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AT&T Loses 390,000 U-verse, DirecTV Subscribers; Denies Cord-Cutting a Factor

Phillip Dampier October 12, 2017 AT&T, Competition, Consumer News, Online Video 3 Comments

AT&T tried to calm investors Wednesday in an 8-K filing with regulators, reporting that although it has likely lost 390,000 DirecTV satellite and U-verse video customers in the last three months, it has gained 300,000 online streaming customers for its DirecTV Now TV service.

The company is required to report materially adverse changes to its business to shareholders, and AT&T elected not to wait until its next quarterly earnings report to divulge the substantial losses in video customers. DirecTV Now gains are not expected to be a significant panacea for investors because AT&T reportedly makes little or no profit from the service since it launched in late 2016.

AT&T avoided blaming cord-cutting for customer losses:

The video net losses were driven by heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards. The decline of traditional video subscribers negatively impacts our Entertainment Group revenues and margins, resulting in an adjusted consolidated operating income margin that will be essentially flat versus the year-ago third quarter.

Overall, the company confessed it lost 90,000 total video subscriptions once DirecTV Now’s gains were included.

AT&T told investors earlier this year it was substantially cutting marketing of its U-verse video service and began encouraging customers to subscribe to DirecTV satellite service instead. But the satellite TV service is rapidly losing customers as well. Wall Street analysts suggest the only explanation for this is cord-cutting.

“The issue is in the acceleration in cord-cutting, and the prevalence of [online streaming], not each other,” said Craig Moffett of MoffettNathanson. “It is becoming increasingly clear that the wheels are falling off of satellite TV” noting that Dish Networks subscriber numbers appeared dismal as well.

Moffett predicted with the ongoing video losses impacting satellite television, he thought it unthinkable the two satellite companies might consider merging.

Puerto Ricans Giving Up on U.S. Cell Phone Providers; Mexico’s Claro Has Best Coverage

U.S. cell phone providers are facing increasing criticism they are dragging their feet on restoring cell service in Puerto Rico while Mexican-owned Claro has now successfully restored service in 28 of the territory’s 78 municipalities.

Claro Puerto Rico, owned by Mexican billionaire Carlos Slim’s America Movil, has dramatically outpaced AT&T, T-Mobile, and Sprint in getting their damaged cell phone facilities back up and running. Claro is Puerto Rico’s second most popular cell company behind AT&T.

“Claro is the only one with service here,” Francisco Portales, 47, a customer of privately held Puerto Rico-based network provider Open Mobile told a Reuters reporter while waiting outside the Claro store in Fajardo hoping to buy a phone.

Looking for a signal.

The FCC’s latest update on Tuesday reported about 88% of Puerto Rico is still without cell service, but the agency does not break down network repairs by carrier, and American providers have declared their specific restoration plans to be confidential.

While AT&T complained the lack of commercial power remained its biggest problem, Claro said it had pre-positioned generators, diesel fuel, battery backups, and vehicles 72 hours before the hurricane hit, which appears to have made all the difference in restoring service.

Sprint said late last week its towers were still standing and “largely intact” although it gave no specific information on when service might be restored. T-Mobile was more frank, reporting “it’s going to be a long road to recovery.”

Claro is not taking advantage of its position as the island’s most reliable post-hurricane carrier, allowing customers of other providers to roam on its network where a signal is available. That may be all the good publicity Claro needs to win over new customers after the hurricane damage is repaired.

Claro’s repair trucks.

Mercedes Saldana, a 54-year-old school cafeteria worker and Sprint customer is just one of many now searching shops for a Claro prepaid phone.

“I don’t have any service, none,” she said. “We don’t know when Sprint’s going to be connected again.”

Customers unwilling to switch carriers and won’t roam may have long travel times ahead of them to find a signal. Luis Pacheco, 64, was planning to drive with his wife to Canovanas — 30 to 40 minutes west — in hopes of finding a cell signal to text his daughter in California. That is the nearest community where AT&T has a signal at the moment.

Before the storm, AT&T dominated Puerto Rico with a 34% market share, followed by Claro Puerto Rico with a 26% share. T-Mobile was third with 19%, Open Mobile has 11% and Sprint 10%. Verizon Wireless has no network facilities in Puerto Rico, but travelers with Verizon phones are granted roaming access on Claro’s network.

AT&T Shifting More Customer Call Centers Offshore

Phillip Dampier October 4, 2017 AT&T, Consumer News, Public Policy & Gov't 1 Comment

Less than a decade ago, AT&T was one of El Paso’s largest private employers, with 2,400 employees. Next month, it will be a shadow of its former self with fewer than 500 local workers after a series of layoffs and call center closures.

AT&T is planning to close its East El Paso office in November, giving 278 employees the option of leaving or relocating to San Antonio, Missouri, or Florida to remain employed by AT&T.

AT&T used to employ thousands of workers in its El Paso call centers and technical facilities. But much of that work is now being shifted to third-party contractors and offshore call centers overseas.

Since 2011, AT&T has eliminated 12,000 call center jobs in the United States, closing and downsizing call centers across the country, according to the Communications Workers of America.

In 2006, AT&T closed a major call center in Massachusetts, despite receiving generous tax benefits from the local and state government, and offered to relocate those employees to the same call centers in El Paso it is closing now.

In 2015, AT&T demanded El Paso and the state of Texas triple their $50 million annual tax break or else they would shift spending elsewhere. It appears tax abatements ultimately had little effect on AT&T’s spending decisions in the western Texas city.

The union reports the annual salaries for those jobs ranged from $32,000 to $65,000 per year, plus commissions and health and retirement benefits. Offshore customer care centers pay a fraction of those salaries and many third-party contractors do not pay benefits because they designate many employees as part-time workers.

