Jeff Weber on the growth of AT&T U-verse and plug & play home networks

On the Hot Seat
with Jeff Weber, Vice President of U-verse & video products, AT&T

Jeff Weber, AT&T

Jeff Weber, VP of U-verse and video products, AT&T

Jeff Weber likes where AT&T (NYSE: T) is with its U-verse IPTV offering. He believes that they are in a great place because they are in an all-IP environment, and have an advantage over others that are perhaps using an RF-based platform.

Weber should have a lot to be excited about. In the second quarter of 2011, AT&T added 202,000 U-verse subscribers to reach 3.4 million in service.

One of the ongoing themes that's got Weber excited about U-verse is how customers are not only able to bundle multiple services (voice, video, data and wireless), but the integration of services and functions across each of the service domains. This product integration enables a U-verse subscriber that has an AT&T Mobility account to leverage their iPhone or regular cell phone to control their DVR remotely and access their content wherever they are.

FierceTelecom Editor Sean Buckley caught up with Weber to talk about the growth of U-verse and the company's plans to enhance the service in 2011.

FierceTelecom: Jeff, let's take a look back at 2010 and U-verse. To start, talk about the highlights of U-verse over the past year?

Jeff Weber: 2010 was a great year, and the momentum continues. It was a great year across a bunch of different areas. Just in terms of total subscribers, we added almost 1 million subscribers. There was also really good continued growth, not just from just a TV perspective, but also from a bundle and integration perspective. When customers make a purchase decision on TV and their making it on U-verse, they also take broadband and to the extent that they get a voice product that comes with it. One of my favorite statistics is that 75 percent of our TV customers have at least three services from us. That means wireline voice, wireless, broadband, and TV. It really tells me a couple of things: Customers care a lot about TV, and they care a lot about wireless. We have done a very good job with bundling, but really more importantly driving integration. This means that my services work better when I have a wireless phone from AT&T with my TV service or broadband and U-verse TV. I think at the core of all of this success its great wireless, great TV, and great integration. It's a very compelling value proposition for customers and we're seeing that play out really clearly in all of our data.

FT: You mentioned integration. That means not just bundling, but also the ability to use functions across all of the wireline and wireless service domains?

 

"...we'll all take a $5 discount if we can get it, but it's the integration to me that has driven the success of U-verse."

JW: Yes, that's been core to our thinking since day one. Bundling is one thing. There's some convenience to bundling services, but people aren't going to buy wireless and TV from us for a $5 discount. They'll buy it and keep it for a long time for things like U-verse mobile where I can manage my DVR, side load TV shows and watch them when I am on the road or up on the plane. This means if I have an Internet service I can customize my portal with my stocks and sports scores that shows up on my TV and get access to those services through our U-var function. That kind of integration goes well beyond bundling and I think is what really drives the power of having multiple services. Yeah, we'll all take a $5 discount if we can get it, but it's the integration to me that has driven the success of U-verse. We continue to push on that and deliver more integration to make that more valuable for our customers. Obviously, wireless and TV are the two most important products that are customers are most passionate about and are really driving the integration.

FT: Okay, so with 2010 well behind us, what's next for U-verse in 2011?

JW: We said publicly by end of the year we'll reach 30 million homes passed with U-verse. As customers make their purchase decisions around that integration and better TV service, you'll see us driving more integration. Tablets are very important with the U-verse TV service and will drive a lot more product innovation. You'll see a lot more from us during the year in that space and adding more and more content to U-verse line. Right now, subscribers can get 23,000 half-hour TV episodes online and you can control your DVR and manage your settings. Throughout the year, we'll continue to focus on building more value into those existing services and continuing to make them work better and better together both from a content perspective as well as controlling the whole experience. That's going to guide us through the rest of this year and going into next year.

FT: The foundation of that drive will also mean an ongoing expansion of the the VDSL2 FTTN network towards more homes?

JW: Yes, absolutely right. We're really comfortable with the technology and the scalability. Driving costs and making it more efficient is important, but we're really comfortable where we are.

