Altice, the new owner of Cablevision, is not following the rest of the U.S. cable industry by rolling out the next generation of cable broadband — DOCSIS 3.1 — and will instead scrap coaxial cable entirely in favor of a new, all-fiber network.

The cable industry has depended on some form of coaxial cable to offer its service since about 1950, when the first mom and pop operators set up shop offering community antenna television service in areas that could not easily receive over the air TV stations. Most American cable systems today still use the coaxial cable installed in millions of homes starting in the 1970s, supplemented by outdoor coaxial cable that is often 10-20 years old, supported by a more recent fiber backbone network that improves system reliability and maintenance.

Cable systems were originally designed to deliver analog cable television signals, but over the years bandwidth has been set aside to offer ancillary services like video game products, home security and alarm monitoring, digital radio/music, telephone, and broadband. Because of the billions of dollars invested in existing cable networks, the idea of scrapping existing wiring in favor of fiber optics has been largely rejected by the industry as too costly. As broadband service increasingly becomes cable’s most important service, network engineers have instead worked to realign bandwidth to support faster internet speeds, most commonly by upgrading to more efficient cable broadband transmission standards and by removing space hogs like analog television channels from the lineup.

Regardless of what the cable industry does to increase the efficiency of its hybrid coaxial-fiber networks (known as ‘HFC’), they will never achieve the capacity and robustness of all-fiber networks, which may be why Altice is seeking to stop investing in old technology in favor of something new and better.

Altice’s management is legendary in its zeal to cut costs, so an expensive deployment of fiber to the home service to 8.3 million Cablevision/Optimum and Suddenlink customers would seem contrary to the company’s promise to wring out about $900 million in cost savings for the benefit of shareholders after acquiring Cablevision. DOCSIS 3.1 is clearly a cheaper alternative than rewiring millions of homes for all-fiber service. Last summer, Liberty Global CEO Mike Fries estimated that Liberty Global’s costs to deploy the cheaper DOCSIS 3.1 option in Europe would bring gigabit speeds to customers for about $21 per home — a fraction of the cost of tearing out coaxial cable and replacing it with fiber, estimated to cost about $500 a customer.

But Altice wants to future-proof its network with fiber technology that can support profitable next-generation services that may need speed in excess of a gigabit. Dexter Goei, Altice USA’s chairman and CEO, told Multichannel News Altice was not interested in undertaking incremental upgrades every few years trying to keep up with the internet speed demands of its customers:

Goei

Going with a DOCSIS 3.1 game plan “felt to us as one step forward but not a step forward enough relative to what we see as the future of continued connectivity and higher bandwidth usage,” Dexter Goei, Altice USA’s chairman and CEO, said in an interview, noting that the operator has reached an “inflection point” as it sees a disproportionate number of gross broadband subscriber additions taking higher and higher Internet speed tiers.

“We’re big believers in this trend continuing, and we really are moving toward a 10-gig world,” Goei said. “And to sit around and do this in multiple steps doesn’t make any sense [so we decided] to skip over DOCSIS 3.1 and get straight to the point.”

The cable industry may also be exaggerating the cost of fiber upgrades, especially when they cite the financial challenges experienced by Verizon (FiOS) and AT&T (U-verse) as both built out their respective fiber and fiber-copper networks from the ground up. Cablevision and Suddenlink will not have to build fiber networks from end to end because a significant part of their networks already include a substantial amount of fiber optics. Altice would simply extend the amount of fiber in its network to reach each customer.

Fiber to the home upgrades for Cablevision and Suddenlink customers.

Wall Street remains concerned about where the money to build the project, dubbed “Generation Gigaspeed,” is coming from. The Communications Workers of America is also afraid the money will come, in part, from significant downsizing and salary cuts.

Earlier this week, Altice announced it was spinning off its engineering and technical workers to a new independent entity — Altice Technical Services (ATS). When the spinoff is complete, it will employ as many as 4,500 of Altice’s current workforce of 17,000 employees nationwide, and will eventually manage Cablevision and Suddenlink service calls, outdoor network plant design, construction and maintenance, and house all of Altice’s employees servicing commercial accounts.

