TV Everywhere may be the single biggest transformational event in the television industry since cable TV and IPTV was invented. Last July, AT&T (T) acquired DirecTV and took a giant step toward getting this new ball rolling. This put wireless TV in the headlines, however most investors don’t yet understand how important this is.
Wireless TV is the start of a new industry-wide shift which is putting new and intense competitive pressure on traditional cable television companies like Comcast (CMCSA), Timer Warner Cable (TWC), Cox, and Charter (CHTR). So let’s take a look at where the entire television and wireless space is heading.
After the acquisition last summer by AT&T, suddenly DirecTV customers can also now get television over the AT&T Mobility wireless network. That means they can also watch programming on their smartphones and tablets anywhere in the United States over the wireless network. Compare this to DISH Network, which still does things the old fashioned way with more limited access.
TV Everywhere is Transformative
Since AT&T DirecTV is first, they are playing the same transformative role they did eight years ago by being the first wireless carrier to carry the iPhone. I believe this has that same kind of industry reshaping possibility.
Wireless TV is the new marketplace segment which all television competitors are struggling to keep up with. I believe TV everywhere will rapidly become so important, it will change everything.
In fact, this segment is so new, it does not yet have an official separate name so we call it wireless TV or TV everywhere. Its like the first iPhone and Android smartphone. They were smartphones like the Blackberry (BBRY), but they were light years ahead. So what do you call them? The same thing is happening here with wireless TV.
Wireless TV is Changing the Industry
So how is this new wireless TV impacting both AT&T and the competitors? That’s the big question. Last week, AT&T CEO Randall Stephenson gave interviews while at the World Economic Forum in Davos, Switzerland to CNBC and the Wall Street Journal among others. He said it’s still very early in the process since the acquisition was just six months ago. However, he said they are more enthusiastic today than they were when they first started last summer.
We have to also remember that AT&T, one of the largest US telecom companies by revenue is also one of the largest acquirers in the telecom industry. Remember just last year they acquired both DirecTV, two deals in Mexico and wireless spectrum for video. Stephenson said the industry is going through a lot of change and when that happens parts move around and M&A happens.
Next Wave of M&A Has Begun
Stephenson says the industry is not finished changing. I would say that is one of the biggest understatements. The industry is just beginning a wave of M&A, and with all the new technology, several industries will be impacted and go through significant changes.
Just think of all the changes we are seeing in multiple industries like wireless, telecom, television, Internet and more as new technology and the ability to start to work together are creating an entirely new marketplace. Just think how these industries are impacting other industries like automotive, healthcare, retail and so many others.
We Are in the Very Early Years of Transformation
We have to remember that as a society we are still in the very early days of wireless TV or TV everywhere. AT&T and DirecTV are first and as they continue to integrate I think we will start to see much more industry innovation like wireless TV. In fact, I would not be surprised to see more M&A, more innovation and more reinvention going forward.
However, as a first step, wireless television is very exciting and puts real competitive pressure on the entire cable TV and IPTV industry. And AT&T is putting itself right in the center of the explosion of innovation and transformation.
AT&T Unlimited Data
To really juice up this transformation, AT&T also recently started to reinstate their unlimited wireless data plans for customers who sign up with DirecTV. This is a big incentive which should only increase the DirecTV impact.
Verizon (VZ) says they are not moving in this direction. That is disappointing, but then again we are beginning to see AT&T and Verizon take different growth paths going forward. They are no longer the same kind of company anymore.
AT&T is Only Nationwide Wireless TV Competitor
DirecTV let’s AT&T compete in the television industry nationwide, not just within their telephone region. Today AT&T offers Uverse IPTV within their region and they offer DirecTV nationwide.
In addition to television in the home, these services also leverage the AT&T Mobility network so customers can watch TV from anyplace in the United States, wirelessly, on their smartphones, tablets or computers.
This is transformative. This is what most people don’t understand yet. However, as the shape of this new marketplace becomes more clear going forward I believe we will understand much more clearly going forward.
This has such an enormous potential industry reshaping impact I believe we will see every competitor on the industry step up and try to compete in this new space. They have to. Either that or they will simply continue to lose market share.
Then again, we have seen industries reinvent themselves before. If cable TV doesn’t step up, they will lose. They can’t simply hope the marketplace will go back to where it was before. It will not do that. That’s what Blackberry, Nokia (NOK) and Motorola (MSI) always hoped as well. Their future is on the line.
Being a nationwide competitor means AT&T can compete with every cable television company and every other television competitor nationwide. This means AT&T can change the competitive landscape. They can rewrite the rules going forward. They did it in wireless and smartphones a decade ago. So DirecTV is an enormous growth opportunity for AT&T. And this is only one of many.
Equities.com columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst and consultant. He shares his colorful perspectives on the changing wireless, communications and tech industry which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next.
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