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AT&T Acquires DIRECTV, Changes the US Pay-TV Landscape

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Part 8
AT&T Acquires DIRECTV, Changes the US Pay-TV Landscape PART 8 OF 10

GigaPower May Improve AT&T’s Internet Proposition

GigaPower to boost AT&T’s Internet speeds

In the previous part of this series, we learned that AT&T (T) plans to expand its AT&T GigaPower offering to a total of 25 markets. It will also add 2 million new customers now that the DIRECTV (DTV) deal is complete. This should boost the telecom company’s overall Internet speeds.

AT&T GigaPower is an FTTP (fiber-to-the-premises) product that can provide speeds up to 1 Gbps, or gigabits per second. This should help AT&T compete more effectively with cable companies, considering the firm’s relative performance compared with other Internet service providers.

GigaPower May Improve AT&amp;T&#8217;s Internet Proposition

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AT&T U-verse has a relatively low speed

Let’s look at AT&T’s Internet speeds compared with those of the large US Internet service providers. We’ll take the Internet speeds as measured by the Netflix USA ISP Speed Index to get an idea of how AT&T measures up. This index uses primetime speeds that Netflix customers get from their Internet service providers, or ISPs.

As you can see in the chart above, Cox had the highest speed among these service providers in June 2015. It was followed by Cablevision’s (CVC) Optimum service. FiOS—Verizon’s (VZ) fiber-based service—had the third-highest speeds among these ISPs.

In June 2015, Comcast (CMCSA) had lower speeds than Verizon’s FiOS did. But AT&T’s U-verse finished last in the top ten measured by the index that month.

For diversified exposure to AT&T, you might consider the iShares Russell 3000 ETF (IWV). IWV had ~0.8% exposure to the telecom company as of June 30, 2015. You might also consider the SPDR S&P 500 ETF Trust (SPY). SPY had ~1% invested in the integrated telecom company on the same date.

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