Cable Technology Feature Article
AT&T Might Add 12M High Speed Access Locations Outside its Fixed Network Footprint
By Gary Kim, Contributing Editor
AT&T’s (News - Alert) proposed acquisition of DirecTV is largely about video entertainment, but also has implications for expanded high speed access coverage, according to AT&T CEO Randall Stephenson, in testimony to the U.S. House of Representatives Judiciary Committee subcommittee dealing with antitrust issues.
Stephenson noted that AT&T at present can serve less than a quarter of U.S. households with a video entertainment service that now is deemed an “essential” part of the core service bundle for consumers.
Though one might argue there also are other reasons, that degree of household reach explains why Verizon (News - Alert) and AT&T still have only a bit over five million video customers each. Comcast serves about 21.7 million, Time Warner Cable about 11.4 million, while cable operators nationwide serve about 49.6 million customers.
Precisely how the acquisition of DirecTV helps AT&T bolster its high speed access capabilities has been a key concern in some quarters.
Stephenson says the transaction will lead to lower content acquisition costs of perhaps 20 percent, while total cost synergies to exceed $1.6 billion annually within three years after closing.
Those savings will allow AT&T to invest more in high speed access, namely about 15 million mostly rural locations, within four years of transaction close.
About 80 percent of those locations are outside of AT&T’s fixed network footprint. That is a key point. Some critics have argued AT&T is adding nothing new, as it already had embarked on an extensive upgrade of its fixed network connections.
Stephenson is extending high speed access to perhaps 12 million locations not presently served by AT&T’s network, and is in addition to what AT&T already has announced.
AT&T estimates that nearly 20 percent of those rural consumers (one might estimate that includes perhaps 2.4 million locations) “today have no access to a high-speed wireline broadband service, and that another 27 percent are hostage to only one provider.”
The transaction also will allow AT&T to add gigabit access to perhaps two million additional customer locations that today either have no AT&T broadband or have only older generation service that does not support video.
There is another interesting tidbit in the testimony. Stephenson said “fewer than 140,000 of our customers (less than two percent of our video base) purchase video on a standalone basis.” That implies about 98 percent of customers are buying a bundle including at least one other service.
Edited by Alisen Downey