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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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rjmcmahon 12/5/2012 | 3:02:40 PM
re: U-verse Picks Up the Pace How about the govt/FCC "forcing" Ver and T to divest themselves of the last mile infrastructure.

Very unlikely. There would need to be public outrage on the level of Enron and a sudden shift in public perception towards the federal government as a progressive entity. Look what happened after the Enron debacle, still no real actions by the feds. CA rate payers were ripped off to the tune of tens of billions (or more) and nothing was done about it. The populace voted out a decent governor and replaced him with an action figure. About as effective as bombing Baghdad to go after Saudi based terrorists.

Also, the history of forced divestiture in aerospace during suggest a negative outcome. It probably wouldn't stimulate investment. The 96 telco act didn't either.

What's needed is a system that rewards investment. If VZ and T step up to the plate and do it they should be rewarded too. Unfortunately, this system by the feds of rewarding them for at best mediocrity while everybody waits around for Godot doesn't help much.
bollocks187 12/5/2012 | 3:02:41 PM
re: U-verse Picks Up the Pace How about the govt/FCC "forcing" Ver and T to divest themselves of the last mile infastructure.

Each would have a public/private entity to run these facilities to the home.
rjmcmahon 12/5/2012 | 3:02:47 PM
re: U-verse Picks Up the Pace It's infrastructure and needs an entity that can raise long term capital at the lowest cost. Wall St. won't fund it nor should they.

I'm thinking the entities will take traits from folks like the TVA, Fed, army corp of engineers, and a port authority.

http://www.portofhouston.com/g...
http://www.usace.army.mil/
http://www.tva.gov/
http://www.federalreserve.gov/...

It's ironic that all the ideologues that buy into the propaganda "free market good, government bad" discount the reality that the most basic functions of a society are provided by these types of agencies. You guys really need to check into a cult rehab program (though convincing cult followers their belief system is distorted is near impossible.)
telecomtoast 12/5/2012 | 3:02:47 PM
re: U-verse Picks Up the Pace "customer owned network" run by a "pseudo-government agency" isn't that the same as a publicly traded company overseen by the FCC?

Good Lord in heaven are you really suggesting that some sort of government run entity would do a better job than a market driven company? Why, because the government has done such a great job with other programs like Medicare, Social Security and Bridges?

Are Verizon and AT&T perfect? No, not by a long shot. But the thought of a government-run alternative just makes me sick. When will VZ and T roll out 1G services? Maybe when there's enough customers needing applications that require 1G services to make it worthwhile to spend the money to provide them. If you want a government run agency to spend enough money to give you 1G today you're asking them to throw money away. So maybe you're on the right track....
rjmcmahon 12/5/2012 | 3:02:49 PM
re: U-verse Picks Up the Pace Well we're not doomed but Rome wasn't built in a day either.

I believe a possible solution is to create customer owned networks backed by a psuedo government agency, one with the ability to issue municipal revenue bonds. These long term bonds can cover the sunk costs into the outside plant. Customers can pay for the technology churn and carrier neutral colos would help to support this. (Business customers will rationalize the churn via GDP increases.)

The risk on the bonds will need to be reduced. I'm not an expert in this area but I believe Robert Moses was able to structure his financial instruments in a way that the US Constitution protected them from impairment. (He had the legislative skills to get this done.) I also think exclusivity should be granted to the first organization that delivers 1Gbs or better to an area. Maybe this combination would be sufficient to reduce the risk making the bonds palatable to conservative bond investors.

Some think an alternative is to use general obligation bonds but I think this is a political non starter.

The revenue bonds won't be viable without cash flows to back them. Cross subsidies are difficult to kick start things so one possibility is for the industry to support an ecommerce tax where the proceeds could not be diverted but could only be applied to real broadband infrastructures. I believe this is how the auto industry funded roads in the early days, i.e. via a gasoline tax.

Currently the industry leaders seem misguided and haven't banded together in a way to strengthen their futures. AAPL's Jobs noises about bidding on 700Mhz and the many failed attempts at city wireless (INTC, CLWR WiMAX, GOOG SF wifi, etc.) are examples of this. One day they might wake up and stop with with these shenanigans abut to date it hasn't happened. I probably wouldn't go to battle until there were indications that these actors actually have begun with the real fighting.

An excellent post worth reviewing and gives further insights towards the challenges ahead is:

http://www.lightreading.com/bo...
bollocks187 12/5/2012 | 3:02:53 PM
re: U-verse Picks Up the Pace I agree with all your points the bigger question is how does one circumvent the likes of T and Ver. Access to the wireline networks to offer an open one would require lots of monies and politic support.

If not we are doomed to what is 3rd rate service offerings.


rjmcmahon 12/5/2012 | 3:02:57 PM
re: U-verse Picks Up the Pace Are you saying that there's no way T's IP network or VZ's (when they eventually move everything over to IP) can support unicast?

Well, I don't really believe in absolutes so no way may be a little harsh. Though below are some comments on the topic written 5 years ago. Nothing much has changed since then and the Telco's focus on TV is an indicator that little progress towards real broadband has been made. (IPTV isn't relevant other than noticing the trick of telcos hijacking a network protocol term, one with implications of openness, to obfuscate that they have been closing down the futures of open access networks.)

http://www.lightreading.com/bo...

Once we have the alleged reasons the monopoly telco is the only viable path for broadband, I believe we will be able to show that all these reasons fall apart when the hard questions are asked about them, by drilling down below the pervasive one-liner reasons that are floating on the surface.

For example, looking at the history of their past deployment promises and lack of results, and the REAL reasons those promises were made; laying out a timeline of what broadband speeds and capabilities will be available when, and for how much; laying out the upgrade scenarios and timelines in light of their history; defining how there will be a proliferation of new services and applications on a closed network; defining how these new services undermine existing legacy service offerings; defining how their network architecture and its billions in in-place equipment that is many years from paid off doesn't allow an efficient solution; defining how their operating structure is too expensive to maintain, and is vast overkill; defining how the mainstream consumer does not see the value proposition for 256kbps at 50 bucks a month, and how the telco's broadband proposition would change that.
mgardner750 12/5/2012 | 3:02:58 PM
re: U-verse Picks Up the Pace I've had U-verse through a FTTH connection for 2 months and am about ready to switch back to satellite for TV.

The TV service is like subscribing to a beta service that has glitches. The DVR resets itself at least once a day taking 5 minutes to get back where you can watch TV. The DVR software by Microsoft can best be described as bug free as Vista and as user friendly as DOS 1.0 is to MAC OS X. Why they donGÇÖt do the little things like putting shows into folder instead of having a list of 100 shows to slowly page through is beyond me. Simple things that TVIO does so well are missing.

The picture quality is very good on SD but they compress the HD too much for football. You get blocking on the images.

The service has a lot of potential, but if they donGÇÖt get the DVR to stop resetting, I will switch.
Raymond McConville 12/5/2012 | 3:02:58 PM
re: U-verse Picks Up the Pace Yes, sarcasm is in fact my second language.

Are you saying that there's no way T's IP network or VZ's (when they eventually move everything over to IP) can support unicast?
Raymond McConville 12/5/2012 | 3:02:58 PM
re: U-verse Picks Up the Pace I assume you live in a greenfield community then if you're on FTTH. You'd have to assume that they're going to work through some of the software glitches as it is a first generation service and bugs are inevitable. That is interesting though that you say the picture quality on HD is bad for football, (half the reason to have HD in the first place) especially given that you're on a FTTH connection.

I'd never pay for satellite TV though. We have it here in the office and every time it rains, we have problems with the picture.
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