IPTV: Standing on the brink of explosive growth, and big earnings

Jim O'NeillAT&T last week reported second quarter earnings and, as it did in the first quarter, reported that its U-verse subscriptions and IP-related revenues once again were the stars of wireline. Subs bumped a whopping 209,000 for the quarter, bringing the telco to the 2.5 million-customer mark, a pretty heady benchmark. What's even more impressive is the U-verse growth over the past year: 60 percent, and with the reports that it will start rolling out pair bonded VDSL--which will allow the telco to extend its U-verse service up to 2,000 feet--the next couple of quarters could see even bigger subscriber growth.

Verizon, also reported subscriber gains for its FiOS service, 174,000 new customers for the quarter to give it 3.2 million FiOS TV subscribers.

Now, my brother-in-arms at FierceCable, Jim Barthold, would say it's a drop in the bucket next to Comcast's 18.8 million digital cable subs.

But you have to believe that Comcast--and Jim--are taking note of the rate of growth of both services, as well as the phenomenal ARPU each saw in the second quarter. AT&T U-verse triple play customers (who make up some three-quarters of all U-verse subs) turned out a stellar $160, up 13.8 percent from the same quarter in 2009, which helped U-verse revenues exceed $1 billion for the quarter, a first.

Verizon, meanwhile, saw FiOS revenues top $1.8 billion and said ARPU for FiOS subscribers was more than $145.

Jaime Fink, CTO of 2Wire, (see this interview) which this week was bought by STB-maker Pace, said he expects IPTV growth to blossom in the coming months as smaller telcos take advantage of a number of technological breakthroughs--like AT&T's pair bonded VDSL, and Alcatel-Lucent's Integrated Solution for Microsoft Mediaroom, its new compact IPTV offering that takes advantage of virtual networks and rapid deployment.

Alca-Lu's VP for multimedia integration Geeta Chaudhary said she expects the company to see as many as 30 new deployments in the U.S. this year.

"We're pretty bullish on this one," she said, as smaller telcos begin to see a clearer business case for an IPTV rollout that will make them better able to stand up to their cable and satellite competition, offering better service options and a more robust offering.

Add to that the number of tier 2 and 3 telcos that have taken advantage of the broadband stimulus package to expand their fiber footprints (by the way, if you have, and you'd like to talk about your plans for using that grant, drop me a line), and you can see how this next quarter or two could be barnstormers for the IPTV industry.-Jim