Phoenix Rises Toward Sun, A Broadband Battleground

The battle for broadband customers burns in Phoenix like in no other metropolitan area in the country.

In the "Valley of the Sun," telecommunications heavyweights Cox Communications Inc. and U S West are aggressively rolling out advanced video and data services to a bandwidth-hungry population.

If you can stand the heat and crave real choice from multiple telecommunications providers, Phoenix is the place to hang your entertainment system.

In a rapid sequence of announcements in May, the scorching telecommunications landscape in Phoenix got even hotter.

On May 1, Cox announced that it would accelerate its digital-TV and Internet-access rollouts in greater Phoenix, targeting 350,000 to 400,000 homes. Cox's plan is to provide access to 85 percent of the area's serviceable homes by year-end.

A week later, on May 8, Sprint Corp. announced the availability of its "Sprint Broadband Direct" service, based on fixed-wireless MMDS (multichannel multipoint distribution service) technology that delivers Internet access capable of downstream burst rates of up to 5 megabits per second.

The service is now available to anyone in the greater Phoenix area within 35 miles of South Mountain or Shaw Butte, Ariz., with a line of sight to Sprint's transmission towers, the telco said. This coverage area represents about 85 percent of the Phoenix area.

Eight days after Sprint's announcement, Level 3 Communications Inc. opened a large Internet protocol-based technical facility, or "gateway," to provide colocation space, transport and software-based switching services to business customers.

If any town in the United States can lay claim to the title "Broadband City," it's Phoenix.

Phoenix is home to Cox's largest cable system. And the MSO's competitors are bringing to market some compelling services that will force the MSO to keep up the furious pace.

U S West, the incumbent local-exchange carrier, is offering its "Choice TV" and "Online Services" to approximately 170,000 homes in the Phoenix area, according to vice president and general manager of broadband services Vickey Callen, and has attracted 40,000 video subscribers. The company has won franchises to serve about 800,000 homes, and it has built out its network to serve 400,000 homes.

All of U S West's video subscribers were obtained via door-to-door and telephone marketing, Callen added. The company has yet to launch a mass-market campaign.

U S West is moving slowly with its rollout, monitoring operational effects and performing scaling testing. According to Callen, U S West in Phoenix is running fiber from its central-office digital headends to a DSLAM (digital-subscriber-line access multiplexer) cabinet within 4,000 feet of homes at OC-12 (622-megabit-per-second) levels.

The telco will look at dense-wave-division-multiplexing technology next year to enhance its headend-to-neighborhood backbone, she added.

Using very high-speed DSL (VDSL) technology, U S West's network is capable of delivering approximately 21 mbps to 26 mbps downstream and 3 mbps to 4 mbps of upstream dedicated bandwidth per household.

Video programming is pulled from satellites, digitized into MPEG-2 (Moving Picture Expert Group) video and transported via asynchronous-transfer-mode switching technology. IP traffic can run simultaneously over the network. The ATM MPEG stream is terminated at the residential gateway in the home.

The set-tops are made by Next Level Communications, and they can terminate multiple video streams to service up to three TVs in the household. The box uses proprietary software from NextLevel and Wind River Systems Inc.'s "VxWorks" real-time operating system.

Future versions of the box will use Liberate Technologies' software and Gemstar International Group Ltd.'s electronic program guide. Callen said set-tops would have hard-drive support and personal-video-recording capability next year. Wireless options to distribute video and data throughout the home are also being explored.

Up to three ATM MPEG signals and one IP signal are distributed through the house using existing coaxial cable. Because the set-top receives and distributes both data (through Ethernet) and video, only one box is needed for multiple TV/PC connections.

U S West's video service, Choice TV, offers 180 channels, including 80 basic video and 40 digital-music channels, as well as caller ID to the TV screen and a voice-message-indicating light, for $34.95 per month.

Premium and pay-per-view channels are available for extra charges. The set-top is included. Internet access at 1 mbps is available for an additional $44.95 per month, with 256-kilobit-per-second service available for $34.95.

