Q. I was thinking of getting AT&T TV which I was reading about yesterday. But is there anything I should be concerned about? I was wondering about the two-year contract. Is that a good deal? The prices seem really good. — Tim, Fort Lauderdale, Florida. 

Tim, as you know, AT&T TV is an Internet-based service that offers DIRECTV’s programming packages over a company-supplied set-top. AT&T hopes the new unit, which launched nationwide yesterday, will be an eventual replacement for the DIRECTV satellite service. (To see the differences between AT&T TV and DIRECTV, click here.)

The promotional prices now start at $49.99 a month, which doesn’t sound too bad. But this is where AT&T TV becomes a cautionary tale. Like DIRECTV’s promotional plans, AT&T TV requires a two-year agreement for those promo prices. And that is a bad deal for a variety of reasons.

First, when you read the fine print, you discover that the $49.99 a month ‘Entertainment’ plan rises to $93 a month in month 13 of the two-year agreement; the $54.99 a month ‘Choice’ package jumps to $110 a month in month 13; and the $64.99 a month ‘Xtra’ package climbs to $124 a month in month 13.

(By the way, also in the fine print, AT&T reveals that it will charge you $8.49 a month for a regional sports channel fee if you subscribe to the Choice plan or higher. That add-on fee starts in month one.)

What’s that? You say you will cancel when the 12 months are up?

Well, if you do, you will be charged $15 a month for every month that’s left in your two-year agreement. For instance, if you cancelled after the first year when prices rise, you would have to pay a penalty of $180. You also would have to return that AT&T set-top, which sometimes can lead to more charges. 

What’s that? Now you say you’ll never cancel?

Well, there’s another reason why you want to avoid the two-year agreement.

Let’s say AT&T TV is negotiating a new carriage agreement with ESPN, but the sports network is demanding a fee higher than the satcaster wants to pay. If the talks breakdown, and ESPN pulls its signal from AT&T TV, you might be tempted to switch to another service. But if you are still locked into a two-year contract, you will think twice before paying what could be hundreds of dollars in termination fees.

This scenario is occurring more frequently these days as pay TV operators try to trim programming costs.

As a consumer, you want as much leverage as possible in getting the best deal and the best service. But AT&T TV’s two-year contract serves the company far more than the consumer.

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— Phillip Swann