ATLANTA--AT&T is constantly bombarded with questions about the capacity of its U-verse network, given that it will rely on fiber-to-the-node technology and copper connections into the home. One key aspect of that technology’s success is continual advances in compression technology--something Peter Hill, vice president of voice and converged services at AT&T, said is going faster than expected.

Indeed, Scientific-Atlanta, the Cisco Systems company that is providing that compression technology to AT&T, is currently delivering a single high-definition channel over MPEG-4 at 6 Megabits per second and has demonstrated reducing that to 4 Mb/s, said Tony Stanley, director of marketing and business development.

“We are still working on that,” Stanley said at the TelcoTV show this week. “For high-sequence video, like ESPN or action movies, where there is a lot of detail in the picture to convey accurately, it’s still a little hard. But we are doing a lot of work with Peter and AT&T to make this happen.”

Even so, he said, the 25-Mb/s pipe that AT&T says it can consistently deliver over its current U-Verse architecture is not likely to deliver more than two HD streams, given its need to also support standard definition TV, high-speed Internet access and VoIP. Stanley figures today there are two 7-Mb/s HD channels, three to four SD channel at 2 Mb/s each, plus a 3-Mb/s channel for internet access and VoIP.

“If you can maintain a 24-Mb/s to 26-Mb/s line, you have a pretty good shot at a competitive triple-play service,” Stanley said.

Going beyond that will require not better compression but better access technology, he added. “That’s when they’ll have to move to VDSL.”

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It’s hard to believe now, but at one time, SA struggled to get the video industry interested in digital video recorder technology. J.T. Taylor, the company’s director of product marketing, told a TelcoTV workshop audience that the same is likely to be true for the “Connected Home.”

“Consumers are looking to be entertained on the TV set,” he said. “Some of the advanced features may not be for them.”

That’s why he believes consumers initially must be courted not with fancy features but with well-priced bundles that deliver value. “If you look at Cablevision, they pioneered how to market the bundle,” he said. “They were taking in $88 per customer three years ago, and they are up to $99 a customer now. The average cable bill is $120. The idea is to sign people up to the bundle and then quickly upsell them.”

Today, DVRs are among the most popular features and the ones that consumers are least likely to want to give up, Taylor said. That’s largely because they have been integrated into the existing service and are easy to use, versus the early TiVO service, which required a phone jack near the TV and separate programming.

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TelcoTV wasn’t by any means a large show for the Georgia World Congress Center, but it was a lucky event for the drought-stricken region. After eight weeks of virtually no rain, the water works were turned on for almost the entire show.