Mergers, acquisitions, wireless contribute to AT&T’s bigger pocket
By Traci Patterson, CED

AT&T continued to lose lines, but continued to offset those losses with growth in broadband and video subscriptions. The subscriber growth helped lead to a modest increase in profit and revenue.

AT&T’s regional consumer connections—retail access lines, high-speed Internet and video connections—increased by 402,000 in Q1 2007. High-speed Internet and video growth more than offset net declines in traditional access lines: Primary consumer lines across the 22 states where AT&T has its regional operations declined by 285,000 in the first quarter, compared with declines of 251,000 in the Q1 2006 and 331,000 in Q4 2006, the company said.

AT&T’s video connections—including AT&T U-verse service and bundled satellite television service—increased by 187,000 in the first quarter. At the end of the first quarter, AT&T had 1.7 million total video connections in service.

The vast bulk of AT&T’s video customers continue to be DBS subscribers. AT&T’s recently launched U-verse service is now in 15 markets, but at the end of the first quarter, AT&T had only 13,000 U-verse video subs.

AT&T offered U-verse numbers from after the close of the quarter to show the service is ramping. By mid-April, U-verse installations had increased to approximately 2,000 per week, and as of April 24, U-verse subs in service had reached approximately 20,000, the company said.

Q1 2007 consolidated revenue totaled $29 billion, up nearly 50 percent year-on-year from $15.8 billion. Versus Q1 2006 pro forma revenues of $28.9 billion, AT&T’s Q1 2007 revenues—adjusted to exclude the effects of purchase accounting on directory revenues—grew 1.7 percent to $29.4 billion, the company said.

“Merger integration is on track, volumes continue to be solid, and we expanded margins in both wireless and wireline,” said AT&T’s CEO Edward E. Whitacre Jr. “Wireless service revenues increased at a double-digit pace.”

The company’s wireless subs increased by 11.5 percent year-on-year to total 62.2 million. AT&T’s total wireless revenues grew 11.2 percent in the first quarter to $10 billion. Wireless data revenues spiked 66.8 percent year-on-year to $1.5 billion.

AT&T’s Q1 2007 wireline revenues totaled $18 billion, versus $14.4 billion reported in Q1 2006, prior to AT&T’s acquisition of BellSouth. But versus pro forma revenues of $18.6 billion for Q1 2006, wireline revenues declined 3.2 percent.

U.S. still a laggard on broadband adoption, despite sheer numbers
By Brian Santo, CED

The U.S. leads the world by far when it comes to the total number of broadband subscribers (58.1 million), but continues to lag when it comes to broadband adoption rates. The U.S. ranks only 15th in terms of penetration, according to statistics compiled by the Organisation for Economic Co-operation and Development (OECD).

The U.S. is failing to live up to its own goals for broader penetration, but that situation is shared by other countries that are similarly characterized by larger populations who also have an enthusiasm for broadband services. Also ranking low are the U.K., Japan and France, among the countries immediately ahead of the U.S. on the OECD per-capita adoption list.

Through 2006, the number of broadband subscribers in the OECD data increased 26 percent from 157 million in December 2005 to 197 million in December 2006. This growth increased broadband penetration rates in the OECD data from 13.5 in December 2005 to 16.9 subscriptions per 100 inhabitants one year later.

Other data points (all as of December) called out by the OECD include:

European countries continue to lead with high broadband penetration rates. Denmark, the Netherlands, Iceland, Korea, Switzerland,  Finland, Norway and Sweden each had at least 26 subscribers per 100 inhabitants. Denmark and the Netherlands are the first two countries in the OECD to surpass 30 subscribers per 100 inhabitants.

The strongest per-capita subscriber growth over the year comes from Denmark, the Netherlands, New Zealand, and Ireland. Each country added more than 5.8 subscribers per 100 inhabitants during the past year.

Fiber-to-the-home (FTTH) and fiber-to-the-building (FTTB) subscriptions now comprise nearly 7 percent of all broadband connections in the OECD and the percentage is growing. Korea and Japan each have more than six fiber-based broadband subscribers per 100 inhabitants. The total number of ADSL subscriptions continues to fall in Korea and Japan as more users upgrade to fiber-based connections. 

Broadband connections included in OECD data must have download speeds equal to or faster than 256 kbps. Although satellite-based broadband is included in the OECD’s calculations, 3G mobile technologies are not.

Report: VoIP driving MSO sub growth
By Brian Santo, CED

Voice-over-Internet Protocol technology is driving subscriber growth for MSOs; VoIP was directly responsible for an almost two-fold increase in the number of North American subscribers during 2006, by In-Stat’s calculations.

In-Stat projects that cable telephony service revenues will reach $10.4 billion in 2007, up from $7.9 billion in 2006. North America will account for two-thirds of the worldwide service revenues in 2007.

The phenomenon is global, though. In-Stat reports that worldwide cable telephony subscribers increased to over 22 million in 2006, up sharply from 15.8 million in 2005.

“In a growing number of markets around the world, cable TV operators consider telephony service to be an integral part of their telecommunications service bundle,” says Mike Paxton, In-Stat analyst. “This has led to increasing service availability in North America, Europe, and in a few countries in Asia.”

