October 15, 2007
AT&T U-verse by the Numbers
AT&T’s all-IP TV and Internet access service has a pulse.
By Peter D. Shapiro
AT&T launched U-verse for real at the end of 2006 after a rocky false start earlier last year. Now, finally, U-verse is beginning to show signs of life.
To recap, U-verse is delivered via a hybrid-fiber-wire-pair network architecture. AT&T runs fiber to neighborhood nodes and then uses existing telco copper wire-pair loops for node-to-household connections. U-verse is all-IP and 100% switched. Subscribers can receive up to four TV programs simultaneously, plus Internet access.
By early September, according to AT&T, U-verse passed 5 million households and was being actively marketed to "nearly half" of these homes pending full readiness of back-office and other prerequisites to support the service. U-verse had 100,000 subscribers, reflecting approximately 4% penetration of 2.5 million actively marketed homes. The service was growing at 6,000 new installs per week, up from 400 per week at the beginning of the year.
New U-verse installs are ramping up as more techs are trained and as homes are released for marketing. Notably this growth appears more a function of supply than of demand. AT&T reports that U-verse is being installed typically within one week of the customer order. There is no waiting list. Perhaps this is due to the early stage of U-verse marketing, or to ample and efficiently managed resources to install the service.
Alternatively, U-verse might still lack what it takes to excite most consumers. As summarized in the table below, while some U-verse features appear potentially differentiating versus cable, other U-verse features may be perceived less positively. As might be expected, AT&T reports that enhancements to its U-verse product are in the works, for example, to use pair-bonding to expand transmission capacity beyond one HD signal at a time.
AT&T reports spending $330 in capex per U-verse home passed. Given U-verse’s current penetration level, which may change as the number of actively marketed households approaches the number of homes passed, AT&T’s capex per sub is $8,250 ($330/4%), plus the cost of CPE and installation, neither of which is cheap. For example, AT&T reports that each install now takes 6.5 hours on average.
AT&T forecasts that U-verse HP will increase to 8 million by the end of 2007 and to 18 million by the end of 2008, equivalent to 55% of AT&T’s footprint of 32 million residential primary access lines. AT&T also forecasts that new installs will reach 10,000 per week by the end of this year. Keep several grains of salt handy: AT&T has had to backtrack on earlier U-verse projections. However, if AT&T’s current forecasts do turn out to be accurate, U-verse will morph from an interesting technology concept into a significant contender for cable’s market share.
Peter D. Shapiro is an industry veteran and principal at PDS Consulting, a cable & telecoms consultancy (www.pdsconsulting.net). He can be reached at: firstname.lastname@example.org.