AT&T's TV service arrives

Fearing Time Warner retaliation, phone company won't say which neighborhoods can get U-verse

Paid-TV competition is about to heat up in the Triangle.

Nearly two years after promising to bring its U-verse television service here, AT&T is finally introducing it in select -- but undisclosed -- neighborhoods in Raleigh, Durham, Chapel Hill, Cary and Garner. U-verse, available starting today, offers up to 350 channels, including high-definition programming, along with a video-on-demand library and digital recording features.

TV service closes the competitive gap for AT&T, which for years watched helplessly as cable giant Time Warner seduced its telephone customers. Both companies also compete with satellite-TV providers. AT&T plans to continue is partnership with the Dish Network in addition to offering U-verse.

If there's any doubt about the competitive stakes, consider this: AT&T won't name the Triangle subdivisions where U-verse is available, so as to thwart its cable rival from luring customers with bargains. Instead, households that can get U-verse will receive notices in the mail.

U-verse is available to a fraction of homes in the Triangle now, but AT&T plans to keep expanding the service throughout the area, said Bob Sellman, AT&T's general manager for home solutions.

The move comes as the economic recession is crimping household budgets, heightening the competition for customers willing to spend $150 a month or more on packages that bundle high-speed Internet, phone and TV.

Time Warner is expected to quickly undercut AT&T's prices.

"They'll start targeting those neighborhoods with special offers -- discounted services, maybe a free month of HBO, or steeply discounted voice service," said Vince Vittore, a technology analyst in Chicago with Yankee Group. "If you take all three services from Time Warner, then the likelihood of you switching to AT&T is greatly diminished."

This area is the 70th market to get U-verse since 2006. Charlotte, the first area in the state to get U-verse, was added three weeks ago.

On Nov. 10, AT&T filed for a state cable-TV franchise for 22 counties, including Chatham, Johnston, Orange and Wake.

Time Warner closely monitors AT&T's U-verse deployments and has "a pretty good idea what they're going to do," said Time Warner regional vice president Tom Adams.

Time Warner has been preparing for the rival's arrival. The Triangle's cable provider has added channels, including Bravo and more high-definition offerings, and new services. For instance, the Start Over function lets viewers restart live shows.

AT&T expects to sign up 1 million U-verse customers nationally by the end of this year. Time Warner has 14.6 million customers nationwide, 1.6 million in North Carolina.

In the long term, prices on TV services aren't likely to plummet as they did with wireless service, analysts say. Instead, AT&T and Time Warner will compete on advanced features and on high-definition programming.

U-verse is an Internet-based service that combines online features with TV. The U-bar function customizes preferences for displaying weather, stocks and other information. Customers will be able to record up to four programs at once on one digital recorder and watch live or recorded programs on multiple TVs.

In initial rollouts, U-verse suffered from glitches, including delays up to 5 seconds when changing channels. AT&T and technology partner Microsoft appear to have fixed those problems.

"Where the consumer is going to win is they're going to be able to watch what they want and when they want it," said Elroy Jopling, a technology analyst in Toronto with Gartner. "They're going to compete on improving the TV experience."