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Telecom Companies Work to Connect With Ohio Television Viewers

Posted on: Tuesday, 13 September 2005, 18:00 CDT

Sep. 12--Telecommunications companies are competing to bring Internet Protocol Television and the video services it conveys to consumers in the latest round of competition with cable TV companies.

SBC Communications Inc. is making a $4 billion commitment to expand its fiber-optics network so that 18 million households -- half the number that SBC now serves -- could be able to receive IPTV by mid-2008.

The company has also hired Motorola and Scientific-Atlanta as vendors to develop the boxes that will sit atop TV sets as the command centers of a customer's IPTV system.

Through the set-top boxes, the company hopes to boost revenues by selling customers services including TV programming, digital video recording, video games and other interactive applications, high-definition TV and integrated Internet, messaging and telephone services.

Despite its name, IPTV isn't Internet-based. The set-top boxes use an Internet Protocol address, but receive content through a private network of fiber optics and copper cable.

IPTV is a relatively new venture in the United States, with telecommunications companies in Europe, China and Canada already well established in offering it. FASTWEB, an Italian company, has more than 250,000 IPTV subscribers and Hong Kong-based PCCW Ltd. more than 500,000 subscribers.

At the end of 2004, there were 1.6 million telecommunications TV subscribers worldwide, according to estimates by the market research firm In-Stat, of Scottsdale, Ariz. That will rise to 32 million by the end of 2009, with more than half of that total to occur in Asia, In-Stat estimates.

In-Stat projects that worldwide revenues for telecommunications services offered through IPTV could exceed $600 million in 2009.

SBC plans to roll out IPTV in an undisclosed initial market late this year or early in 2006, then expand into other markets by mid-2006.

The company, concerned about letting competitors know its plans, won't say which regions will get IPTV first. SBC also won't say how much customers will be charged for IPTV service, or even how they will receive the bill.

"We're just too early in this to be tipping our hand to our rivals," said Jeff Weber, SBC vice president for products and strategy.

SBC, which had revenues of $41 billion last year, operates in 13 states. It serves all of Ohio's metropolitan areas except Cincinnati.

Telephone companies, facing increased competition for the traditional phone service they offer, are pushing the development of IPTV to boost revenues. The enhanced broadband networks that telephone companies are building increase their ability to also offer high-speed Internet access and Voice-over-Internet Protocol (VoIP) telephone service.

The IPTV push comes at a time when cable companies are eating away at the profits of telecommunications companies by offering their own multi-service packages to consumers. Cable giants including Comcast, Cox and Time Warner Cable are working on plans to develop "next generation network architecture" to deliver enhanced voice, high-speed Internet access and VoIP service.

Time Warner Cable has a six-month test of IPTV service under way, involving 9,000 customers in parts of San Diego, to assess the technology and customer response. There are no plans to expand the service elsewhere until the results of the trial are in, Time Warner spokesman Mark Harrad said.

BellSouth, SBC and Verizon are the major telephone companies working on expanding the networks that will supply the improved broadband service needed to bring the video services into customers' homes.

At homes being constructed in new subdivisions, crews will install fiber lines right up to the dwellings. But with existing homes, the fiber optics will be installed to within 5,000 feet of a customer's home. The IPTV service would be relayed the final stretch by copper cable used for the existing telephone system.

The deployment will be a challenge for telephone companies, said Rick Thompson, an analyst with Heavy Reading, a New York-based market research organization. Although some small telephone companies have begun offering IPTV to limited numbers of customers, it is still a new venture for the U.S. telecommunications industry and there will be problems to be worked out before large-scale deployment is practical, Thompson said.

SBC is addressing those issues now with the intent of being ready for a smooth deployment, Weber said. He declined to discuss the problems encountered so far.

But, he said: "If we didn't have any issues, I'd roll it out this afternoon. This is well beyond a question about whether this works. This is an implementation program."

Pioneer Telephone, a rural cooperative that serves central and western Oklahoma, has 3,300 IPTV customers and is adding to that total as it expands the service to more of the 76 telephone exchanges it serves, said Scott Ulsaker, the company's video products manager. The company provides local telephone service to about 50,000 customers.

IPTV service can be pricey. Pioneer charges $245 for installation, which includes up to three TVs and a computer. The installation is offered free if the customer agrees to take the service for a year.

Pioneer charges $42.95 per month for a basic digital package which includes local TV networks, 62 channels, an interactive program guide, parental controls, on-screen Caller ID and access to pay-per-view.

For $47.95 monthly, customers can get a deluxe package that includes an additional 80 channels and CD-quality music channels.

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Copyright (c) 2005, Dayton Daily News, Ohio

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SBC, MOT, SFA, TWX, BLS, VZ,

Source: Dayton Daily News

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