U-verse Picks Up the Pace

AT&T Inc. (NYSE: T) says it's just signed its 100,000th customer to the U-verse fiber-to-the-node TV service. (See U-Verse Hits 100K.)

That's a nice pickup for a service that struggled out of the gate with rollout delays, cost miscalculations, and a mere 3,000 subscribers to speak of at the end of 2006. (See AT&T Lowers U-verse Goals Again and AT&T Hits Lowered U-verse Goal.)

U-verse ended the first quarter of 2007 with 13,000 subscribers. Customers nearly quadrupled to 51,000 by the end of the second quarter and have nearly doubled again since.

UBS AG analyst John Hodulik thinks the fourth quarter will be even bigger. "We had projected that 4Q will be a big quarter for U-verse, with over 100K new installs. With over 80K in 3Q, this could prove conservative," he writes in a research note today.

This recent success should "eliminate overhang from speculation regarding [any] DISH acquisition and FTTH strategy change," Hodulik writes.

AT&T expects to be installing U-verse in 10,000 homes per week by the end of this year, which would represent roughly 120,000 new subscribers per quarter. Based on today's milestone and some quick long division, the company is doing roughly 6,250 installations per week since the end of the second quarter, which would give it about 125,000 subscribers by the end of the third quarter.

AT&T spokesman Wes Warnock says the company is still "absolutely on track" to reach its goal of 10,000 adds per week this year.

By comparison, FiOS TV from Verizon Communications Inc. (NYSE: VZ) had 515,000 subscribers at the end of the second quarter.

In addition to the milestone announcement, AT&T unveiled some interactive features that will become available later this month, including customized weather, stock, traffic, and sports information; a yellowpages.com plug-in; and Yahoo Games on the TV screen.

AT&T has talked about other interactive features such as the whole-home DVR, sharing content across three screens, and viewing your Yahoo photos on your TV.

U-verse runs on AT&T's IPTV infrastructure. Verizon is running FiOS TV as a digital cable-like RF service but has announced plans to move everything over to IPTV. (See Verizon: HD VOD Is Coming.)

— Raymond McConville, Reporter, Light Reading

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