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AT&T’s new bundle could shake things up

Mark Garrison Aug 3, 2015
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We’re getting a look at what AT&T plans to do with DirecTV after buying it for $48.5 billion. Monday, AT&T announced its plan to bundle TV and mobile phone service into a package with an introductory rate of $200 a month. It’s a bundle that’s different from existing ones.

“The new AT&T bundle is unique in that it’s a nationwide bundle,” says Brett Sappington, director of research at Parks Associates, a consulting firm that focuses on digital technology.

That’s the benefit of owning DirecTV: reaching customers around the country without having to lay cable or fiber lines to their homes.

“It looks like a very attractive kind of bundle, particularly by building in the mobile phone service into that,” says Jim Nail, principal analyst at Forrester Research.

Rolling mobile phones into the bundle is something the typical local cable company can’t do. But some analysts think AT&T’s offer, and the explosion in smartphone video, may force cable companies to change course.

“One of the things that you may see is an increasing number of potential partnerships between television providers and mobile providers,” Sappington explains.

He says bundling TV and phone services could save consumers money and the headache of multiple bills.

But, “it makes it hard for people to switch off a particular service and that reduces competition in markets across the board,” says Nicholas Economides, economics professor at New York University’s Stern School of Business.

He says companies are less inclined to offer better prices or service when it’s troublesome for you to choose another option. And a look at the fine print of AT&T’s new package reveals the requirement that customers sign a two-year contract to get the new DirecTV deal.

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