Gone from Spectrum lineups across northern New England.

Many Spectrum cable television customers across the country have seen their broadcast TV lineups shrink as the company removes “duplicate” and “semi-local” stations, even as it hikes the cost of its Broadcast TV surcharge.

Southern Maine customers are the latest to be affected with the sudden removal of Boston’s ABC affiliate, WCVB-TV on June 5 — the last Boston area station on the television lineup.

“York (Maine) is part of the Portland TV market and we carry the designated in-market ABC affiliate — WMTW,” responded Andrew Russell, Spectrum’s director of communications for the northeast division. “We no longer carry the out-of-market ABC affiliate.”

Viewers trying to watch WCVB in southern Maine saw a screen stating “programming on this network is no longer available,” instead of local news and traffic information important for a number of southern Maine residents that commute down I-95 into the Boston area for work.

“I am fit to be tied,” York Beach resident Ken Morrison told the Bangor Daily News. “And I’m not alone. A lot of people are very upset about it.”

Subscribers in distant suburbs, exurban or rural areas between two major cities often had access (often for decades) to several stations in adjacent television markets. Each subscriber could choose the station serving the city that was most relevant in their lives. Prior to Spectrum and Time Warner Cable, cable systems in these areas were often locally owned and operated by smaller companies. These operators were responsive to the needs of their customers and distant over-the-air stations were often a part of the cable lineup from the 1970s forward. But as consolidation in cable industry continues, local lineups are now usually determined in a corporate office hundreds of miles away.

This Binghamton, N.Y. PBS station was thrown off the Spectrum lineup across several counties in the Southern Tier.

That could explain why Spectrum subscribers living in Tompkins and Cortland counties in New York suddenly lost WSKG-TV, the PBS affiliate from nearby Binghamton in favor of Syracuse-based WCNY-TV. Local residents do not consider themselves a part of Syracuse. Most consider themselves residents of the Southern Tier, which stretches along the New York-Pennsylvania border and includes Binghamton, Corning, Elmira, Hornell, Olean, Salamanca, Dunkirk, Jamestown, and Vestal. Residents will tell you they have more in common with their neighbors in northern Pennsylvania than Syracuse, but Spectrum apparently knew better and announced viewers in the two counties would now have to be satisfied watching a PBS station broadcasting to an audience at least 50 miles away.

Spectrum’s decision in this case does not appear to be a financial one.

“A public media organization like us gets no money from Charter to air our programming,” said WSKG’s management. “Our programming is provided to them for free, by law.”

WSKG believes what is actually behind Spectrum’s decision to change the lineup is the regionalization of their cable system head-ends, from which television programming is managed. Programming seen on Spectrum subscribers’ TV screens across much of the Southern Tier and part of the Finger Lakes region is now managed from Charter offices in Syracuse.

“In this case, because our tower is more than 70 miles from Syracuse’s head-end, where the signal originates, there’s a line of demarcation where they don’t have to carry our signal anymore,” said WSKG station president and chief executive, Greg Catlin. “In this case, that cut-off is Cortland and Tompkins County. They have every right to be doing what they’re doing. That doesn’t mean they have to do it.”

Subscribers were exceptionally unhappy to lose their Binghamton PBS station, and the station received a significant number of listener and viewer contributions from an area that is now cut off. The Southern Tier, like Pennsylvania to the south, is notorious for poor signals due to mountainous terrain, which limits television and FM radio reception. Verizon offers no competing television service in this part of New York, leaving residents with satellite television as the only possible alternative.

WPTZ in Plattsburgh is off Spectrum lineups in several parts of northern New York.

The first week of June was a significant date on the calendar for many residents in Spectrum’s northeastern service areas. In northern New York, Spectrum customers were notified they were losing WPTZ, the NBC affiliate in Plattsburgh, in favor of Syracuse’s NBC station WSTM-TV. That Syracuse station now produces news and current affairs programming for three Syracuse stations – WSTM itself, WTVH (CBS) and WSTQ (CW) under the “CNY Central” brand. But subscribers who lost WPTZ do not consider themselves a part of central New York and would more likely choose to visit Vermont than Syracuse.

In other parts of New England, Spectrum customers also lost WMUR-TV — the New Hampshire station with one of the best regarded news operations in northern New England, in favor of WVNY in Burlington, Vt. Newscasts on WVNY are produced by its sister station WFFF-TV. WMUR has a larger American audience than WVNY. In fact, this Vermont ABC affiliate has far more viewers in southern Québec and Montréal than it does in its own home market.

