Directv Now logoAT&T plans to launch a cable TV-like service for delivery over-the-top over its own or a competitor’s broadband network in 2018, said AT&T CEO Randall Stephenson at an investor conference today. The AT&T OTT video offering will be in beta trials before year-end and is laying the groundwork for ‘software-based’ TV delivery that will ultimately replace satellite delivery of video directly to the home, Stephenson said.

Stephenson did not provide details about the content that would be offered but he likened the offering to the company’s current mobile-centric DirecTV NOW offering, which offers more than 100 channels and is largely competitive with traditional pay-TV in terms of content.

“We’re taking DirecTV Now and leveraging it into a scaleable platform that goes into the home as a primary service,” said Stephenson.

AT&T OTT Video Path
Pay-TV providers are losing customers because, at a cost of $115 to $120 a month, today’s service is too costly, Stephenson said. But considering that content costs are unlikely to come down much, he said AT&T aims to get costs down by changing the company’s delivery method by shifting to a DirecTV Now-style platform for all video offerings.

Stephenson referred to DirecTV Now as a “software-based solution for, let’s call it cable TV for want of a better term, just to be descriptive about it.”

That solution, he said, “is going to be the platform for how we deliver all video in the future – software-centric.”

He added that “we will be ambivalent as to whose broadband the television service traverses.”

Importantly, despite AT&T’s ownership of DirecTV, he said the service will not require a satellite dish.

Currently DirecTV Now content can be displayed on a television screen by casting it to an Apple TV or Amazon Fire device, Stephenson explained. But the new offering will use a “very thin client in the home.” A streaming media player, perhaps. DVR-like capabilities will be delivered via the cloud, he said.

Stephenson credited AT&T’s purchase of DirecTV as a key enabler of DirecTV NOW, noting that the purchase gave the carrier the clout it needed to persuade content providers to renegotiate contracts. Some others in the industry have bemoaned being locked into long-term content deals that were originally made before OTT delivery became as important as it is today. Indeed, Stephenson went as far as to say that the ability to renegotiate content contracts was the biggest benefit of the DirecTV purchase.

The path outlined by Stephenson today represents a long discussed video strategy. One that chooses IP video distribution using any available broadband network, replacing legacy distribution technologies like satellite DBS, QAM, and even first-generation IPTV. AT&T is the first major TV provider to actually disclose a path towards this next generation video delivery, replacing its legacy technology.

Not So Fast About Replacing Those Dishes
Perhaps it’s ironic that AT&T plans to move away from the satellite content delivery capability that the company also acquired through the DirecTV purchase. Nevertheless, the company may not be able to move away from that infrastructure as quickly as Stephenson’s comments might suggest. They have an embedded base of 20+ million satellite dishes with associated set-top-boxes in the field. You can’t just pull the plug on all of them and move to a new delivery method, not to mention the technology and quality challenges of streaming all of this video at scale for millions of customers. OTT video delivery at this scale has never been tried before.

Also, there are still plenty of households nationwide, particularly in rural markets with poor quality broadband that cannot deliver an adequate OTT video experience and a quality broadband connection combined – and those households also include a portion of AT&T’s base. AT&T DirecTV satellite dishes on homes will be around for quite a while.

Stephenson made his comments at the Goldman Sachs Communacopia conference, which was also a webcast.

Bernie Arnason contributed to this post.

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8 thoughts on “AT&T CEO: Bye-Bye DirecTV, Hello AT&T OTT Video

  1. In a great part of the country, AT&T does not have the data capacity on their cellular network to allow them to shut down satellite delivery of television in favor of OTT delivery. There are large swaths of the US where AT&T does not even offer LTE service, only HSPA that they call "4G". The very idea that they can shut down DirecTV is preposterous right now.

    1. I don't necessarily disagree with your assessment of AT&T's wireless network. But I think it's important to note, the approach outlined by CEO Stephenson is talking about using fixed broadband networks (HFC, FTTx, DSL, etc.) to deliver this video bundle. And not just AT&T's network, but any broadband network – it's an OTT play.

      1. None of those are available in my part of the country except in places where AT&T is the local ILEC, which is only a very small part of the state. I agree that I pay way too much for DirecTV and only watch a minute number of the channels on it, I would much prefer to be able to customize a channel lineup on that service since it's available over every square inch of the US. I understand that the programmers will never let that happen, I will still be forced to pay for the Dog-Walker channel in order to have access to History Channel (sigh).

  2. One thing to keep in mind is that Cox and other ISP's have a 1 TB limit where in my case I have to pay an additional $50 for unlimited data since I have an at home wife taking care of my children and watching tv. This is eliminating the cost savings and I now can pay the $50 extra or go back to traditional pay for TV streaming service like Dish or COX!

  3. Don't see how they could do this. How are they going to do 4K OTT to millions of customers, over someone else's network?

  4. I just received the AT&T “Home Base” phone + internet product. It is supposedly their latest and greatest cellular hotspot! The speed test I ran, just moments ago, registered a dismal 3.44 Mbps down 0.86 up with an unimpressive 66 ping. Fortunately I have high speed broadband at home so this Home Base unit is just for remote use. The numbers I’m reporting are typical of what I have been seeing. The Home Base unit is well engineered and some cell sites provide better numbers than the one near my home.

    As a retired Broadcast Engineer, I think Mr. Stephenson is either living in a dream world or completely ignorant of the technical requirements necessary to stream HDTV much less 4K!
    The AT&T network overall might struggle with YouTube videos!

  5. In this rural area (north-central Florida) broadband speeds are insufficient to carry streaming TV without dropouts, buffering, and extremely poor audio/video quality. Our broadband (supplied by AT&T) is so bad that we can’t use a Ring or similar doorbell, because they require 2mb upload speed minimum, while we’re lucky to get 1/4 mb (download is 3mb if we’re lucky). AT&T shows no desire to upgrade the area, either,

    And cellular coverage here is a nightmare. We had 1 bar with AT&T, and we have 1 bar with Verizon now. To use our phones, we have to use them via our home network.

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