The telco has been fairly successful in selling data services to its video customers, as Callen said 23 percent to 25 percent of video subscribers are also opting for Internet services. U S West is realizing about $53 per month in revenue per video customer and $80 to $82 per combined video/data subscriber.

Because the platform U S West is building is "very robust for interactivity," Callen said, the company hopes to deliver Advanced Television Enhancement Forum (ATVEF) content, and will test video-on-demand, TV e-mail and other interactive services. Callen added that with 100 percent addressability for every customer, the platform offers the flexibility to deliver interactive content via the IP path timed for the video signal or embedded within the MPEG-2 stream.

One of the key differentiators between U S West's and Cox's video services, Callen said, is that digital video can be distributed throughout the home to up to three other sets, with each set then capable of displaying an EPG with PPV service.

Phoenix offered a number of advantages for U S West to test and bring to market its VDSL platform. "The franchise authorities in Phoenix were very supportive," Callen said. "That wasn't the case in other places."

Phoenix has also turned out to be a good proving ground for the DSLAM cabinets, which contain powering equipment, in addition to switching equipment. Because of the desert heat, "If they're going to work in Phoenix, they'll work anywhere," she said.

The competitive fires in Phoenix were sparked five years ago, when Cox embarked on a plan to offer voice, video and data services.

With 615,000 video, 200,000 telephony and 600,000 video-and-data subscribers, Cox has successfully brought true bundled services to Phoenix.

According to David Harris, vice president of marketing and sales for the Cox Phoenix system, by early 2002, Cox's upgraded plant will deliver a full suite of services to between 1.2 million and 1.3 million homes passed.

"We can't keep up with the number of households that are asking for our services," Harris added.

Cox's Phoenix upgrade, spokesman Alex Horwitz said, will include the construction of eight new "master telecom centers," or hubs, in addition to existing hubs.

Cox employs a ring-in-ring architecture, and it is building up to 1,000-home nodes in the Phoenix area.

The facilities are in place for customers to pay their bills and sign up for new services, which will offer Cox an opportunity to showcase its new services and build awareness in the community about its bundles.

According to marketing manager for residential Internet access Phil Weintraut, Cox is utilizing Data Over Cable Service Interface Specification 1.1-based modems from Motorola Inc. and Toshiba America Consumer Products. The modems are available at retail. "For the first time from an MSO, the customer has a choice of where to get their equipment," Weintraut said.

Cox@Home has also partnered with Cox Interactive Media (CIMedia) property to provide local and state content to data subscribers.

Cox does have plans to introduce VOD in Phoenix, but details were not available.

Like other MSOs that offer telephony services, Cox has deeply discounted its local phone service. According to Harris, Cox is offering first-line service for 10 percent less than U S West's rates and 50 percent off the incumbent's second-line rate.

With its network now passing 1.1 million homes, Cox has plenty of room to improve on, or churn out, its 615,000-video-subscriber base.

As U S West and Cox develop strategies to bring bundled services to the masses in Phoenix, Sprint is focused on high-speed data. The company bought People's Choice TV Corp. last year, and it discontinued the wireless firm's video service to concentrate on Internet access, said Robert Hoskins, director of corporate communications for Sprint Broadband Wireless Group.

Sprint has re-engineered the former PCTV network, and is now ready to ramp up marketing efforts to build upon its 2,000 data subscribers in Phoenix.

The Phoenix market represents Sprint's first in which it is rolling out its wireless-data services. Despite line-of-sight issues inherent in first-generation MMDS technology, Hoskins said, the coverage of the service is 3,850 square miles, or 85 percent of Greater Phoenix.

"For a lot of people in Phoenix, this is the only [high-speed-data] option they've got," Hoskins said.

Sprint is experimenting with next-generation orthogonal frequency-division multiplexing and vector OFDM technologies to resolve line-of-sight issues.

With Level 3 setting up shop in Phoenix, the door is open for a local or regional broadband provider to join Cox, U S West and Sprint in the escalating competition for Phoenix telecommunications customers.