IPTV's up, so why's U-verse slowing down?

The total number of global IPTV subscribers for 2008 came in at 21.3 million — about one million more than analyst firm Multimedia Research Group originally forecasted. With a solid year behind IPTV operators and a strong first quarter, MRG is predicting 5.6 million more new subscriber additions in 2009, bringing this year's end total to 26.9 million global subs. Given this optimistic outlook, what's going on with AT&T (NYSE:T) and U-verse?

Last week, GigaOm first reported that John Hodulik, analyst with UBS, said U-verse could only pass between four and five million additional homes this year, which is significantly less than the nine million it passed in 2008. AT&T responded to Hodulik that its U-verse expansion remains aggressive, but it is managing everything conservatively these days, given the economy.

AT&T already did admit to a slowdown back in January, although not to the degree Hodulik is predicting. At that time, the end of the fourth quarter, AT&T said it would focus on selling services to the 17 million living units it currently passes, rather than forge ahead to new territories. Its long-term goal also was adjusted to passing 30 million units by 2011, rather than 2010, as originally planned.

There have been many potential alternative explanations offered up for AT&T's U-verse stall. It could be the economy. It could be that they are having trouble scaling Microsoft's Mediaroom — its middleware platform of choice — to new users, focusing instead on upgrading its capabilities. It could be that union strikes are relegating U-verse contractors to landline work, or it also could be that AT&T is focusing on going after DirecTV's subscribers for its satellite bundle instead.

AT&T isn't alone in its holdup either. Verizon confirmed it would slow FiOS expansion, at least in Southern California, last month for the same reason: to focus on areas where the service already is available. But while tempered IPTV plans are not all that surprising given the economy and aforementioned scenarios, it's still a bad time for the carrier to lose any focus on TV — even though it does have its hands full with wireless as well. Competition is only increasing, as Verizon innovates on its service, cablecos continue to steal digital voice customers from telcos, and over-the-top video raises the question of whether IPTV is necessary at all.

According to MRG, AT&T U-verse and Verizon FiOS combined added 583,000 TV subs in Q1 — 284,000 going to AT&T, compared to the two largest cable companies, Comcast and Time Warner Cable, which only added 114,000 new subs in the same period. Still, with tempered expectations and plans to tone down growth, AT&T — and Verizon, too — shouldn't rest on the progress of Q1. It's still anybody's game for pay TV and — recession or not — AT&T needs to forge ahead.

E-mail me at sreedy@telephoyonline.com.