Although details remain murky, the union is concerned Altice could be engineering an end run around the New York Public Service Commission’s order approving the buyout of Cablevision if Altice did not lay off any New York workers for the next four years.

“We’re very concerned,” CWA District 1 assistant to the vice president Robert Master said. “But we haven’t fully unpacked it yet. We don’t know what they have in mind.”

CWA District 1 organizer Tim Dubnau was more blunt, telling Multichannel News: “We definitely smell a rat.”

Assuming ATS is configured as an independent entity, it will not be required to adhere to the NY PSC order prohibiting reductions of Cablevision’s customer-facing workforce in New York State, which theoretically could allow Altice to dramatically downsize.

Outside of New York, Altice’s cost cutting has followed a long established pattern company executives have followed in Europe for years, where Altice also offers service. In France, battles over toiletries and office supplies resulted in workers bringing their own toilet tissue to work. Downsizing, despite regulatory orders prohibiting layoffs, went ahead in France as company officials thumbed their noses at regulators. In the United States, a familiar pattern is emerging, charges Altice’s critics. Almost 600 call center workers were terminated in November in Connecticut, and other cutbacks have taken place in North Carolina and other states.

Late last week, the NY Post reported Cablevision employees are now complaining about an increasingly miserable office life as they endure penny-penching from their bosses. In New York, top management reportedly ordered the removal of many office printers to reduce the expense of replacement ink cartridges. Office cleaning expenses have also been reportedly slashed by increasing the length of time between cleanings. Even the cost of an ice machine for a break room has come under intense scrutiny, as cost management specialists demand better deals and less costly equipment. Much of the removed equipment provides one last service to Altice – a tax write-off after being removed from service and donated to charities.

Employees report unprecedented intensity of cost cutting and lengthy scrutiny of almost every expense. Some claim to have resorted to buying certain equipment and supplies out of pocket just to avoid drawing management scrutiny. Employee morale is reportedly low — especially at Cablevision, where reduced pay packages predominate under Altice ownership. Management has told employees to hold out for a planned IPO, which could allow them to reap some of the benefits of a Wall Street-fueled cash-raising exercise likely to be put to work buying up other cable operators in 2017.

The pain of cost-cutting isn’t exactly reaching the top level executive suites, however. Despite a very public dispensing of Cablevision’s lush Dolan family corporate jet immediately after Altice took ownership of Cablevision, a replacement nearly identical to the original was quietly been put into service for the benefit of Altice’s management, according to the newspaper.

Assuming Altice can raise the money to pay for its fiber upgrade, it is expected to be completed within five years for all Cablevision and most, but not all Suddenlink customers.

Frontier Communications has told Sinclair Broadcast Group the asking price to renew carriage of the Tennis Channel and several Sinclair over-the-air stations is too rich for their blood, and as a result will drop the channels Jan. 1, 2017.

The most affected network will be Sinclair’s Tennis Channel, which is seen in several hundred thousand homes subscribed to Frontier FiOS, U-verse, or its new IPTV service Vantage TV.

“We are not close,” Barry Faber, Sinclair’s executive vice president and general counsel, told the Wall Street Journal on Tuesday.

Sinclair is the largest owner of local television stations in the country — owning or operating 173 stations in 81 cities. But only a handful are threatened by this contract dispute:

Frontier called Sinclair’s proposed renewal price “unreasonable” and stopped responding to Sinclair’s follow-up offers, according to Faber.

“And that’s where it stands,” Faber added. “We view it as negotiations are over.”

Tis the season for rate increases. Fa-la-la-la-la, La-La-La-La.

Comcast is bringing itself some Christmas cheer this holiday season with more of your money going into its pocket as the cable giant announces nationwide rate hikes that will cost customers an average of 3.8 percent more in 2017. Comcast blames much of the increase on others.

