Beginning April 6, 2017, AT&T will include HBO--free--as part of the AT&T Unlimited Plus mobile plan.
In addition, AT&T Unlimited Plus customers get a $25 monthly video credit on DirecTV, DirecTV Now or U-verse TV while they on on the Unlimited Plus plan.
For any Unlimited Plus wireless customer who also subscribes to one of AT&T’s video services, including DirecTV Now, DirecTV, or U-verse, the channel will be offered for free. If they had previously signed up for HBO, they’ll no longer have to pay for it. And if they didn’t, it will become free.
A couple of observations are worth noting. Assuming the AT&T acquisition of Time Warner is approved, the new offer will illustrate the value of owning popular content assets. Though HBO is willingly sold to all video services that wish to offer it, AT&T gains advantage--as the owner--of packaging HBO in a different way, to reinforce the value of its mobility and fixed services.
Also, the move illustrates the fact that with the shift of video entertainment to mobile and internet delivery, zero rating is necessary.
Business models and consumer expectations of products do not change, simply because the delivery method changes.
Consumers do not expect to pay for bandwidth--which is an essential requirement for broadcast TV, broadcast radio, or any network-delivered video or audio service--when consuming traditional media.
As traditional “television” and “movie” media becomes internet media, those consumer expectations are not going to change. So zero rating is a business requirement.
Also, networks face physical and business model issues caused by bandwidth pricing.
Video is hugely more bandwidth-intensive, but revenue per bit is quite low. There simply is no way media business models work if, in the switch to internet delivery, consumers pay for bandwidth in addition to cost of content.
Revenue per bit matters, in other words. In the case of video, revenue per bit is so low that the mass market consumer simply would not pay the cost of bandwidth consumption if charged at rates anyplace close to that of voice, messaging or internet access.
Finally, retail bandwidth prices are dipping low enough that some question whether access services actually can remain profitable.
If zero rating is not the charging framework, the video entertainment business model breaks. In fact, some might argue the overall access business already is facing a profit challenge.
Some would note that bandwidth prices are plunging so much that overall network revenue per bit could even go negative within 10 years.
“Two decades ago, it would have cost almost $10,000 a month to get a data connection as fast as today's baseline internet wireline connections,” said Tom Nolle, CIMI Corp. principal. “Yet, the internet has pushed down revenue per bit transported so sharply that operators widely believe connection services will have a negative return on investment before the end of the decade.”
Indeed, revenue per gigabyte has been declining for some time, in the mobile and fixed realms.
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