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AT&T/Time Warner: The Big Bundle is Back! Introducing the $522/Mo Telecom Bill

Phillip Dampier June 13, 2018 AT&T, Competition, Consumer News, Video 3 Comments

Your bundle is bigger than ever.

A-la-carte TV is still dead. Long live the super-sized bundle!

If AT&T and Time Warner wanted to deliver a message to the cable industry as a result of their now-approved blockbuster merger deal, it is one that promises hundreds, if not thousands of more TV channels, movies and shows headed your way in the coming days, bundled into super-sized pricier packages of television, telephone, and internet service.

Despite the fact consumers claim they want to pick and pay only for the entertainment options they specifically want, in reality people are paying for more bundled packages and services — usually from multiple online streaming services — than ever before, with no possibility they will ever watch everything these services have to offer.

AT&T and Time Warner are well aware customers are now subscribing to cable television -and- streaming video services like Hulu and Netflix. But many customers are also buying streaming live cable TV alternatives, despite the fact they already subscribe to a cable television package. Given the option of selling you an inexpensive package of a dozen cable channels you claim to want or selling you much larger and more expensive bundles of services many are actually buying, AT&T will follow the money every time.

What will be different as a result of this merger is where you buy that programming. Before, you may have purchased AT&T Fiber internet access, AT&T wireless mobile phone service, a HBO GO subscription through DirecTV Now, a cable TV alternative, and Netflix. Now, with the exception of Netflix, all of that money will go directly to AT&T. The company will also be able to enhance their bottom line by monetizing content viewed over mobile devices. After taking control of Time Warner’s vast entertainment offerings, which range from HBO to Turner Broadcasting networks like CNN and TNT, AT&T will generously bestow liberal (or possibly free) access to this content for its broadband and wireless customers, while those served by other providers will have to pay up to watch. AT&T will ultimately set the terms of its licensing agreements. AT&T Wireless customers with unlimited data plans already have a sample of this with a free year of DirecTV Now, which customers of other wireless companies have to pay to watch.

AT&T plans to offer the best deals to customers who bundle everything through AT&T. The “quad play” bundle of TV, internet, home phone, and wireless phone will offer customers discounts on each element of the package, but some may experience sticker shock even with the discounts.

The Wall Street Journal noted a premium AT&T customer could pay more than $500 a month for AT&T’s best package — that’s more than $6,000 a year. Most bundled AT&T customers will pay about half that — around $246 a month for a package of 100 Mbps internet, a home phone line, wireless phone and a limited TV package bundling Time Warner content, including HBO. The entry level ‘poverty’ package will still cost around $115 a month.

By controlling each element of the package, AT&T can discourage a-la-carte package pickers by substantially raising the price of standalone services, to encourage bundling. That explains why many customers take a promotional TV offer priced just $10-20 more than the $70 broadband-only package some customers start with. If broadband-only service costs $40 a month and the TV package also costs $40 a month, those leaning towards cord-cutting would find it much easier to pass on cable television.

With Comcast on the verge of picking up much of 21st Century Fox’s content library and studio, Comcast will be able to defend its own turf creating similar giant bundles of content to keep its customers happy. Wall Street is already putting pressure on Verizon to respond with an acquisition of its own to protect its base of FiOS and Verizon Wireless customers.

Companies likely left out in the cold of the next wave of media and entertainment consolidation include online content companies like Google, Facebook, Amazon, and Apple, which will be stuck licensing someone else’s content or bankrolling many more original productions. Charter Communications, which has a small deal with AMC for content, is also stranded, as are smaller cable companies like Cox, Altice, and Mediacom. Independent phone companies like CenturyLink, Windstream, Consolidated, and Frontier are also in a bad position if Wall Street determines telecom companies without content divisions are in serious trouble.

Netflix stands alone as the behemoth content company, and is not likely to be impacted by the current wave of consolidation. Hulu will most likely end up in the hands of a telephone or cable company, most likely Comcast, if it successfully acquires Fox’s ownership share of Hulu.

For customers, your future choice of provider is about to get more complicated. In addition to pondering speed tiers and wireless coverage maps, you will also have to decide what content packages are the most valuable. Your choices will range from basic company-owned networks to third-party services like Netflix and Hulu, as well as full cable TV lineups ranging from DirecTV Now to XFINITY TV. Then get ready for the bill, which will likely include charges for most, if not all, of these services.

The Wall Street Journal explains the current wave of media consolidation. (2:44)

Currently there are 3 comments on this Article:

  1. Ian Littman says:

    A few notes here, because that graphic is a bit muddled:

    50M internet isn’t actually $70 anywhere I’ve seen. It’s $40-$50.
    AT&T is pushing home phone service a lot less now than in the past. Particularly given that all of their wireless plans have had unlimited voice for years, home phone is a pointless extra expense. Shouldn’t be listed in any of the tiers, even if it only costs an extra $10.
    The top tier listed there includes four mobile lines. Yes, dropping to a single line only drops the price by maybe $90/mo, but that’s $1080 per year. Likewise, the Mobile Share plan is a multi-line plan, whereas the CricKet one is single-line. Apples and oranges, and not clearly labelled.

    I don’t like AT&T any more than the next person (though in areas where they’re DSL-only vs. cable they actually have to compete on price, which is handy). But their corporate overreach is already bad enough without having to inflate the numbers. Even AT&T doesn’t do that level of mouseprint anymore, at least on their wireline internet.

    • $40-50 sounds suspiciously low. Are you sure that isn’t a promotional rate which customers may not be able to get after a year or two?

      AT&T’s bundles, just as Verizon’s, still frequently include home phone service. In fact, for several years new Verizon customers cannot buy DSL without also buying home phone service — something AT&T has also considered implementing, but hasn’t yet in an effort to minimize alienation/controversy as they work with the FCC on trying to win approval to decommission the rural landline network they operate. I personally have an unlimited Verizon plan and a home phone line myself.

      According to AT&T, the average wireless family plan has four lines, which is why they provided those dollar amounts to the WSJ for their chart. From what I have come to understand, all of those prices were volunteered and provided by AT&T. The WSJ did not cherry pick the data.

  2. Paul Houle says:

    I think the third package was designed to pop eyes.

    First it is closer to a “quad play” than a triple play bundle. The “triple play” bundle of home phone, cable TV, and internet is long established, but “quad play” has always been a harder sell — part of it has been that mobile operators usually haven’t been in the TV biz.

    Note also that $700 of that spending is on non-bundled TV (NFL/NBA) that some people might find easily worth the cost.

    The Gigabit internet pricing is not that bad, many people would jump at that, but it comes with no TV or phone relative to comparables.

    It is hard for me to picture DirecTV as a premium TV service (other than NFL/NBA;) I can’t say I have seen every installations, but when I have watched it in hotels and other places the image quality has been downright awful. The user interface is pretty good, but the compression artifacts make it hard for me to see the content. It could be this is specific to those installations, but it seems crazy to spend big bucks on TV to get a picture much worse than you could get for free OTA.

    (Some people don’t care. “Audiophile” websites are filled with reviews of tiny speakers and bluetooth headphones, for instance…)

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