AT&T Makes It Clear: It Bought DirecTV So It Doesn't Have To Upgrade Its Lagging Networks

from the decidedly-last-generation dept

When AT&T originally announced the company wanted to spend $69 billion on a satellite TV company on the eve of the cord cutting revolution, even M&A bullish Wall Street thought AT&T was a little nuts. After all, AT&T’s refusal to seriously upgrade its aging DSL networks to full fiber have left it at a serious disadvantage to faster cable broadband. Given Verizon’s FiOS fiber build clocked in somewhere around $24 billion, the $69 billion AT&T spent on DirecTV could have gone a long way toward bringing those customers into the modern fiber to the home era.

But AT&T has made it abundantly clear for some time that it doesn’t really care about fixed-line broadband when wireless usage caps and overage fees are much more profitable. That was reiterated this week with the news that AT&T has stopped building set tops for its IPTV over U-Verse (fiber to the node) service, and is now actively pushing those customers to satellite:

The biggest U.S. pay TV provider has stopped building U-verse set-top boxes and is nudging prospective customers toward its satellite unit, which has lower hardware and programming costs. The shift is the first stage of a plan to create a ?home gateway? within three years that will consolidate all AT&T services and act as a central hub to deliver video to any device…?AT&T is going to actively get out of the U-verse business,? said Chris Ucko, an analyst with CreditSights Inc.

What’s AT&T thinking? Instead of upgrading its DSL lines, the company hopes to offer customers in these un-upgraded markets a home gateway that can connect to satellite TV and AT&T wireless networks (which explains why AT&T is whining so intensely about the FCC’s plan for new open set top box competition). Existing U-Verse customers will be able to connect to the devices as well, but with AT&T now pushing all new customers to DirecTV, it’s not entirely clear AT&T has much of an interest in keeping these users around. But according to AT&T, this is all about meeting consumer needs:

?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.?

Here’s the thing the press won’t remember, and won’t make a sexy-enough headline to warrant mention. To get into the U-Verse TV business a decade ago, AT&T and Verizon went state by state pushing TV franchise “reform” bills written by telco lobbyists and lawyers. AT&T effectively promised states that if they passed these bills they’d be awash in new television competition and lower prices. Of course real competition never came, prices went up anyway, and people started noticing that in many states these bills were little more than legislative wish lists that gutted any number of existing consumer protections.

So those awful laws remain intact, but the next-generation service AT&T promised was never actually delivered. Why? AT&T never wanted to spend the money necessary to really offer video over fiber, much less real next-generation broadband speeds. And while the company makes a lot of noise about its plans to deploy gigabit fiber, those announcements are largely theatrical in nature (focused largely on the occasional development community). In reality, AT&T’s fixed-line broadband CAPEX continues to drop as lobbyists go state by state, gutting regulations so AT&T can hang up on unwanted DSL customers for good.

In short, AT&T promised a broadband and television revolution, and instead it’s offering expensive, capped wireless broadband and good old satellite TV. Are we feeling the amazing merger synergies yet?

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Companies: at&t, directv

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Comments on “AT&T Makes It Clear: It Bought DirecTV So It Doesn't Have To Upgrade Its Lagging Networks”

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Anonymous Anonymous Coward says:

Re: Re:

Then you will be interested in this promotion. For only $100 per month additional we can now offer you our Super Smooth Lube(TM) where we filter out the ground glass additive. Pay no attention to the fine print where we reduce your usage cap so that you go over faster. That’s a no charge feature.

morganwick (profile) says:

Re: Re:

If you want to know why corporations “suffer” so much government “regulation”, this is why: anyone who isn’t paid off by them never, ever, ever trusts anything they say to get what they want, because they know all their promises will either be quickly forgotten or will be adhered to at the bare minimum to fall far short of counteracting what they get by getting their way.

JBDragon says:

Re: Re:

The real problem is the City’s and states going along with it and creating Monopolies!!! So the whole FREE Market wasn’t ever there. There should be zero reason why Comcast, TWC and anyone else aren’t in the same City’s!!!

Of course we have that with Politicians passing bills they don’t eve bother reading.

R.H. (profile) says:

Re: Re: Re: Re:

The problem there is proving that they are illegal monopolies. Comcast and Charter are both huge. Either of them could argue that the other is a valid competitor in the United States.

