answered is how enthusiastic AT&T will be about signing up customers at that low rate. If the sales and marketing effort behind it is as grudging and upsell focused as the terms and conditions, the actual benefits could be very limited.

Satellite TV’s special circumstances are history

by Steve Blum • , , ,

For more than 20 years, satellite television companies have gotten a pass on many of the federal regulations that apply to their cable competitors. There was a lot of righteous rhetoric in those days about why Direct Broadcast Satellite was unique and should be allowed to live by different rules. But the underlying thinking was that satellite companies were small, cable companies were big and it was in everyone’s interest to foster a competitive alternative.

Those assumptions no longer hold. The two surviving DBS companies, DirecTv and DISH, have more subscribers than any cable company save Comcast. Only DISH remains independent, now that AT&T has absorbed DirecTv. Now, the Federal Communications Commission is planning to treat DBS and cable identically as it writes new rules opening up the set top box market

In the First [1998] Plug and Play Report and Order, the Commission exempted DBS providers from our foundational separation of security requirement because “customer ownership of satellite earth stations receivers and signal decoding equipment has been the norm in the DBS field.” This meant that DBS was also exempt from most of the rules that the Commission adopted in the Second [2003] Plug and Play Order. Unfortunately, in the intervening years the market did not evolve as we expected; in fact, from a navigation device perspective, it appears that the market for devices that can access DBS multichannel video programming has devolved to one that relies almost exclusively on equipment leased from the DBS provider. Accordingly…we tentatively conclude that any regulations we adopt should apply to DBS.

The plug and play orders were the FCC’s first attempt at breaking down the walled content gardens that network operators have built over the years. As acknowledged in the current FCC proceeding, those efforts didn’t work so well. This third try might not either. But treating all network owners the same is necessary if there’s to be any hope of success.

Back in the day, I wrote a lot of that righteous rhetoric. I’m proud to say that much of it remains as pungent today as when it was penned. I’m not an innocent bystander.

AT&T tries to stop video bleeding with DirecTv tourniquet

by Steve Blum • , , ,

AT&T is cutting off its Uverse video service, according to a story on Bloomberg.com. It’s no longer making Uverse set top boxes and new video customers will be hooked up to DirecTv’s satellite service. With video customers fleeing to cable, AT&T’s move comes not a moment too soon…

The shift to DirecTV was reflected in fourth-quarter results. U-verse subscribers fell 4 percent, the worst loss ever, as 240,000 customers canceled service, the company said. And while DirecTV gains of 214,000 customers almost offset the loss, U-verse defectors helped pump up cable TV growth. Comcast Corp. had its biggest user gain in eight years.

AT&T says that while it’s focusing on DirecTV, it isn’t shutting down U-verse.

“To realize the many benefits of our DirecTV acquisition, we are leading our video marketing approach with DirecTV,” said Brad Burns, an AT&T spokesman. “However, our first priority is to listen to our customers and meet their needs, and if we determine a customer will be better served with the U-verse product, we offer attractive and compelling options.”

Translation: we will do everything we can to hang on to existing Uverse video subscribers until we can move a sufficient number of them to DirecTv. Then we’ll shut down the Uverse video stream and reclaim the bandwidth.

I recommend reading the whole article. It concludes with the assessment that AT&T’s future lay with fiber – which it is very selectively deploying – and wireless. It’ll squeeze what it can out of existing copper networks by offloading as much traffic as possible to satellite and terrestrial wireless, but upgrades aren’t in the picture.

AT&T plans to push DirecTv aside

by Steve Blum • ,

The DirecTv brand will fade from the U.S. marketplace beginning next year. According to a story by Karl Bode in DSL Reports, AT&T will start the process of re-branding the service as AT&T in January, and will complete it when the company’s next generation television platform is launched. That also means that Uverse will begin to fade as well, positioned as AT&T’s “legacy TV offer”. The plan, according to Bode’s story, is to consolidate everything into a single architecture…

The company has previously stated that it’s developing a new gateway that will allow third-party broadband connections, LTE connections and AT&T broadband connections. Users will be offered a mish-mash of options depending on whether or not they’re inside AT&T’s fiber to the node footprint.

AT&T executive John Stankey has said that the carrier is moving to “one consistent architecture” for all TV and broadband users that will involve “very thin hardware profiles,” likely a nod to cloud DVR support. The company’s set top, router and gateway hardware “will become a consolidated, single platform over the next 24-36 months.”

The DirecTv and Sky brands will still be used outside of the U.S., at least for the near term.

I’m sorry to see the DirecTv brand fade, though. It’s a powerful brand, as I discovered in 1994 when DirecTv (owned by General Motors, via Hughes), Thomson Consumer Electronics (under the equally fearsome RCA brand) and my company, U.S. Satellite Broadcasting (USSB) launched the first digital DBS platform in the U.S., then called DSS, short for digital satellite system. The DirecTv brand proved dominant, and eventually everything, including USSB, was merged into it.

