AT&T sees growth in landline VoIP despite wireless substitution trend

AT&T (NYSE: T) may be seeing its wireline customers continue to abandon their POTS lines in droves and use wireless as their only voice connection, but the company continues to see more customers adopt its VoIP-based U-verse Voice service.

Growth of the U-verse VoIP service was on display in the first quarter. Besides seeing gains in broadband and video subscriptions, it ended the quarter with more than 5 million U-verse Voice subscribers.

This number will likely continue to ramp as it converts more of its customers off of legacy DSL and onto its IP-based U-verse broadband and, where it's available, to the 1 Gbps fiber-to-the-home (FTTH) services. As of the end of the quarter, AT&T said that it converted around 80 percent of its subscribers to IP.

In tandem with the IP transition, a growing number of AT&T's customers will often purchase a double play bundle of broadband and VoIP service. 

"I'd say the near-term driver is the bundle and if you create a good combination of a robust high speed Internet service and a great home voice product at a good price, customers migrate to that," said Bob Bickerstaff, vice president of voice and data products for AT&T, in an interview with FierceTelecom. "A large percentage of our customers buy both products together and in some cases [when] some customers are moving to our IP network from our DSL Internet network, they'll bring along their voice and we often sell it into new customers as well."

Despite seeing competition from over-the-top VoIP players such as Vonage and Skype, AT&T is differentiating its service with a host of features such as E-911, call blocking and call forwarding. What's more, the service provider maintains that because it runs its own managed Internet network, it can provide an equivalent experience found on a traditional TDM-based service.

The service provider currently offers three main U-verse Voice packages: U-verse Voice International, which offers unlimited calling to the U.S., territories and Canada and discounts to other countries; AT&T U-verse Voice Unlimited that offers unlimited calling within the U.S. and to Canada, Puerto Rico, the U.S. Virgin Islands, Guam and the Northern Marianas; and AT&T U-verse Voice 200 that offers unlimited calling to other U-verse Voice customers and 200 minutes of anytime calling to anyone else in the U.S., Puerto Rico, the U.S. Virgin Islands, Guam and the Northern Marianas.

Bickerstaff said that regardless of the growing sentiment that wireline voice is dead, the service provider is taking ongoing steps to enhance its VoIP product for residential and small business customers. "Many outside of the telecom industry think voice is dead, but that's really not the case at all," Bickerstaff said. "We really think we offer a convenient product that's flexible and delivers value and there's a good market for wired home voice."

The service provider has been taking steps to integrate its VoIP service with other services, including its IPTV service. "We have spent a good bit of time integrating it with our other services to make it more accessible and more convenient than TDM," Bickerstaff said. "For instance, caller ID shows up on the TV and you can load an app on your smartphone and look at voice mails on it and transcribe it to text so you can read it and send the voice message via e-mail to your PC or another person."

AT&T is not just stopping with service integration and bundles. The service provider plans to integrate new elements such as Web RTC and high-definition voice elements into its U-verse Voice feature sets. However, at this point, it can't reveal any specific plans around these technologies.

"You've seen Web RTC and things like HD voice and we're currently assessing those technologies and getting our arms around where the home voice products are going," Bickerstaff said. "There could be something there, but we're not prepared to announce specific plans as we're assessing these advanced technologies."

Despite seeing more consumers opt to cut their landline voice cord by using wireless as their only voice connection, AT&T is seeing more consumers see value in having a wireline-based VoIP service in their home.

"The overwhelming trend remains wireless substitution where customers use their cell phone and that becomes the primary device, but I do believe there becomes a point in which the value around a home phone dedicated to the users in the home does have merits," Bickerstaff said. "I do think that we're getting closer to that point of equilibrium where there is a value."

Bickerstaff added that the growing telecommuting trend is also driving consumers to rethink using just a cell phone. This is because the call quality of some cellular services can vary depending on where a user resides in relation to the nearest cell tower and if they are in a congested area.

"So many people in our country now work from home and sometimes the wireless voice quality of wireless carriers isn't sufficient to provide a great conference call experience," Bickerstaff said. "We can guarantee a high quality voice connection with our wired services."

Related articles:
AT&T converts nearly 80% of broadband subscribers to its IP platform
AT&T pre-empts Comcast 2 Gbps threat by launching 1-Gig service in Chicago suburbs
AT&T says it needs to invest in FTTP where it makes economic sense
Google Fiber's presence pressures AT&T to adjust 1 Gig pricing plans
AT&T to battle Comcast, Google Fiber with 1-Gig service in Atlanta

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