AT&TU Adds Detroit, Telcos See Cable, Satellite As Real Threat

AT&T's telco TV service, which the company says is taking a quality versus quantity approach to rollouts, has entered its fifth DMA in the top 15, adding the Detroit market.

As of last week, AT&T U-verse only had 26,000 customers, giving it a penetration rate--before Detroit--of perhaps 5% in homes where it's available, maybe even lower. That pales beside the 348,000 customers the other telco TV entrant, Verizon's FiOS, had at the end of March, earning a penetration rate of 11%.

Verizon is also a step ahead in the ad sales business, hiring ViaMedia as a rep firm to sell the local avails it gets, similar to cable and satellite operators. AT&T has formed a unit to implement the process--looking to sell packages across its broadband, TV and wireless offerings--but has yet to launch.

AT&T says its rollout has been slow in order to ensure that it offers a top-notch product when it hits a market, including a DVR that records up to four programs at once, picture-in-picture for every subscriber, regardless of set, model and HD capabilities. Verizon has tried to compete on price.

While Verizon has run TV spots promoting its service, AT&T has focused on grassroots efforts for U-verse, including having ice cream trucks in serviced neighborhoods hand out treats and offer demonstrations.

So far, the two are attempting to mount challenges to cable and satellite providers, but not each other. They are concentrating their efforts on areas where they operate traditional phone service. To date, there are no regulatory barriers to competing.

With cable operators making an increasingly aggressive play to attract phone customers--in bundles with TV and broadband--telco providers are fighting back. They offer a package with the same services, but lag considerably in customers. (Telco can also pitch a fourth option: wireless.)

Still, the companies predict they will be in millions of homes (though nowhere near the large MSOs or DBS operators) by 2010 or so.

Besides Detroit, U-verse is in other top-15 DMAs, including Los Angeles, the Bay Area, Dallas and Houston.

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