Back in Maine, the local congressional delegation is turning up the heat on Spectrum, so far to no avail. State Reps. Lydia Blume and Patricia Hymanson of York have written a letter to Spectrum demanding the company reinstate WCVB or reduce the cable television bills of affected customers to compensate. So far, Spectrum has done neither.

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Morrison told the Bangor newspaper Channel 5 “is the channel of the household. We watch it every day, multiple times a day,” he said. “Many people in the York area commute to Boston. The traffic reports on Channel 5 are essential.” WCVB was also the last Boston channel that could be accessed through Spectrum. Boston channels 4 and 7 have already been discontinued.

WMUR in Manchester, N.H. is gone for many New England Spectrum subscribers.

After contacting town officials, who hold the franchise agreement with Spectrum until it expires in 2022, Morrison learned a powerful lesson about deregulation. When a cable company lacks competition or regulation, it can do pretty much what it wants.

York town manager Steve Burns says his hands are tied, noting that Spectrum’s franchise agreement is written to automatically renew (for their convenience) unless the town wants to attempt to renegotiate.

“But negotiate how?” Burns asked. “Comcast is not going to come in and compete with Spectrum. They divvy up the territory. And there’s no one else.”

Spectrum has also made sure that Burns’ phone is among those that rings first when a customer has a complaint, noting Spectrum prints his name and number on each subscriber’s bill, listing him as the “franchise administrator” for the town.

“But it doesn’t mean anything,” Burns told the newspaper. “We have no authority. They decide the programming and the fees. I don’t think we’re important to them.”

So far, all Spectrum has been willing to do is mail out a channel request form to residents who complain, but there is scant evidence the cable company will restore the Boston station, because it has refused other similar requests from subscribers across the country.

For customers in the Berkshires in western Massachusetts, they know only too well how responsive Spectrum is to channel requests. When Spectrum took over Time Warner Cable, local subscribers lost access to several stations (most recently WCVB as well), forcing some to watch local news from stations either in Albany, N.Y., or Springfield, Mass. At the same time, customers were notified Spectrum was increasing its Broadcast TV surcharge, for fewer channels.

Spectrum did not offer any significant response to U.S. Sens. Ed Markey and Elizabeth Warren, or Congressman Richard Neal when they contacted Charter Communications to complain. In Maine, it is the same story for Sens. Angus King and Susan Collins, as well as Rep. Chellie Pingree.

Charter Communications has been quietly testing a streaming video lineup of services on selected college campuses in its service area — so quiet very few students know or care about the service.

In Rochester, N.Y., Charter this year introduced SpectrumU at two suburban colleges – St. John Fisher and Nazareth College. The 50+ channel service at St. John Fisher includes five local network stations, but not the low-powered MyNetworkTV or secondary CW affiliate that are found on the traditional local cable lineup. According to Nazareth’s channel list, SpectrumU at the college comes from Spectrum Enterprise’s Fiber Connect service and lists six network affiliates on the lineup imported from Buffalo, a city 70 miles away. The service is accessible around each campus on the schools’ Wi-Fi networks.

Charter wants participating colleges to set aside a 1Gbps connection to manage Wi-Fi streaming for every 5,000 students on campus. Stop the Cap! found anecdotal evidence Charter may be dramatically overestimating how many students actually use the service. A recent visit to both campuses and guest participation in online college forums found almost zero interest in SpectrumU at either college. Students, it seems, have mostly moved on from linear, live television and do much of their viewing on-demand from other streaming services and apps.

Charter Communications kept publicity and expectations low for the service, setting the monthly subscription price for SpectrumU at $0.00. No password or authentication is required to use the service, and logging into the campus network is simple at schools like Nazareth, where the Wi-Fi password GoldenFlyers was easy to come by on and off campus. While driving around, we could easily access SpectrumU from Wi-Fi on streets surrounding St. John Fisher, although Nazareth’s wireless network was tougher to reach on a tree-lined campus set further back from the main road.

Television services at St. John Fisher College, located near Rochester, N.Y.

