If you are an executive providing linear video entertainment services, and head a public company, one thing you don’t want to say is that a major shift in how video entertainment gets delivered could harm the existing video subscription business.
One other thing such an executive does want to say is that it will be able to shift to on-demand, over the top services when it has to, to manage the transition.
And that basically is what AT&T CFO John Stephens said recently at theDeutsche Bank Media, Internet and Telecom Conference.
As other major Internet service providers also have said, AT&T believes its growing fiber-rich access customer base (Project VIP) could give AT&T additional leverage, should it be desirable or necessary to provide branded over the top video services.
With 10.4 million stand-alone U-verse broadband customers already served, AT&T would have amalgamated that large a potential audience for sales of an OTT video service.
Cable executives while saying they do not see major threats from over the top video at the moment, nevertheless say they will move to participate should that happen on a significant scale.
If programmers cut deals with an over-the-top player like Intel or Sony, “we could drop them and have a relationship with the over-the-top provider and put those signals on the TV for the customers,” Charter Communications CEO Tom Rutledge has said.
“In some ways, I would like that to happen, because I think it would change the leverage relationship between us and content providers,” Rutledge has said.
In other words, any major ISP’s high speed access customer base is, at the same time, an aggregated potential base of customers for an Internet-based video entertainment service.
Verizon and AT&T are already making moves in the mobile entertainment delivery sphere, AT&T having purchased Qualcomm’s Media Flo assets and Verizon having partnered on a streaming service with Redbox, purchasing EdgeCast, a content delivery network, as well as investing in Long Term Evolution multicasting.
The point is that a large base of high speed access customers also represents a huge pool of potential customers for any new branded streaming service a major ISP would want to launch.
"The advantage for us is that opportunity for over the top for the broadband connections we have may be so attractive it allows us to shift gears or take risks with regard to our traditional subscription model on our 5.4 million customers," Stephens said.
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