Telco TV

SBC, Verizon Execs Say ’05 Will Bring Big Start In Video

1/09/2005 7:00 PM Eastern

Las Vegas— This Consumer Electronics Show might well be remembered as the video coming out party for the big phone companies.

From a main address by SBC Communications Inc. CEO Edward Whitacre, to Microsoft Corp.’s news that it was testing Internet-protocol TV with BellSouth Corp. to a strong presence by Verizon Communications Inc. — with a Court TV carriage deal in hand — the telcos made their grand entrance into the pay TV business.

Unveiling “U-Verse” — the new brand moniker for SBC’s IP vision of wireless and wireline video, voice and data for consumers — Whitacre said: “2005 will be a transformative year for consumers. You control your universe.”

Whitacre’s company is spending $4 billion on its LightSpeed fiber-to-the-node build, as well as $400 million with Microsoft to deliver IPTV services to consumers. That fiber technology will reach half of SBC’s 36 million-home subscriber base in three years, with the first homes coming online by year-end, he said.

In the other half of SBC’s universe, the telco will continue to offer EchoStar Communications Corp.’s Dish Network satellite service. But through a new box from vendor 2Wire, it will combine that product with its SBC Yahoo! DSL service. SBC Yahoo! customers will be able use the box to access the broadband service on their TVs, for content such as Movielink films, music and digital photos.

Both SBC and Verizon plan to provide standard-definition TV, HDTV, video-on-demand and DVR capabilities, in competition with cable and direct-broadcast satellite.

“We will be successful as long as we execute on two fronts,” said Verizon vice president of video programming Terry Denson. “We have to provide a better customer experience and we have to foster better programming relationships.

“We don’t think the battle has been won by anyone at this point. Our bet is we can do video better than they can do telephone.”

Whitacre also is confident. “We don’t talk about strategy or plans until we have a better idea of the outcome,” he said, noting SBC’s caution up until now. “Our promises should not exceed our capabilities to deliver.

“Convergence is a good example. The benefits are obvious. It’s easy for the imagination to outpace our ability to deliver. But this year, SBC is going to deliver.

“Within three years, 18 million homes will have access to this network,” Whitacre continued. “No other company is pushing this hard or this fast. We’re talking about a digital lifestyle.”

STRATEGIC DIFFERENCES

Both Denson and Whitacre gave indications as to how their services will be different from cable.

“We will try to give ourselves a slight edge across every category,” Denson said. With greater capacity, Verizon can tell consumers it has more standard-definition and HDTV channels than cable. Its TV-programming package will be all-digital, thus providing better picture quality.

SBC will market its VOD as a competitive advantage versus satellite.

Both executives talked about integrating DSL broadband content for consumers on their television sets, although SBC plans to be the more aggressive on that front.

Whitacre said IPTV will allow SBC to provide more content choices than cable’s linear and VOD lineup. The telco also plans to deploy different camera angles for sporting events with future software upgrades, Whitacre said.

“IPTV is a new area, but it’s a great fit,” he said. “We know broadband, the Internet and innovative networks. IP changes the way you experience TV. Video has been about hardware. With IPTV, it’s about hardware and software and services, and for SBC it’s how we combine these new services.”

Cable operators weren’t taking the new threats lying down.

“There is no real difference in the platforms,” said Cox Communications Inc. vice president of product marketing and management David Pugliese. “We can match that fairly closely. It will come down to who’s providing a better customer experience.”

BELLSOUTH JUMPS IN

BellSouth Corp. also got into the act, saying it intends to trial a video service in the first half of 2005 using ADSL2-plus (asynchronous DSL) technology, similar to the technology SBC plans for its video rollout.

BellSouth said it is currently testing IPTV hardware and software and will expand the trial to set-tops in select customer homes. Deployment plans won’t be announced until it finishes all trials.

“IPTV will potentially forever alter the way we consume video content, much like personal video recorders have done,” said BellSouth chief technology officer Bill Smith. He hinted that BellSouth’s video plans would integrate TV and PC content and devices.

“IPTV places customers in the driver’s seat and gives them complete control of their entertainment experience, regardless of the media format or on which device within their home they wish to use,” he said.

September