The brand is perfectly simple and explicit. In seven letters, it tells you exactly what it is and what you’ll get. AT&T, on the other hand, despite being one of the world’s most recognised brands, has never made that hard connection with television service in consumers’ minds. Don’t be surprised if DirecTv makes a comeback.

AT&T shaves the Uverse cord

by Steve Blum • , ,

AT&T is moving its Uverse television platform into legacy status, and will use DirecTv technology to deliver video to new subscribers in the future. That’s according to a story in Fierce Cable by Mike Dano. In comments made to analysts on Wednesday…

AT&T executive John Stankey said that the carrier is moving to “one consistent architecture” that is a “derivative of the DirecTV in-home architecture.” He said the company will begin selling the platform across all its channels by the beginning of next year. He said the platform will include “very thin hardware profiles,” likely indicating a cloud-based approach to a set-top box.

That doesn’t mean that AT&T will stop delivering video via landlines in the foreseeable future, but it clearly intends to favor satellite delivery going forward. AT&T’s press release makes it clear that if you’re on a system that supports broadband but not television, your only option will be to get an AT&T/DirecTv bundle…

AT&T now has the ability to broadly offer TV service to its 57 million broadband customer locations; previously, the company could offer U-verse TV and broadband to only about half of these customer locations.

Translation: AT&T won’t spend money to upgrade substandard broadband systems. Instead, it’ll try to offload as much linear video traffic as it can onto DirecTv’s birds, and hope that any bandwidth savings realised will mollify enough customers (or would be customers) to keep regulators off its back for another few years.

Federal justice department has no problem with AT&T’s takeover of DirecTv

by Steve Blum • , , ,

Move along. Nothing to see here.

AT&T’s purchase of DirecTv is about to get the green light, without any inconvenient conditions, at least from the federal justice department. That’s the word from Bloomberg, which has a pretty good track record on this kind of reporting. According to a story by Todd Shields and David McLaughlin

Justice Department officials closed their investigation without demanding any conditions, such as promises about fair treatment of Internet traffic, or demanding the sale of business units, said the person who wasn’t authorized to speak publicly.

The final decision about the review rests with the antitrust division’s leadership.

That’s one hurdle. The other is the Federal Communications Commission, where

The companies have said they will expand broadband coverage. AT&T had promised for three years to honor FCC open-Internet restrictions established in 2010. Since the promise, the FCC has set new rules, and AT&T has joined legal challenges to them.

That expansion of broadband coverage is still notional, at best. In a heavily redacted filing with the FCC, AT&T says if the DirecTv purchase is approved it’ll deploy “fiber-to-the-premises” (FTTP) to 11.7 million “customer locations” and implies that figure is two million more than it would have been without the deal. Given AT&T’s preference for deploying fiber to office buildings in dense and lucrative central business districts, you can arguably rack up a lot of customer locations without going very far.

It would be helpful if the FCC required AT&T to tell it and us exactly what that means.

AT&T says its future is fiber, but that doesn’t mean yours is too

by Steve Blum • , , , ,

Hanging out, but not hanging fiber.

With the Comcast mega-merger officially dead, the next big deal in line for federal review is AT&T’s proposed purchase of DirecTv. The buzz is that regulators don’t have the same concerns and the expectation is that AT&T will get a green light. The odd thing, though, is that the idea that the deal will improve rural broadband seems to have caught on in Washington.

AT&T sent a letter (h/t to the Eldo Telecom blog for the pointer) to the FCC claiming that consumers would see faster broadband speeds if the deal is approved because off-loading video delivery onto satellite will free up wireline bandwidth and that, somehow, the deal will make fiber-to-the-premise (FTTP) service economically feasible for two million more homes. Competition from cable companies and Google mean that fiber-to-the-node (FTTN) isn’t working for AT&T any more…

These harsh competitive realities were the principal driver of AT&T’s 2014 decision to accelerate its long-term upgrade strategy to extend its fiber deployment all the way to the premise, particularly in those markets where competitive realities require it. FTTP facilitates a better, more compelling set of products, and AT&T expects FTTP to have a longer economic lifespan than FTTN and other prior wireline network technologies. Accordingly, as described in the record, AT&T concluded that it needs to invest in FTTP, where it is economically feasible to do so, to meet customer demand and compete with Cable DOCSIS 3.1 and Google Fiber.

Except that the “markets where competitive realities require” fiber all the way to the home aren’t in rural areas. In fact, AT&T hasn’t put much effort into building even FTTN networks in those markets. It’s the affluent and dense high-potential neighborhoods where competitive realities meet marginal revenue potential.

AT&T is correct in saying that it needs more fiber to stay competitive in the broadband market for the long term. Don’t be fooled, though, into thinking that means it’ll upgrade either decaying rural copper networks or low capacity FTTN systems in low income communities.