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Phone Companies, Cable TV Providers See Edge in Fiber-Optic Triple Play

Posted on: Tuesday, 19 October 2004, 12:00 CDT

Oct. 16--Phone companies and cable TV providers are duking it out for the wallets of consumers like Terry and Patricia Scott of Buford.

The companies' goal is to turn a triple play, getting consumers like the Scotts to buy their voice, cable TV and high-speed Internet service from a single source.

The Scotts opted to get their triple play from BellSouth, which connected the couple's home to its fiber-optic network.

"What we have now in terms of service is exactly what we want," said Terry Scott, 59, who retired as director of internal auditing at Southern Co. Their package, for about $160 a month, consists of 70 TV channels, plus HBO and Showtime, and DSL and phone service.

Look for more consumers to join the Scotts in picking BellSouth and other phone companies as their triple-play providers, analysts predict.

One key reason: The Bells will more quickly build fiber-optic networks for carrying video after federal regulators this week said they won't force the phone companies to share the equipment with competitors.

SBC Communications will now build its network in two to three years instead of its previously stated time frame of five years, while BellSouth will extend its fiber network to 40 percent more homes next year, compared with this year.

The Federal Communications Commission decided that network-sharing rules, which require Baby Bells to lease their phone networks to competitors, won't apply to fiber-optic networks. The ruling is a victory for BellSouth and SBC, which are upgrading systems to contend with cable operators entering the phone market.

"It's confirmation that removing that regulatory uncertainty is going to allow these guys to spend," said analyst Mark Hesse-Withbroe at U.S. Bancorp Asset Management.

Carriers also don't have to include so-called circuit-switched technology, common to older, slower networks, on their upgraded high-speed networks, the FCC said.

SBC said it still plans to spend $4 billion to $6 billion on its fiber-optic network, which will reach 18 million homes by the end of 2007. BellSouth will "redirect" spending to the fiber-optic network from its copper-wire system, spokesman Kevin Curtin said.

BellSouth extends its fiber network curbside. From there it's connected with copper wires, which then carry services into residences. The network now reaches 1 million homes, though only a fifth now can receive video.

BellSouth will extend its fiber network to 180,000 more homes next year, compared with 130,000 this year, Curtin said.

In Georgia, BellSouth already has connected 250,000 homes to its fiber network. More fiber is being deployed in new subdivisions, such as Dogwood Manor in south DeKalb County.

Networks being built by SBC and Verizon Communications connect fiber cable straight to homes. Last year, the FCC exempted from network-sharing rules fiber cables that reach premises.

BellSouth opted not to extend higher-capacity fiber all the way to homes to make the network "more cost-effective" and ensure customers can use services when power fails, Curtin said.

Separately, the FCC adopted rules governing high-speed Internet service through electrical outlets and wiring, also known as broadband over power lines.

Bloomberg News contributed to this article.

HISTORY OF FIBER-OPTIC NETWORKS AT BELLSOUTH

--1986: Deploys first fiber to the home network in Hunter Creek, Fla.

--1996: Fiber is used for all new construction.

--2000: Debuts cable TV services in Gwinnett County.

BY THE NUMBERS

--28.2 million: Total high-speed Internet connections in the U.S.

--16.4 million: Total U.S. cable broadband connections

--9.5 million: Total U.S. DSL connections

--2.3 million: Total U.S. satellite or wireless broadband connections

Source: Federal Communications Commission data, June 2004

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(c) 2004, The Atlanta Journal-Constitution. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

BLS, SBC,

Source: The Atlanta Journal and Constitution

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