“We continue to make investments in our network and technology to give customers more for their money—like faster internet service and more Wi-Fi hotspots, more video across viewing screens, better technology like X1 and a better customer experience,” Comcast said in a statement. “Unfortunately, the costs we are charged to carry popular networks continue to increase significantly, especially broadcast television and sports programming, which are the largest drivers of increases in price adjustments.”

Customers may not feel like they are getting more for their money with Comcast’s data caps and overlimit fees, which increasingly affect customers except in the northeast (for now). Cable TV customers will generally see a published rate increase of around $1 a month, which sounds like a pittance until you scrutinize the rate hike more closely.

Bill padding is where the real money will be made in 2017:

• Broadcast TV Fee: Was around $5 in most markets, but Comcast intends to charge $2 more, bringing the fee to $7 a month;
• Regional Sports Surcharge: Whether you watch sports channels or not, you will be expected to pay $2 more next year for those channels, with fees rising to $5 a month.

The absence of viable broadband competition in states like Maryland, bypassed by Verizon FiOS, means Comcast can raise broadband prices almost at will.

TV Predictions notes officials in Montgomery County, which includes the suburban Washington, D.C. cities of Bethesda and Rockville, have been notified of $5 a month rate hikes on broadband, taking some internet access pricing above $80 a month:

• Internet Plus will increase from $77.95 a month to $82.95 a month;
• Internet Pro Plus with Showtime will rise from $81.95 a month to $86.95 a month;
• Internet Pro Plus With HBO will increase from $84.95 a month to $89.95 a month;
• Premier XF Double Play package will increase from $182.95 a month to $187.99 a month, taking Comcast closer to the $200 cable bill.

Standalone internet pricing is now just as expensive as a deluxe cable television package, despite the fact it costs Comcast only a fraction of the amount it charges to provide the service:

• Performance plan will rise from $69.95 to $74.95 a month;
• Performance Pro plan will go from $79.95 a month to $84.95 a month;
• Blast plan will rise from $82.95 a month to $87.95 a month.

An activist group of shareholders led by a hedge fund has successfully pressured executives at FairPoint Communications to sell the company to maximize shareholder value.

The buyer, Illinois-based Consolidated Communications Holdings, Inc., said on Monday it would acquire FairPoint in an all-stock deal worth $1.5 billion, debt included.

The buyout will enrich certain shareholders and hedge funds, including Maglan Capital’s David Tawil and Steven Azarbad, who blasted FairPoint CEO Paul Sunu in a letter sent earlier this summer complaining “shareholders have been extremely patient with the company’s operational turnaround and have suffered because the board has not been vigilant in protecting shareholder value.”

Maglan will cash out its investment initially made after FairPoint went bankrupt, when the share price was below $4. As of 4pm this afternoon, FairPoint stock was trading at $18.85 a share, less than the $23 a share and 75% premium Tawil and Azarbad were hoping for back in August. But they will still walk away earners, selling at around $18 a share plus an additional 17.3% premium. Collectively, the two hedge fund managers control 7.6% of FairPoint’s shares.

Consolidated Communications will inherit residential FairPoint phone and broadband customers in 17 states, most notably those in Maine, New Hampshire, and Vermont. But press releases from Consolidated showed little interest in the residential telecommunications business. Instead, Consolidated executives are looking at FairPoint’s business and enterprise customers, and the benefits of owning FairPoint’s 17,000 fiber route mile network.

Critics suggest the deal effectively enriches shareholders while putting FairPoint’s existing debt and buyout on the new owner’s credit card. Consolidated will inherit $887 million of FairPoint’s current debt plus the $1.5 billion cost of the acquisition.

The combined company will keep the Consolidated Communications name and FairPoint Communications as a brand will eventually disappear if regulators approve the transaction sometime in 2017.

Consolidated Communications currently serves residential phone customers in:

• Suburban/Exurban Sacramento, Calif.
• Fargo, N.D.
• Mankato, Minn.
• West Des Moines, Ia.
• Suburban Kansas City, Kan.
• Mattoon, Ill.
• Lufkin, Conroe, and Katy, Tex.
• Suburban Pittsburgh, Pa.

