AT&T, which is betting big with U-verse, hopes the new product will revolutionize the way Americans connect to the world outside their homes. U-verse offers TV, data and (eventually) phone in one high-speed broadband connection. Users can view multiple channels at once, instantaneously retrieve information about the programs they are watching and — eventually — access some Internet content through their TV’s.
For the initial rollout, AT&T has targeted 62,000 homes in its home base of San Antonio. A network of fiber optic wiring called “Project Lightspeed” supplies the technology.
Attracting the first 10 percent of the market to switch to IPTV should be relatively easy because there will always be a segment of people eager to change for the promise of lower prices, Sanford Bernstein telecommunications analyst Jeffrey Halpern said.
AT&T’s CFO Rick Lindner said that the company expects to sign up the first 10 percent by the end of July, and is on track to unveil high definition service by the end of this year. Hi-def service is expected to reach an additional 15-20 markets.
Picking up the next 10 percent will be the real challenge because most cable and satellite users are either happy with their service or unwilling to go to the trouble of changing, according to Halpern.
“We feel very good about how the service is performing and the technology we are using,” Lindner said.
While AT&T is not the only phone company to experiment with IPTV, it has made a large gamble on customer migration to the service. By the end of 2008, the company expects to have IPTV service available to half of the 38 million homes it provides local phone service to. AT&T predicts that a successful subscription rate will be 30 percent of that market, bringing IPTV to 5.7 million customers in 13 states.
AT&T offers customers plenty of bang for their buck. The company’s middle-tier plan comes with 170 TV channel, 31 premium movie channels and 17 music channels, a 3-megabit broadband connection, three setup boxes, a digital video recorder and a WiFi router for $94 per month.
In the meantime, cable companies such as Time Warner, which serves half the homes in San Antonio, have been fighting back, offering subscribers discounted rates and increased content to keep them from jumping ship.
“Customers will be amazed by the U-verse experience — from our ordering and installation process to the unprecedented control and enjoyment they’ll receive with our TV, high speed Internet and wireless home networking services,” Brooks McCorcle, AT&T vice president and general manager for the South Texas region, said. “We’ve really reinvented the universe of communications and entertainment.”