By Thomas Gryta
Less than two weeks after closing its $49 billion acquisition of
DirecTV, AT&T Inc. is getting set to sell bundles of satellite
TV with its wireless phone services.
Next week, AT&T will begin selling a plan that combines
high-definition television and DVR service for up to four TVs, with
a wireless plan that has 10 gigabytes of shared data and unlimited
talking and texting for four smartphone connections. The pricing of
$200 a month is promotional and will last a year for
subscribers.
The company, seeking to attract DirecTV customers to its
wireless service and compel its own customers to add TV, is also
offering a $10-a-month discount to customers who purchase both.
With DirecTV, AT&T will now be able to extend the reach of
its previously offered combined television and wireless bundle
beyond its 21-state wireline footprint to include all states. This
ability was one of the drivers that led AT&T to go after the
satellite operator despite declining demand for pay-television.
But AT&T won't be able to offer broadband in the states
outside of its existing wired network, meaning DirecTV customers in
those locations will still have to get Internet connections from a
separate provider. As an independent company, this was a key
weakness for DirecTV in competing with cable companies.
Rivals like Verizon Communications Inc. and Comcast Corp. are
also exploring ways to better capture the dual trends of more
Americans cutting the cord from traditional cable packages and of
more people watching videos and movies are on their devices.
Verizon is planning to start its mobile streaming video service
this summer, while Comcast is exploring ways to offer wireless
service.
AT&T has acknowledged the move away from traditional bundles
of TV channels as people increasingly subscribe to over-the-top
streaming services, but it is betting that the decline is slower
than many people think. Meanwhile, it hopes to use the cash from
DirecTV's subscriptions to help fund upgrades in its wired and
wireless networks.
Bundling provides savings to customers but by doing so customers
are less likely to switch providers, which reduces a key metric
tracked by investors known as churn.
AT&T said the $200 plan saves customers about $45 a month
from buying the services undiscounted. After 12 months, the price
will rise to $235 a month including the $10 monthly combined bill
discount.
The television package is DirecTV's lowest priced package which
excludes ESPN and requires a two-year service contract.
As part of its promotions, the company is also offering a $300
bill credit for DirecTV and AT&T U-Verse customers who switch
their wireless services from another company.
The success of bundling different services isn't assured. The
cable industry has flirted with offering wireless service numerous
times and even has a few failed efforts under its belt. Verizon
meanwhile doesn't bundle TV, Internet and wireless in its
footprint, arguing that its customers haven't shown much appetite
for such offers.
Write to Thomas Gryta at thomas.gryta@wsj.com
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