FairPoint workers on strike in the fall of 2014. (Image: Labor Notes)

FairPoint customers and state regulators in New England expressed concern about the transaction. After FairPoint acquired landlines formerly owned by Verizon Communications a decade ago, the transition was described as “disastrous” by regulators, who received scores of complaints about service and billing problems before FairPoint ultimately declared Chapter 11 bankruptcy, mired in debt.

After emerging from bankruptcy, FairPoint has endured union strikes and was assessed multiple fines for failing to meet service quality standards in Maine.

“The last time these assets were sold to FairPoint it was a disastrous outcome for Maine customers,” says Tim Schneider, Maine’s Public Advocate, who represents consumers on utility matters.

Schneider told Maine Public Radio he is planning to scrutinize the deal to prevent further problems, but customers in Maine, New Hampshire, and Vermont are already expressing concern regulators are just as likely to rubber stamp this sale just like the last one, further saddling them with problematic service.

The owners of Maglan Capital are pleased with themselves, tweeting out this is a “December to Remember.”

One transaction done this month on FairPoint $FRP $CNSL. $GSAT $MVN $MDLNF on the queue next #DecembertoRemember

— Maglan Capital (@MaglanCapital) December 5, 2016

When AT&T announced it would offer 100+ cable television and broadcast network channels under the DirecTV Now brand for $35 a month, Wall Street had a fit.

Craig Moffett, an analyst with Moffett-Nathanson, speculated that AT&T would make at most a profit margin of $5 a month for its $35 a month plan, once programming costs were covered. But then AT&T announced it would sweeten the deal with a free Apple TV Player or Amazon Fire Stick for those confident enough to prepay for the new service. That makes DirecTV Now a purposefully unprofitable service, creating considerable stress for both the cable and satellite industry and their investors.

Variety notes the average DirecTV satellite subscriber delivers about $60 a month in profit to its owner, AT&T. That led the industry magazine to speculate DirecTV Now is a “loss leader” designed to sell its parent company’s AT&T-Time Warner, Inc. merger deal to regulators on the premise of increased competition delivering real savings to consumers.

Thankfully for Wall Street’s nerves, AT&T’s usual practice of marketing things with a lot of fine print emerged in the nick of time, and the $35 dollar price has now turned out to be an introductory offer for early adopters. In the not-too-distant future, AT&T will enroll new customers for its “Go Big” package at a much more profitable $60 a month. Customers who sign up at the $35 rate and stay customers will be able to keep that price as long as they make no changes to their account after the promotion ends.

Moffett

But Moffett warned investors that the traditional cable television model is still under serious threat, and AT&T’s less-promoted “Live a Little” package offering 60 popular cable networks for the everyday price of $35 is the equivalent of AT&T “running with scissors” because it alone could cause millions of cable and satellite customers to cut the cord and stay more than satisfied with a slimmed down cable package.

“Virtually all the channels that anyone would really want, save for regional sports networks” are included in the lighter “Live a Little” package, Moffett added. Customers who loathe watching sports but want a beefier package can also sign up for a $50, 80-channel “Just Right” package that primarily omits sports-oriented channels and a handful of spinoff cable networks few would miss.

Moffett and other Wall Street analysts were hoping AT&T would bloat its cheaper package with home shopping, religion, and other little-watched, low-cost cable networks and then entice customers to upgrade to unlock more popular cable channels. Instead, AT&T’s most premium package — “Gotta Have It” which costs $70 a month adds the “can live without” networks like Boomerang, Cloo, El Rey, Centric, and other little-known channels that typically live unnoticed in Channel Siberia on 500+ channel cable lineups. The highest premium priced package is attractive only for those looking for Starz/Encore channels and the basic cable network that gets no respect — Hallmark Movies & Mysteries (a/k/a the Dick van Dyke Permanent Employment Network.)

“By stacking their base package with all the best networks — likely a requirement for getting the programming contracts at all — they still have the same problem that was highlighted initially,” by Moffett. “Put simply, they aren’t going to make any money.”

