AT&T Inc. (NYSE: T) said late Thursday it has launched its U-verse IPTV service in selected areas of the San Jose and San Francisco Bay Area markets of Northern California. (See AT&T Unveils San Jose IPTV and AT&T Intros Bay Area IPTV.)

The two new markets mark the third and fourth of the 15 markets AT&T has pledged to launch by the end of the year. AT&T says it remains faithful to that goal as the last days of 2006 tick away. U-verse has already launched in AT&T's hometown of San Antonio, Texas, and in Houston, Texas. (See AT&T Set to Expand Its U-verse and Lightspeed Unauthorized.)

The carrier is taking a decidedly cautious approach as it enters new markets, making the service available only in limited areas in each. The San Jose and Bay Area markets are no exception. AT&T says U-verse is live in "limited areas across the San Jose-Sunnyvale-Santa Clara metropolitan statistical area (MSA) including parts of the cities of Cupertino and Saratoga." (See It's a Small U-Verse for AT&T.)

In the Bay Area, it says, U-verse is available in "limited areas across the San Francisco-Oakland-Fremont metropolitan statistical area (MSA), including parts of the cities of San Ramon and Danville."

"It's fitting Bay Area residents, known around the world as early adopters of new technology, are among the first to receive our innovative U-verse services" said AT&T VP for the San Francisco Area Melba Muscarolas in a statement Thursday.

AT&T has been busy attaining local video franchise agreements in California cities since early 2006. Light Reading reported in May that the carrier was making inroads in selected Northern California cities and also in the Southern California city of Anaheim, where U-verse is likely to launch next. (See AT&T to Launch Lightspeed Next Month and SBC on TV Franchise Regs: We're Immune.)

The U-verse service offers a choice of five channel packages with up to 300 channels including 25 HD channels. Internet access comes in speeds of 1.5, 3 or 6 Mbit/s downstream (upstream speed for each tier is 1 Mbit/s). See the San Francisco channel lineup here. (See AT&T Launches HD.)

U-verse video and data bundles start at $44 per month and go up to $119 per month, depending on the channel package and Internet service selected by the customer. The details of the U-verse bundles can be found here. (See AT&T Waits on Lightspeed VOIP.)

AT&T will be going head to head with Comcast Corp. (Nasdaq: CMCSA, CMCSK), which currently dominates both the San Jose and Bay Area video markets. Comcast's TV packages (unbundled) range from $55 to $100. Internet access comes in two flavors -- 6 Mbit/s downstream and 384 Kbit/s upstream for $43, and 8 Mbit/s downstream and 768 Kbit/s upstream for $53. Comcast Digital Voice is $40 per month if bundled with TV and Internet access. (See AT&T Waits on Lightspeed VOIP.)

The EchoStar Satellite LLC DISH Network and DirecTV Group Inc. (NYSE: DTV) satellite services are also available in both the San Jose and Bay Area MSAs.

Northern California U-verse users will be outfitted with Motorola Inc. (NYSE: MOT) HD-capable set-top boxes. (See Microsoft Says Middleware Not a Problem.) The boxes, AT&T says, feature DVR which can be programmed remotely with any broadband connection. Cisco Systems Inc. (Nasdaq: CSCO)/Scientific Atlanta set-top boxes will also be given to U-verse subscribers as the service rolls out in new markets, AT&T tells Light Reading. (See Cisco to Acquire Scientific-Atlanta.)

In both new markets, AT&T is offering some enticements to lure subscribers away from Comcast. Through March 31 new customers that choose one of the fancier U-verse packages get their TV service free for the first two months. Customers that buy the $10-a-month HD package also get the first two months free.

Comcast has its own deal going on in Northern California. Through the end of the year, it's offering a voice, video, and data bundle at $99 for the first year. (See Selling Telco TV: You Got $99?.)

— Mark Sullivan, Reporter, Light Reading