AT&T's latest tactic for U-Verse: Free money!

AT&T is willing to buy U-Verse subscribers, at $200 a pop. Here's the deal, according to xchange Magazine: Sign up for a mid- or high-tier IPTV service package (starting at $59/month), keep it for at least a month, and get back $200. The most expensive of the three packages starts at $119/month, and in all three packages covered by this plan, subscribers get three set-top boxes, including one DVR, and additional set-top boxes are $5/month. Subscribers don't need to commit to any long-term contracts, or to bundles with phone or high-speed Internet. The program ends on January 31, 2009.

In other words, if you sign up for the lowest tier of service covered under this plan, you get a month of free service and $140 in your wallet. I don't think that AT&T expects everyone to throw out their current cable or satellite service in order to get the $200, but at least for a significant number of users, the $200 will cover their cable or satellite bills while they try AT&T's U-Verse service. Their hope is that a lot of those users will be sold on U-Verse, and will then drop their incumbent video service.

Given my suspicious nature, I've got to wonder why AT&T is offering this fairly incredible deal. I don't track subscriber counts anymore, but AT&T's subscriber growth must be slowing down dramatically. This plan will be an excellent way to boost the company's subscriber count by the end of the year. How many of those new subscribers will stick around after their first month is anyone's guess.

I can't see any of the major cable or satellite providers matching AT&T's deal, and I'm not sure that they have to. Comcast has for some time been running an unpublicized "hold at any cost" program to keep its subscribers from defecting to competitors, offering no-cost upgrades and free service. In the markets where Comcast and AT&T compete, I'd expect them to offer free service to those customers who ask to cancel in the face of AT&T's deal--"Keep your Comcast service for the next two months for free, and compare it with your AT&T service; we think that you'll prefer Comcast." Other operators are likely to do the same thing. The result will be lots of double-counted subscribers, but no one will really know how effective AT&T's promotion will be until well into next year, when we see how many of the subscribers bought by AT&T stay with them when the money runs out.