Rumors of a Time Warner merger came a day after the Wall Street Journal said that AT&T is taking a major step with its other recent acquisition, DirecTV: To compete in the growing market for online streaming, DirecTV intends to launch an Internet-based TV service called DirecTV Now. The service will allow customers to sign up for live programming without the need to pay for satellite dishes, set-top boxes or other equipment, according to the Journal.
AT&T did not immediately respond to a request for comment.
AT&T has made no secret of its ambitions to grow beyond its roots in telephony and into a company that controls video programming.
As consumers shift away from landline phones to embrace smartphones, mobile data and online video, providing access to the Internet is no longer enough for many telecom and broadband companies. Now, some of the country's biggest wireless firms are making moves to acquire exclusive content or to produce their own content in a major shift in their business model.
Verizon, for instance, is attempting to purchase Yahoo for $4.8 billion; although the embattled Web company is reeling after disclosing a historic data breach affecting 500 million user accounts, it commands one of the largest online audiences after Google and Facebook, according to the market research firm ComScore.
Underlying these moves, analysts say, is the hope that Internet providers will be able to collect behavioral data about where customers go on the Web and what they consume. That data can be turned into revenue in the form of targeted advertising.
But some argue that regulatory efforts in Washington may pose risks to this strategy. The Federal Communications Commission is expected to vote next week on new privacy rules for broadband firms that would limit how they can use customer data. At issue in particular is one provision that would require companies to seek their customers' explicit consent before using their data for marketing purposes.
“The proposed rules are a clear negative for ISPs like Verizon, which was seemingly banking on location-based advertising as a critical part of their AOL/Yahoo strategy,” said Craig Moffett, a telecom analyst at the firm MoffettNathanson, in a recent email. “Geolocation information is expressly identified as being subject to the more onerous 'sensitive information' rules.”