uploads///Global Video Streaming Market

Did AT&T Miscalculate Its Streaming Video Move?

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Feb. 3 2017, Published 1:31 p.m. ET

DIRECTV Now dogged by hiccups

Based on questions raised by lawmakers and persistent customer complaints, it appears that AT&T (T) hasn’t had much peace since it launched its streaming video service, DIRECTV Now.

With DIRECTV Now, AT&T is appealing to cord-cutters who are mainly Millennials as well as customers who have avoided its bundled pay-TV packages mainly due to costs. DIRECTV Now, which launched in December, costs $35 per month for a plan that offers up to 60 channels and $70 per month for a package that includes more than 120 channels.

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Problems dogging DIRECTV Now

But DIRECTV Now has faced problems, from a Senate committee suggesting that AT&T is trying to destroy competition by zero-rating the service, to customers complaining about outages, to unresponsive features on the service.

When AT&T executives appeared before a Senate committee for a hearing related to AT&T’s planned acquisition of Time Warner (TWX), the matter of DIRECTV Now came up. Because AT&T allows subscribers to stream DIRECTV Now without eating into their data plans, lawmakers wondered whether the company is being unfair to rivals Netflix (NFLX), Amazon.com (AMZN), Sony (SNE), and Alphabet’s (GOOGL) YouTube. AT&T explained that it is actually bearing the cost of zero-rating DIRECTV Now—something, it said, its could do just as easily.

DIRECTV Now reputation at stake

But hiccups with DirecTV Now streaming threaten to turn off customers or slow down AT&T’s growth in the streaming video market. The service recently suffered an hours-long outage, with the company attributing the problem, and several others before it, to bugs that it said are common in new technologies.

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