x
DSL/vectoring/G.fast

U-verse Overtakes FiOS

Maintaining its strong momentum in the pay-TV business, AT&T Inc. has surpassed rival telco Verizon Communications on the video front and is picking up steam on the biggest US cable operators.

In its third-quarter earnings report last week, AT&T Inc. (NYSE: T) said it signed up an impressive 265,000 new U-verse TV customers in the latest three-month period, up from 198,000 in the year-ago period and its second-best quarterly gain ever. With that increase, it reached nearly 5.3 million U-verse TV customers, putting it a notch ahead of Verizon Communications Inc. (NYSE: VZ)'s nearly 5.2 million FiOS TV customers.

Thanks to these latest gains, both AT&T and Verizon easily have more video subscribers than all but the two biggest US MSOs, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC). Both telcos also continue to pick up video customers at a much faster clip than cable operators, who, while still dominating the US pay-TV market with nearly 60 million video subscribers, have been struggling to stem the steady erosion of their core video customers over the last few years.

On the broadband front, AT&T also notched one of its strongest gains yet with its U-verse Internet service, even though the telco still offers much lower maximum data speeds than Verizon's FiOS Internet service or most major MSOs. The company reported a whopping net increase of 655,000 U-verse Internet subscribers in the third quarter as it continued to convert as many DSL customers as possible to the new hybrid fiber-copper platform.

Overall, though, AT&T still shed 26,000 wireline broadband subscribers as some of its DSL customers went elsewhere. So U-verse is largely just stemming AT&T heavy broadband losses, not increasing its high-speed data customer base.

Thanks to its latest gains, AT&T now boasts 9.7 million U-verse Internet subscribers, up 37 percent from a year earlier and well above Verizon's total of 5.9 million FiOS Internet subs. Factoring in its rapidly dwindling DSL base, AT&T has 14.7 million high-speed residential data customers, more than all US broadband players except Comcast. U-verse accounts for 59 percent of that total, up from 43 percent a year ago.

Overall, AT&T reported that 10 million of its customers now subscribe to either one or both of its main 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 U-verse TV subscribers are taking three or more of its consumer products.

Due to these gains, AT&T reported that total U-verse revenues climbed to $3.1 billion in the third quarter, up 28 percent from a year ago, as U-verse enjoyed its first $1 billion month. U-verse's residential products now account for 54 percent of the company's consumer wireline revenue, up from 43 percent a year earlier.

U-verse is also starting to make an impact on the commercial services front. AT&T said it added a record 97,000 business U-verse Internet subscribers in the third quarter as more customers signed up for such advanced IP services as VPN, Ethernet, and web hosting. However, the company's total revenues from business services slipped 2.6 percent to $8.8 billion over the summer, as its legacy products continued to sag.

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

Page 1 / 3   >   >>
DOShea 10/28/2013 | 2:30:46 PM
Real growth? As you point out, the impressive-sounding U-verse Internet growth is more like a trade-off between U-verse and DSL. Even on the business side, the Internet growth is interesting to see, but it seems like competition is taking a bite out of its other products.
Sarah Thomas 10/28/2013 | 3:19:28 PM
Re: Real growth? What are the three or more consumer products that its customers are buying on the U-Verse front? I know broadband and TV are its primary services, but does that mean premium channels or Digital Life services?
TaraSeals 10/28/2013 | 4:49:13 PM
Video gains--increasingly a rarity I agree that the broadband numbers need to be analyzed for what they are-- a trade-off as DoS points out-- but U-verse subscriptions also bring in more ARPU than DSL, don't they? So maybe subscriber gains aren't the thing-- ARPU and margin are?

Also I think it's fascinating that AT&T and Verizon continue to add TV subs--while cable continues to lose and satellite falters. This, even though there really aren't that many reasons to switch to IPTV in my opinion. TV Everywhere options are becoming fairly standard across providers though I think AT&T may be out ahead in terms of live streaming being available outside of the home...but DISH arguably has the biggest differentiator in the form of the Auto Hopper network whole-home DVR with commercial-skipping for recorded content. Middleware and princing tend to be comparable...and outside of DirecTV's NFL Sunday Ticket the content options are pretty standard.

So wherefore incumbent telco success? Is this a product of people wanting the Next Big Thing? Brilliant marketing? true differentiators that I've missed? Regardless, in a mature, saturated market it's always hard to take market share so hats off--they're doing something right. 
DOShea 10/28/2013 | 8:33:22 PM
Re: Video gains--increasingly a rarity Re: the video gains--and all cable is getting back in return on a bunch of lousy telephony customers.
albreznick 10/28/2013 | 10:17:35 PM
Re: Real growth? Good question, Sarah. U-verse also has a VoIP product, which I didn't get into here. And the fourth product could be any othert AT&T product, including home security. It would be interesting to find out if there is a standard fourth product that customers take.   
albreznick 10/28/2013 | 10:21:52 PM
Re: Video gains--increasingly a rarity Good points. It's true that AT&T is largely trading DSL subs for U-verse subs. But it is making more money on those Uverse subs. So ARPU is definitely going up. Plus, it's gaining all these lucrative video subs. And it would have lost all those DSL subs eventually anyway. So I don't see a real downside for AT&T.
Sarah Thomas 10/28/2013 | 10:22:44 PM
Re: Video gains--increasingly a rarity Well, I made the switch over to U-Verse because it was cheaper. I imagine a lot of people are in the same boat. But, I agree that it can't really about new features or superior marketing. It's all pretty comparable. I think, in part, they are stealing some customers from the cablecos. It is surprising to see the disparities though.
albreznick 10/28/2013 | 10:23:11 PM
Re: Video gains--increasingly a rarity That's true, Dan. But the cable cos are at least solidifying their bundles, making it harder for video and broadband subscribers to leave. That's definitely worth something, no?   
Sarah Thomas 10/28/2013 | 10:25:45 PM
Re: Real growth? Ha I admit I sorta forgot about its home phone service. People still buy that?! Digital Life is doing well for them, but 70 percent seems like a high number there.
DOShea 10/28/2013 | 10:59:32 PM
Re: Video gains--increasingly a rarity I wonder how long this all lasts for AT&T then. If people are buying because it's cheaper, or the next big thing, maybe there is a point at which that honeymoon is over and they go back to a cable bundle or perhaps cut the pay TV cord for real.
Page 1 / 3   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE