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

from the decidedly-last-generation dept

Thu, Feb 18th 2016 6:22am — Karl Bode

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?

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: broadband, competition, dsl, infrastructure, satellite tv, tv, upgrades
Companies: at&t, directv

46 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Michael, 18 Feb 2016 @ 6:35am

Are we feeling the amazing merger synergies yet?

Yes we are. Some lube would be nice.
[ link to this | view in thread ]
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
[ link to this | view in thread ]
TechDescartes (profile), 18 Feb 2016 @ 6:45am

AT&T's "New" Product
Re-Verse
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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!!
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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!
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
Ninja (profile), 18 Feb 2016 @ 8:08am

Re: AT&T's "New" Product
I wonder how much the company can work and think backwards before they go Kodak, Blackberry and the likes. I'd like to know if there's a limit up to the point no regulation will save them.
[ link to this | view in thread ]
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
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
That One Guy (profile), 18 Feb 2016 @ 8:24am

Re: Re:
'Oh please Mr. Voter, please don't throw me into that terrible office job.'
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
Karl Bode (profile), 18 Feb 2016 @ 8:37am

Re: AT&T's "New" Product
I may have to steal this. :)
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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".
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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...
[ link to this | view in thread ]
Anonymous Coward, 18 Feb 2016 @ 8:50am

Re: Re:
Clearly the solution to that is having a slower connection. Your internet will last you longer every month!
[ link to this | view in thread ]
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!
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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).
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
Anonymous Coward, 18 Feb 2016 @ 10:30am

Re:
soviet union before it's collapse?
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
nasch (profile), 18 Feb 2016 @ 3:50pm

Are they competing with Comcast to become the most hated company in the US?
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
bob, 19 Feb 2016 @ 12:46am

Re: Re: Wireless broadband
Who provides a microwave feed?
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
Wendy Cockcroft, 19 Feb 2016 @ 5:55am

Re:
Again: http://capitalismmagazine.com/2000/01/what-does-competition-mean-under-capitalism/

While such views as obtain in this article hold sway, good luck with that.

Red Scare dog whistle in 3...2...1...
[ link to this | view in thread ]
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).
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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
[ link to this | view in thread ]
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 !!!
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
A Fee & Fee, 25 Sep 2016 @ 12:22am

I farted.
[ link to this | view in thread ]
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
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
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.
[ link to this | view in thread ]
Grace, 22 Jun 2018 @ 9:21am

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.https://arstechnica.com/information-technology/2016/03/att-to-sell-directv-online-no-satelli te-dish-or-set-top-box-required/ 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.
[ link to this | view in thread ]