Charter dictates the terms and availability of the service, which requires participating schools to subscribe to Charter Spectrum’s Enterprise Fiber Connect service, which supports campus internet and video services. Schools must offer:

• Charter Clear QAM or fiber video services
• Charter fiber internet services (preferred)
• 1Gbps dedicated bandwidth per 5,000 students (~500 concurrent users) recommended
• Wi-Fi network utilizes WPA or WPA2 encryption
• Public IP addresses/ranges for whitelisting
• PAT IPs are supported
• IP requirements: IPv4: /24 – IPv6: /48
• AP’s consistent with current fifth generation Wi-Fi technology, 802.11ac (no older than fourth generation 802.11n)

SpectrumU is designed to work exclusively over Wi-Fi, and only with portable smartphones and tablets:

• iPhone, iPad, or iPod touch running iOS 8 or above
• All major Android smartphones and tablets running Android 4.2 or above
• Kindle Fire Phone, all Kindle Fire models except for the 1st generation model

There is no support for streaming set-top boxes like Roku or Apple TV and SpectrumU works differently from the QAM cable TV service available in many dorm rooms. Casting isn’t supported either. The Android version of the app only attracted 69 mixed reviews as of the date of this article.

Charter seems convinced SpectrumU will soon replace traditional internet video streaming, telling campus managers that the service will have “minimal impact if the school’s internet service is robust today, as SpectrumU usage will replace usage of other streaming apps.”

Students doubt it.

“I have never heard of SpectrumU and don’t care,” said Cody, a student we ran into in the parking lot at Nazareth. “I have Amazon Prime and Netflix and I’m good with that.”

Hobart and William Smith Colleges in Geneva, N.Y., are also an early adopter of SpectrumU.

Zephyr, a freshman at St. John Fisher who lives on campus said she doesn’t know anything about the service either, although a roommate in her friend’s dorm room brought their QAM-equipped television to school and can watch the campus TV lineup on it.

“Her boyfriend is a Buffalo Bills fan so he watches the games on her TV, but we really don’t watch it ourselves,” she told us. “Everyone has their own phone or tablet and most people are sharing  passwords from home to watch HBO, Hulu, or Amazon stuff.”

Dylan’s password trading brings him access to Hulu, Amazon, Netflix, CBS, and Sling TV. Even with SpectrumU available for free with no password required, he doesn’t care, preferring to watch on-demand content on his tablet or the PlayStation he brought to school.

“I don’t know anyone who watches Spectrum TV and their company sucks anyway,” said Dylan. “I hate ads and I pretty much only binge watch stuff now, so this is useless for me.”

A few students told us they did bring televisions to campus to watch live television, but many just use an antenna. Nazareth and St. John Fisher are only a short distance from Pinnacle Hill, the location for most Rochester television transmitters, and reception is easy.

“Televisions are what our parents watch,” Serena at Nazareth told us. “I don’t know anyone my age with cable.”

Stop the Cap! tested the Android version of the app at both colleges. It reminds us of Spectrum’s streaming TV app, only less capable. The app does not support DVR-type recording, pause and rewind, or on-demand services — things college students would probably look for the most. We experienced occasional buffering watching CNN in a parking lot, but note Wi-Fi signal strength was not ideal. We also found, despite warnings in student handbooks, a number of student-run hotspots and wireless access points. At one dorm at St. John Fisher, we found over 60 Wi-Fi signals competing with the college’s own wireless network.

Cable companies believe by offering cable services to college students, they will get hooked on those services and subscribe after they leave college. But evidence suggests those under 30 are increasingly unlikely to pay for a cable television subscription and are dubbed “cable-nevers” for having no interest in subscription television. They are, however, avid users of streaming services like Netflix and Hulu.

AT&T’s U-verse TV has been losing customers for over a year. (Image: Market Realist)

AT&T wants its U-verse TV video service dead, but is willing to watch it bleed customers for a while before likely downsizing or axing the service to make room for better broadband speeds.

The phone company has allowed U-verse TV to wither on the vine for more than a year, losing hundreds of thousands of customers every quarter since late 2015, and surprisingly has done almost nothing to stop the subscriber losses. In all, more than a million AT&T U-verse TV customers canceled service in 2016.

AT&T has admitted it has abandoned aggressively marketing its U-verse TV platform and has put its marketing muscle into selling DirecTV, the satellite provider AT&T acquired two years ago. DirecTV has added customers at a remarkably similar rate that AT&T has been losing U-verse TV customers. AT&T is even willing to watch customers walk into the arms of their competitors, a clear sign AT&T hopes their U-verse TV customers churn away.

Customers report U-verse TV-related promotions and retention plans have gotten worse in the last 14 months and some tell Stop the Cap! they were steered to DirecTV when they contacted AT&T to discuss their options.

