U-verse comes to Chicago suburbs

AT&T said it plans to compete primarily on the strength of its Internet access, TV and wireless bundle, essentially meaning that no price discounts – a historical competitive tactic – will be made available to interested consumers. Mitchell recognized that most consumers are price-sensitive but said AT&T feels the offering is very competitive and plans to market it based on the features and value of the product itself. “Hopefully at the end of the day, people will be able to see the value in the features and the pricing we have,” he said. “It is a very competitive offer and a great value proposition, I believe.”

This tactic may not last for long, according to Heynen. Considering consumers’ price sensitivity, the cost of the service as compared to satellite and cable offerings will be extremely important going forward. All options will have to be on the table as AT&T moves into major markets, he said.

“It is still very, very small numbers, relatively speaking,” Heynen said. “It is really early to say, but you can bet that when it comes to impact and how they react, pricing will be the first thing you see all these operators start to compete on, and we as consumers will benefit.”

The company is hiring 1,100 new technicians to handle the Illinois U-verse installations, which typically take about five hours to complete. Because of technology limitations, customers who live more than 3,000 feet from a U-verse node may be unable to get the service. It is unclear what this means for the Illinois market, but nationally, AT&T's goal in 22 states where it is the primary provider is to have U-verse available to half its customers by the end of 2010.

On a national level, U-verse installations are already running at 12,000 a week, exceeding the previous target of 10,000 a week, according to last week’s earning call. The service has already been installed for 231,000 customers, and AT&T expects that number to grow to more than 1 million by the end of 2008.