Like most giant cable TV companies, AT&T is losing angry subscribers hand over first as they flock to cheaper, more flexible streaming services. AT&T lost a whopping 4 million pay TV subscribers last year; 1.16 million in the last three months of 2019 alone. Most of these “cord cutters” left for the usual reasons: high prices, sneaky fees, and terrible customer service.
So how is AT&T trying to fix it? By doubling down on all the bad ideas that caused the problem in the first place.
The company this week announced the launch of AT&T TV, a new creatively-named streaming TV service that was previously only available in 13 markets as part of a beta.
On its surface, AT&T’s new streaming service looks promising. The company insists that users can sign up for new streaming TV service starting at $50 a month. Users can also bundle 1 gigabit AT&T broadband (assuming it’s available) and TV service for $80 a month.
"Our customers told us what they want from their TV service and we built AT&T TV around that,” AT&T executive Thaddeus Arroyo said of the new offering.
But upon closer inspection AT&T’s offer begins to quickly unravel, unveiling a service that doubles down on all the things US consumers have made it very clear they don’t want.
For starters, AT&T’s promotional rates are only good for twelve months, after which the price of the service skyrockets. The company’s $50, $55, $65, and $70 per month rates all nearly double after twelve months to $93, $110, $124, and $135 per month, respectively.
AT&T’s advertised price also doesn’t include a bevy of misleading surcharges and fees, a tactic cable and broadband providers have long utilized to help them falsely advertise a lower price. AT&T doesn’t even tell you how much these added surcharges and fees will cost you until you actually order service, leaving you blindsided when your bill arrives.
There’s a $20 activation fee unless you order online. There’s an additional $8.49 per month “regional sports networks” fee for sports programming you may or may not watch. And should you cancel service before your contract is up—there’s an early termination fee (ETF) that will cost you $15 for each month left on your contract.
“With the proliferation of add-on fees, it’s nearly impossible for consumers to find out the full cost of a cable package before they get locked into a contract—and cable companies count on this,” groups like Consumer Reports have said of the practice. Lawmakers and regulators (usually) turn a blind eye to this behavior, despite it being glorified false advertising.
AT&T is offering users proprietary, Android-based streaming box to fuel the service. Your first box is free, but each additional box for other rooms in the house will run you $120 each. Most streaming alternatives have ditch the traditional cable box, the monopoly over which generates the cable TV industry an additional $21 billion every year.
Most streaming video alternatives usually lack such sneaky surcharges, contracts, ETFs, and hidden fees, resulting in consistently higher customer service ratings as a result.
AT&T’s price hikes are a byproduct of AT&T’s obsession with merger mania. AT&T spent more than $150 billion on mergers in the last five years alone (DirecTV, Time Warner), hoping this greater size and leverage would help it dominate the video space. To recoup that debt, AT&T is passing it off to its customers in the form of price hikes.
Consumers have made it very clear they’re tired of sneaky fees, misleading promotional rates, and proprietary, locked down cable industry hardware. Yet AT&T, after spending a year watching millions of customers run for the exits, is engaging in all the exact behavior that created this problem in the first place.