AT&T's Stephenson: DirecTV Now to offer 100-plus channels of zero-rated video for wireless subs

AT&T’s DirecTV Now will roll out later this year with more than 100 channels at a “very aggressive price point,” CEO Randall Stephenson said this morning. And the content will be zero-rated for the company’s wireless customers.

“We’ll be rolling it out in a couple of months,” Stephenson told attendees at an investors conference. “We’re talking 100-plus channels at a very, very aggressive price point. And when you buy this content, the data required to stream it onto your mobile device is incorporated into the price of the content…. If you choose to use that in a mobile environment on AT&T, your data cost is incorporated into your content cost."

Mobile carriers are increasingly offering zero-rated content in an effort to differentiate themselves from the competition. T-Mobile was the first to do so with Music Freedom and Binge On, which enables users to consume music and video without it counting against their monthly data allotments; every other major wireless operator in the U.S. has also brought zero-rated content to market in one form or another.

Some critics have said zero-rated data may run afoul of net neutrality principles because it can give some content providers an advantage over others. The FCC has yet to intervene in carriers' policies regarding zero-rated data, but has said it continues to monitor the issue.

But FCC Commissioner Michael O'Rielly said this week that the Commission's stance is effectively preventing some companies from bringing consumer-friendly services to market.

"As many of you may know, we now review these innovative means to attract consumers in an exceedingly competitive marketplace under a vague, catch-all rule called the 'general conduct standard,'" O'Rielly said during a speech at the International Bar Association Conference Tuesday. "Clearly, it's impossible for companies to keep in compliance and avoid regulatory 'flags' when the overall game is not explained in advance."

The nation’s second-largest carrier announced the DirecTV-branded offering in March, outlining a three-tiered service for smartphones, tablets, PCs, web-enabled TVs and other connected devices. AT&T has spent much of the last few months locking in programming rights with content providers across platforms, and smartphones and tablets will be a primary focus of the over-the-top service.

Stephenson noted the ever-increasing consumption of video on mobile devices, citing the growing audience of the NFL’s Sunday Ticket offering.

“The platform the NFL Sunday ticket rides on is an AT&T platform,” he said. “Last week, if you looked at the number people streaming the NFL Sunday Ticket, just week over week it was up 60 percent, which is a stunning number. From one week to the next, the number of people streaming the NFL Sunday Ticket on a mobile device was up 60 percent.”

DirecTV now will initially be targeted at consumers in 20 million homes that don’t currently have pay-TV subscriptions, Stephenson said. Many of those users live in apartments, he suggested, and are more inclined to use smartphones and tablets to watch video than other consumers.

AT&T clearly hopes to leverage last year’s $49 billion acquisition of DirecTV to grow its wireless customer base. Indeed, the carrier said in July that 5 million customers have signed up for its bundled offering of unlimited wireless data for DirecTV subscribers starting at $100 a month.

But a crucial component of AT&T’s video initiative is the data that will be generated by consumers as they watch on various platforms. That data will not only help marketers deliver highly targeted ads, it will help content providers develop programming strategies.

“Most of the programmers are still trying to figure out the new model as well, and I would tell you one of the key variables if you’re anybody in this industry that you want is the viewership data,” Stephenson said. “We have, I believe, the best viewership data in the industry; we have millions and millions of set-top boxes in homes that are connected to the internet. We have anonymized viewership data that is very instructive to how you think about new advertising models, addressable advertising models, and this data is also instructive in terms of how you think about determining programming.”

Indeed, AT&T said this week that it will expand its AdWorks offering later this year to help advertisers target consumers across 14 million homes and 30 million mobile devices. The expansion will include ad inventory on an overhauled DirecTV mobile app, which enables subscribers of the satellite TV provider to access live and record content based on their home TV subscriptions.

"This is a scalable, verifiable and transparent way of targeting and measuring advertising that is truly cross-platform," said Rick Welday, president of AT&T AdWorks, in a press release. "Advertisers will have the ability not only to target an audience, but also to measure results through the full marketing funnel."

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