BellSouth Corp. plans to spend $200 million next year to
install fiber optic technology in 200,000 homes in metro Atlanta and in south Florida's
Dade and Broward counties.
The Atlanta-based regional Bell operating company said its
strategy is to bring to customers a "mosaic" of high-speed Internet and video
services, as well as a technology similar to asymmetrical-digital-subscriber-line service.
BellSouth said it is accelerating fiber deployment in part
as an answer to high-speed-data competition from cable companies in those areas. And
deploying fiber enables it to provide an ADSL-like high-speed service that does not have
the distance constraints of ADSL.
"ADSL is our answer to the cable modem,"
BellSouth spokesman John Goldman said.
Goldman said the high-speed service -- which the telco
plans to test later this year and to deploy in 1999 -- will transmit data at speeds of 1.5
megabits per second.
This marks the first time that BellSouth will deploy fiber
in existing homes. Normally, the company runs fiber to new subdivisions, at a rate of
about 80,000 homes per year. The copper replacement mainly involves homes that are too far
away from the central office (more than 18,000 feet) to receive ADSL.
BellSouth has high hopes for its data business, projecting
that data revenue will increase from $1.8 billion this year to $5 billion by 2002. But it
has some entrenched competition in Atlanta and south Florida from MediaOne,
Tele-Communications Inc. and Adelphia Communications Corp.
Englewood, Colo.-based MSO MediaOne has been offering
telephony, high-speed data and video in the Atlanta market for more than one year.
Dave Wood, a MediaOne spokesman, added that although
BellSouth has considerable marketing and financial muscle, it's going to take a far
superior service at a much lower price to convince MediaOne data customers to switch
"[BellSouth] certainly has to realize that we have a
pretty good head start on them," Wood said. "If they're phasing out copper plant
that was installed fairly recently, they must be reacting to something."
Jeffrey Kagan, president of Atlanta-based Kagan Telecom
Associates, said the real test will come when the network is deployed on both the RBOC and
"This is just the beginning of a very messy
transition," Kagan said. "After the dust settles, then it's going to be a
marketing war. At this point, it's just a technology and availability war."
But at least one analyst didn't see BellSouth's strategy as
a threat to cable.
"[A total of] 200,000 homes is not a major
announcement: It sounds more like a 'proof-of-concept trial,'" said Jim Wahl, an
analyst for Boston-based research firm The Yankee Group.
"There have been a lot of announcements [by telcos],
but our take is that it is more smoke than fire," Wahl said. "DSL doesn't fit
nicely in [telcos'] portfolio of products."
Wahl added that MediaOne is well-positioned in the
telephony and high-speed-data market, attracting customers who spend upward of $100 per
month on communications services.