Telco Video, Then and Now: What's Different, or Same?

Ten years ago, the subject of telco-delivered video was just as hot, if not hotter, than it is now. Monthlies wrote cover stories about it. Conferences sprang up to attend to the growing video plans of the then-Big Six phone companies.

A lot was going on. But not much was ever accomplished. It took a decade for telco video not to happen the last time. Now, the question could be if it will take that long this time.


One could argue that telco video didn’t happen the first time around, because broadband did, instead. Remember? It went like this: Cable launched cable modems. People liked them. Suddenly, the ADSL (asymmetrical digital subscriber line) gear, specifically invented for telco video, was pressed into alternative action — for broadband Internet connectivity. Enter DSL.

If one could characterize this sequence as a parable (which is always easier to do 10 years later), the cable industry moved the “bull’s eye” to its youngest son (data), sparing its elder son (video) from a competitive attack, at least from telephone companies. (It didn’t hurt that the telcos, at around that time, were distracted by a teeming desire to get into the long-distance business.)

A decade passed. Cable planted the big bull’s eye on the telephone industry’s elder son — voice service — which gets a dent every time a cable-telephony customer signs up.

Plus, this time around, service bundles are the name of the game. The telcos, as a group, are missing a key bundle component: Video.

That explains why they’re back. But can they do it this time?


It couldn’t be more clear, looking around, that the last big telco video attempt never really materialized.

Technologists who witnessed that chapter can tick off at least two big reasons.

One, loop lengths between central offices and homes were generally too long for aggressive downstream speeds. (The longer the loop, the slower the speed.)

Two, available video compression didn’t have quite enough squeeze to get the video bits through the telco pipes. MPEG-2 techniques needed 3.75 Megabits per second, per channel; downstream speeds for early ADSL topped out at 1.5 Mbps. That pointed to an MPEG-1.5 styled offering, with video quality similar to VHS tapes. (Remember, this was the mid’90s.)

Better techniques were on the drawing board, of course, as they always are. VDSL (very high bit rate DSL), on the surface, offered data rates high enough to be video friendly, and competitively interesting. But technological threats are only scary if they can really be launched.

Asking a telco to commercially launch a video service over VDSL, in the mid-90s, would’ve been like asking a cable operator, in the same timeframe, to launch a high-band return path (above 1 GHz) for hauling business data: Technically risky. Lots of unknowns. Murky business model. Other priorities.


As a plastering of tasty, competitive headlines made very clear over the last month, telephone companies aren’t hobbled by the same technology-stoppers this time around.

Loop lengths become less of a noose with every shovelful of dirt that covers those swell new fiber-optic cables going into Verizon Communications Inc., BellSouth Corp. and SBC Communications Inc. territories.

Video compression improved three-fold since the mid ’90s: MPEG-4 and its variants can achieve the same picture quality of that 3.75 Mbps stream, but using only 1 Mbps.

And there’s an accelerator this time around: IPTV, shorthand for Internet Protocol Television.

Investment continues to pour into IPTV from companies that are difficult to ignore, like Microsoft.

IPTV is a vast nomenclature for the sending of video over IP-based networks, such as DSL. Microsoft is a huge proponent, calling its effort “TV2,” and testing it with SBC and Bell Canada, among others.

On the receiving end, consumer-electronics and PC makers are investing considerable R&D into handheld and “media center” devices that can do IPTV.

At the upcoming Consumer Electronics Show, IPTV will assuredly be one of the “acronyms of show.”

Why: In the IPTV world, everybody wants to be the one who figures out how to deliver video into the home, to handheld or stationary devices, over that fast IP path.


Ultimately, then, the answer to the question of whether telephone companies can do video this time around is yes. No question. From a pure technology perspective, the nation’s telephone companies really can do it this time. The story titled “Telco Video: Take 2,” then, which will punctuate 2005, will be long on cost scrutiny, and plain old timing.

If the tale unfolds with some of the same characters as the last time, for instance, we should expect a chapter titled “Shareholder Revolt,” which exposes the skittishness among telco investors about big-ticket bandwidth costs.

The technology chapters will dissect the tech options of the telcos, to see how they can differentiate themselves, competitively. That means lots of interesting wrinkles to watch (and translate) from the technology bleachers. After all, the telcos are arriving over a decade late to a party that already has three industrial incumbents: Broadcast, cable, and satellite.

Then there’s the chapter titled “Timing.” The addition of multichannel video to a telco voice and data bundle takes time. Three years is a modest estimate.

By then, cable’s bundle, already anchored in video, will likely include mobility and wireless.

Game on.