AT&T Will Become the Largest U.S. WISP if DirecTV Acquisition is Approved

By Gary Kim September 12, 2014

Assuming the AT&T bid to buy DirecTV is approved by regulators and antitrust authorities, AT&T plans to launch a rural areas bundle based on Internet access and TV including Internet access at 15 Mbps.

The bundle apparently would use dedicated access spectrum--fixed wireless--not the core AT&T mobile network.

AT&T earlier had said it would provide service to about 13 million rural locations using fixed wireless, but had at that time expected to deliver only about 20 Mbps to 30 Mbps.

Such a development would make AT&T the largest wireless Internet service provider (WISP) in the United States, and arguably the WISP with the fastest access speeds.

That strategy contrasts with the thinking at Verizon, something that often is the case. Simply stated, AT&T sees lots of strategic value in linear video, while Verizon sees rather little.

That is why AT&T is investing capital to become the largest, or second-biggest,  U.S. linear video provider, while Verizon wants to launch an over the top streaming service.

Verizon is among the firms that think the right answer for consumer video is 20 channels, delivered over the Internet or a mobile network.

Skeptics have estimated the market for a 20-channel streaming video service is only about five million customers in the U.S. market. Of course, that would be understandable from suppliers of the traditional linear video packages sold to well over 80 percent of U.S. households.

Verizon seems to believe the primary market is Millennials who do not subscribe to traditional linear video subscription services, and particularly single-person households.

Verizon expects to launch a 20-channel streaming service in 2015.

And where mobile is the distribution Verizon targets, AT&T will use fixed wireless, assuming its acquisition of DirecTV is approved.

“Nobody makes much money at this point in distributing content,” Lowell McAdam, Verizon CEO, recently has argued.

AT&T has a contrary view, of course. AT&T’s bid to buy DirecTV is a big bet on the continued viability of linear video.




Edited by Stefania Viscusi

Contributing Editor

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