For the Telcos, OTT is Hot

If you’re a telco and you don’t have an over-the-top video offering in your game plan, then you’re apparently not trying very hard to prepare for the market shifts that continue to shake up the pay TV business.

Two major U.S. telcos — AT&T and CenturyLink — announced significant OTT video initiatives last week that share some technical similarities, but don’t necessarily line up the same way strategically. While both appear to be long on ambition, information on pricing, content and packaging is still in short supply.

Another big question yet unanswered is whether these services will help these telcos expand the pay TV pie, or cannibalize their base.


AT&T said its angle is to pursue the 20 million homes or so that are not part of the pay TV ecosystem today. That includes cord-cutters and cord-nevers, and consumers with “transient lifestyles” who aren’t currently in the pay TV mix, AT&T Entertainment Group CEO John Stankey said last Wednesday (March 2) at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.

As for AT&T’s plan, the aim is to deliver video services agnostically — via managed and unmanaged wired networks, as well as increasingly speedy wireless connections — and to tie them all together with a common middleware platform.

AT&T, which has seen its U-verse TV subscriber base shrink as it focuses on the lower- cost DirecTV platform, will try to attack multiple segments of the market with three OTT services that, it said, will launch in the fourth quarter of this year.

Though some observers believe DirecTV Now will be akin to Sling TV, Dish Network’s OTT service, the DirecTV offering won’t be “skinny.”

“It is a rich bundle of content; it’s not a skinny bundle of content,” Stankey said, without providing specifics. The aim is to target pay TV’s “middle road,” he said — somewhere between the traditional premium bundle and slimmed-down offerings.


CenturyLink has been hinting at its OTT strategy for months, and last week (at the same conference), company CTO Aamir Hussain shed more light on those plans, revealing that the telco is developing products that can be delivered in and out of its Prism TV footprint.

The telco has “soft launched” an in-footprint service called Prism Stream, a multiscreen offering that delivers the telco’s traditional Prism TV service over-the-top.

Hussain said the OTT approach will allow CenturyLink to deliver pay TV packages using less bandwidth while expanding its pay TV footprint. Going over-the-top, he said, will reduce the minimum bandwidth requirement for Prism from 25 Megabits per second to 10 Mbps.

“We can literally double the size of our footprint in a very short period of time by doing that,” he said.

CenturyLink has about 3.2 million homes enabled for Prism TV, its managed IPTV service currently powered by the Ericsson Mediaroom platform. It ended 2015 with 285,000 Prism TV subscribers.

According to some concept art for Prism Stream that appeared on the Web, the service will allow users to connect on up to five devices.

CenturyLink is also starting to test an OTT service for millennials that delivers a smaller package, and will be offered outside the Prism footprint. Hussain said CenturyLink is set to trial that millennials-focused OTT service in four markets, but did not identify them.

“The platform has been built,” he said. “The content agreements have almost been negotiated.”

And CenturyLink believes it has a good reason to push video products, as 50% of subs on Prism TV today are new to CenturyLink, and 98% of Prism customers also get broadband from the telco.

Frontier Communications is also broadening its video game, saying it plans to launch video service to more than 40 markets, representing about 3 million homes, over the next three to four years. Frontier is expected to deliver those services on a managed IPTV platform that rides a fiber-to-the-node platform plus fiber-to-the-premises networks in California, Texas and Florida it’s buying from Verizon Communications.

AT&T’s OTT Trio

Here’s what the telco has on tap:

DirecTV Now: To feature a range of content packages, including much of what is available from DirecTV today, including VOD and live TV, and premium add-ons. “We expect to be able to offer local channel coverage in the future,” an AT&T official said.

DirecTV Mobile: A “mobile-first” offering will feature premium video for smartphones, made available via any wireless service provider. AT&T has expressed interest in offering a sponsored mobile data product, but has yet to follow Verizon and its new FreeBee Data service.

DirecTV Preview: A free, ad-supported offering delivered via wired or wireless connection that could look a bit like Verizon’s Go90 service. AT&T’s version will feature fare from AT&T’s Audience Network as well as from Otter Media, the AT&T-The Chernin Group joint venture. This offering, AT&T Entertainment Group CEO John Stankey said, will be delivered “outside the paywall.”