U S Wests Broadband TV, Data Launches

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U S West has gotten its broadband digital-TV and data
service under way in Phoenix, amid signs that the telephone industry is finally getting
serious about moving to a full-service-network platform.

There are now a few thousand residents in and around
Phoenix subscribing to what U S West is calling "Choice TV," said Rubin
Valdillez, marketing-communications manager for the carrier's video-services unit.

The service -- offering 136 digital-video and 30 audio
channels -- was launched without fanfare at the start of this quarter with the goal of
passing between 300,000 and 400,000 households with its new fiber-rich network by year's
end, he added.

"We now have secured franchises for Phoenix,
Scottsdale, Gilbert, Chandler and a couple of unincorporated areas representing a total of
650,000 households," Valdillez said.

The service -- which has two high-speed-data options, as
well as multiple TV tiers -- starts at $31.95 per month for 142 channels, including the
audio, with data available at 256 kilobits per second for an additional $34.95 per month
or at 1 megabit per second for $44.95, both including Internet service, he said.

With service being made available on a
neighborhood-by-neighborhood basis as the network is turned up, marketing is limited to
door-to-door and a small amount of targeted mailings, with no advertising yet, Valdillez
added.

After years of trial and error in U S West's and other
telcos' territories that largely led to dead ends, the Phoenix launch represents the first
large-scale commercial deployment of a U.S. telco network suited to delivering an
integrated package of voice, data and TV services over a single line.

Ameritech Corp., GTE Corp. and Southern New England
Telecommunications Corp. have used cable-network technology overlaid on existing copper
plant, and BellSouth Corp. is widely offering TV over wireless cable, as well as preparing
to experiment with a fiber-to-the-home delivery system in Atlanta.

But high costs and a general absence of incentive to push
the technology envelope in this direction have stymied the deployment of fiber-based
broadband-telco networks.

The situation is quickly changing, largely due to the
splash AT&T Corp. has made in making cable a credible threat to the telcos' core
business, asserted ImagicTV Inc. president and CEO Marcel LeBrun.

ImagicTV is a Canadian company that offers telcos a
packaged broadband-operations platform for delivering TV and data services in
Internet-protocol format over high-speed lines.

"The competitive environment has really changed the
thinking among a lot of companies, leading them to experiment this year and to plan on
major rollouts starting in 2000," LeBrun said.

ImagicTV now has five telco customers in various trial
stages preparing for commercial launches of TV and high-speed-data services this fall.
They are Canadian carrier group Aliant.ca, which holds a majority stake in ImagicTV; U.K.
carrier Kingston Business Communications; and three other telcos in Canada and Europe that
LeBrun said he was not free to name.

What U S West and ImagicTV's customers share, and what a
lot of other telcos are looking at, is a significantly lower-cost approach to fiber
broadband networks than what was once embodied in the concepts of fiber-to-the-curb and
FTTH.

In Phoenix, U S West is extending fiber -- much of it
already in the ground -- to nodes up to 3,000 feet from end-users and using a version of
digital-subscriber-line technology known as VDSL (very high-speed DSL) to deliver signals
the rest of the way.

"We're committed to using this technology throughout
our territories at this point," Valdillez said. "To us, it's the one that makes
the most sense economically and operationally."

VDSL allows the telco to use the existing copper plant to
deliver dedicated video and data channels at speeds ranging between 13 mbps and 52 mbps,
depending on copper-wire distance. That is enough to carry several channels of video, as
well as high-speed data, to serve multiple TVs and personal computers in the home.

Channels are switched at the fiber node so that no single
user line has to carry all of the system's channels at once, as is done over the hybrid
fiber-coaxial cable network.

This built-in on-demand access capability -- supported by a
highly computerized set-top that interacts with the network through
asynchronous-transfer-mode switching technology -- provides a ready platform for offering
advanced services, including video-on-demand and other interactive-TV formats, LeBrun
noted.

For example, he said, ImagicTV's system has the software
"hooks" to support a wide range of such capabilities, including delivery of TV
services to PCs without requiring special tuners in the PCs.

This fall, ImagicTV plans to introduce a network-replay
capability that will allow telcos to offer "virtual VCR" service to customers,
where they can use their remote controls to request the network to record and store a
particular program for later playback.

"This concept of MPEG [Moving Picture Expert Group]
over IP also allows you to offer microbroadcasting service, where the service provider can
deliver a private broadcast to employees of a company or participants in a conference
without consuming a lot of bandwidth," LeBrun said.

The ability to cost-effectively offer advanced services
over VDSL rests in part on the fact that telcos have ample amounts of fiber already in
place within the VDSL transport range.

Moreover, the plummeting costs of ADSL (asymmetric DSL)
equipment used for delivery of high-speed-data services over telco lines -- now in the
$300 range for customer modems -- is driving down the costs of the ATM and modulation
chips that will be used in VDSL set-top boxes.

"The pieces are coming together to where telcos will
soon be able to respond to the competitive threat from cable with a pretty strong
integrated service offering of their own," LeBrun said.

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