That quest for profit is further challenged with subscriber acquisition programs that dole out free Apple TV units to customers willing to prepay for three months of service at the $35 rate or an Amazon Fire Stick (with Echo remote) in return for prepaying for one month of service. Anyone in the market for either device can sign up for DirecTV Now, get the equipment at an attractive price, and consider the 1-3 months of service a free extra bonus. Customers were reportedly lining up at AT&T’s owned and operated retail outlets (not authorized resellers) to pick up devices and sign up for service today.

At these prices and with these promotions, AT&T DirecTV Now could first decimate the subscriber base of its immediate competitors Sling TV and PlayStation Vue, either of which offer a much less compelling value. AT&T can afford to charge a lower price because it has deeper pockets and enormous volume discounts on the wholesale price of cable programming — combining millions of DirecTV and U-verse TV subscribers together to negotiate what industry insiders suspect are major discounts the smaller providers cannot get.

But there are issues likely to be deal-breakers for some would-be DirecTV Now subscribers:

• Local broadcast stations are available only in a handful of selected cities and only a very few include all ABC, NBC, and FOX affiliates. CBS is not participating in DirecTV Now at this time, and that is a major omission;
• NFL Network isn’t on the lineup;
• Regional sports networks are spotty and geographically restricted. Here is a detailed PDF outlining options by zip code;
• There is a limit of two concurrent streams and although video quality is very good, it is not the 1080/HD experience AT&T’s marketing material would suggest. The quality of your internet connection will make a difference;
• No DVR option at this time.

CNET compiled an excellent channel comparison chart to help consumers figure out which, if any, of these upstarts make sense as a cable TV replacement:

$5 a month each for HBO and Cinemax.

Time Warner, Inc. did its part, offering a substantial deal to DirecTV Now to allow customers to add HBO and Cinemax for just $5 a month each, substantially less than what both networks charge customers signing up a-la-carte. This also unlocks access to streaming options on both networks’ websites.

In fact, as a DirecTV Now customer, you will also become an authenticated pay television subscriber, unlocking access on various cable network websites to extra streaming and on-demand options.

The implications of DirecTV Now depend on how long AT&T extends its $35 offer, which is going to be compelling for a lot of Americans. Moffett predicts DirecTV Now could sign up a staggering 11 million Americans — at least two million cannibalized from its own DirecTV satellite customer base, six million cutting the cord on their cable company (including AT&T U-verse) and another three million cord-cutters or “cable-nevers.” Most of the latter are Millennials, and research suggests $35 may be low enough of a price point to sign them up.

AT&T is also raising concerns among internet activists because online streaming of DirecTV Now will not count against an AT&T postpaid customer’s data allowance. This zero rating scheme is seen as an end run around Net Neutrality, particularly because AT&T is not as generous with its competitors. AT&T said it will offer other video streamers the possibility of being exempted from AT&T data allowances, if they pay AT&T for the privilege.

How It Works/Signing Up

AT&T DirecTV Now starts with the Google Chrome 50+, Safari 8+ or Internet Explorer 11+ (on Windows 8 and up) web browsers or the DirecTV Now app. AT&T recommends Chrome for desktop viewing. The service doesn’t work with Firefox, Microsoft Edge, or legacy browsers.

The first step is registering for a 7-day free trial. Before handing over your credit card number, if you scroll down you will find a small free preview option is also available that includes a largely useless streaming barker channel promoting the service and a respectable collection of video on demand options from basic cable networks. The free video streaming option will give you a clue about how the service is likely to perform on your internet connection and devices. For the record, DirecTV Now now supports:

• Amazon Fire TV
• Amazon Fire TV Stick
• Apple TV (4th generation)
• Android^TM phone 4.4 and higher
• Android tablet 4.4 and higher
• Chromecast (for Android only)
• iPad iOS 9 and higher
• iPhone iOS 9 and higher
• iPod Touch version 9 and higher

Support for other devices like Roku is coming next year.