The data comes from In-Stat’s recent report titled, “The Worldwide Market for Cable Telephony Services.”

Tellabs hits dip in Q1, expects better Q2
By Brian Santo, CED

Tellabs, trying to negotiate a transition from one generation of equipment to the next, reported lower first-quarter revenue and profit, but proclaimed itself encouraged by the adoption of its newest products.

Tellabs today reported first-quarter 2007 revenue of $452 million, down 12 percent from $515 million in the first quarter of 2006. Tellabs earned $25 million in Q1 ’07, down 51% from $52 million in the like quarter a year ago.

“Despite industry uncertainties, we are encouraged that Tellabs’ new technologies are taking root in service provider networks,” said Krish A. Prabhu, Tellabs president and chief executive officer. “These technologies play a key role in evolving our customers’ networks for video services.”

Tellabs picked up Verizon as a customer for its 7100 ROADM product last summer, and is now jockeying for Qwest’s business.

Tellabs said it expects a 10 percent to 15 percent sequential increase in revenue for its second quarter.  As part of second-quarter revenue, Tellabs expects to meet the criteria that would enable it to recognize $60 million to $70 million of revenue related to its 7100 ROADM product, at essentially a breakeven margin. Excluding revenue from the Tellabs 7100 ROADM product, Tellabs expects the balance of its second-quarter revenue to be flat to down slightly from first-quarter 2007 revenue.

Imagine adds VBR/statmuxing to switched digital video
By Brian Santo, CED

Imagine Communications announced its Switched Digital Video (SDV) system now supports variable bit rate and statistical multiplexing (VBR/StatMux) to improve video quality and bandwidth efficiency. Imagine claims the ability as an industry first.

Using the multi-rate CBR feature, Imagine ensures that difficult-to-compress services will have equivalent perceived quality relative to other signals. The CBR rate for each service is automatically determined by analyzing actual empirical data from each signal.

With VBR, Imagine enables up to 15 SDV signals to be statistically multiplexed in a 256-QAM channel, while maintaining the video quality of the incoming VBR digital broadcast signals. The QOD Gateway allows operators to maintain centralized bulk encryption of their SDV signals.

Imagine-processed VOD and SDV signals can also be multiplexed through a common QOD Gateway hardware platform and can support optimized EdgeQAM sharing. Also, Imagine’s products employ industry-standard open interfaces, allowing interoperability with any Session or Edge Resource Manager (SRM/ERM), EdgeQAM device and VOD server.

Imagine CEO Jamie Howard said, “One of the goals of a successful SDV deployment is maintaining the quality of experience for digital cable subscribers with respect to video quality and channel change latency. Imagine’s SDV system not only addresses these objectives, but also delivers up to 50 percent more streams per QAM channel.”

Broadband Briefs for 4/24/07

* FTS, Sandvine enable service personalization
FTS and Sandvine have integrated the former’s business control, billing and CRM solutions and the latter’s deep-packet inspection (DPI) based policy management solutions. The combination aims to give operators the ability to respond to customer behavior in real time with personalized services. For example, if a premium customer orders a VOD stream, the provider can dynamically improve his or her service level to guarantee an optimal viewing experience.

* Ikanos intros 2.7 GHz VDSL2 gateway processor
Ikanos Communications introduced its Fusiv Vx180, a single chip, multi-mode VDSL2 gateway processor that provides 2.7 GHz of processing power, Voice-over-Internet Protocol (VoIP), multi-mode DSL and security. Ikanos is trying to move into the gateway space with the Vx180 and the recently introduced Vx170. The latter is designed for residential gateways particularly in an FTTH system, while the latter adds an onboard VDSL modem, making it appropriate for gateways used in fiber-to-the-building (FTTB) systems.

* Tektronix launches VoIP, IMS test solution upgrade
Tektronix Inc. has launched Release 5.2, part of its Spectra2 test solution. Release 5.2 enables Spectra2 to provide a complete diagnostic testing solution for network operators and equipment manufacturers developing platforms and service offerings for VoIP, IP Multimedia Subsystem (IMS) and converged networks.
 
* OpVista appoints European telecom vet to board
OpVista has appointed Lawrence Williams to its advisory board. The 20-year European telecom vet is a managing director of the German cable operator PrimaCom Management GmbH.

At PrimaCom, Williams led the development and roll-out of digital pay-TV and VOD services. Williams previously held various leadership positions with Motorola GmbH, including director of e-commerce, and director of marketing and operations for the Personal Communications Group.

* Ambit, Netwave introduce channel bonding modem in Korea
Ambit Broadband Corp. and Netwave are partnering to deliver a channel bonding modem to subs of Hanaro Telecom, a high-speed Internet, IPTV and telephone service operator in Korea.

The modem has the capability to bond three downstream channels to enable a maximum 144 Mbps downstream and up to 30 Mbps upstream throughput. It also supports features such as Gigabit Ethernet and USB 2.0 interfaces, bonding channel recovery and QoS features enabling IPTV service. The pre-DOCSIS 3.0 modems will support future interoperability with full DOCSIS 3.0 CMTSs and cable modems when they become available.