Ed: Copper DSL still much larger than fiber. Mobile broadband growing faster than both.
Ralph de La Vega, CEO of AT&T Mobility and Consumer Markets, took a moment to chat at the Web 2.0 Summit Thursday. He talked about the iPhone 3G, broadband limits and the economy's effect on AT&T's business.
But the first topic was about AT&T's move this morning to up its U-verse broadband service to 18 megabits per second, up from 10 mbps previously. Max 18, available Nov. 9 for $65 a month as part of a U-verse TV bundle, provides the highest residential speeds in the Bay Area. De La Vega said AT&T was able to achieve the speed boost by better encoding of the U-verse TV stream to make more room for broadband.
"Customers want more speed and we have the capability to deliver that," he said.
Speaking of AT&T's home services, AT&T is on track to hit a million U-Verse Internet Protocol TV and broadband customers. De la Vega said the economy is having more of an impact on home services like DSL and phone lines because home sales and construction have slowed recently. AT&T added just 148,000 new DSL subscribers in the most recent quarter, down from 499,000 a year earlier.
But he said on the mobility side, AT&T is weathering the downturn well. AT&T's wireless business added about 2 million new subscribers in the most recent quarter, much of it due to the iPhone 3G, which pulled in 40 percent of its customers from other carriers. Same store sales in the latest quarter are up 17 percent. De la Vega said AT&T is trying to be prudent about inventory in these tight economic times but hits like the iPhone 3G and recently released BlackBerry Bold are making that tough at times.
"It's rare for a company to launch two products that have people standing in line for them," he said.
The iPhone 3G in particular has been a turning point for AT&T. The company got some flak for the $900 million in iPhone related costs it reported in the last quarter, which included customer acquisition costs, marketing, network upgrades and subsidy payments to Apple. But de la Vega said while the phone will require some upfront payments for AT&T, it will prove lucrative over the life of the two-year iPhone contracts.
"The iPhone provides low (customer turnover), high revenue and high loyalty and that's good for profitability," de la Vega said.
He said there is no plans for a price cut on the iPhone 3G, which he said is already a great value for customers.
De la Vega said AT&T continues to look at Google's Android operating system but is not prepared to make any moves to carry any Android phones. He said the platform is still evolving and needs to open up even more to offer a wider array of non-Google applications.
De la Vega also addressed AT&T's recently announced 150 gigabyte per month usage limit trial in Reno. He said the company is trying to sort out how best to rein in some of the excessive use of the network by about 5 percent of its users, who represent 46 percent of its network traffic. He said getting a handle on this group can ensure that the other 95 percent aren't stuck paying for data traffic they're not using.
"To keep prices down for the 95 percent we have to figure out how to deal with this small number of users," de la Vega said.
...Deutsche Telekom Q3: encouraging signs for domestic broadband
DT's results consolidate its mobile operations under the T-Mobile International umbrella. Net revenues from mobile operations in Q3 2008 were EUR8.85 billion, up by 1.8% from EUR8.69 billion in the same quarter of 2007, while net profit came to EUR1.69 billion, a 24.6% rise from the year-ago figure of EUR1.35 billion. The group flagged up growth in its US operations, where T-Mobile USA had 32.14 million customers at the end of September, representing an increase of 4.4 million users in a year, including new subscribers from the recent acquisition of US and Puerto Rican operator SunCom.
At the group’s Broadband/Fixed Network division, total (gross) revenue for the third quarter fell by 5.5% year-on-year to EUR5.31 billion, including a 5.9% drop in domestic gross turnover to EUR4.71 billion and a 1.9% fall in international gross sales to EUR620 million. Quarterly net profit for the division was down 1.8% at EUR930 million. In Germany, falling revenues from traditional PSTN voice services are being partially offset by growth in broadband services. According to the company’s statement, its T-Home brand reinforced its strong position in the DSL market, claiming a 49% share of all DSL net subscriber additions in the country in the third quarter, which was the highest level reported by the company since the launch of its resale DSL offer in 2004. Of the 344,000 new DSL customers, around 50,000 were customers returning from competitors. This brings the total of DSL customers won back from resale providers and other network operators to around 150,000 since the beginning of the year. Telekom’s IPTV service, Entertain, now has around 333,000 customers – an increase of 33% in July-September 2008. The number of fixed line losses for the full year is forecast at 2.5 to three million. This includes losses due to regulatory measures as well as on technical grounds as a result of the migration of DSL resale customers to ‘All-IP’. At 1.8 million in the first nine months of 2008, the number of line losses was at the lower end of this guidance, with 574,000 losses in the third quarter.
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