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AT&T CEO Plans to ‘Go Hard’ on Sponsored Data for Streaming Subscribers

Randall Stephenson says smooth sailing ahead for popular perk with Trump-installed FCC head

AT&T CEO Randall Stephenson and CFO John Stephens hopped on a Wednesday afternoon earnings call to shed light on the company’s fourth-quarter finances and future outlook as the world’s largest telecom company continues its evolution into a media empire. One thing they aren’t overly concerned with: the future of “zero rating,” which has helped its new streaming service DirecTV Now accumulate more than 200,000 subscribers in less than two months of operation.

AT&T uses zero rating to not charge its wireless customers for data they use while streaming DirecTV Now, the over-the-top service the company launched in November that opened with a promotional offer of more than 100 channels for $35 a month. The FCC sent a letter to AT&T in December expressing competitive concern about zero rating, but with a new regime led by net neutrality opponent Ajit Pai — installed this week by President Trump — Stephenson isn’t worried about its longer-term prospects.

“We actually were quite confident that zero rating as we were implementing was fine under a Pai chairmanship,” Stephenson said, remarking that AT&T was “going hard” when it was putting together that capability. “You should expect us to continue that, and continue to push aggressively on this.”

And he said the ability of AT&T Wireless subscribers to stream more than 100 live TV channels through DirecTV Now without cutting into their data allocation was a significant enticement to sign up for the streaming service.

“We launched U-verse back in 2007,” Stephenson said, referring to AT&T’s first TV service. “It took us a year and a half to get to 200,000 subscribers on U-verse.”

Stephenson opened his comments by talking about the investments AT&T has made in its wireless and broadband infrastructure in the previous years to build a foundation for the rise of streaming video. He also said that as video, home internet and mobile continue to converge, it was “critical” to have an ownership interest in “something that’s going to ride on this foundation, and that’s premium content.”

As pay-TV subscribers continue to decline, Stephenson and Stephens highlighted the growth story of DirecTV Now, which has accumulated subscribers — and not merely ones who have traded in a cable package — quickly despite a handful of high-profile technical issues.

Stephens said “we’re learning more about the subscriber base and the platform” as the company works through some early technical challenges that Stephens acknowledged are part of launching a new service. But based on very early results, it appears DirecTV Now is reaching a different consumer base.

“Early demographics are urban, younger and more apartment dwellers than a typical linear customer,” Stephens said.

And although President Trump has picked a public fight with Time Warner’s cable network CNN, Stephenson said he was encouraged by his recent meeting with the president, saying that he felt his focus on tax and regulatory reform could be good for AT&T. He did not express any concern that AT&T’s $85 billion deal to acquire the media conglomerate would be blocked, and Stephens said he expects it will be approved later this year.