Tech

AT&T begins rolling out TV product that uses Android boxes and will replace DirecTV and U-Verse as flagship service

Key Points
  • AT&T's new internet-connected TV service rolls out nationally beginning Monday.
  • The product costs $49.99 per month with a 24-month commitment or $39.99 per month when bundled with AT&T internet service, if available.
  • The service includes a box that customers can plug in by themselves, a remote control with Google Assistant and a cloud DVR.
Randall Stephenson, CEO of AT&T, speaking at the Business Roundtable CEO Innovation Summit in Washington, DC. on Dec. 6th, 2018.  
Janhvi Bhojwani | CNBC

AT&T is rolling out a new national TV service that lets customers connect Google Android-powered boxes directly to their broadband internet, eliminating the need for U-Verse fiber hookups or satellite TV dishes.

The service, AT&T TV, which has previously been available in just 13 markets, includes access to all streaming apps that are available in Google's app store and free access to HBO Max, AT&T's streaming service that launches in May. The Android box runs a custom interface built by AT&T and has 500 hours of DVR cloud storage. There's also a remote that includes Google Assistant.

Among other things, Google Assistant can be used to change channels, check the weather, play music and control smart home gadgets, such as light bulbs.

AT&T's new video interface is similar to Comcast's X1 and will ultimately be the company's flagship TV service, replacing DirecTV and U-Verse.

The primary benefit for AT&T, beyond the next generation software, is the dramatic reduction in subscriber acquisition cost that comes with an internet-connected box. No external box or satellite installation is necessary because consumers will be able to plug in the set-top box directly to the TV, which connects wirelessly to any home broadband service. Satellite TV installation and associated customer acquisition costs are typically more than $700 — a figure that will be drastically lower without the cost of a dish installation.

If DirecTV customers switch to the new AT&T video service over time, AT&T may be further compelled to sell off its satellite TV assets — a divestiture championed by hedge fund Elliott Management last year but has been resisted by AT&T.

In areas where U-Verse internet service is available, AT&T will bundle the new TV service with 1 gigabit AT&T internet for about $80 per month. Without internet, AT&T TV packages will start at $49.99 per month for 12 months with a 24-month commitment. AT&T TV users who decide to subscribe to HBO, or who are premium video, mobile or broadband subscribers, will get HBO Max for free.

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.

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