AT&T (NYSE: T) is considering expanding its U-verse buildout which could, in turn, mean between $110 million and $190 million in equipment sales for Alcatel-Lucent (NYSE: ALU), according to a research note from Jefferies & Co. equity analyst George Notter.
Notter estimated that 3 million to 5 million access lines--of the total 18 million AT&T access lines that do not currently receive U-verse--would be upgraded to receive the service should AT&T go forward. The buildout would take 12 to 18 months.
More interestingly, Notter suggested AT&T would not totally abandon leftover subscribers unable to access U-verse via DSL, but would instead offer the service over LTE--opening yet another can of wormy questions about how to deliver a multiscreen service over a wireless technology.
Alcatel-Lucent is considered the frontrunner for the wireline business because it is the incumbent vendor, Notter said, calling the potential $110 million to $190 million in orders "incremental" business for the French company. Alcatel-Lucent and Ericsson (Nasdaq: RIC) would probably share the LTE business, he added.
It will be interesting to see if AT&T can deliver an adequate U-verse product without a wire--or even if it can get away with trying. LTE, while considered faster than DSL, is limited and not nearly as capable of transporting rich content as AT&T's fiber-to-the-node U-verse network. In fact, DSL vendors continue to wring more from copper and have delivered--for carriers hoping to preserve their copper investments--some marked improvements in the last year or so. Wireless is bandwidth-constrained and the service carries some serious charges for over-usage.
AT&T, meanwhile, is feeling increased pressure in the residential space from cable's triple play as the cable industry aggressively rolls out DOCSIS 3.0 and, as of last week's SCTE Cable-Tec Expo in Orlando, also pursues development of a DOCSIS 3.1 spec.
On top of the technology aspects, Broadband DSL Reports suggests there can be some regulatory issues. The story pointed out that AT&T has lobbied to change regulations that require them to provide wireline DSL and POTS service and, if those services are withdrawn, subscribers will have two choices: fast and potentially inefficient LTE or cable.
"Once consumer advocates wake up to what's going on you can expect some howling, since AT&T has received countless billions in taxpayer subsidies to get those lines up and running in the first place," the Broadband DSL Reports story said.
More information about U-verse and where it goes from here will probably be brought forth when AT&T hosts an analyst day Nov. 7. Until then, an AT&T spokeswoman declined to comment on the newspaper story.
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