Evolving the U-verse Ecosystem

One topic that AT&T Inc., its partners and industry analysts all agree on is that the first focus on evolving U-verse must be on a combination of added features, applications and integration with other services (such as wireless to delivery on the three-screen vision).

The worst-case scenario, they agree, is for Tier-one telcos such as AT&T to make price competition with incumbent cable and satellite providers their primary battlefield. That, they said, would result in the devolution of IPTV along the lines of CD players, DVD systems, big screen TVs, PCs and more.

“The notion of competing just on price doesn’t make sense to us,” said Jeff Weber, AT&T’s vice president of product and strategy, who added that the company will not lead on price. “The value equation for the customer is going to get better. It’s simple to say that, but we have to execute every day with that in mind because nobody is standing still.”

A is for Applications

Core to the evolution of U-verse is the development of applications that build on the delivery of video-driven package to enable new capabilities, commerce and interactive TV – three areas that can help AT&T control the consumer entertainment experience.

“If you’re focused on being in the business of thinking up the next killer application, you’re in a bad place,” admitted Weber. “I have no idea what it will be, but I believe the market will decide that.”

That said, Weber added that “we need to create an applications environment that results in the easy and fast turnaround of applications.” To its credit, AT&T began this effort last year with longtime partner Yahoo. The telco provided core APIs and its partner wrote an application that became a launch feature of U-verse – Web remote access to the service’s DVR offering.

Cashing In

Commerce applications – ones that let you buy things using your video services – represent more than a core part of IPTV’s future. They represent a potentially deep and sustained revenue stream in addition to service subscription fees and pay-per view charges.

It’s not yet clear where these commerce applications will come from and therefore it’s uncertain when they may be added to offerings like U-verse. The allure, however, of being able to buy related merchandise after viewing a favorite movie or watching a sporting event, seems undeniable.

“The APIs come from us, and we believe that third parties that can write applications for the Internet can write ones for us,” said Weber. “We are learning a lot about applications as we market the service and sell to customers. It’s a great opportunity to get to talk to customers in more and better ways, which wasn’t available without [U-verse] in our offerings.”

Fulfilling the Vision

AT&T also realizes that delivering on its three-screen vision (TV, PC and wireless device) is a daunting integration effort, one it plans to attack with extra vigor now that its merger with BellSouth is decided and the RBOC brings Cingular Wireless into play.

And for applications to reach three screens in a truly integrated fashion, they must be accessible across three networks, which most expect can be accomplished using the all-promising, but still nascent, IP multimedia subsystem (IMS). While Weber noted that integration doesn’t have to wait for IMS, it will be far easier with it.

AT&T Inc. www.att.com

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