elling TV Like Tupperware By DIONNE SEARCEY and PETER GRANT June 29, 2006; Page B1 Deep inside the gated subdivisions of San Antonio, AT&T Inc. is reaching back to the past to market the future, hosting get-togethers reminiscent of 1950s Tupperware parties to show off its Internet- based TV service.
At house parties throughout the area, neighbors gather in living rooms and snack on cheese cubes and finger sandwiches while they pass the remote control, watching a side-by-side comparison of the phone company's new TV service, which is delivered over the company's broadband Internet connection, against Time-Warner's cable TV. The services are viewed on a 50-inch television set that AT&T has rigged to simultaneously display both systems.
AT&T says the gatherings have been successful in generating buzz for the service, dubbed "U-verse," with some attendees signing up for the service on the spot.
The TV bashes are the brainchild of Republican strategist Matthew Dowd, who was one of President Bush's chief campaign strategists in his 2004 re-election campaign. AT&T has hired his Austin, Texas-based consulting firm, ViaNovo, to help market TV to the phone company's customers. The marketing push draws on campaign experiences that have proved to be successful for Republicans and harnesses them for commercial purposes.
Using an approach the president's team employed in Ohio in the 2004 election, AT&T's local marketing teams are burrowing deep into communities to find neighborhood leaders to pitch its new service. They have come up with a list that includes Sunday school teachers and other "navigators," or trend-setters whose opinions are sought out and valued by neighbors.
The navigators will receive some sort of compensation for their help, but exactly what they'll get hasn't been decided. (Mr. Dowd's firm confirmed its work for AT&T but declined to comment.)
AT&T is starting to tap those individuals to host TV parties and otherwise help sing the praises of U-verse. Initially AT&T is using its own employees, but it has identified hundreds of so-called navigators in San Antonio and the Chicago area, where it hopes to soon roll out the service, and is working with them to host TV parties. (Since the process is in its early stages, AT&T declined to make any navigators available to comment.)
"People were like, wow," said Yollie Martinez, director for AT&T's national retail organization and consumer marketing, who hosted a TV party at her San Antonio home in The Vineyard subdivision in May.
Time Warner Inc., AT&T's main cable rival in San Antonio, isn't impressed by such efforts. The company says it has deep roots in the community and was involved in more than 500 local events last year alone.
"They're playing catch-up on the television product and also playing catch-up on marketing," said Keith Cocozza, a spokesman for Time Warner.
AT&T and other U.S. telephone companies are under tremendous pressure in their competition with cable companies to offer consumers the most attractive packages of TV, phone and high-speed Internet services.
Cable operators are leading this race so far because they have succeeded in rolling out phone service much faster than telephone companies have launched TV. Cable operators have more than five million phone subscribers and are adding hundreds of thousands of new ones every quarter.
For AT&T, which is embarking on a merger with BellSouth Corp. to become the largest telecom company in the world based on market capitalization, the race is particularly important. To overtake cable and its sizable lead, AT&T recognizes that it must use Internet technology to create a better television experience than cable offers.
Telecommunications companies throughout the world are viewing the Internet as a way of breaking into the TV business. But the technology is tricky because it is essentially delivering huge streams of video data bits over copper wires that were designed to handle simple phone calls. While AT&T is stringing high-capacity fiber through some of its network, the last stretch of wiring into homes is upgraded copper. It is more feasible in a densely populated city like Hong Kong where homes aren't far from distribution points than in suburban neighborhoods where millions of AT&T's customers live. (Cable companies deliver their services over fat cables.)
AT&T is using unproven Microsoft Corp. software, which can allow instantaneous channel changes, high-definition TV and an interactive "picture-in-picture" program guide that lets viewers watch two channels at once. But the software also adds to the complexity of the operation and adds to the demands on the thin copper wires. AT&T is months late in launching, and the service being offered now in San Antonio doesn't make high-definition possible though the company says it will add that feature soon as it rolls out to 15 to 20 more markets by the end of the year.
There are, however, plenty of advantages to AT&T's approach. Rather than broadcast all channels at once to a TV or set-top box as is the case with cable and satellite systems, Internet protocol technology sends one stream at a time, similar to the way a Web page is delivered to a computer. As a result, there technically is no limit to the number of channels operators can offer, and on-demand streams will flow faster. These Internet streams could allow AT&T to partner with a high school, for example, to offer live football games on a channel with little effort. Someone would still have to film the event, but the service would have plenty of room to air it.
To do the same thing with existing technology, cable companies would have to create a new channel or bump a programmer from an existing one. "We'll have the Fiesta Day parade and little Johnny in the marching band, and grandma will see him on TV," says Randall Stephenson, AT&T's chief operating officer.
But cable operators aren't waiting for the parade. Major cable companies like Comcast Corp. and Time Warner are pushing to add a wide range of new features and content to their cable services, sometimes with the same Internet technology that AT&T is using.
For current AT&T subscribers, the system appears very similar to a regular cable TV setup. An AT&T technician installs a set-top box and gives customers a remote control that allows viewers to use specialized search functions to look for programs.
For now, the programming AT&T offers is essentially the same as that offered by Comcast, Time Warner and others with channels such as CNN and HBO and the like; customers can't surf the Web on their TV sets.
AT&T this week expanded its San Antonio TV launch to include an undisclosed number of additional homes in the area. Months before that launch, the company was employing the tactics learned by Republican strategists. Mainly, AT&T has focused on compiling a list of local opinion shapers using telemarketing questions and other techniques developed by Mr. Dowd's firm.
"From a marketing standpoint we've long been intrigued with the idea that certain people hold the power to market things and talk to others in a way that gets listened to in a different way," said Mikal Harn, vice president of consumer marketing for AT&T. "We're looking for people who are more likely than most to have a strong pull and power -- the word-of-mouth champions."
AT&T is offering those people special demos of the service with the intent of converting them into fans of its TV offering. The hope is they will then go back into their communities and talk up the service and agree to host TV parties. The effort is in its very early stages but so far at employee-hosted parties AT&T has found that typically three attendees sign up for the TV service on the spot. The following day two more will call AT&T to buy service, the company says.
The marketing effort also includes ice-cream trucks wrapped in U- verse banners and stores where shoppers can view the TV service and its features. A display will be set up inside at least one swanky country club in suburban Texas.
AT&T has also designed mobile trailers to look like suburban stucco or brick homes, complete with furnished living rooms, that it plans to park in neighborhoods where residents can test its TV service in a home-like setting.
One early customer of the service, Alan Weinkrantz, who is chronicling his TV experience in a blog (satechblog.com), says the picture and programming of his Time Warner cable service and his AT&T service is similar but he likes AT&T's user interface better because it reminds him of sitting behind a computer screen.
"The interface is superior, it's much faster," says Mr. Weinkrantz, who runs a public-relations company that represents technology firms as well as technology and Internet phone entrepreneur Jeff Pulver. Mr. Weinkrantz says he isn't being paid by AT&T or Microsoft.