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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  • identicon
    Michael, 18 Feb 2016 @ 6:35am

    Are we feeling the amazing merger synergies yet?

    Yes we are. Some lube would be nice.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Anonymous Coward, 18 Feb 2016 @ 8:29am

      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.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 6:41am

    The markets are self regulating they said.
    These bills will provide new television competition and lower prices they said.
    We will listen to our customers and meet their needs they said.

    How do you tell when corporations are lying?
    - Their lips are moving

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Feb 2016 @ 6:51am

      Re:

      Markets that are filled with State Actors who are voluntarily turning over access to your data in return for monopolies have no reason to compete. They have already split up and claimed their part of the pie.

      reply to this | link to this | view in chronology ]

    • icon
      morganwick (profile), 18 Feb 2016 @ 8:47am

      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.

      reply to this | link to this | view in chronology ]

    • identicon
      JBDragon, 18 Feb 2016 @ 5:41pm

      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.

      reply to this | link to this | view in chronology ]

      • identicon
        Wendy Cockcroft, 19 Feb 2016 @ 5:46am

        Re: Re:

        You named that tune in one. Now let's sort it out: break the monopolies up using extant anti-trust legislation.

        reply to this | link to this | view in chronology ]

        • icon
          R.H. (profile), 22 May 2017 @ 8:19pm

          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.

          reply to this | link to this | view in chronology ]

  • icon
    TechDescartes (profile), 18 Feb 2016 @ 6:45am

    AT&T's "New" Product

    Re-Verse

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 7:12am

    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!!

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Feb 2016 @ 8:13am

      Re:

      What would the ultimatum be? Throw them out of office where they will collect their salaries for life and become high paid lobbyists? That is like throwing Brer rabbit into the brier bush.

      reply to this | link to this | view in chronology ]

    • icon
      morganwick (profile), 18 Feb 2016 @ 8:48am

      Re:

      Was it a coincidence you used the word "trump"?

      Of course, if people were remotely paying attention the way they should, this wouldn't be a problem to begin with...

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Feb 2016 @ 10:30am

      Re:

      soviet union before it's collapse?

      reply to this | link to this | view in chronology ]

    • identicon
      Wendy Cockcroft, 19 Feb 2016 @ 5:54am

      Re:

      As long as people who think like this have influence, good luck with that. You see, they've got a lot of sympathisers among the electorate and those guys have been fooled into thinking it's entirely reasonable and fair.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 7:18am

    This is what asset forfeiture should be for. These companies are actively harming the infrastructure of the US for raw profits. These assets should be seized and turned into a utility.

    reply to this | link to this | view in chronology ]

  • identicon
    Capt ICE Enforcer, 18 Feb 2016 @ 7:29am

    Reality

    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.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Feb 2016 @ 7:54am

      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.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Feb 2016 @ 8:10am

      Re: Reality

      And collusion (price fixing0 is supposed to be illegal, and is enforced (lol) by DOJ. But they do not need to regulate because the markets are self regulating ... hahahahahahaha

      reply to this | link to this | view in chronology ]

    • icon
      morganwick (profile), 18 Feb 2016 @ 8:51am

      Re: Reality

      "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public." -Adam Smith by way of Civ IV

      But! But the free market always knows best!

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 7:51am

    Ha...

    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 Sonic.net) 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!

    reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 18 Feb 2016 @ 8:17am

      Re: Ha...

      You are actually lucky there was someone that decided to actually do something. And the law allowed it. But yes, companies like Comcast and AT&T can only exist because the govt granted them a monopoly.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 8:11am

    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.

    reply to this | link to this | view in chronology ]

    • icon
      Karl Bode (profile), 18 Feb 2016 @ 8:39am

      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.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 8:40am

    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".

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Feb 2016 @ 9:15am

    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.

    reply to this | link to this | view in chronology ]

  • icon
    Mark Gisleson (profile), 18 Feb 2016 @ 9:54am

    Wireless broadband

    In case any readers are unclear as to the concept, due to unique geography I get my internet from Verizon wireless. That costs $10/1 GB. Do your own math (hint: it's cheaper to buy DVDs of new movies than to stream them).

    reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 18 Feb 2016 @ 10:26am

      Re: Wireless broadband

      Wow. Do you have neighbors? You'd only need a couple to make it more economical to erect a tower and set up a microwave feed for internet, if you're lucky enough to have even treetop line of site to a feed.

      reply to this | link to this | view in chronology ]

      • identicon
        bob, 19 Feb 2016 @ 12:46am

        Re: Re: Wireless broadband

        Who provides a microwave feed?

        reply to this | link to this | view in chronology ]

        • icon
          John Fenderson (profile), 20 Feb 2016 @ 7:31am

          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).

          reply to this | link to this | view in chronology ]

          • icon
            John Fenderson (profile), 20 Feb 2016 @ 7:35am

            Re: Re: Re: Re: Wireless broadband

            Oh, and if you're in a rural, but not middle-of-nowhere, the odds are good that there exists at least one smaller local company that will provide a microwave feed to you. These things are more common than many people think.

            reply to this | link to this | view in chronology ]

  • identicon
    Joe V, 18 Feb 2016 @ 10:42am

    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.

    reply to this | link to this | view in chronology ]

  • icon
    Andrew (profile), 18 Feb 2016 @ 2:58pm

    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.

    reply to this | link to this | view in chronology ]

  • icon
    nasch (profile), 18 Feb 2016 @ 3:50pm

    Are they competing with Comcast to become the most hated company in the US?

    reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 18 Feb 2016 @ 6:54pm

      Re:

      I think you're right. They used to be a most hated company back before the breakup, perhaps they've been yearning to regain that trohpy ever since.

      reply to this | link to this | view in chronology ]

  • identicon
    Justin, 22 Feb 2016 @ 1:58pm

    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

    reply to this | link to this | view in chronology ]

  • identicon
    John Kersey, Sr., 25 Mar 2016 @ 3:09pm

    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 !!!

    reply to this | link to this | view in chronology ]

  • icon
    thomas tulinsky (profile), 2 May 2016 @ 9:58pm

    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.

    reply to this | link to this | view in chronology ]

  • identicon
    A Fee & Fee, 25 Sep 2016 @ 12:22am

    I farted.

    reply to this | link to this | view in chronology ]

  • identicon
    Nehul Khatpe, 8 Feb 2017 @ 10:34pm

    Good move

    Good initiative to go lag free. Improve UX.
    Hehe.
    You know, there is sharp rise in businesses dealing in networking products. on b2b portals like IndiaBizClub.
    You can utilize that

    reply to this | link to this | view in chronology ]

  • identicon
    Janet Burns, 8 Jun 2017 @ 12:13pm

    Chanels not available as told

    Recently Direct TV was in our neighborhood because of contracts running out and wanting users to continue with their service. We renewed since ATT bought Direct TV. We were told that we would have all the channels as before with the ultimate plan but we do not.

    reply to this | link to this | view in chronology ]


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