Cable Operators

Motorola Confirms Verizon Video Buy

10/31/2004 7:00 PM Eastern

Verizon Communications Inc. last week took a major step last week toward making its video plans a reality, confirming a deal to buy video headend equipment and digital set-tops from Motorola Inc. for its fiber-to-the-premises rollout.

Verizon is building FTTP transport in nine states this year that will pass one million homes, and another million homes are scheduled to be passed in 2005.

The telco plans to launch wireline video service—with HD, VOD and DVR services—sometime next year, and will use Motorola's platform to do it.

$20M OR MORE

No details were released on the size or dollar figure of the order. But even at 10% penetration, 200,000 subscribers across 2 million homes at a $200 set-top price would translate to $20 million, not counting the video headend gear and network integration services Motorola will offer.

After an analyst, Anton Wahlman of Needham & Co., wrote a report in August that said Motorola had won the Verizon set-top business, the possibility of the contract was reported in Multichannel News last month.

“The available bandwidth that fiber provides makes the addition of video services the next logical step,” Paul Lacoutre, president of the network services group at Verizon, said in a release.

Bruce Swail, general manager of Motorola's telecom access group, said what Verizon will install will look a lot like what's seen in a typical cable system.

“The headend equipment is largely the same,” he said, and the set-tops, although not exactly the same DCT models, “will be close cousins.”

Verizon has a nationwide fiber backbone it upgraded earlier this year. The company is the third-largest long-distance telephone service provider, so it has experience with long-haul transport.

Although Verizon said it has made no final decision, several vendors say the company is looking at creating one national super headend, which will send signals from national networks like Cable News Network and ESPN to Verizon headends in local markets.

Some satellite receiving capability might still be necessary in local markets, vendors say. But Motorola will be supplying local headend and access-control equipment, including MPEG-2 (Moving Picture Experts Group) encoders.

But Swail said that could migrate to MPEG-4 and Windows Media 9 encoding schemes, among other formats.

Swail said Verizon plans to open a third wavelength on its video-only FTTP network. “It's almost an HFC (hybrid fiber-coaxial) link,” Swail said.

While the forward path will be very similar to cable's, the return path will be all-digital, said Swail. That will give Verizon switched digital video capabilities.

A handful of other vendor contracts remain for Verizon, including one for a video-on-demand server vendor and associated asset-management system, an interactive program guide, as well as programming deals.

But with the Motorola deal and Verizon's early announcement on its FTTP transport vendors, most of the pieces the telco needs to launch video service are in place.

WHERE IT'S ACTIVE

Verizon has already rolled out FTTP-based data service in Huntington Beach, Calif., North Tampa, Fla., and Keller, Texas. It offers 5 megabits per second downstream, 2 megabits upstream for $34.95 a month when ordering another Verizon service. The company also is offering a 15-megabit downstream, 2-megabit upstream service for $44.95 a month.

Home businesses also will be offered a 30-megabit downstream service.

Two weeks ago, Verizon announced a batch of new FTTP deployments, including Delaware and Dallas-Fort Worth, as well as parts of the following counties: Riverside, Orange and San Bernardino, all California; Hillsborough and Pasco, both Florida; Montgomery, Md.; Essex and Middlesex, both Massachusetts; Nassau, Rockland and Westchester, all New York; Bucks and Chester, both Pennsylvania, and Falls Church, Arlington, Fairfax and Loudon, all Virginia.

Executives said the telco is in the midst of negotiating franchise agreements with local governments for its launch of cable-TV service next year.

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