Light Reading
AT&T's fiber-fed platform records slower growth in second quarter but still well outstrips pace of Verizon FiOS and other broadband pay-TV providers.

U-verse Growth Slips But Still Strong

Alan Breznick
7/24/2014
50%
50%

Leaving Verizon FiOS in its dust, AT&T U-verse continued to maintain a breakneck growth pace in the second quarter, albeit at a somewhat slower rate than in previous quarters.

AT&T Inc. (NYSE: T) reported late Wednesday that it signed up another 190,000 subscribers for U-verse TV in the second quarter. That's down from its gains of 201,000 TV subs in the first quarter and 233,000 in the same period a year ago. But it's still far more than the 100,000 new FiOS video subs that Verizon Communications Inc. (NYSE: VZ) reported a day earlier and stands in stark contrast to the video subscriber losses that most US MSOs are still experiencing.

Thanks to this latest increase, AT&T now has 5.9 million U-verse TV customers, widening its lead over Verizon's similar fiber-fed FiOS platform, which closed out the spring quarter with 5.4 million video customers. The large telco also has significantly more video subs than every US cable operator except the two industry leaders, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC).

Likewise, AT&T enjoyed another healthy quarter on the broadband side, signing up an impressive 488,000 high-speed data subscribers for its U-verse Internet service. Once again, that total is down from the whopping 634,000 U-verse Internet customers it added in the first quarter and the 641,000 it added a year ago, but it still dwarfs the 139,000 that FiOS Internet added in the winter quarter.

With this increase, AT&T now has 11.5 million U-verse Internet customers, easily more than FiOS Internet's 9.1 million total. AT&T also has more broadband subscribers than every cable operator besides Comcast, even though the telco's total wireline broadband sub count actually fell by 55,000 because of its continued huge losses on the DSL end.

On their earnings call, AT&T executives bragged that U-verse now accounts for 70% of their broadband sub base, up from 55% a year ago and 40% two years ago. They also highlighted the fact that U-verse now generates 62% of the company's consumer wireline revenues, up from 51% a year ago.

With U-verse's video and broadband penetration rates now at about 20%, much lower than FiOS's penetration rates of a smaller base, AT&T officials expressed confidence that they can still push their subscriber totals significantly higher. "We have plenty of room to grow," said AT&T CFO John Stephens. "We believe we can achieve much more."

Stephens offered no new updates on their plans to deliver gigabit speeds throughout the US with their new "U-verse with GigaPower" initiative service. AT&T, which is now rolling out a slower, 300Mbit/s version of GigaPower in Austin, Texas, intends to expand next to Dallas and several North Carolina cities. (See AT&T's Austin GigaPower Debuts at 300 Mbit/s .)


If you want to keep up with all the latest U-verse and FiOS developments, keep your eyes glued to our broadband FTTX channel on the site.

On a separate note, Stephens did provide an update on AT&T's plans to buy DirecTV Group Inc. (NYSE: DTV). He said the regulatory approvals for the buyout are proceeding smoothly so far, with Brazil's antitrust regulator and three states reviewing the merger -- Arizona, Louisiana, and Hawaii -- all signing off on the deal without imposing any conditions. Stephens said AT&T officials are working closely with various regulatory agencies to consummate the deal and "are more excited and confident about it than ever."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(14)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
MarkC73
50%
50%
MarkC73,
User Rank: Light Sabre
7/29/2014 | 7:50:00 PM
Re: something missing?
Though I agree that the content fees are getting higher, I'm in the camp that doesn't think the carriers will be able to get around any content fees for long or without consequence.  Sure negotiation is on the table but I feel eventually carriers will be limited in options to do either all or a combination of own content, lower the cost of delivery method, and value add.

Instead they pony up to the content fees and get as many customers as they as efficiently as they can.  Meaning that OTT and mobility will be tools to extend reach to retain and add customers, not to avoid content fees.  That way, customers have more choices, carriers get more customers, and content providers still get paid.  The unfortunate thing is all of this is that unless there's an increase on how much consumers spend per month on video entertainment and like services, the only growth will be take them from someone else.  Thus, there must be value add so that people are willing to redirect more of their resources to the services.  Remember what your cell bill was in year 2004?
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/28/2014 | 11:38:56 AM
Re: something missing?
What's changed with video services is the cost of content to the network operators. In the past five years, rights fees reached a tipping point, making what was a marginal but acceptable margin level now too low. Cable operators now focus on broadband services because those margins are much healthier. Telcos are a bit stuck because they still see the need to gain more market share in video services, but they now realize that conventional video is on its way to being a loss leader. This is a big reason that OTT service delivery is so critical to figure out. Operators need a way to get around onerous content rights costs.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/28/2014 | 11:16:33 AM
Re: something missing?
Dennis,

I think unprofitable is a strong statement.  Residential service has always been:

- High Volume,

- Low Margin,

- Long Term.

