Getting the Picture?
Telcos struggle with unfocused video market
By Karen Brown
from the June 4, 2001 issue of Broadband Week
Turning phone lines into video pipes is not producing a clear picture these days.
While telcos have tuned into video services over DSL to better compete with their cable operator rivals for broadband customers, actual rollouts have been spotty at best. The Baby Bells have hesitated to add video on wide scale, so much of the activity is centered on smaller, independent telcos and a dwindling number of competitive carriers.
Why the flickering picture for video over copper phone lines? Industry players point to a chronic combination of technical obstacles and old-fashioned economic barriers.
The small market advantage
To find DSL video today you are better off looking in smaller places. How about Wood County Telephone Company in Wood County, Wis.? Two small market operators in Minnesota, Paul Bunyan Telephone in Bemidji and Hutchinson Telephone Co. in Hutchinson, also are on the video over copper cutting edge.
|
VDSL Finds Homes in Ohio
ADSL may be on most telco video delivery screens, but VDSL isn't entirely out of the picture.
Horizon Chillicothe Telephone in Chillicothe, Ohio has deployed voice, data and full video service using the technology in its 38,500-line territory 50 miles south of Columbus. With an OC-48 SONET ring as a distribution backbone, the telco sends its services along fiber spokes to access modules, which in turn connect to homes within 4,000 feet via copper.
"This model allows us to deliver a lot more bandwidth ... of course they are shorter loops, but we've got a lot more bandwidth, and we can give the subscriber his telephone service, his Internet access and his digital video all on the same bill," says John Wilson, vice president of administration.
Although serving a primarily rural area, the OC-48 SONET ring gives the system the fiber reach to the communities.
"In most of these communities 4,000 feet will reach just about everybody within the village itself," Wilson says. Plus, set-top box provider Next Level Communications has delivered a new software upgrade that will allow two streams of video at the 5,000-foot range.
The system pumps a minimum 24.7 megabits per second to customers, with three MPEG-2 video streams taking up 5.5 Mbps each and 119 channels. It is bundled with voice and high-speed Internet service.
Wilson says adding full video service to the package was not just a nice thing to do for customers--it was necessary for the telco's survival.
"We understand that we have to look for new revenue sources--that our traditional sources are drying up," he says. "It's a money issue ... we plan to make money on broadband. We're not doing it because there is a government agency forcing us to or because of competition. We think we need to for the viability of our core business." - K.B.
|
With larger carriers hesitating, many DSL video providers are finding better footing among smaller, independent operators.
Minerva Networks Inc., a maker of television video infrastructure, is finding that to be the case. These days, RBOCs seem more interested in value-added voice services they can offer quickly and widely.
"They (RBOCs) are fiscally conservative and fairly pragmatic," says Patrick Sweeney, Minerva's vice president of marketing. "If they are looking at deploying a service for $1 to one million subscribers, that's more than video-on-demand over time."
Smaller telcos also are a target for mPhase Technologies Inc., a company hitting the market with a somewhat radical, non-IP video system. The company landed its first deployment for television service with Hart Telephone Co. in Hartwell, Ga.
"It seems like the companies that are most committed to video over copper are the smaller, independent incumbent local exchange carriers," says mPhase CEO Ronald Durando. "Certainly they have smaller total bills for infrastructure upgrades and they have more limited geographic regions to worry about."
Indeed, the DSL-dominating Baby Bells have no consistent strategy for video, according to Joe Laszlo, a DSL analyst for Jupiter Research.
"We're still kind of stuck in a rut - some consumers in smaller markets may well see early offerings from the smaller ILECs that would let them migrate away from their cable operator if that's what they want to do," Laszlo says. "But as far as the Bell operating companies themselves, it's sort of piecemeal strategies--sort of 'tide you over' kind of, working with a third party like a satellite provider."
ADSL or VDSL?
Choosing a flavor of DSL for video delivery is a big factor, and today, economics is winning out over fatter pipes. Most telcos are leaning toward the lower-bandwidth asymmetric DSL, which can theoretically deliver up to 8 megabits per second downstream. In widescale deployment, to guarantee a consistent minimum throughput residential ADSL generally is capped at 1.5 Mbps.