If a regulator tries to force them to compete in a single market I can just imagine how much trouble could be caused if they purposely caused accidents for one another’s lines thereby showing that there’s a reason that multiple companies shouldn’t run cables in the same market.

The only real fix would be having municipalities build out their own fiber networks and requiring ISP’s to connect to it in order to access their citizens. Unfortunately, many states have specific laws against just that.

Anonymous Coward says:

it’s about time US citizens got hold of their political representatives by their throats and gave them ultimatums of the order of do your jobs, represent us, not business and stop putting them above all else!!!
is their another country on the planet that is really as corrupt as the USA? it seems to me to trump all others!!

Capt ICE Enforcer says:


Listen, I know competition is good for consumers and some businesses. But the reality is that these mega corporations don’t compete against each other. They meet up and say hey, lets raise the prices on this day. Look at Comcast and their charge more for using internet. In a competitive market that would end a company. But instead the competition is following suit TWC. Spending money to purchase a companies customers is less work than having to deal with logistics of upgrading their service.

Anonymous Coward says:

Re: Reality

When I hear about these big companies ‘competing’ by raising their prices, this is what comes to mind:

They’re not competing for your business. Instead, they’re competing against each other to see who can make more money. It’s just a game to them where the winner is determined by who has the highest score (money). Folks like us are just the goombas that get stomped on along the way.

Anonymous Coward says:


It’s amusing that I am exactly the sort of customer AT&T is about to lose.

I have had DirecTV for many years, but I will probably be cancelling it soon (the merger didn’t help). I am also an AT&T DSL subscriber (indirectly, I purchased my DSL through and have been eagerly awaiting an upgrade to U-verse or similar.

It seems the U-verse upgrade isn’t coming, and AT&T is moth-balling their DSL infrastructure in my area (they are not hooking up new subscribers). In response, a local ISP has started building out gigabit fiber, which I anticipate arrival in my area by the end of this year.

At that point, I can finally ditch my DSL line *and* DirecTV for good! Bye bye AT&T!

Anonymous Coward says:

But AT&T is actively laying fiber now

AT&T is actively laying fiber in areas that Google fiber has been announced, why would they do that if they intend to drop it in just 2 or 3 years time?

I am currently an UVerse subscriber who will be switching to Comcast in the near future for better internet speeds. I just hope I don’t have to deal with Comcast customer service.

Karl Bode (profile) says:

Re: But AT&T is actively laying fiber now

With a few exceptions where their hand has been forced by muni or other operations (parts of North Carolina), they’re primarily offering gigabit speeds to places where fiber was already in the ground and no real cost or work is involved. Read: housing developments, campus condos.

I think they’ll probably hang on to these customers for a while, but by and large they’re just cherry picking the places where there’s minimal effort and expense involved.

They want the public to believe they’re engaging in full city builds, they’re just not.

Anonymous Coward says:

No, thank you

“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.”

Let’s get this straight: they offer Option A, which they want to drop, and Option B. You approach them for a service and they’ll shoehorn you into whichever is closest to what you actually wanted, right? That is if they don’t really, really insist you should really, really go for Option B.
I’m guessing this is as far as “listen to our customers and meet their needs” goes. It’s actually, like it as always been, “our customers will eat what we serve and be grateful”.

Anonymous Coward says:

Look, any time you hear an infrastructure company talk about competition, you know they are lying. Infrastructure is a natural monopoly. Only one company is going to have a line (be it copper or fiber) into your house, and it’s not much better to the cabinet that serves the neighborhood (Can you imagine 5 telcos all ripping up the same roads to service their lines!? Madness!). That core infrastructure needs to be a taxpayer-funded service, which anyone can use to deliver their own (both for and not for profit) services, just like the roads and in some regions the power networks.

There are a number of benefits here. Businesses get access to all users in the country, at fiber-speeds (unlike now, where people like my mother are forced to use slow, latent, and expensive satellite services, which for all practical purposes prohibits access to many service I take for granted). The public gets access to truly high-speed networks. Schools, Libraries, Police Departments, and other government agencies get access to high-speed service at no cost. The billions(!) spent by the NITA, USDA, and FCC on rural broadband subsidies can be replaced by actually going out and doing it. It may (I’m not sure I buy this) cost more, but it will be more effective then throwing money at companies that have no competition (and cannot have competition, due to physical realities) and therefore have no real incentive to depoly upgrades.

