AT&T is the U.S. leader in local and long distance voice services, mobile telephony and DSL-based high-speed Internet services. Built through a string of acquisitions, the company is about to vault even higher once its pending merger with fellow telco BellSouth closes. Despite this strength, AT&T is watching as its core voice businesses shrink. The pressure is on the giant phone company to compensate for this erosion--and to compete with cable operators--by upgrading its network architecture to video-capable levels. To the extent AT&T succeeds in transforming itself into a major video provider, competition in the U.S. communications marketplace will undergo a radical shift, forever changing the rules of the multichannel video game.
IP Media Monitor and Emerging Media Dynamics are therefore proud to announce the release of our April Spotlight on Television 2.0 Leaders report, which focuses on AT&T Inc. AT&T is pulling out all the stops to pioneer a new and controversial form of television delivery using a technology known as VDSL2 and an architectural blueprint that brings fiber to the node, a lower cost and presumably faster video retrofitting than the fiber-to-the-premise upgrades being implemented by another leading phone company, Verizon.
Our report on AT&T delivers in concise actionable summaries overviews of the company's history, current business model, financial performance and Television 2.0 efforts. Although AT&T has mounted nascent efforts to deliver movies and videos via DSL and tentative steps to deliver video services via mobile broadband, the highest profile and most expensive video initiative underway at AT&T is Project Lightspeed.
Based on cost, revenue, deployment and penetration assumptions offered by AT&T itself, we conducted a payback period analysis of the Lightspeed initiative. The results of this analysis, presented in our spotlight report, indicate that AT&T would be hard-pressed to justify the costs of Lightspeed based solely on the incremental revenue and cash flow that might be generated from video services. However, the Lightspeed architecture is premised on the delivery of integrated voice, video and data services, and AT&T anticipates that this integrated approach will also boost voice and high-speed data revenues, as well as cut costs in the delivery of voice and high-speed services.
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- Introduction and Executive Summary
- I. Short History of AT&T
- A. From Lab Invention to Break-Up
- B. Consolidation Following 1996 Telecom Act
- C. Failed Attempts at Reorganization, Diversification
- D. New Era of Consolidation
- II. Overview of AT&T’s Businesses
- A. Voice Business
- B. Data and DSL Services
- C. Mobile Services
- D. Video Business
- E. Profitability
- III. AT&T’s Television 2.0 Initiatives
- A. Project Lightspeed
- 1. Lightspeed Technology
- 2. Does VDSL2 Deliver Enough Bandwidth?
- 3. Delays in Lightspeed
- B. HomeZone
- C. DSL-Based Initiatives
- D. Cingular Initiatives
- IV. AT&T Television 2.0 Initiative - Project Lightspeed Financial Analysis
- A. Revenue, Cash Flow and Payback Model
- B. Conclusions from the Payback Analysis
- Appendix One BellSouth Overview
- A. Operating and Financial Overview
- B. BellSouth’s Television 2.0 Efforts
- C. Size of a Combined AT&T-BellSouth
- About the Autthor
- About Emerging Media Dynamics
- List of Tables
- Table 1 - Project Lightspeed Vendors
- Table 2 - Lightspeed Revenue, Cash Flow and Payback Analysis, 2006 - 2010
- Table 3 - AT&T and BellSouth Key Statisics
- List of Figures
- Figure 1 - AT&T Consolidated Revenues, Q1 04 to Q1 06
- Figure 2 - AT&T Consolidated Voice Revenues, Q1 04 to Q1 06
- Figure 3 - AT&T Total Switched Access Lines, Q2 04 to Q1 06
- Figure 4 - AT&T Quarterly Line Losses (in 000s)
- Figure 5 - AT&T Quarterly Line Losses, Q2 04 to Q1 06 (in 000s)
- Figure 6 - AT&T Consolidated Data Revenues, Q1 04 to Q1 06
- Figure 7 - AT&T DSL Lines, Q2 04 to Q1 06
- Figure 8 - Cingular Total Revenue Q1 04 to Q1 06
- Figure 9 - Cingular Wireless Voice Customers
- Figure 10 - AT&T Video Customers (000s)
- Figure 11 -- AT&T Net Income - Q1 05 to Q1 06
- Figure 12 - Lightspeed Architecture
- Figure 13 - Illustration of Switched Video
- Figure 14 - BellSouth Total Access Lines, Q3 04 to Q1 06
- Figure 15 - BellSouth DSL Customers, Q3 04 to Q1 06
- Figure 16 - BellSouth Video Customers, Q3 05 to Q1 06
- Figure 17 - BellSouth Operating Revenue and Income, Q3 04 to Q1 06
- Figure 18 - BellSouth Net Income
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