AT&T disputes it is increasing its offshore customer service workforce at the cost of American workers.

“It’s important to note that there is a job for every employee who is willing to relocate to the facilities where the work is being consolidated,” and they will get a relocation allowance if they have to move, Marty Richter, a spokesman for AT&T, told the El Paso Times.

“We’re adding people in many areas of our business where we’re seeing increased customer demand for products and services,” and reducing jobs in areas where work volumes are decreasing, “in part because of changing technology,” Richter added.

Most of the remaining 350 AT&T employees in El Paso will be staffing five retail stores in the area or working as technicians or back-office workers.

Few are expected to take AT&T’s offer to relocate to San Antonio, if only because there are signs AT&T will continue to cut back on its domestic call center operations and shift that work online or overseas.

Despite Net Neutrality, Providers Launch Fiber Spending Spree

Despite claims from some industry-backed researchers and former members of Congress that Net Neutrality has reduced investment in telecommunications, a new research note from Deutsche Bank shows America’s top telephone and cable companies are spending billions on fiber upgrades to power wireless, business, and consumer broadband.

“Telecoms have become much more public signaling their intent to increase fiber investment, with AT&T and Verizon leading the spending ramp,” reports Deutsche Bank Markets Research.

Verizon has been on a fiber spending spree in the northeastern United States, signing contracts with Corning and Prysmian worth $1.3 billion to guarantee a steady supply of 2.5 million miles of fiber optic cable Verizon plans to buy over the next three years. Much of that spending allows Verizon to lay a foundation for its future 5G wireless services, which will require fiber to the neighborhood networks. But in cities like Boston, Verizon is also once again expanding its FiOS fiber to the home service to consumers.

AT&T is committed to connecting 12.5 million homes to gigabit-ready fiber broadband by 2019 — part of a deal it made with the FCC to win approval of its acquisition of DirecTV. AT&T claims it has already connected 5.5 million homes to its gigabit AT&T Fiber network, expected to reach 7 million by the end of this year.

Deutsche Bank thinks providers’ future drive towards 5G service will also simultaneously benefit fiber to the home expansion, because the same fiber network can power both services.

“To support the upcoming innovations such as autonomous driving, IoT, smart cities, the US needs to densify its fiber network,” Deutsche Bank said. “The U.S. fiber penetration rate is 20% vs. 75% for leading OECD countries, which suggests a large gap needs to be closed.”

Altice founder Patrick Drahi (second from left) and Altice USA CEO Dexter Goei (center) visit a Cablevision fiber deployment on Long Island, N.Y.

The bank predicts companies will spend around $175 billion over the next 10 years building out their fiber networks, with most of the spending coming from the phone companies, who may see fiber buildouts as their best attempt to level the playing field with cable operators’ hybrid fiber-coaxial cable networks. As cable operators expand their networks to reach more business parks, they have been gradually stealing market share for phone and data services from phone companies. Consumer broadband is also increasingly dominated by cable operators in areas where phone companies still rely on selling DSL services.

FierceCable notes Comcast and Altice have stepped up aggressive spending on fiber networks for their consumer and business customers. Altice is planning to decommission Cablevision’s existing coaxial cable network and move customers to fiber-to-the-home service. Comcast is deploying fiber services while still selling traditional cable broadband upgraded to DOCSIS 3.1, which supports substantially faster broadband speeds. The two networks co-exist side-by-side. Customer need dictates which network Comcast will use to supply service.

Customers benefit differently in each state, depending on what type of service is available. Comcast’s large footprint in Pennsylvania, outside of Philadelphia, is usually served by traditional coaxial cable. Verizon still sells DSL in much of the state. In Massachusetts, Verizon is building out its FiOS network to serve metro Boston while Comcast will depend on DOCSIS 3.1 upgrades to speed up its internet service. In New Jersey, long a battleground for Verizon’s FiOS service the company stopped aggressively expanding several years ago, Comcast has announced DOCSIS 3.1 upgrades for the entire state.

Independent phone companies are also seeing a bleak future without fiber upgrades. Both CenturyLink and Windstream are planning moderately aggressive fiber expansion, particularly in urban service areas and where they face fierce cable competition. Frontier continues its more modest approach to fiber expansion, usually placing fiber in new housing developments and in places where its copper facilities have been severely damaged or have to be relocated because of infrastructure projects.

None of the companies have cited Net Neutrality as a factor in their future broadband expansion plans. In fact, fiber networks have opened the door to new business opportunities to the companies installing them, and the high-capacity networks are likely to further reduce traffic/transit costs, while boosting speeds. That undercuts the business model of selling digital slow and fast lanes.

DirecTV Now Up to 155 Local Channels; Showtime Available for $8/mo

Phillip Dampier September 20, 2017 AT&T, Competition, Consumer News, DirecTV, Online Video No Comments

AT&T’s DirecTV Now is aggressively pursuing agreements to include local network stations in its online streaming platform.

This week, the company announced it added CBS and CW stations in more than 75 markets reaching over 70% of U.S. households, and now carries 155 local stations on its lineup. As part of that agreement, DirecTV Now also now offers customers the option of adding Showtime at what AT&T calls the cheapest price available from any streaming service — $8 a month. Access to the Showtime Anytime app isn’t ready yet, but will be “in the coming weeks,” claims AT&T.

Subscribers to the “Go Big” package will soon find CBS Sports Network added to their lineup. Those with at least the “Just Right” package will see Pop added as well. On Demand programming from CBS and The CW will begin in October.

Here’s the current lineup of TV markets and stations available on DirecTV Now as of late September:

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