Customers must be within the United States to use the service. If you travel abroad or to any U.S. territories like Guam, the Virgin Islands, or Puerto Rico, DirecTV Now will stop working until you return. When you sign up, keep in mind your billing zip code will mean a lot when it comes to accessing regional sports and local broadcast channels. DirecTV Now uses your billing zip code and your actual location to determine whether you are qualified to access regional sports networks and local stations.

Score a Free Apple TV Player or Amazon Fire TV Stick

Apple TV (4th Generation): Effectively free after prepaying for three months of service.

If you are looking to score an Apple TV (4th generation) or an Amazon Fire TV Stick, you will want to skip the 7-day free trial and enroll in a paid plan immediately, which will allow you to select which player you want. If you want the Apple TV, you will prepay for three months at $35 a month ($105). The Amazon Fire TV Stick only requires you to prepay for the first month of service ($35). One device per email address, but you can sign up for multiple accounts (using individual email addresses) and get a device for each — especially useful for larger families that could run into DirecTV Now’s two-stream limit.

Consider your choices before enrolling. If you want to add premium channels or upgrade your plan, and you select the three-month prepay option to grab an Apple TV Player, adding premium channels like HBO and Cinemax or moving to a higher plan will result in three months of prepaid charges for those upgrades as well, billed automatically to your credit card on file — which amounts to a $30 charge if you select HBO and Cinemax. After your promotional prepaid term ends, your account will continue to be billed at the $35 (plus any add-ons) rate until you cancel. AT&T covers you for the forfeited first free week by extending your bill date out by seven days. Allow 2-3 weeks for the device(s) to be shipped to you.

You can also sign up at an AT&T owned and operated retail store, but be aware AT&T “authorized” reseller stores are not participating in this promotion. That may allow you to bring home a device today.

Don’t care about the device promotions? Take the 7-day free trial, but be aware that you are giving AT&T your credit card number and charges begin immediately after the free week ends unless you cancel. Here’s how:

1. Sign in to your account.
2. From your User Account overview page, select Manage My Plan.
3. Select the Cancel Plan link.
4. Choose one of the listed reasons.
5. Select Cancel Now to confirm cancellation.

Your subscription will continue until the end of the billing cycle. No refunds or credits are provided for partial months. Your account will revert to Freeview demo status after you cancel a subscription.  You can add a subscription package back at any time.

Oddly, AT&T is not charging sales tax for New York, California, Maryland or Virginia residents. Customers in states like Tennessee where AT&T provides local phone service were most likely to face sales taxes. Those signing up early are in the best position to exploit what appears to be an oversight, or it represents the first time the New York Department of Taxation and Finance left money on the table.

Streaming from Your AT&T Wireless Device Does Not Count Against Your Data Allowance

If you’re a DirecTV Now and AT&T Wireless customer, streaming most DirecTV Now movies and programs over the AT&T wireless network won’t count against your data usage allowance, according to AT&T. But believe it or not, AT&T’s fine print indicates advertisements and non-streaming app activity do count! There are some other important disclosures to be aware of:

• You must be on the AT&T Wireless network within the U.S. (U.S. territories are not qualified for zero rating);
• You must be a postpaid, not a prepaid AT&T wireless customer to qualify and must not have “data block” on your mobile line;
• If you are grandfathered on an unlimited data plan, using DirecTV Now will not count against the 22GB data threshold which subjects you to speed throttling;
• This offer may disappear at any time and/or is subject to change.

DirecTV Now Qualifies You as an Authenticated Pay Television Subscriber

Many cable networks require customers enter their cable, satellite, or telco TV login credentials to unlock video streaming and on-demand features. DirecTV Now is a qualified provider for these websites (more coming):

• ABC
• Disney
• Disney Jr.
• Disney XD
• ESPN (WatchESPN)
• Freeform
• HBO GO (requires subscription to HBO)
• MAX GO (requires subscription to Cinemax)

Other networks are not yet enabled for DirecTV Now. CNN, for example, has a prompt for DirecTV satellite customers to log in, but DirecTV Now has its own account registration system.

