The two US giant RBOCs are now starting to motor in the respective TV strategies, with Verizon taking its FiOS TV customers to 943,000 in its latest quarterly filing, and since rising above 1 million, while AT&T’s oft troubled U-verse TV system has added over 100,000 subscribers in the last quarter to take its toll to 231,000 at the end of 2007.
Unless there has been some exceptional growth in France, where three operators each offer IPTV services, or at PCCW in Hong Kong, both of which had over 800,000 at the end of the third quarter, then after four years of developing its system, and chasing customers, FiOS should be considered the top telco TV operation on the planet, not counting those which offer cable TV technologies.
The trouble is that those which do use cable, are so far ahead of the two US giants, and across the boarder in Canada, both Rogers and Bell Canada each have around double the number of TV customers that FiOS has, and it will be a long, long haul before they start reining in US operations like Comcast with its huge 24 million TV customer lead.
But the first step on the telco chain is to put together a working service which does not churn too badly, and Verizon is certainly there, and AT&T may well be there at last. The next step is to use the service to plug the desertions from its fixed line base, and for that the companies need to make TV sign ups around the same number of fixed line losses, something approaching one or two million new telco TV customers a year and that most probably won’t be reached for another year.
The RBOCs line losses were niftily disguised in this year’s numbers, and may be easier to spot in their official filings rather than their press releases, but they continue to be heavy and Verizon owned up to falling fixed line revenues while AT&T said that it had managed to turn the tide and was up 568,000 lines, or 1.2%, and it said gains in high speed Internet and video more than offset declines in voice access lines in the 4th quarter.
The next and final step would be to take the fight to the cable operators, and that’s not even necessary in order for Verizon and AT&T to appear healthy in the eyes of investors, but if they could begin the process of stealing net customers from cable, rather than trying to stem the losses, then Wall Street’s view will change radically.
AT&T said that it was now installing IPTV customers at the rate of 12,000 a week, ahead of its promise to reach 10,000 by year end, and if that rate was sustained throughout this year it would add half a million customers during the coming year. It clearly thinks it will be able to ramp the install rate further, because it says that it will be joining the 1 million IPTV customer club by the end of 2008, and regardless of what you think of Microsoft’s middleware design, no-one except FiOS is moving any faster, anywhere else in the world.
In effect the next really newsworthy items on US major RBOC IPTV strategies will be the counter-offensive from cable, mostly geared to DOCSIS 3.0 and 100 Mbps broadband lines.
Almost as if it was anticipating that, AT&T, which is the more vulnerable of the two, given that it uses copper in the last mile (last 5,000 feet) has introduced a new broadband rate for its U-Verse customers of 10 Mbps downloads and 1.5 Mbps uploads. Bundled with U-verse TV, this speed will cost $55 a month.