Telecom AT&T Hits TV Milestone
Sep. 5, 2007 (Investor's Business Daily)
AT&T said Wednesday that it has reached the 100,000-customer milestone for its U-verse TV service.
That's up from just 3,000 in January, but still far less than the 500,000 Verizon Communications (NYSE:VZC) (NYSE:VZ) VZ has signed up for its FiOS fiber-optic network. Many FiOS subscribers use it to get TV service.
Both phone companies are building networks that provide faster Internet speeds and TV. Verizon plans to spend $23 billion on FiOS through 2010. AT&T (NYSE:SBT) (NYSE:T) T says it will have spent $6.5 billion on U-verse through 2008.
Verizon has opted to use an all-fiber approach. It rewires homes with new optical fiber.
AT&T chose a less costly approach.
The wiring to the neighborhood nodes is a mix of fiber-optic and digital subscriber line technology, but service still comes into the home via old copper wires.
AT&T's U-verse rollout was delayed because of technical problems, but now seems to be ramping up fast in more markets.
In a recent interview with IBD, AT&T's chief technology officer, Chris Rice, addressed lingering questions about U-verse.
IBD: Is the 100,000 mark a big milestone for U-verse?
Rice: It represents the coming-of-age of IPTV (Internet protocol TV), a new type of content delivery. It shows IPTV is scaling (to more customers) and maturing very nicely.
IBD: Will this number satisfy AT&T's critics?
Rice: I'm sure there will be people who believe 100,000 isn't enough. But the fact that we've ramped up from just a few thousand in January to 100,000 says a lot about the capability of the service platform and about AT&T as a video content provider.
IBD: Some critics say that AT&T's broadband network is inferior to Verizon's.
Rice: Those people are very misinformed about our technology and what its capabilities are.
We achieve the same cost savings (as Verizon does with FiOS, from running a state-of-the-art network).
It would be good for them to look at whether Verizon is actually shutting down its old network in an overbuild environment as opposed to maintaining both old and new (in that some customers want to keep the copper wire, so Verizon might have to keep running both networks, adding to its costs).
In a recent press release, Verizon said that if you're a customer on FiOS and want to go back to copper, they'll move you back to copper.
That indicates to me they're not shutting down the old (copper) network.
In AT&T's case, we're moving customers to a fiber-to-the-node network as they come on.
People also don't understand IPTV technology. Today we're doing high-definition (broadcasts). People don't understand the compression technologies, the IPTV technologies, the architecture or the capabilities of an all-IP network.
Verizon says they're going to do IPTV, but that's not going to be easy for them (using FiOS).
IBD: AT&T's critics say Verizon will sign up more data and TV customers because FiOS provides faster Internet speeds and better high-definition video.
Rice: People don't understand Verizon's network either.
Today, Verizon has 622 megabits of downstream bandwidth on a BPON (first-generation fiber) network.
If that single fiber pair is split by 32 (customers, which is typical) that's 20 megabits each for high-speed Internet.
They have an 870-megahertz broadcast system that's run over a single (fiber) wavelength.
So they will be capacity-constrained to deliver content just like cable companies, and capacity-constrained to deliver broadband beyond 20 megabits.
They will either have to upgrade to GPON (next-generation fiber), which will give them more bandwidth but involve another (costly) overbuild, or they can convert to IPTV.
In that case, they would have to replace every set-top box they've deployed.
IBD: Some analysts say AT&T still has problems streaming hi-def programs to TVs in multiple rooms.
Rice: I think compression technology will continue to improve. I don't think we'll be challenged to offer two high-def streams along with two standard streams (to any given customer). I think we'll be more than competitive on the high-def front.
IBD: What improvements does AT&T plan for U-verse?
Rice: Today we do video sharing mobile-to-mobile. Long term, (users will be able to share) video from a mobile device to the PC in homes and ultimately to the TV.
I think having podcasts on TVs (is not) outside the realm of things we could deliver.
We've looked at pulling in iPhone personalization, family finder, flight trackers, any number of things that would take advantage of wireless assets.
IBD: Will there be an IPTV deal between Apple and AT&T, building on the iPhone relationship, in 2008?
Rice: Not that I'm aware of.
IBD: In May, AT&T hiked its capital spending estimate for U-verse to $6.5 billion through 2008, up from $5.1 billion. Why the increase?
Rice: It's tied to the success of our solution. U-verse has always had a component that was fixed, the cost to deploy the service, and a success-based component, based on the number of customers.
That success-based component includes the residential gateway (connecting to each home) and the set-top boxes, as well as a line card that goes into an electronic box in the neighborhood.
IBD: That $6.5 billion cost estimate doesn't include the Southeast U.S. region formerly served by BellSouth. When will AT&T announce IPTV plans for those nine states?
Rice: We'll be turning up Atlanta as our first market later this year or the first part of '08. I'd expect announcements after third-quarter earnings are done.
The architecture is going to be the same. It'll be fiber to the (neighborhood) node and a fiber-to-the-premises solution for all new builds.
IBD: BellSouth's fiber wiring comes closer to some homes than in most of AT&T's other markets. Will some BellSouth customers get more bandwidth for TV and data services?
Rice: Same architecture, same services, all 25 megabits per second.
IBD: Does AT&T have enough bandwidth to compete against cable companies?
Rice: We have a lot more bandwidth to homes than we're actually utilizing.
At the site of my home in San Antonio, I'm 1,500 feet away from the (neighborhood) electronics, there's 54 Mbps of service (available). We're only allocating and using 25 Mbps (so there is more available for high-def and faster Internet services).
We only need to use 25 Mbps for the video service we're offering as well as high-speed Internet and ultimately the voice over IP service we'll launch later this year.
As other services come along that need more bandwidth, we have the capability to bring it up.http://money.cnn.com/news/newsfeeds/...1-19375710.htm