U-verse gains no plus for competitors

AT&T TV service crosses half-million subscriber mark

NEW YORK -- AT&T's gain could mean pain for cable operators and Dish Network.

The telecom giant said Wednesday that its U-verse TV service has crossed the half-million subscriber mark and is on track to exceed 1 million customers this year.

With a net subscriber gain of 170,000, the company ended the second quarter with 549,000 U-verse users.

In its quarterly earnings report, AT&T also said it remains "on trajectory" to exceed 1 million subscribers by year's end.

Although U-verse has been slower out of the gate than Verizon's FiOS TV, AT&T management signaled growing comfort with the product, saying network deployment is on schedule and that install times continue to decline.

Collins Stewart analyst Tom Eagan said the latest quarterly growth rate is "negative" for such cable giants as Comcast and Time Warner Cable. "AT&T's solid 170,000 U-verse TV adds suggest increased competition for cable operators," he argued.

Analysts also highlighted a continued decline in AT&T customers signing up for TV service via Dish. The 3,000 additions in the second quarter was down from more than 85,000 in the year-ago period and 40,000 in the first quarter.

Sanford C. Bernstein analyst Craig Moffett called this "a truly awful result" and suggested the weak momentum could make AT&T more likely to choose DirecTV over Dish as its satellite TV partner after their current relationship ends this year.