AT&T TV is a brilliant idea wrapped in terrible pricing

After seven months of pilot testing, AT&T TV is now available nationwide, and I keep coming back to one question: Why?

AT&T TV’s big idea is to provide a familiar TV experience, but over the internet instead of through cable or satellite. Customers get a streaming set-top box from AT&T that’s preloaded with the AT&T TV service, and it comes with a remote that borrows lots of ideas from cable boxes. Because the AT&T TV box runs on Google’s Android TV operating system, it also supports other streaming apps, such as Netflix and Disney+.

Unfortunately, AT&T TV also brought along some of the reasons people have been parting ways with cable and satellite TV service in the first place, including long-term contracts, sneaky fees, and drastic price hikes. As a result, what could have been a gateway to cord-cutting for millions will instead appeal to almost no one.

AT&T TV explained

To be clear, AT&T TV is not the same as AT&T TV Now (which was previously known as DirecTV Now). With AT&T TV Now, you bring your own streaming device—whether it’s an Amazon Fire TV, Apple TV, Roku, Chromecast, or Samsung smart TV—and then sign up for service with AT&T and pay as you go.

AT&T TV hews closer to the cable and satellite playbook. Instead of bringing your own hardware, AT&T provides a box for free with service and sells additional ones for $120 each, with the option to pay them off in $10-per-month installments. While you can use other devices like Fire TV and Apple TV with the service, the AT&T TV website and sign-up flow don’t make this clear. (The service includes 500 hours of cloud DVR storage, so recordings transfer across devices either way.)

AT&T

More importantly, AT&T TV employs the old satellite TV trick of requiring a two-year contract with a severe price hike in the middle. So while advertised pricing starts at $50 per month, that price jumps to $93 per month after the first year. Should you decide to leave in the middle of a contract, you’ll pay $15 for every month that’s left.

You can see the full AT&T TV channel comparison on the company’s website, but here’s how pricing breaks down:

• Entertainment: $50 per month for one year, then $93 per month
• Choice: $55 per month for one year, $110 per month thereafter
• Xtra: $65 per month for one year, $124 per month after that
• Ultimate: $70 per month for one year, then $135 per month

AT&T TV’s Choice, Xtra, and Ultimate plans also include regional sports fees of up to $8.50 per month. And while you can defray some of these costs by bundling internet service—$10 off per month with AT&T wireless, and $20 off with U-Verse gigabit internet where available—those bill credits also go away after the first year.

By now, you can probably see the problem: Compared to other live TV streaming services such as YouTube TV ($50 per month) and Hulu + Live TV ($55 per month), AT&T TV is much pricier over its contractually obligated two-year service period. While it does have a larger selection of channels overall, the appeal of all those extra channels is decreasing as the best shows move outside of the TV bundle entirely.

Squandered potential

Despite my naysaying, I do believe a market exists for some kind of all-in-one cord-cutting solution. I’ve heard from plenty of readers who’d like to save money by dropping their pay TV service, but don’t want to give up cable’s creature comforts. When they turn on the TV, they want the last channel they were watching to pop up on screen. They want remotes with dedicated buttons for the TV guide, channel recall, and DVR. Some of them even want a number pad, so they can enter channel numbers from memory. Most importantly, they want everything to work right out of the box.

AT&T

AT&T TV claims to offer those things, which is why its price structure is all the more frustrating. If AT&T had some spine and was willing to price its service more aggressively, it might capture the millions of people who want to slim down from cable without sacrificing the experience they already know. AT&T could even use its hardware to upsell those customers on the forthcoming HBO Max, which the company now believes is the future of its TV business.

Instead, AT&T says it isn’t targeting cord-cutters at all. As a spokesperson told Matthew Keys this week, the real goal is to pull people over from cable or satellite service.

But if people aren’t making plans to cut the cord, it’s probably because they’re happy enough with the service they have and don’t mind paying a premium for it. Either that, or they don’t get fast enough internet service for streaming. Getting those customers to embrace an entirely different system that relies on internet streaming and doesn’t save much money will be a tough sell.

I still think services like YouTube TV and Hulu + Live TV would be wise to offer their own streaming devices, ones that focus on making the switch as simple and cost-effective as possible for folks who’ve spent decades using cable TV. I also think a lot of people will stick with cable because it’s easier than switching to something new despite the costs.

AT&T TV is caught in the middle, offering neither the reliability of cable nor the savings and flexibility of cord-cutting. So why does it exist? Maybe it’s just for folks who don’t read the fine print before signing a two-year contract.

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