The New AT&T

Elsewhere on the competitive front, AT&T this week somewhat quietly announced first-quarter results that included the initial activity of a merged AT&T-BellSouth–Cingular entity.

Of interest to the cable industry was the fact that the telephone company – and we probably have to come up with a better way of describing these guys than that since Alexander Graham Bell wouldn’t recognize them – called out its "accelerated broadband and video growth" in its news release.

According to AT&T, there was a 691,000 increase in high-speed Internet connections to reach 12.9 million in service, an increase of 2.3 million over the past year. There were 187,000 total video net adds to reach 1.7 million in service, and AT&T U-Verse video subscriptions ramped to 13,000 in service at the end of the first quarter and "approximately 20,000 currently, up from 3,000 at the beginning of the year."

Numbers aside – a heartbreaking thought for engineers and analysts – the company appears to have learned well from its cable brethren, especially when it comes to marketing its wares. Bundling up "Customers that are standalone voice customers have ARPUs (average revenue per unit) in the low $40 range. As they begin to bundle, as we move them upwards to a full quad bundle where they have voice, video, data and wireless from us, all of a sudden that customer moves to a $250, $260 monthly customer, and at the same time the churn rates are cut by two-thirds," said Richard Linder, senior executive vice president and CFO at AT&T, speaking during a conference call.

If that quote were part of a song, cable could sue the guy for "sampling." As it is, the industry not only has to watch where AT&T is going with a quad play, but also where it might go with 700 MHz spectrum that will be abandoned by the broadcasters and auctioned by the FCC.

"In terms of looking at it as spectrum that would be used in our wireless and our mobile wireless operations, I would expect we would look at it the same way we did in the last spectrum auction: Simply look at a forecast of the business and the traffic by market with and without that spectrum, and then determine how that impacts our capital expenditures that would be required to support various volume levels. That, in effect, determines the value that we place on that spectrum in the auctions," said Lindner.

What he left unspoken is that the 700 MHz spectrum could also serve as cable’s entrée big-time into the mobile space, and that might be reason for a deep-pocketed telco – er, broadband services provider – like AT&T to invest a little time, effort and maybe money into the auction.

"This spectrum, with its propagation characteristics, potentially could have some other applications, but we’re still early in the analysis of that," Lindner concluded.

We’ll leave you to judge the meaning of that. – Jim Barthold