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AT&T U-verse Gains Broadband, Video Subs

Alan Breznick
4/24/2014
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Shrugging off the early doubts about its viability, AT&T U-verse is plowing ahead with healthy broadband and video gains as it continues to close the gap on the largest US cable operators.

AT&T Inc. (NYSE: T) reported Tuesday that it signed up another 201,000 subscribers for U-verse TV in the first quarter, slightly up from a gain of 194,000 subs in the previous quarter. With the latest gain, AT&T now has 5.7 million U-verse TV customers, widening its lead over Verizon Communications Inc. (NYSE: VZ)'s similar FiOS Video service. The large telco also has 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).

Similarly, AT&T enjoyed another standout quarter on the broadband side, signing up a whopping 634,000 high-speed data subscribers for its U-verse Internet service. With the increase, the telco now has 11 million U-verse Internet customers, more than Verizon FiOS and every cable operator besides Comcast.

Despite the big gains for U-verse Internet, though, AT&T did not expand its broadband customer base all that much because of continued heavy DSL losses. Overall, the company netted a much more modest total of 78,000 wireline broadband customers as it shed more than 550,000 DSL users.

With most of its U-verse TV customers also subscribing to U-verse Internet, AT&T ended the winter quarter with a total of 11.3 million U-verse subscribers. Consumer U-verse revenues scaled $2 billion, jumping 28.3% on a year-over-year basis. As a result, U-verse now accounts for 59% of AT&T's overall wireline consumer revenues, up from 48% a year earlier.

On the earnings call, AT&T CFO John Stephens said the company is already seeing strong early returns in Austin, Texas, where it has started rolling out a slower, 300Mbit/s version of its planned new "U-verse with GigaPower" service. "We're seeing take rates in Austin that have surprised us, exceeded expectations," he said, without disclosing any actual numbers. (See AT&T's Austin GigaPower Debuts at 300 Mbit/s .)

Plans call for AT&T to upgrade the Austin service to 1Gbit/s speeds later this year as it rolls out GigaPower in other markets. In all, the telco aims to offer GigaPower in at least 21 metro regions, including Atlanta, Chicago, Dallas, Los Angeles, and San Diego, as it seeks to match or trump moves by Google Fiber Inc. and such major MSOs as Comcast and Time Warner Cable. (See AT&T Turns Up Gig Heat in 21 New Metros.)

Stephens said AT&T has also earned high "quality scores" for its new service in Austin so far. He attributed the company's initial success to its ability to gain local right-aways, permitting, and pole rights in a quick, efficient manner build in the areas where it knew customer demand would be strong. "When you build where the demand is, you can get higher penetration and the returns to support that build," he said.

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

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mendyk,
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4/24/2014 | 9:27:34 AM
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