Local Channels Are Very Spotty

Local over the air channels are very limited on DirecTV Now and are geographically restricted. You can access these channels only if you are located in or very near to the cities listed below and your billing zip code is in the same area. If you travel outside of the immediate area, live streaming will stop working until you return.

Giving the Service a Test

Stop the Cap! enrolled as an ordinary customer this morning and gave the service a rigorous test, including multiple streams over our 50/5Mbps internet connection. The service debuted today, and there is little doubt there is intense interest from consumers, so we expected some performance problems from the initial demand. We didn’t see any evidence of traffic congestion, however, and that is a good sign.

AT&T’s John Stankey explaining DirecTV Now.

A similar test of Sling TV did not perform as well during peak viewing times, when streaming problems emerged. DirecTV Now seems to be built to withstand intense demand.

One customer with a 6Mbps U-verse internet connection “in the boonies” was impressed the video quality of DirecTV Now was high even on a relatively slow DSL-like connection.

“This blows SlingTV away,” the person shared. “I only have U-verse 6Mbps internet service and it is not pixelated or buffering at all. Looks exactly like my regular DirecTV picture.”

AT&T published these recommendations for DirecTV Now customers regarding internet connection speeds:

• 150kbps – 2.5Mbps – Minimum broadband connection speed for Mobile devices
• 2.5 – 5.0Mbps – Recommended for HD quality

We’ve been led to believe DirecTV Now should perform equivalently to 1080i HDTV service (depending on the video source of course). We cannot say we agree it does right now. We noticed significant artifacts on high-motion video and picture graininess that left us feeling this was closer to a 720p HD experience. It isn’t possible to say whether the video player reduced playback quality because of internet traffic issues we were unaware of or if this is how the picture is supposed to look. It did not significantly detract from the viewing experience and the lack of buffering and pixelation was far more important to us.

AT&T store in NYC.

DirecTV Now would serve adequately as a cable TV replacement if it had local station coverage and some type of DVR. At present, DirecTV Now is limited to a “Restart” feature that allows you to restart shows already in progress on certain channels, but you cannot fast-forward or record a restarted show. Once AT&T introduces a cloud-based DVR and fills out the local station lineup, this service could be lethal to overpriced cable TV packages.

AT&T’s marketing attempts to undercut the powerful position of inertia by setting an unknown time limit for customers to enroll in the $35 a month video package. If you don’t sign up today, you may not get the “free” Apple TV or Amazon Fire Stick and a respectable cable TV package for just $35 a month — about half what cable operators are charging these days for their bloated video packages. AT&T doesn’t care if you stick with your current cable provider and signup for DirecTV Now, if only to grab free streaming video equipment while sampling the service. They get their money either way.

Had AT&T permanently kept the price at around $35, many consumers would likely sit back and wait for AT&T to sort out the streaming contract issues it has with the TV networks — CBS in particular, and come up with a DVR solution before those potential customers decided to sign up and make the change. Based on several “hot deals” websites, the mentality among many consumers is to “lock in” the $35 price now and wait for AT&T to build out the package while continuing to invest $35 a month on it. That doesn’t seem so bad when you get free electronics as part of the deal.

Our Final Take

AT&T’s DirecTV Now is a potential winner and worth signing up for because of the introductory price and free equipment offers. But if you decide not to disconnect your cable/satellite television service, it is probably safe to drop DirecTV Now after your prepayment expires and return to resume service a little later. There will probably be some warning when AT&T will end the introductory price for the service, and interested customers can hop back on board before that date arrives. DirecTV Now will be a formidable competitor, but it will fight against consumer resistance to confront the cable company and cut cable’s cord until it solves the local channels issue and has a credible DVR option. The service could also use an add-on to make adding additional concurrent streams possible and more affordable than just signing up for a second account.

Don’t count out Big Cable just yet. With data caps and other internet overcharging schemes, Comcast, Cox, Suddenlink, and others can play games with usage allowances to deter customers from streaming all of their video entertainment online at the risk of blowing past their allowance. DirecTV Now’s $35 price won’t mean much after overlimit fees begin appearing on your internet bill.