AT&T U-Verse Catches FiOS
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 7/24/2013
Making up for its late start in the pay-TV business, AT&T Inc. has caught up with rival telco Verizon Communications on the video front, making it just as serious a competitive threat to U.S. cable operators.
In its second-quarter earnings report late Tuesday, AT&T said it signed up 233,000 new U-Verse TV customers in the latest three-month period, up from 155,000 in the year-ago period. With that gain, it reached the 5 million mark for U-Verse TV customers, just as Verizon did with its fiber-powered FiOS Video service in the spring.
As a result, both AT&T and Verizon now have more video subscribers than all but two large U.S. MSOs, Comcast Corp. and Time Warner Cable Inc. Both telcos are also picking up video customers at a much faster clip than cable operators, who, while still dominating the U.S. pay-TV market with nearly 60 million video subscribers, have been struggling to stem the steady loss of basic video customers over the last few years.
AT&T also recorded strong gains on the broadband front with its U-Verse Internet service, even though the telco offers much lower maximum data speeds than Verizon's FiOS Internet service or most major MSOs. The company reported a whopping net increase of 641,000 U-Verse Internet subscribers in the second quarter as it continued to switch over as many DSL customers as possible to the new hybrid fiber-copper platform.
With that increase, AT&T boasts 9.1 million U-Verse Internet subscribers, far more than Verizon's total of 5.8 million subs for FiOS Internet. Including its rapidly dwindling DSL base, AT&T now has 14.7 million high-speed data customers, more than all U.S. broadband players except Comcast. U-Verse accounts for nearly 60 percent of that total, up from 43 percent a year ago.
Overall, AT&T reported that 9.4 million of its customers now subscribe to either one or both U-Verse products. More than 90 percent of its new U-Verse TV customers are signing up for both services as the telco aggressively bundles the two together. In addition, the company said, about 70 percent of its U-Verse TV subscribers take three or more of its consumer products.
Thanks to these gains, AT&T reported that total U-Verse revenues climbed to $2.9 billion in the second quarter, up slightly more than 30 percent from a year ago. For the first time, U-verse's residential products now account for more than half of the company's consumer wireline revenue.
U-Verse TV does continue to trail FiOS Video in penetration rates, clocking in at a relatively low 20.1 percent at the end of the second quarter (as opposed to FiOS' solid 34.5 percent rate). But that also means that U-Verse TV has plenty of room to grow because of its much larger footprint.
— Alan Breznick, Cable/Video Practice Leader, Light Reading