AT&T goes after Comcast with digital TV service
Posted
Dec 12 2007, 07:13 AM
by
Kim Peterson
Rating:
After years of paying Comcast at least $100 a month for cable and Internet, I can't help but cheer AT&T on these days. The company is going after cable in a big way by aggressively expanding its U-verse digital television service. AT&T said yesterday it wants to have signed up 1 million video customers by the end of next year. And by 2010, the company said, the service will be available to 30 million customers.
Getting there isn't cheap: AT&T is planning to spend about $5 billion this year and next to deploy U-verse, which could cut into 2008 earnings by as much as 14 cents a share. It wants to up its weekly installs from 10,000 to 40,000 by next year.
U-verse's TV signal comes over Internet Protocol through broadband, and you don't need a traditional voice line to use it. The service's advantages include fast channel changing, the ability to record four shows at the same time on a DVR, and a picture-in-picture tool that lets you watch one channel and browse another. You can only watch one HD channel at a time, but AT&T said it will change that in the future.
U-verse is already available in California, Texas, Connecticut and several states in the Midwest. But the service only had 126,000 customers at the end of last quarter.
All this comes as cable stocks are suffering from new subscriber slowdowns, more intense competition and pricing pressures. Comcast had to lower its guidance twice in the past few months, most recently on Dec. 5, when it said cable revenue growth would be 11% in 2007 instead of 12%. And it isn't just Comcast that's hurting. Time Warner Cable and Cablevision have had a tough go this year.
AT&T shares jumped 4% yesterday on other news from the company, most notably a dividend increase to 40 cents and a $15 billion share buyback plan.
What does this mean for the consumer? More choices, for one, and more features to choose from. I don't expect my monthly bills to drop significantly, but it's nice that the competition is there for people tired of the cable monopoly.