FT: There are a number of emerging technologies on the market to boost the range, speed of copper, including bonding, dynamic spectrum management and vectoring?

 

"We've gone from no HDTV to 1, 2, 3 and four HDTV streams and compression continues to get better. ...the roadmap to drive high end service capability on the investment we already made is very clear"

JW: There's a fair amount of interest in those technologies. You know that's a great point because when we started, there were all kinds of questions such as could you make it work, could you scale it and what about HDTV? Those were all legit questions way back when, but what's been so encouraging for me is that there are new technologies on the horizon. We've gone from no HDTV to 1, 2, 3 and four HDTV streams and compression continues to get better. When you add in bonding and other technology solutions like vectoring and others, the roadmap to drive high end service capability on the investment we already made is very clear for a long, long time. We're really pleased with that investment and how efficient that investment is. Obviously, efficient investment is not that interesting unless you can put world class products on top of it, but with IP and switched video we are there.

FT: Obviously, AT&T has been boosting its U-verse video content library, but I have to ask what your perspective is on online video platforms like Netflix (Nasdaq: NFLX)? Do you see them as major competitors?

JW: There are lots of new competitors out there with IP and over-the-top video, which all enables a much more robust market. From our perspective, we're IP and we happen to deliver on our own network and there's nothing magic about that other than quality of service. We deliver some content that you would call over-the-top today. That means certain channels delivered off the Internet to the TV. I guess you could say we do over-the-top today, although it's not how most people would use the term today. Sure, Netflix is a competitor at some level and we need to make sure that customers get movies a month before you can get them on Netflix.

We're in a terrific place to capitalize on the new opportunities based on IP as well as have hundreds of channels and thousands of movies in HD and SD. I actually think it's a good thing for us as the world gets more competitive because we're in such a good place competitive place from a product, network, and a capability perspective. Then if you layer on wireless it's even better because then you can get integration and get at your content or set up your DVR from wherever you happen to be.

FT: In addition to OTT video there's a lot of talk about putting consumer services, including video into the cloud. Do you see cloud being a vehicle for U-verse video services and is there any advantage of putting residential video into the cloud?

JW: I don't want to minimize cloud, but that's just a way how we choose to deliver something. It might be more efficient to deliver cloud. We have a total home DVR service. You could store that stuff in the cloud because there's nothing magic about that technically. It seems to be more efficient to put it on one hard drive in a home rather than in the cloud every time the customer wants to look at it. Again, in the IP world it's just an engineering choice as opposed to the only way I can do it. If there's a service where cloud makes sense, okay let's do that. It's just moving IP around the house or around the network. There's just no magic in that anymore.

FT: Along with getting the service mix right, the major pain that all service providers continue to face with delivering IPTV is home installation. Do you think the telecom industry is getting closer to being able to offer self-configuration at the home or is that still far off?

JW: There's no question that a self-configuring device for IPTV would be ideal, but I don't think anyone is thinking about that in the near-term. That's going to be an evolution. But things like being able to put in a wireless set-top box in a home as opposed to running wire if something is a complicated installation or drop ship a set-top box to a consumer who has a repair or wants a new one and use wireless. Those are the kinds of things to start down that path, but it does not get you to where you want things to automatically happen. I keep coming back to it, but we're in a great place--because we're in an all-IP environment, I think we can get there a bit quicker than others. Right now, for any new customer that signs up for U-verse IPTV service we do an install with a truck and make sure they have they have the right experience.

FT: In the home wiring regime, there have been innovations with the emerging G.hn standard and home plug. Do you see those as being helpful for U-verse installations?

JW: Those are encouraging. Some of those will lessen truck rolls, but I don't know if they will completely eliminate truck rolls, but it puts you in a better place. When we go in we create a robust home network that's partly wired with WiFi in every home. There's a lot that has to happen. All of those to your point steps down that path. Ultimately, we'll wake up and be in a place where it's much more plug and play or plug and play like we'd all like it to be.

Jeff Weber on the growth of AT&T U-verse and plug & play home networks
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