from: XChangemag.com [1]

AT&T Ups U-verse Spending by $1.4 Billion
By Bob Wallace
Posted on: 05/07/2007

Facing challenges on all fronts with the deployment of its IPTV-driven U-verse triple-play bundle, AT&T Inc. confirmed Monday that it will spend an additional $1.4 billion on its initial plan to drive the offering and is reducing it subscriber target by 1 million.

AT&T said the changes reflect additional investments that “will further strengthen the service – such as new infrastructure to support our expansive channel lineup, development and introduction of new features for the platform, and additional network conditioning to help ensure an optimal customer experience. AT&T is also paying a premium to lock up contractors who will continue their work on U-verse deployments.”

The news comes as little surprise as the company ended 2006 by missing its long stated U-verse deployment mark by four cities. AT&T execs have cited software problems as a big challenge and the telco has run into franchising problems in its region that have resulted in drawn out negotiations, impasses and lawsuits.

All of these factors, combined with the need to bulk up the service with greater HD capabilities and distinguish it marketing-wise from its Homezone satellite bundle have likely driven up the cost of AT&T’s video efforts.

While AT&T had already spent billions in deploying DSL to the home to provide the infrastructure, the carrier also likely incurred sizable expenses from almost pulling together billing and back-office systems form scratch, as opposed to using it legacy systems.

AT&T said it now plans to pass approximately 18 million households by the end of 2008. The company said that number doesn’t include its plans for the Southeast, which could increase the number past 19 million homes.

The new projections will not impact AT&T’s overall 2007 capital expenditures, the company said.