Several interesting trends emerge from AT&T’s 1Q09 numbers. iPhone mania aside, AT&T’s wireline trends are worth observing too. These trends include competitive implications of U-Verse TV and access line loss implications of U-Verse Voice.
CFO Rick Lindner reported on AT&T’s 1Q09 earnings conference call that 60% of U-Verse TV customers are coming to AT&T from competitors. That fact alone is not surprising. After all, where else are they going to come from? The more important trend is that of those new U-Verse TV customers, 90% are also opting for U-Verse Internet, and 60% are opting for U-Verse Voice. AT&T is converting a significant number of these competitive gains into multiple revenue generating units, evidenced by a revenue per household increase of 2%, primarily driven by a 23% growth in consumer IP data revenue. Not terribly impressive numbers by themselves. But when put into the context of the negative growth of AT&T’s core product for households – access lines – perhaps a little more impressive. The historical engine of household revenue is in major decline, yet AT&T still manages to grow overall household revenue.
Of particular note are the 170K new U-Verse Voice subscribers. U-Verse Voice is an IP voice product which provides a variety of advanced features over traditional TDM voice. AT&T lost 699K residential TDM access lines in the quarter, meaning net new U-Verse Voice adds equate to 24% of residential TDM access line losses. Put another way, using an IP voice product, AT&T is ‘recapturing’ roughly 1/4 of the residential TDM access lines it’s losing. This trend is not unique to AT&T. We’ve also observed similar trends with SureWest, who also has introduced an IP voice product alongside traditional TDM voice. This suggests carriers can positively impact TDM access line loss by introducing a more advanced IP voice product. Granted, it’s not a one-for-one replacement, but 24% beats 0% every day of the week.