Video’s the Rage at Supercomm Confab

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Chicago— To Federal Communications Commission chairman Kevin Martin, it was almost hard to tell last week whether the Supercomm exhibit floor in Chicago was really the one from January’s Consumer Electronics Show in Las Vegas.

While video dominated much of the booth activity, the need to obtain local cable franchises to deliver video services was the topic of much of the talk in the halls.

Verizon Communications Inc. CEO Ivan Seidenberg addressed the issue head-on in his June 7 keynote address. He told some of the 25,000 Supercomm attendees that Verizon is willing to pay local governments franchise fees, but added that placing the same full franchise agreements on the second, third or even fourth wireline franchise operator was unfair.

'BIZARRE’ REQUIREMENT

“This is not an issue of us paying our fair share,” which Verizon is willing to do, he said. “It’s bizarre to ask us to file for a franchise under the same terms as the first provider did, as a monopoly. We need to simplify and reform the franchising process that is acting as a barrier to video competition.” (Still, Verizon executives indicated the telco would continue to seek franchises beyond the six they’ve already signed.)

In his keynote speech, Seidenberg said: “We need to put our customers first and give them the kinds of products and services that will unleash the potential of technology to enhance their lives. That means making speed, mobility and interactivity part of our DNA.”

While Verizon’s FiOS fiber-to-the-home platform delivers the Internet at speeds from 5 Mbps to 30 Mbps — and will include a video service now in trials in Keller, Texas — Verizon’s V Cast service brings video to wireless phones.

The new breed of consumers are “media-saturated multitaskers who expect to get what they want, wherever they are, on whatever device they happen to have in hand — and they want to do it all at the same time,” Seidenberg said.

Seidenberg said the high-speed data portion of FiOS is penetrating the market faster than PCs, DVDs, cable modems or even wireless phones.

“Speed sells,” he said. [Verizon also kicked off a broadband image campaign with TV ads. See Spot Watch, page 18.]

Notwithstanding the franchising speed bump, he said, video is on the way.

“We can offer HDTV and DVR functionality through the whole house, not just one TV set,” he said. “With its interactive capabilities, FiOS viewers will eventually be able to change camera angles, call up their favorite pitcher’s ERA, order a CD with American Idol, or vote someone off the island … all in real time, with a simple click of the remote.”

Meanwhile, SBC Communications Inc. executives shrugged off the news that software delays are causing it to push off its full-consumer IPTV launch date until 2006.

“This is a massive program,” said SBC vice president of product and strategy Jeff Weber. “The real challenge is to bring it all together,” and software integration is just one piece of that.

Similar comments came from Microsoft Corp., the subject of reports last week that IPTV software was not ready for customer Swisscom AG.

“We’re one piece of a big puzzle,” said Ed Graczyk, Microsoft TV’s director of marketing. While their have been minor delays, he said “nothing is hugely off schedule.”

Swisscom has delayed its IPTV launch until next year, although a small group of employees will have the service by year-end, Gracyzk said. The full commercial launch is now set for 2004.

Switzerland’s leading telco is waiting on an integrated hard drive to be built into the set-top box it will deploy, Graczyk said.

North of the U.S. border, Bell Canada is also using Microsoft IPTV software, but a spokesman said the company remains on track with Microsoft to launch an IPTV trial by the end of the year.

Six months ago, SBC was at square one, Weber said. Since then, it has taken down signals from a satellite, encoded them in the VC-1 and MPEG-4 (Moving Pictures Expert Group) codecs and delivered them across a video digital subscriber line network to dozens of employee homes in San Antonio.

“That’s a lot of movement in six months,” said Weber. “The next six months will be even harder.”

Progress comes in fits and starts, he said.

“We cruise along, hit a bump, fix the bugs and move on. We’ve found all the problems and are just knocking them out as fast as we can,” he said.

AGGRESSIVE FORECASTS

In hindsight, SBC might have fallen victim to its own traditionally aggressive forecasts. “We have an extremely aggressive timeline,” Weber said.

“Every piece of the ecosystem is moving aggressively,” he added. “I look out two to three years and ask can the telcos compete with cable and satellite and the answer is a resounding 'yes,’ ” he said.

Weber remained confident the software problems will be overcome. “We will have a differentiated product and we’ll be able to take share from our competitors.”

Those points of differentiation include a video network that’s tied into SBC’s Cingular Wireless network, allowing consumers to program their DVRs through their wireless phones. The telco’s SBC Yahoo! Internet service content can also be ported to the TV, he said.

And SBC will be able to economically serve niche ethnic audiences by transmitting ethnic fare nationally, to any subscriber in any system, he said.

Weber said SBC will also stay out of the franchise fight because it doesn’t believe local franchises aren’t required for an Internet-protocol TV network. That’s because IPTV will flow through the same pipes that have been built on rights-of-way the telco has already paid for, he said.

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