The ROI on these services has been LONG.  But if you have the service for 10+ years then it doesn't matter.  It is why even minor upsells in the old days (CLASS Services) were such big winners.  I think the bigger issue is that nobody has located these type of low cost margin upgrades.  The thought is always around upping the price per bit per second.  That is (to me) like trying to sell phone service for more money.  I always think telcos should be looking for small incremental service offerings that have broad applicability and don't take lots of new infrastructure.  I see that as MUCH more viable.

seven

 
pcharles09
50%
50%
pcharles09,
User Rank: Light Beer
7/28/2014 | 10:07:07 AM
Re: something missing?
@mendyk,

Too much unprofitable revenue will eventually lead to the lights being OFF. Seems like something that needs to be acted upon sooner rather than later.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/27/2014 | 12:47:41 PM
Re: something missing?
You wonder how many years it will take for the conventional video service model to fade into oblivion. At this point, live programming (almost all of it sports) is what's keeping this going. Probelm is, it's very difficult for companies to simply walk away from revenue, even if it's mainly unprofitable revenue.
MarkC73
50%
50%
MarkC73,
User Rank: Light Sabre
7/27/2014 | 1:47:19 AM
Re: something missing?
I still stand by a couple of statements, first content is and will be king.  Second, OTT, ala carte, etc. is inevitable. However, a lot of how things are delivered is controlled by the content providers.  This includes how things are bundled and paid for.  The good news they understand all this and know it's inevitable, you see many of them already doing OTT and ala carte programs.  Once the content providers allow different bundling then you'll see more options from the carriers.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
7/26/2014 | 1:26:34 PM
Re: something missing?
Yeah, I would also have to question how much these video numbers really mean anymore. 

I think that many people are tired of paying for exorbitant video subscriptions. These providers really need to start thinking more about how to sell data because of the rise in streaming's popularity. 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/25/2014 | 5:19:26 PM
Re: something missing?
Meanwhile, operators have started to figure out that margins are likely to continue to shrink for conventional video services, at least under the current model. So maybe "winning" the race to add more video subs isn't really winning at all. And to the original point, AT&T and VZ aren't really in a race here because they don't compete head to head.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/25/2014 | 5:03:26 PM
Re: something missing?
Beyond converting lower end subs of DSL to either FiOS or U-Verse, there is simply a limit on market share that people are going to win.  There are 2 other video competitors.  I think that essentially that video market shares are going to be limited to 35% or so.

Broadband is also going to be limited by competition with Cable.  For some, Cable wiill be better.  For others, high speed telco interfaces.  Reality will drive them to about a 50% market share.

seven

 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
7/25/2014 | 8:55:08 AM
Re: something missing?
So the process of adding context to raw numbers starts to indicate that AT&T and Verizon are about on the same track.
Page 1 / 2   >   >>
Flash Poll
From The Founder
Is your network built on 'The Old IP,' or are you part of 'The New IP' revolution?
LRTV Huawei Video Resource Center
Innovating Access Technology With G.fast

10|1|14   |   3.42   |   (0) comments


Exploring the potential of G.fast technology from the point of view of the Broadband Forum, Huawei – and an end-user.
LRTV Documentaries
A Cultural Shift for an OTT World

9|26|14   |   01:41   |   (3) comments


Telcos need to embrace a new approach to partnerships if they are to generate extra revenues quickly and give customers what they want.
LRTV Documentaries
New Skills Needed as Telecom, IT Collide

9|26|14   |   4:07   |   (1) comment


As telecom and IT collide, new technologies are emerging, new skills are needed and new opportunities for women are arising.
UBB Forum News
Do IP Networks Need An Overhaul?

9|25|14   |   02:01   |   (0) comments


As traffic levels ramp, do IP networks need new technologies and topologies?
LRTV Documentaries
Sprint Wields Its Influence in the Valley

9|25|14   |   3:09   |   (11) comments


Anne-Louise Kardas, Sprint's connection to startups in the Valley, explains how telcos can be innovative and find new opportunities with partners.
LRTV Documentaries
SDN, NFV & The Future of XO's Network

9|25|14   |   3:47   |   (1) comment


XO Communications COO Don MacNeil explains how cloud, SDN and NFV are altering its network requirements as well as changing data centers of the future.
UBB Forum News
The OTT Conundrum

9|24|14   |   01:39   |   (0) comments


What is holding back prosperous partnerships between telcos and the OTT players?
LRTV Documentaries
Putting Broadband to Work

9|24|14   |   01:26   |   (0) comments


High-speed broadband network rollout is key to telco strategies, but it's what happens after the network is built that counts.
Light Reedy
Light Reading's Women in Telecom Recap

9|24|14   |   0:55   |   (4) comments


Our first Women in Telecom breakfast was a huge success, and we hope you'll join us in London for the next event on November 6.
UBB Forum News
Monetizing Ultra-Broadband

9|24|14   |   01:43   |   (2) comments


Ultra-broadband networks need to be built, with fiber-to-the-premises the ultimate goal, but they need to be monetized, too.
LRTV Huawei Video Resource Center
Sales Director of INIT on Plug & Play Switch Devices

9|19|14   |   3:21   |   (0) comments


INIT Italy uses both the Huawei S5700 and S7700 series switches for the campus LAN environment. Sales Director Andrea Curti says their company chose these Huawei devices over others because of their performance, flexible scalability and plug-and-play features.
LRTV Huawei Video Resource Center
Saudi Arabia Upgrades Vocational Training System

9|19|14   |   3:31   |   (0) comments


The Technical and Vocational Training Corporation (TVTC) has 100,000 students, 150 government-owned institutions and oversees 1000 private institutes. The CIO of TVTC explains that Huawei devices have allowed them to manage multiple datacenters using just one software program, scientifically tracking the progress of students and teachers, saving them millions.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
Half of the world's population will be connected to the Internet by 2017, but not just by smartphones and desktops.
Hot Topics
Facebook Pokes Around LTE Direct
Sarah Reedy, Senior Editor, 9/25/2014
Is Redbox Instant Shutting Down?
Mari Silbey, Independent Technology Editor, 9/30/2014
Sprint Wields Its Influence in the Valley
Sarah Reedy, Senior Editor, 9/25/2014
US Ignite Cultivates Gigabit Apps
Jason Meyers, Senior Editor, Utility Communications/IoT, 9/25/2014
SoftBank Eyes a DreamWorks Buy – Report
Sarah Reedy, Senior Editor, 9/29/2014
Like Us on Facebook
Twitter Feed