AT&T has shifted into overdrive on subscriber acquisition for U-verse TV, shooting to nearly double its midyear count to end 2008 with 1 million customers. A compelling high-definition lineup is a crucial part of meeting that goal, says Dan York, AT&T’s executive vice president of content. But he notes that the telco needs to balance channel counts with programming costs. York recently spoke with Multichannel News technology editor Todd Spangler about the HD arms race, as well as multiplatform content distribution and the challenges of cutting deals in a business driven by volume discounts.
MCN: What is your HD road map — where will you be at the end of 2008 and 2009, as far as HD channel count?
Dan York: We haven’t announced our long-term HD ramp plans, although north of 100 is clearly in our near-term sights. We provide more HD linear channels than our cable competitors in almost every market [more than 45, depending on how many local HD channels are available]. And we’ll soon be launching HD video-on-demand.
MCN: When will HD VOD be available?
DY: We haven’t announced that, but it eventually will be across the entire footprint … HD is clearly important to consumers. DirecTV has done a good job of grabbing the mindshare in the market on HD. HD is to standard-def what color is to black and white. I think we’ve hit a tipping point in terms of the availability of HD sets. You can’t buy a TV set that isn’t HD now. It’s important to provide the best possible video service to customers, including the amount of linear HD channels.
MCN: With Internet-protocol TV, you can add a virtually unlimited amount of programming. So why hasn’t AT&T set a target of 150 HD channels as the satellite operators and Verizon have done? Or 1,000 HD channels?
DY: There aren’t 1,000 linear HD feeds available — let’s start there. But yes, AT&T has the most flexible platform with IP, and it therefore gives us the flexibility to offer a range of channels, and the experience with those channels can be more interactive and engaging than on [quadrature amplitude modulation]-based technology. But bear in mind that, unfortunately, content providers want to be paid for their programming. So we have to offer something with good value to our customers.
MCN: AT&T expects to have 1 million U-verse TV subscribers by the end of this year. Would hitting that number help you in your negotiations with programmers?
DY: Yes. A million subs is an important threshold for us to cross, and we’re well on schedule to do that. This is a business that is unfortunately dictated by volume discounts and most-favored-nations provisions. And we would like to see structures in our relationships with our content providers that support better competition from new video entrants. We’re finding many of our content partners to be creative in giving us the tools to effectively compete with the larger cable and [direct broadcast satellite] providers.
MCN: What’s an example of a creatively structured carriage deal?
DY: Well, we recently announced a deal with NBC Universal that was a broad, strategic relationship that included access to the Olympics, with live coverage on all three platforms. AT&T is the only place you can see live coverage on all 16 days on all three screens. It included access to all their high-def and VOD content [including the HD basketball and soccer channels].
MCN: Why is having a multiplatform strategy important? Don’t people consume content on those different platforms in different ways?
DY: Consumer behavior with content consumption continues to evolve and move toward digital platforms where AT&T is the clear provider — we’re the No. 1 Internet service provider, the No. 1 wireless carrier. We’re better positioned than anyone else to satisfy consumers’ access to content anytime, anyplace. That’s especially true because we’re building a [TV] platform for the future, on IP. As rights issues are sorted out upstream, we’ll be able to offer our customers true integration across all their devices — TV, Internet and mobile. It’s control and integration across all three screens.
MCN: What interactive TV capabilities will you be offering programmers?
DY: Let me put it this way: Our platform is truly, 100% interactive because it’s IP-enabled. That affords us a greater range of interactive capabilities with content owners in the future. On our near-term roadmap we’ll have customizable, interactive mosaics where you can choose different audio and video feeds. That’s relatively easy for an IPTV platform.