Telco TV

AT&T's Fast IPTV Growth May Have a Downside

10/23/2007 11:00 AM Eastern

AT&T said Tuesday that its U-verse TV service hit an "accelerated" growth curve in the third quarter, with the telco more than doubling video subscribers in three months to reach 126,000 as of Sept. 30.

But the company's Internet Protocol TV infrastructure has shown signs of strain under such relatively fast growth: AT&T confirmed that U-verse TV suffered a massive, nationwide outage on Sunday, which prevented viewers from tuning to dozens of cable networks for most of the day.

AT&T, which said it fully restored service as of 8:30 p.m. ET on Oct. 21, claimed it was still investigating the cause of the outage and did not provide any technical details about the glitch. The telco advised affected customers to reboot their set-top boxes at appointed times to restore their full channel lineups.

Industry analysts have been skeptical that the IPTV architecture adopted by the phone company, which sends video signals down traditional copper wiring to subscribers' homes, would be able to scale up to handle millions of customers comfortably. U-verse TV uses networking equipment from Alcatel-Lucent and IPTV middleware and set-top software from Microsoft.

In the last three months, the pace of U-verse TV customer installs picked up dramatically, according to AT&T. The company said weekly install rates for U-verse TV in the last weeks of September approached 10,000, up from approximately 5,500 three months earlier.

Meanwhile, the telephone company still has 10 times as many TV customers through agreements with DirecTV and EchoStar Communications as it does for U-verse TV. AT&T had 2.0 million direct-broadcast satellite subscribers at the end of September, having added 140,000 in the quarter.

Total video connections, combining AT&T U-verse TV and DBS, increased by 215,000 in the quarter to 2.1 million. At the end of the third quarter, 6.7% of AT&T's primary consumer lines had a video solution from either AT&T, DirecTV or EchoStar, up from 4.2% a year earlier.

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