Higher-capacity Very High Speed DSL, which can hit upwards of 55 Mbps, has taken a back seat largely because of the higher deployment cost.
That economy of scale is the reason ADSL likely will outmuscle VDSL, according to Jonathan Taplin, CEO of Intertainer Inc., an IP video service rolling out on DSL plants. His IP video-on-demand service is gaining RBOC interest--it landed a deal with Qwest Communications International to roll out Seattle, Portland, Salt Lake City, Denver, Minneapolis and Phoenix starting last month, and plans are to add two major markets with Verizon Communications this month. Intertainer is also working on deals with SBC and BellSouth to add service in those territories later this summer.
"I think (VDSL) is a lot more expensive to deploy--you have got to build a whole new network, whereas ADSL is being rolled out pretty widely," Taplin says. "We see 4 to 5 million subs by the end of this year, so why would you need it?"
ADSL also figures heavily for Minerva. Its service can tweak ADSL plant up to a minimum 2.5 Megabits per second downstream, with future upgrades to 6 to 8 Mbps possible. Uncompressed MPEG-2 video generally needs about 4 Mbps, so that limits the product to a single video input for now. VDSL's bigger bandwidth could solve that problem, but Minerva is betting the technology won't be within its reach.
"Right now, where the market is, where you have long distances, you can get to critical mass. That's where ADSL is right now," says Sweeney. "I love the idea of VDSL. But right now the cost limitations are pretty severe."
Though not dominant, VDSL is not dead. Recently, it has found traction in the multiple-dwelling-unit market. Qwest Communications International still runs a VDSL system in Phoenix and holds a franchise to develop a system in the Denver suburb of Highlands Ranch. A Qwest spokeswoman, however, says there are no plans to expand that rollout; the company has made it clear in the past that deployment costs remain stubbornly high enough to hold off on more VDSL rollouts.
VOD or full television service?
ADSL's bandwidth limits affect what kind of service telcos deploy. Pace Micro Technology plc, a British equipment vendor that produces a DSL set-top box in addition to cable and digital satellite boxes, is finding telcos are interested in a cable television-like video service. But they are more comfortable with the video-on-demand model, according to Neil Gaydon, president of Pace's Americas division.
"They are new to this. They are new to the pay TV business, he adds. "And I think they are just trying to work out how they can make a business out of it."
Laszlo also sees bandwidth restraints hampering deployment of a full video service over DSL. "I think it is hard to offer an equivalent service to cable television if for no other reason than the fact that most households have more than one TV and don't necessarily want to be stuck watching the same channel on all of them at once," he says. "Enabling that requires offering multiple high-quality video streams to the home simultaneously. But I think it's harder to implement that if you are anywhere short of fiber or VDSL."
While Intertainer may be finding some ground with the major RBOCs, other efforts have not been so fortunate. The pact between Blockbuster Inc. and Enron Corp. to create a DSL-based video-on-demand service (other partners included SBC, Qwest and Covad Communications) fell through earlier this year, partly because of the partners' inability to gain major movie studio support.
Other snarls
There also are some who question the quality of IP video. Providers such as Intertainer use IP and stand by its picture quality, but lingering doubts are the reason mPhase's technology detoured away from it.
"We feel that video over IP has not been proven," says Jennifer Silcott, mPhase's director of marketing. "The jittering, the set-top box resetting ... there's definitely quality of service issues. And when it comes to quality of service, you'd better be pretty good when it's TV."
Consumer equipment costs also are presenting a hurdle. Critics have argued that consumers are not going to want to buy a $300 VOD box and then pay for standard cable TV service, especially since cable competitors are starting to offer VOD as part of their overall package.
Vendors like Pace will likely have to hit the traditional $300 box benchmark, but that is complicated by the fact many telcos haven't made up their minds about what box features they want, Gaydon says.
Gaydon also warns that telcos are going to have to sort the overall deployment issue out to combat cable's triple play of video, high-speed data and, in many markets, voice.
"The telcos do have to make some decisions, because their market could very quickly erode," Gaydon says. "The more time goes on, the clearer the threat from cable is becoming."
|