Even the U-verse brand is being gradually discontinued. AT&T recently rebranded its fiber to the home service AT&T Fiber, dropping the AT&T U-verse with GigaPower brand the company had used since first announcing gigabit speed access.

AT&T U-verse as a brand is slowly disappearing in favor of AT&T Fiber.

Market Realist reports AT&T doesn’t necessarily want to spend a lot of money upgrading its legacy U-verse fiber to the neighborhood network across its entire landline service area, but needs to boost broadband speeds to stay competitive with cable broadband. When U-verse was originally launched, the service reserved much of its available bandwidth for television service, limiting broadband speeds to a maximum of around 24Mbps. That is no longer seen as competitively adequate and that leaves AT&T with only two options: upgrade its legacy infrastructure to support fiber-fed gigabit speed or reduce the amount of bandwidth devoted to television services and use it to expand broadband speeds.

AT&T is doing a little of both, expanding its gigabit broadband service in very limited areas in 46 cities with 23 more to come sometime this year. An indication of just how few customers can actually buy AT&T’s gigabit speeds was revealed indirectly by AT&T. Only four million homes and businesses, including 650,000 apartment and condo units can buy 1,000Mbps broadband from AT&T nationwide. Los Angeles and Chicago — both AT&T Fiber service areas, combined have more than five million potential customers alone.

In many cases, fewer than 10% of AT&T’s customers in AT&T Fiber cities can actually buy the service. In Knoxville, Tenn., AT&T admitted its gigabit service was only available in about 30 apartment and condominium complexes.

AT&T is promising to expand its fiber service to reach at least 12.5 million customers in 67 metro areas by the summer of 2019. But that will still likely leave more than half of AT&T’s customers out of reach of the service.

AT&T has told investors it plans no blockbuster budget increases to aggressively roll out fiber service across its footprint, which includes much of the south and midwest and large sections of California. Instead, it will likely offer fiber service to new housing developments, multi-dwelling units, and higher income areas. That decision still requires AT&T to do something for customers not on a near-term upgrade list, and that will likely be a gradual transformation of legacy U-verse into broadband-only service with speeds closer to 50-75Mbps, where video streaming from services like DirecTV Now can travel over the top to customers.

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.

With the advent of AT&T/DirecTV Now, AT&T’s new over-the-top streaming TV service launching later this year, AT&T is preparing to bury the U-verse brand.

Earlier this year, AT&T customers noticed a profound shift in the company’s marketing priorities. The phone company began steering potential customers to AT&T’s latest acquisition, satellite television provider DirecTV, instead of U-verse. There is an obvious reason for this – DirecTV has 20.45 million customers as of the second quarter of 2016 compared to 4.87 million customers for AT&T U-verse TV. Volume discounts make all the difference for pay television companies and AT&T hopes to capitalize on DirecTV’s lower programming costs.

AT&T’s buyout of DirecTV confused many Wall Street analysts, some who believe the days of satellite television are past their peak. Satellite providers lack the ability to bundle services, although some phone companies partner with the satellite company to pitch phone, broadband, and satellite TV to their customers. But consider for a moment what would happen if DirecTV introduced satellite television without the need for a satellite dish.

Phillip Dampier: The “U” in U-verse doesn’t stand for “unlimited.”

AT&T’s DirecTV Now will rely on the internet to deliver television channels instead of a satellite. AT&T is currently negotiating with most of the programmer conglomerates that own popular cable channels to allow them to be carried “over-the-top” through broadband connections. If successful, DirecTV Now could become a nationwide powerhouse alternative to traditional cable TV.

AT&T is clearly considering a potential future where DirecTV could dispense with satellites and rely on broadband instead. The company quietly began zero rating DirecTV streaming in September for AT&T Mobility customers, which means watching that programming will not count against your data plan. For current U-verse customers, broadband speeds have always been constrained by the need to reserve large amounts of bandwidth to manage television viewing. Although AT&T has been boosting speeds in selected areas, a more fundamental speed boost could be achieved if AT&T dropped U-verse television and turned the service into a simple broadband pipe that relied on DirecTV Now to manage television service for customers.

AT&T seems well on the way, adding this notice to customer bills:

“To make it simpler for our customers U-verse High Speed Internet and U-verse Voice services have new names: AT&T Internet and AT&T Phone. AT&T Internet product names will now align with our Internet speed tiers. Our voice plan names will remain the same.”

