I've been following this project for a number of years. "U-verse" is the ultimate result of SBC's "Project Lightspeed" (
background info ).
The original plan was to pull fiber right to the home of all new buildout, and pull it to the neighborhood level for existing structure and use VHDSL (Very Highspeed DSL) to get connectivity to the end node. This new hybrid fiber/VHDSL would deliver speeds up to about 25Mb/s to the end user, allowing 4 concurrent HD streams, telephony, and data (internet) access.
The fiber buildout was accompanied by massive datacenter buildout in all CO's They were setting up a hierarchical network of on-demand video delivery servers, to allow caching video at the local level and not require delivering it all across the Internet. The end-user's set-top-box for IP->TV connectivity was a really cool box running an embedded Windows OS. I saw some demos of what it did and was quite impressed. Due to all video being stored on the servers in the CO, you could watch any program you wanted, any time you wanted. It was kind of like a really huge DVR with the storage hosted remotely at the CO.
It is my understanding (and I don't know how accurate this is) that since the ATT merger, the project has been scaled down dramatically to make shareholders happy. The set-top-box is no longer built by Microsoft, and has been cheapened significantly. The capabilities have been scaled down significantly, and the fiber/VHDSL rollout has slowed to a crawl. I believe that ATT intends to deploy the service using existing DSL network infrastructure, and then upgrade to the original plan at an indefinite later date.