AT&T to stop investing in U-verse CPE, will move to new in-home architecture using DirecTV system

AT&T said it plans to stop investing in its U-verse CPE platform and will instead use a "derivative" of DirecTV's in-home equipment to create a new, in-home TV product that the company said will display content from AT&T and others. The company also said users would be able to access the same content while outside the home.

During the carrier's analyst day today, AT&T executive John Stankey said that the carrier is moving to "one consistent architecture" that is a "derivative of the DirecTV in-home architecture." He said the company will begin selling the platform across all its channels by the beginning of next year. He said the platform will include "very thin hardware profiles," likely indicating a cloud-based approach to a set-top box.

"As this platform matures, you'll see an integration of mobile, social and entertainment capabilities with a best in class approach to user interface development," Stankey said. "The evolution of our customer experience will bring legacy U-verse and DirecTV customers to a new and common customer experience with personalization features, user controls, and the ability to manage managed and unmanaged content."

AT&T added the platform, which it called a "home media gateway" in its presentation, will support third-party broadband connections, LTE connections and AT&T broadband connections into users' homes. 

Concurrently, Stankey said AT&T is also developing a new content gateway that will link to its new in-home equipment. He said the gateway would allow users to access the same content outside their homes, including on networks that are not managed by AT&T. He said the new content gateway that will work with AT&T's in-home platform "will become a consolidated, single platform over the next 24-36 months."

Indeed, Stankey added that AT&T today is working to offer a variety of unified products. "Our integration efforts continue today," he said. "Some of the planned highlights are the single truck roll installation for multiple products, live local streaming, improved content portability, over-the-top integration for mobile broadband, and user interface re-engineering. All of these are steps that are planned to deliver that premium effortless entertainment experience anywhere."

During the event, AT&T executives acknowledged that the company's acquisition of DirecTV has been seen by some as a move into a mature market and therefore not financially savvy. However, company executives argued that the recent movements in the market -- including the loss of more than 500,000 pay-TV subscribers in the second quarter across the industry -- are not a surprise.

"This evolution is tracking in a manner that is consistent with our assumptions," Stankey said.

"We do anticipate cord-shaving to accelerate," AT&T CEO Randall Stephenson said. "Cord shaving isn't a big issue with us. … There's going to be a reshifting of revenues. … We like how it's playing out."

Stankey added that content providers want to make sure the pay-TV industry "doesn't disappear overnight."

Stankey said that AT&T is working to "take a mature product [DirecTV] and extend it" by cross-selling between AT&T and DirecTV subscribers, adding functionality to the carrier's services, and making its offerings portable.

For the cross-selling opportunities specifically, AT&T said it counts 39 million total households in that category. The company said 15 million of those households could add its wireless services, 21 million could add its video services, and 3 million could add its high speed Internet offerings.

"These [cross-selling] tactics yield very competitive growth," Stankey said.

Finally, Stankey added that AT&T and DirecTV now have additional offerings for advertisers looking to develop targeted ads across different platforms including pay TV and mobile.

For more:
- see this AT&T release

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