An earlier internal company memo suggested AT&T would eventually transition all of its TV products into “AT&T Entertainment” after completing a transition to its “next generation TV platform.” Increasingly, that platform seems to be an internet-powered streaming solution and not U-verse or DirecTV satellite. That transition should begin in January.

Gone by end of 2016.

It would represent a formidable change, but one that makes sense for AT&T’s investors. The transition to IP networks means providers will offer one giant broadband pipe, across which television, phone and internet access will travel. The bigger that pipe becomes, the more services customers are likely to use — and that means growing data usage. Having a lot of fiber infrastructure also lays the foundation for expansion of AT&T’s wireless network — particularly towards 5G service, which is expected to rely on small cell technology to offer faster speeds to a more localized area — fast enough to serve as a home broadband replacement. Powering that network will require plenty of fiber optics to provide backhaul access to those small cells.

Last week, AT&T announced it launched a trial 100Mbps service using point-to-point millimeter-wave spectrum to offer broadband to subscribers in multiple apartment complexes around the Minneapolis area. If the initial trial is successful, AT&T will boost speeds to include 500Mbps service to those same complexes. AT&T has chosen to provide the service outside of its usual service area — Minneapolis is served by CenturyLink. AT&T acquired a nationwide license to offer service in the 70-80GHz band back in 2009, and an AT&T spokesperson claimed the wireless signal can reach up to two miles. The company is also experimenting with new broadband over power lines technology that could offer service in rural areas.

Just like its wireless service, AT&T stands to make money not just selling access to broadband and entertainment, but also by metering customer usage to monetize all aspects of how customers communicate. Getting customers used to the idea of having their consumption measured and billed could gradually eliminate the expectation of flat rate service, at which point customers can be manipulated to spend even more to access the same services that cost providers an all-time low to deliver. Even zero rating helps drive a belief the provider is doing the customer a favor waiving data charges for certain content, delivering a value perception made possible by that provider first overcharging for data and then giving the customer “a break.”

As of mid-September, streaming media analyst Dan Rayburn noted Akamai — a major internet backbone transit provider — was selling content delivery contracts at $0.002 per gigabyte delivered, the lowest price Rayburn has ever seen. Other bids Rayburn has reviewed recently topped out at 0.5 cents per gigabyte. According to industry expert Dave Burstein, that suggests large ISPs like AT&T are paying something less than a penny per gigabyte for internet traffic.

“If you use 139GB a month, that costs your provider something like $1/month,” Burstein wrote, noting doubling backbone transit costs gives a rough estimate of the cost to the carrier, which also has to carry the bits to your local exchange. In this context, telecom services like broadband and phone service should be decreasing in cost, not increasing. But the opposite is true. Large providers with usage caps expect to be compensated many times greater than that, charging $10 for 50GB in overlimit fees while their true cost is well under 50 cents. Customers buying a cell phone are often fitted with a data plan that represents an unprecedented markup. The extent of price increases customers can expect can be previewed by looking at the cost of phone service over the last 20 years. The average, often flat rate telephone bill in 1995 was $19.98 a month. In 2014, it was $73 a month. In 2015, it was $90 a month. Those dramatically rising prices in the last few years are mostly as a result of the increased cost of data plans providers charge to clean up on customers’ growing data usage.

Both Comcast and AT&T are dedicated to a campaign of getting customers to forget about flat rate, unlimited service at a reasonable cost. Even as both companies raise usage caps, they continue to raise prices as well, even as their costs to provide the service continue to drop. Both companies hope to eventually create the kind of profitable windfall with wired services that wireless providers like AT&T and Verizon Wireless have enjoyed for years since they abandoned unlimited flat rate plans. Without significant new competition, the effective duopoly most Americans have for telecommunications services offers the opportunity to create a new, more costly (and false) paradigm for telecom services, based on three completely false claims:

• data costs are expensive,
• usage must be monetized, and
• without a bigger return on investment, investors will not finance the next generation of telecom upgrades.

But as the evidence clearly shows, profits from selling high-speed internet access are only growing, even as costs are falling. Much of the drag on profits come from increasing costs related to licensing television content. Voice over IP telephone service is almost an afterthought for most cable and phone companies, often thrown in for $10-20 a month.

AT&T’s transition puts all the attention and its quest for fatter profits on its broadband service. That’s a bad deal for AT&T customers no matter what the company calls its “next generation” network.