John Fenderson (profile) says:

Re: Re: Re: Wireless broadband

There’s almost certainly a provider no matter where you are. The trick is that you have to have line of sight to their tower (which can be miles away, no problem), or be able to relay to their tower.

When I helped my friend (who lives in the middle of nowhere) set his up, he had a choice of two providers, and went with AT&T iirc.

The downside of going this route is that it’s more expensive, both with initial costs (equipment, licensing, etc.) and as the monthly fee. The upside is that you get much better bandwidth than you’d get through cable or DSL. That’s why it’s mostly only economical when you have a couple of houses chipping in together and you’re going to be using it for a long time (to amortize the initial investment).

Joe V says:

AT&T wireline for sale to Centurylong, frontier and Windstream

An AT&T rep gave this statement: “To realize the many benefits of our DirecTV acquisition, we are leading our video marketing approach with DirecTV. 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.”
listen to the customer???? LOL. What a crock of horseshit coming from Randall Stephenson. If that were true, I have a bridge to sell you too LOL. The man who is paid over $20 million a year accepted CAF II funding because he wants a new yacht.

As soon as enough people move over to Direct TV, AT&T is going to sell off its wireline to CenturyLink, Frontier and Windstream.

Andrew (profile) says:

Another fun thing I’ve heard in relation to the merger. AT&T has just laid off (or said it will have laid off by end of the year) over 1500 people who run DirecTV’s 24hr telephone support. It’s the ‘work at home’ people who work remotely via VPN’s. Their claim is ‘its a security issue’, yet the people who do the jobs are on far more limited remote terminals (citrix) than those who work in a physical call center.

Justin says:

Your missing the big picture

You all are missing the big picture. This is brilliant! Imagine all the satellite dishes in the world equipped with 5G gigabyte or multi-gigabyte wireless radios, acting as access points for your neighbors and neighbors neighbors etc. They can continue running fiber to there cell towers as they have been doing and inexpensively expand there network anywhere! They could do it now with lte but it would be slower, with lower latency (also less reliable).

This is there ace in the hole. The world is going wireless

John Kersey, Sr. says:

AT&T Service

I was an AT&T customer for 46 years but I left several years ago because I was tired of talking to someone in India or the Philippines when I had a problem. AT&T has recently installed new fiber optic cable on my street and I hoped it had upgraded its service. I called to inquire about new Internet and wireless phone service with AT&T.
Guess who I was connected to: “Christian” in the Philippines. When American corporations decide to assign customer service to Americans then I will consider doing business with them and not before. SO LONG AT&T !!!

thomas tulinsky (profile) says:

satellite TV is cheaper and better

DirecTV is the best pay TV service, better than UVerse, FiOS and cable. It benefits everyone for UVerse to be replaced by DirecTV satellite.
True DirecTV rates have gone up same as everyone else’s, but that is because of the huge price increases of content like ESPN and regional sports networks, and the huge increase in quality. (e.g. 200 HD channels).
Most of the world skipped cable TV because satellite is obviously the most efficient way to distribute TV.

Grace says:

AT&T Plans to Disconnect From Satellite Feeds in 2 yrs

This article was interesting. Thought you might be interested in a consumer real experience report regarding AT&T’s plans for satellite DirecTV users. 2 days ago I needed repair of my DirecTv satellite box due to pixelating and randomly resetting on its own. My home box is a older model and MDed. They brought a new HD box which operates 2 or 3 satellites but the AT&T technician announced that DirecTv will stop using Sat 101 next year, completely stop. This is my current satellite and my only one for DirecTV signal and Sat 101 allows me to travel with my home box and continue receiving signals, like millions of travelers today. Wonder if Winegard has been told or Dish? He also said AT&T has a policy of no longer working on roofs so if that is where your dish is located, you are not going to be served by DirecTV. Then the technician said this: AT&T plans to completely ‘stop using’ satellite feeds for DirecTV in about 5 years. GASP! When asked what they plan to use he said: Wireless and 4G network. It would be great for you to research what the field AT&T tech shared to prepare for a sea of migration to DISH for traveling and CoxCable for those that don’t pick AT&T when they get rid of satellite to receiver.

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