SBC’s Coming at 'Lightspeed’

SBC Communications Inc. kicked some competitive sand into cable’s face last week, detailing plans for its “Lightspeed” fiber-to-the-node project, which will deliver video to consumers in competition with satellite and cable operators.

Lab and field trials to deliver Internet protocol-based TV to consumers are underway, and full-scale video operations are headed for a late 2005 launch, the telco said.

The regional phone company said it expects to be the second-largest video provider within its FTTN service areas in five years — achieving a 20% market share that would surpass satellite in most cases.

SBC, which has hired cable programming veteran Dan York to head up its video-acquisition efforts, said it aims to provide service superior to cable.

“We are not involved in a me-too exercise,” said SBC senior executive vice president of IP operations and services Lea Ann Champion. “Subscribers will be able to control and choose their content without bandwidth constraints.”

The fiber network will allow SBC to deliver 20 to 25 Megabits per second of bandwidth per home, Champion said. That will allow four switched-video signals, plus a 6 Mbps high-speed Internet service and telephone service. HDTV, video on demand, digital video recorders and ITV all will be part of the IPTV switched-video platform.

“IPTV far exceeds what’s delivered in the market today,” she added.

Switched video is superior to what cable can deliver because it’s not bandwidth-constrained, Champion said. The video service also will be all-digital.

SBC plans to sell a dedicated data service at 6 Mbps downstream and 1 Mbps upstream.

“We also plan to offer incremental bandwidth on demand when not all four video streams are in use,” said Champion — something that hasn’t been offered to consumers.

“Cable provides a shared connection with modems,” she said. “We have dedicated bandwidth and bandwidth on demand.”


SBC also plans to offer ITV services, such as multiple camera angles for sporting events, and the ability to show multiple games, call up stats or capture photos on a home network for display on the TV.

The telco’s biggest edge might be its ability to bundle wireless packages and service together with video and DSL. Consumers will be able to use their SBC cell phones to direct their DVRs to record a program, Champion said.

Subscribers will be able to eventually combine their address books from wireline and wireless, even DSL, on a single handset in the years to come, she added.

SBC also will be able to integrate eventual wireless fidelity (Wi-Fi) service into video applications.

“We can provide seamless data integration,” said Champion, enabling customers to watch a TV show and vote using interactivity while simultaneously instant-messaging friends via cell phone.

SBC said it will spend $4 billion on infrastructure on Lightspeed, as well as $1 billion in success-based capital, to be deployed when service is ordered.

The video-network upgrade is scheduled to be completed by 2007, and will pass 18 million homes, about half of SBC’s total base, Champion said.

SBC will continue to market Dish Network satellite TV to non-FTTN homes, Champion said. “EchoStar [Communications Corp.] remains an important part of our bundle,” she said. “We expect the EchoStar relationship to continue.”


SBC will allow customers to choose the technology they want, even in fiber areas, she said. “The primary target is winning over the cable guys,” said Champion.

The Baby Bell plans to build two national “super headends” for content aggregation and distribution.

Content will be shipped over SBC’s national fiber backbone to 40 video hub offices across the country, where VOD content will be stored, local content inserted and interactive applications launched. The local plant will include 140 video-serving offices to distribute the service. SBC will run fiber to nodes that are within 3,000 feet of consumers’ homes.

Video will be switched from those node locations across traditional copper wire to the home, where SBC will install home gateways and set-top boxes. The fiber build will pass 17 million homes, and SBC plans to pass another 1 million homes using fiber-to-the-premise technology in new housing developments and certain multiple-dwelling-unit areas.

That strategy differs sharply from that of Verizon Communications Inc., which has launched a FTTP build in many markets, although at a slower pace than SBC envisions.

SBC prefers fiber-to-the-node because it can be built in one-quarter of the time of a premises build, at one-fifth the cost. And in any event, it claims FTTN can deliver 70% of the network operational savings achievable from FTTP.

Some on Wall Street weren’t impressed with that argument. The 20 to 25 Mbps of throughput per home might not be enough to compete with cable, according to Anton Wahlman, an analyst with Needham & Co.

“Generally speaking, we are very doubtful about SBC’s and BellSouth’s TV strategy,” he wrote in a report issued the day after SBC’s announcement. “We do not believe 20 megabits or even 50 megabits will be nearly enough to compete intelligently against the cable TV companies.”


Vice president of network services Ernie Carey said SBC chose Alcatel to supply transport gear, and plans to solicit proposals for home gateways and set-top boxes. He estimated initial success-based capital — covering the home gateway, set-top, in-home wiring and installation — would run $500 to $600 per subscriber in 2005, declining to $300 to $450 per subscriber by 2007.

Carey said SBC has begun IPTV field tests in Houston; Irvine, Calif.; Canton, Mich., and Norwalk, Conn.

It has also launched an IPTV test with Microsoft Corp. in San Antonio.

Chris Coles, CEO of Myrio — which has deployed IPTV middleware with 50 telcos worldwide — called phone companies’ entry into video inevitable, despite false starts in the past.

“I don’t think they have any choice,” he said, endorsing SBC’s approach as sensible.

He also said telcos will gain market share, even as cable takes share of the phone market, and that early cost battles could settle into competition over features and service.

“There is a segment of the population that simply wants an alternative to their existing provider,” Coles said. “Beyond that, it becomes what can you do to integrate these services.”