AT&T's move affects about five million US households, a significant hit for Al-Jazeera America, which had said about 40m homes were expected to have the channel available.
"Unfortunately AT&T's decision to unilaterally delete Al-Jazeera America presented us with circumstances that were untenable - an affiliate that has willfully and knowingly breached its contractual obligations," a statement from Al-Jazeera America said.
"Accordingly, we had no choice but to take this action and to enforce Al-Jazeera America's rights under its agreement with AT&T - and to compel AT&T to do the right thing."
AT&T spokesman Mark Siegel said Al-Jazeera had breached its obligations and that the company's U-verse television systems would not carry the channel, despite previously carrying Current TV, which was bought out by Al-Jazeera.
"As a result of our inability to come to terms on a new agreement and due to certain breaches by Al-Jazeera of the existing agreement we have decided not to carry Current TV on U-verse," Siegel said in a prepared statement.
The channel, operated by the Qatari media group behind the Middle East's biggest satellite broadcaster, went live earlier this week.
The launch was accompanied by a big promotional push and it pledged to outdo its rivals with serious, in-depth journalism.
Americans will be able to see 14 hours of news, documentary and discussion programming tailored to the US market daily, and updates at the top of every hour 24 hours each day.
But main the selling point will be long-form reporting of stories overlooked by other news organisations.
It is likely to face a tough sell to US audiences because of its history in the Middle East, where it was the outlet for videos distributed by Al-Qaeda and Osama bin Laden.
Some in America regard Al-Jazeera's output as anti-Western.
Al-Jazeera is also in negotiations with Time Warner Cable over carrying the channel.
Source: AFP via I-Net Bridge
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