Is DirecTV planning to ditch the dish?

After 25 years as America’s most popular satellite TV service, DirecTV is preparing for a future in which its programming will be delivered not via satellite dish, but across the internet.

Telecom industry watchers have taken note of recent signals that parent AT&T, which purchased DirecTV in 2015 for $49 billion, wants to shift how DirecTV delivers its programming.

Last November, John Donovan, AT&T’s chief executive officer of AT&T Communications, told analysts that the company had “launched our last satellite” and will focus on expanding the company’s internet-delivered video services, according to spacenews.com.

Earlier this month, AT&T expanded the number of programming bundles available through the DirecTV Now streaming service from the initial two introduced when DirecTV Now launched in November 2016. The five new bundles range in price from $86 to $135, and most of their names mirror names of bundles available to DirecTV’s satellite customers — Choice, Xtra, Ultimate and Entertainment.

In addition, the company has been beta testing a new set-top box for the online service and is expected to offer it to all DirecTV Now customers this year.

What’s behind the effort? Saving money. AT&T can send the set-top boxes to new customers for much less money than it costs to dispatch technicians to install rooftop satellite dishes, AT&T Chief Financial Officer John Stephens told a telecom conference in November, according to the website FierceVideo.com.

“It’s a device that allows us to, instead of rolling a truck to the home, we roll a UPS or FedEx truck to the home and deliver a self-install box,” Stephens told the Morgan Stanley European Technology, Media and Telecom Conference. “This allows the customer to use their own broadband. We certainly hope it’s our own fiber, but it could be on anybody’s broadband. And they get the full-service premium package that we would normally deliver off satellite or over our IP-based U-verse service,” Stephens said.

As internet service providers prepare to blanket the nation in ultra-high-speed 5G connectivity over the next several years, television companies expect more of their customers to forego programming delivered through cable or satellite and instead pair skinny streaming bundles such as DirecTV Now, Sling TV, Hulu, and YouTube TV with premium add-on services like HBO Now and Netflix.

In addition to being DirecTV’s owner, AT&T is also one of the nation’s largest internet service providers. That gives the telecommunications behemoth a competitive advantage in the 5G era — not only will it know which regions are getting 5G service and thus be ripe for marketing streaming services, but AT&T can continue to bundle its internet service with DirecTV programming for a discounted price and keep so-called cord-cutters tethered.

The shift is seen as inevitable, analysts say. Although DirecTV’s satellite service remains the second-largest pay TV service in the country with 19.2 million subscribers (behind only Comcast with 22 million), cord cutting is accelerating across cable and satellite markets. DirecTV lost 1.2 million subscribers in 2018 compared with 554,000 in 2017, according to a report by Leichtman Research Group.

Still unknown is how the shift from satellite dishes will affect DirecTV’s crown content jewel — NFL Sunday Ticket, which makes all out-of-market NFL games available to subscribers every Sunday of the NFL’s regular season. Currently, DirecTV offers the package to its satellite customers only and not through streaming DirecTV Now.

A standalone streaming version is available only under certain circumstances, including for customers living in apartment complexes or who live in areas unable to receive DirecTV’s satellite signal.