AT&T's Stephenson: 'I'm not concerned about OTT video'

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BOULDER, Colo.--AT&T (NYSE:T) CEO Randall Stephenson said he is not worried about continued inroads that are being made by over-the-top video providers.  "If the world moves to the OTT video model, that doesn't keep me awake at night," he said, adding that AT&T has approximately 4.5 million U-Verse IPTV video customers but the company's real driver is its broadband customers. "Our money is made off the broadband product … The consumer who acquires video off our broadband is not a bad model for us."

Randall Stephenson

Stephenson (Image source: AT&T)

Stephenson was surprisingly candid during an onstage interview with Phil Weiser, dean of the University of Colorado's Law School and director of the Silicon Flatirons group. Stephenson, who was speaking at the Silicon Flatirons' annual Digital Broadband Migration conference here, said that he believes that consumers will demand OTT video and that more and more people are watching video on tablets, smartphones and across multiple devices, which is why AT&T is focused on enabling customers to take their content with them across different devices.

Indeed, AT&T announced last month that it added 192,000 U-verse IPTV subscribers and 609,000 high-speed Internet subscribers during the fourth quarter of 2012.  U-Verse produces a $10 billion annualized revenue stream, which increased 38 percent in 2012. However, IP data revenues, driven by U-verse, represent 61 percent of consumer revenues.

Nevertheless, AT&T is looking ahead to its $14 billion Velocity IP (or VIP) Project in which it plans to expand its broadband wireless and wireline footprint. Stephenson said that the company is committed to moving all of its infrastructure to IP and he encouraged all operators, including rural telcos to follow AT&T's lead. "They better get to IP. They need to make the transition," he said.

When Weiser questioned Stephenson on the smaller operators' ability to finance this type of transition, he said that while there are no easy answers, there has to be a transition to all-IP. "Everybody better get on to the world of IP.  We can't sit as a country and hold onto policies that keep us holding onto obsolete technologies."

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