AT&T's Stephens: Project VIP could drive new OTT video opportunities, content arrangements

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AT&T's (NYSE: T) CFO John Stephens said that as it extends its Project VIP footprint into more markets, it could gain more negotiating power for video content and potentital over the top (OTT) service opportunities.    

While Stephens doesn't see a slowdown in U-verse video subscriptions, the company could use its 10.4 million standalone U-verse broadband customers to negotiate better content deals or explore an OTT model.

"The advantage for us is that opportunity for over the top for the broadband connections we have may be so attractive it allows us to shift gears or take risks with regard to our traditional subscription model on our 5.4 million customers," Stephens said during the Deutsche Bank Media, Internet and Telecom Conference. "We're committed to our U-verse video product, but we do have flexibility in our space just because of the amount of broadband customers and connections that don't have a [video] subscription today."

Being still a relatively new video provider, the growth of U-verse could also enable it to strike better deals to purchase content, which has been a challenge for both IPTV providers and cable operators.

"As we grow our U-verse video subscription business, we're going to push for better content arrangements and better content pricing just on a traditional scale model," Stephens said.

At the same time, AT&T will be able to expand the growth of U-verse broadband and video. When it completes the VIP project, the telco estimates it will be present at 33 million customer locations with U-verse service.

"If we got to near 30 percent, that's closer to 10 million customers," Stephens said. "We're at about 5.4 million U-verse video customers today, so that gives you a sense of the possibilities."

It sees a similar trend with U-verse broadband.

Today, AT&T has a total of 15 million broadband customers. Out of that figure, about 10 million are on a high-speed broadband platform.

Stephens said the company sees opportunities to drive existing customers onto its 45 and upcoming 75 Mbps speed tiers.

"We have another 5 million to convert on our existing customers and we're seeing some real positive ability to take share in the marketplace with our 45 Meg offering that we have in our U-verse footprint, which will soon be 75 Mbps," he said. "We expect to see continued positive activity in our consumer space."

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