AT&T Broadband & Internet Services is testing salesof its "AT&T Digital Cable" service through four Pittsburgh-area Best Buystores, the companies said last week.
Best Buy is not yet stocking digital-cable boxes, but isoffering a $19.95 "Digital Cable Starter Kit," which includes free installation,one free month of AT&T Digital Cable and a $50 Best Buy gift card for subscribers whokeep the service for three months.
AT&T Broadband senior vice president of marketing DougSeserman would not disclose details of the business agreement with Best Buy, but said theretailer would receive a margin from the sale of the starter kit, plus repeat businessfrom customers who return to the stores with their gift cards.
The retail-business model is still in the test phase,Seserman added.
Programming packages for the service start at $56.95 permonth, including rental of the remote control and digital receiver. AT&T Broadbandstill handles installation for the service, but consumers can choose their owninstallation date while at Best Buy, as long as it's at least three days away.
"We're right there next to DirecTV [Inc.],"AT&T Cable Services Pittsburgh metro marketing manager Beth Patterson said. "Nowconsumers see that we're an option."
Through the test with Best Buy, AT&T Broadband hopes tolearn whether customers who sign up for the digital-cable service came into the store withthe intent to buy, or whether they made the decision while looking for a television, VCRor direct-broadcast satellite system.
Cable & Telecommunications Association for Marketingpresident Char Beales said it makes sense for operators to be visible in locations wheretheir subscribers are making decisions "to stay with you or go to the competition. Ifyou're not there, then [retail sales associates] will have every incentive to sell thecustomer something else."
In its move to retail, AT&T Broadband is"essentially piggybacking on DirecTV's promotions," Tellus Venture Associatespresident Steve Blum said. "They're convincing an awful lot of people to go down toretail to shop for digital television."
DBS providers DirecTV and EchoStar Communications Corp.expressed no immediate concern over cable's head-to-head competition.
"We think our product stands up very well against anydigital-cable product available," DirecTV spokesman Bob Marsocci said. "We're100 percent digital, and we offer more pay-per-view channels and exclusive sportsprogramming."
Even though EchoStar's Dish Network products are not soldthrough Best Buy, EchoStar spokesman Marc Lumpkin said cable's move to retail will helpencourage cable customers who hear about digital television to look at all of thealternatives.
"We know consumers shop around," Lumpkin said."They'll see that our prices are so much less expensive that they'll choose us."
"We feel very confident that when consumers comparedigital cable with satellite, they'll see that cable is a tremendous value," Sesermansaid. "Getting into retail is all about consumer choice."
Dove Associates managing director Bob Davis said cableoperators must learn to "play the retail game" in order to compete against DBS.Cable's competitors have already learned to pay for retail shelf space, end caps, in-storemerchandising and sales training, he added.
AT&T Broadband's first newspaper ads for the Best Buydigital-cable trial ran over the weekend in the TV Weekly guide in the Sunday PittsburghPost-Gazette. Early next month, Best Buy will promote the trial in its weekly advertisingcircular.
Yesterday (Oct. 31), AT&T was scheduled to sendrepresentatives to each of the four Pittsburgh test stores for the first of the monthly"Live Demo Days" suggested by Best Buy.
The retailer demonstrates AT&T Digital Cable in BestBuy's "high-touch" section, which also includes products that require a thoroughsales pitch, like DirecTV and WebTV Networks.
Two of the Best Buy stores have live demonstrations wiredto cable, and the other two use DVDs with clips of available programming.
Pittsburgh was chosen for the tests because 75 percent ofAT&T Broadband's local operations have deployed digital, and the MSO controls a largemajority of the market, Patterson said.
Retail is not an entirely new concept for cable operators,but it's likely to represent a growing trend, especially as the industry prepares to meetgovernment mandates that set-tops be distributed at retail next summer.
AT&T Broadband is already selling digital-cable servicethrough seven AT&T Wireless Phone stores in Salt Lake City. Comcast Corp. demonstratedits cable services at a Philadelphia-area wireless phone store before selling off itscellular-phone business. And a number of operators are selling cable-modem service - andhardware, in some cases - through retail.
Best Buy is not marketing the AT&T@Home cable-modemservice in Pittsburgh. Patterson said local CompUSA stores display AT&T@Home, but nosales associates are involved. Customers who are interested in the service pick up a phoneat the display that connects them with an AT&T call center.