7 Agenda AT&T U-verse Verizon FiOS AT&T vs. Verizon Sample Triple Play Bundles Cable Company Progress, Strike and Counterstrike Rating the Competition Other Considerations Summary and Conclusions Questions and Answers
8 Graphics courtesy of and used with permission from AT&T AT&T U-verse Service Delivery FTTN/FTTP, VDSL, IPTV/MPEG-4, HPNA
9 U-verse Strengths & Weaknesses Strengths –U-verse integral to AT&Ts Three Screens strategy –AT&T U-verses Microsoft platform provides superior services –AT&T offers more HD channels –AT&T offers additional technical support Weaknesses –AT&T has reported only 126,000 U-verse customers (Q307) –Advanced features are not available –AT&Ts VDSL platform can reach speeds at a minimum of 25 Mbps, but much of the capacity is dedicated to deliver video
10 AT&T Triple Play Results Residential Voice Lines Broadband Access Satellite Video (DIRECTV and DISH) U-verse Video Net Consumer Revenue Connections
11 AT&T U-verse: Announced Future Plans 30 million living units with the U-verse fiber network by 2010, covering about 50 percent of living units and 33 percent of businesses. AT&T expects U-verse services will represent a multibillion dollar revenue stream over the next several years. AT&T projects it will have more than 1 million U-verse customers by the end of In 2008, AT&T plans: Whole-Home DVR, 2 HD streams at the same time, a media sharing capability, and 10 Mbps using VDSL pair- bonding.
12 Verizon FiOS Service Delivery FTTP (B-PON, G-PON) MPEG-2, MOCA Super Headend Super Headend Hub Office Serving Office PSTN Circuit Switch Optical Line Terminal Hub Splitter ONT
13 FiOS Market Positioning Strengths –FiOS Internet penetration 20% and FiOS TV penetration15.2% –Verizons FTTP architecture allows it to meet the bandwidth needs of consumers for the foreseeable future. –Verizon has the flexibility to offer IPTV and VoIP. –Verizon claims an industry-leading service rating for FiOS installations. Weaknesses –Verizon still has a long way to go to achieve even 50% coverage. –Verizon is under pressure to reduce its capital spending. –Verizon has done little to match the full potential that a quadruple play can provide.
14 Verizon Triple Play Results Residential Voice Lines FiOS Internet and DSL Broadband Access FiOS TV and Satellite Video (DIRECTV) Net Consumer Revenue Generating Units
15 Verizon FiOS: Announced Future Plans Verizon plans to pass approximately 18 million homes with FiOS by Verizon will continue to upgrade its FiOS data and video network and offer converged services. It has plans to increase its consumer portfolio of home networking services. The companys long-term video strategy beyond FiOS includes offering additional channels and moving IPTV over the FiOS network. In 2007, Verizon began to deploy Gigabit PON (GPON) technology.
16 AT&T vs. Verizon: Sample Triple Play Features and Prices (Los Angeles Market 12-07)
17 Q307 MSO Triple Play Progress Like Cox and Cablevision, other cable companies could achieve a 25-35% voice (VoIP) penetration rate within three years. Broadband penetration rates have not peaked but have slowed. Digital video penetration rates are good, but basic video customer growth is slowing or declining. MSOs are more willing to take voice and data customers without requiring a video subscription.
18 MSO Strike and Counterstrike Against U-verse and FiOS Switched Digital Video: Being Deployed –HD Channel Count Solution DOCSIS 3.0: In trials, deployments –Broadband Speed Solution OCAP: Interesting Opportunity –Counterstrike to IPTV? What about Quadruple Play ???
19 AT&T and Verizon vs. MSOs: Sample Triple Play Features and Prices (California Markets 12-07)
20 Rating the Competition Scale 1 (low) to 5 (high) Based on Customer Criteria Month Horizon
21 Other Considerations Regulatory and Legislative Climate Content and Applications Providers without a Network –Google, Microsoft, AOL, Wal-Mart, Vonage The Effect of Wireless (Mobile) Integration The Future of Satellite Providers –DIRECTV, DISH Breaking-up the 200-channel video package
22 Summary and Conclusions Customers with choice will churn & (maybe) churn again FiOS and U-verse will reach their 2010 goal of 25-30% market share Cable companies will continue to win voice customers Triple-Play prices will not decline significantly Value Added Services will drive ARPU Satellite still relevant as AT&T and Verizon Plan B