AT&T: Virtual MSO?

Intel Media is gearing up to launch a "virtual" MSO service later this year that will be delivered to customers over-the-top. Is AT&T preparing to do something similar?

It's an idea that seems to spring from a survey that the telco floated to U-verse customers on  March 24. According to Variety,  AT&T asked if customers would be interested in a "new video and Internet service" that could be delivered to a range of IP-connected devices without need for a separate set-top, and provide the option to bundle in broadcast TV channels, "popular sports and entertainment" networks, and even some streaming video services from sources such as Netflix.

While delivering live TV and VoD content to IP devices without a set-top isn't exactly all that fresh and new in the TV Everywhere era, the notion of taking offering a subscription TV service bundle out of footprint could be a bit more interesting.  "This service could be offered by any broadband provider, not necessarily AT&T," the survey notes, according to the publication.  

The idea of marketing pay-TV services outside of cable's traditional franchise areas has been a topic of discussion in recent years as MSOs mull ways to grow their video subscriber bases amid a saturated market.   

Faster broadband connections, adaptive bit rate technologies and content delivery networks have removed many of the technology hurdles that could prevent such an offering.  New carriage deals between programmer s and pay-TV operators typically include out-of-home streaming rights, so the business side of the equation is starting to come into focus, as well.

But any sort of cable OTT video service comes with some tricky political components. The cable industry has a collaborative chumminess about it in large part because MSOs don't typically compete against each other.  If cable operators started to deliver pay-TV packages outside their traditional footprints, that would change the whole dynamic of the industry. I don't think cable's ready to take such an explosive step, at least not while they are having some success trimming back their quarterly video subscription losses.

But companies like Intel Media and AT&T don't have such reservations; they're not part of the cable club.

"We regularly survey U-verse customers to get their input on a variety of topics," an AT&T spokeswoman said via email, without saying whether the company is looking to debut the kind of services envisioned by the questionnaire.

Of course, AT&T doesn't have to hit the panic button yet on U-verse TV, because that part of the subscriber base is still growing.  The company added 192,000 IPTV subs in the fourth quarter of 2012, wrapping up the year with 4.54 million.  Meanwhile, AT&T's Project VIP initiative also calls on the company to expand the U-verse network to 33 million homes passed by the end of 2015, an increase of about 3 million. That will give U-verse some extra headroom for growth, but an OTT subscription pay-TV service package could give it  plenty more.