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AT&T: 60% Of U-verse Customers From Cable Competitors

About 60% of the customers signing up for AT&T's U-verse services are switching from cable competitors, chief financial officer Rick Lindner said on a conference call with analysts Wednesday.

In the first quarter of 2009, AT&T continued to ramp up U-verse TV subscribers, adding 284,000 net customers for the service in the period.

Most of those came from competitors, and more than 90% of U-verse TV customers are also taking U-verse Internet service, Lindner said.

"One of the exciting things happening with U-verse is that it's coming into its own as an integrated platform," Lindner said. "The potential for U-verse isn't just in video, but in an integrated set of services."

The telco's highest-speed broadband tier, 18-Mbps downstream, is delivered over the U-verse network, which extends fiber to the node and uses DSL for last-mile connectivity.

The number of AT&T U-verse Internet subscribers has tripled in the last year, to 1.3 million at the end of March. The telco added 284,000 net U-verse Internet subs in the first quarter and about 75,000 net legacy DSL customers.

In addition, AT&T has now deployed U-verse Voice -- a voice-over-IP service that rounds out the triple play -- in more than 86% of U-verse markets. Lindner said the attach rate for the VoIP service is more than 60%.

"We're now starting to get a lot of traction behind the U-verse Voice product, and that's helping offset the consumer line loss," Lindner told analysts. "We're the seeing the results we had hoped from the integrated platform."

In the first quarter AT&T racked up 170,000 net U-verse Voice customers, to stand at more than 390,000 VoIP subscribers total.

However, those gains were not anywhere near enough to make up for AT&T's losses of traditional phone lines. AT&T lost more than 4.2 million consumer landlines in the last 12 months, down 12.3% from a year ago, to stand at 29.969 million.

Lindner said U-verse TV's momentum has been fueled by the rollout of multiroom DVR across all markets in the fourth quarter, as well as the expansion to more than 100 HD channels earlier this year.

Penetration across all U-verse markets is now in the "double digits," and in areas where U-verse has been marketed for at least 18 months the penetration rates are in the "mid-teens," Lindner said.

The U-verse network passed 17 million living units at the end of 2008; AT&T said Wednesday that the number of homes passed increased to nearly 18 million in the first quarter.

In January, AT&T said it expected to "make continued good progress on its U-verse network build in 2009," but would reach the previously announced target of 30 million living units in 2011, a year later than originally planned.

Separately, AT&T this week is shutting down its CallVantage Internet-based phone service, the AP reported. The phase-out of CallVantage was expected; AT&T stopped signing up customers for the service last summer.