AT&T will begin testing a new pay television service that will be delivered online. It will bridge the gap between its online virtual multichannel propositions like WatchTV or DIRECTV NOW and the full DIRECTV satellite service or U-Verse telco television offering.

The company recently told analysts that the new online service was in beta, with trials beginning in early 2019. It has been writing to customers asking them it they would like to test the service.

It is understood to use a proprietary device, running Android TV, rather than a retail product like a Roku, Fire TV or Apple TV box. It will not be confined to a managed network from AT&T.

“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,” John Stephens, the chief finance officer, told the Morgan Stanley European Technology, Media and Telecom Conference in Barcelona.

“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,” he said. “They get the full-service premium package that we would normally deliver off satellite or over our IP-based U-verse service.”

“The key is, as we roll that out to full production or full availability to our customers, you will see subscriber acquisition cost come down significantly because it’s the cost of that box as opposed to the cost of an employee rolling a truck, climbing the roof and installing the satellite [dish].”

DIRECTV lost 359,000 satellite television subscribers in the third quarter of 2018, taking its total to 19.63 million. The subscriber loss was seen as a further weakening of the satellite service, which has seen consecutive quarterly losses shed a total of 1.39 million subscribers since the middle of 2017, according to the informitv Multiscreen Index.

Meanwhile, the DIRECTV NOW online virtual multichannel service added 63,000 subscribers in the same quarter, having gained 1.43 million since mid 2017, reaching a total of 1.81 million.

The AT&T U-verse service added a modest 13,000 subscribers in the third quarter, to reach 3.67 million, considerably down from its peak of 5.97 million in March 2015.

AT&T lost a total of 283,000 subscribers across its television services in the third quarter, which many commentators took as a sign of general decline in pay television in the United States.

The company still has over 25 million subscribers across its television services across the country and its various services.

It could simply be that AT&T is backing off promotion of these services in preparation for plans for the new online proposition.

It will be interesting to see whether DISH Network, which lost 367,000 satellite subscribers in the third quarter, will adopt a similar approach. It has 10.28 million satellite subscribers, well below its peak of 14.34 million in March 2010. It has 2.37 million subscribers to its Sling TV online virtual multichannel service.

Sky is understood to be planning a similar proposition in Europe, with plans to offer its Sky Q experience over broadband, without a satellite dish.