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AT&T Raises Lightspeed Projections

AT&T Inc. executives told financial analysts that they intend to scale their Project Lightspeed IPTV rollout to 21 markets covering 3 million homes by year�s end, according to senior vice president and chief technology officer John Stankey.

By the end of 2007, 9 million homes will be passed, �and we will be able to deliver multiple HD streams,� Stankey added. In fact, lab work into HD and digital-video recorders is giving AT&T enough confidence to raise its video-penetration expectations from 25 percent to 30 percent by 2010, Stankey said.

Cable, he added, �risks losing customers� because the industry is spectrum-constrained. AT&T doesn�t face the analog-digital conundrum because of the inherent nature of the switched IPTV infrastructure it�s putting into place. Stankey said Lightspeed will cost the company $4.4 billion in incremental capital expenditures, largely in electronics, fiber and power. He broke down the spending at $1.4 billion in 2006, $1.7 billion in 2007 and $1.3 billion in 2008.

Over time, he estimated, per-subscriber �success-based costs� will drop from $750-$850 this year to $450-$500 in 2008 and $350-$400 in 2010. Stankey said one super hub office has been completed, with the other expected to be online in 2007. The video hub office in San Antonio is complete, with 20 more offices to be built in 2006.

He added that AT&T expects video revenue per subscriber to be in line with the $60 per month AT&T generates with EchoStar Communications Corp.�s Dish Network direct broadcast satellite service. AT&T has rolled out TV service in 200 San Antonio homes with 200 channels. Stankey said that when Lightspeed launches, the company will focus on new builds and apartment houses and �we�ll maximize our retail relationships. And we will have a sales presence at the right local events."

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