Haven't we already been down this path?

AT&T Launches Its Cable Foray With TV Service

The new AT&T made its new television service available to thousands of San Antonio consumers, kicking off a battle against cable rivals that could result in lower prices for TV, Internet and phone services.

With prices starting at $59 a month, AT&T's initial packages are roughly on par with those of cable, but the phone company says it offers more services for that price, including faster channel surfing, three set-top boxes, an interactive program guide and digital video recorder. Until this week AT&T offered its TV service to only a few hundred consumers in San Antonio. The wider rollout in that area is the precursor to offering the service in 15 to 20 markets by year's end. Eventually the service will be available to 19 million homes. For consumers, increased competition could mean better TV deals, especially if they buy the service packaged with phone or Internet service. Time Warner, AT&T's main cable competitor in San Antonio, says it has no plans to change its prices.

Analysts predict cable companies will lower the cost of their service if they see AT&T begin to win over their customers. Still, other experts say AT&T's television service may consistently be priced a bit higher than cable TV because the very few customers for the nascent service drive up its programming costs. "It'll hasten the advent of bundling as the way to get the best price for a consumer, but is it going to be transformative to your cable bill? Probably not," said Craig Moffett, an analyst with Sanford Bernstein. AT&T's pricing for San Antonio is similar to that of its main cable competitor for the most part but cable offers more general channels and more features such as high-definition television.

AT&T's midrange plan for its TV service, which it calls U-Verse, offers 150 channels plus 31 premium movie channels such as Starz, Showtime and Encore for $79 a month. AT&T's marketing materials promote TV bundled with high-speed Internet, and customers who sign up for both are eligible to receive both services for $10 to $25 a month for the first three months of service, depending on which package they choose. Next month AT&T plans to launch Homezone, which will combine satellite TV from EchoStar with videos and movies from the Internet, according to people familiar with the new offering.