AT&T to Sever DirecTV Ties in Early 2008

AT&T has confirmed its intention to early next year sever an arrangement whereby it provides services from DirecTV to customers, primarily in the region previously served by BellSouth before the telecom giant merged with the RBOC.

The decision comes as little surprise as AT&T already sells its Homezone service which provides video and Internet access via DISH Network to far-flung consumers in something of a complement to its landline-based, video-driven U-verse triple-play bundle.

AT&T’s aggressive deployment of U-verse this year has raised questions as to when, and how widely the telco would continue providing Homezone, which it added high definition viewing capabilities many months ago.

Asked what would become of its DirecTV users, an AT&T spokesperson would say only that, in the near term, the telco will begin selling DISH service in the Southeast. “We continue to evaluate our long-term relationships with both companies based on the best interests of our customers and shareholders. We will make a decision by late 2008, when our current DISH contract expires.”

The fluid and evolving situation calls into question AT&T’s overall video services strategy, especially for customers already using DirecTV from AT&T in the Southeast, who could be facing multiple service changes in the next year.

Conspicuous in its absence from AT&T statement is any mention of what, if any, steps AT&T will take to minimize potential disruption for current customers buying DirecTV from the telco.

DirecTV says it provides digital TV to 16.6 million customers in the United States, but does not say what subset of that group it serves via the AT&T arrangement. DirecTV has gained attention by aggressively adding to its HD programming.

DirecTV Inc. www.directv.com
AT&T Inc. www.att.com

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