SBC: IPTV's Day Has Come

Light Reading
News Analysis
Light Reading
4/22/2005



LAS VEGAS -- NAB2005 -- The RBOCs have tried IPTV before and failed, but SBC Communications Inc. (NYSE: SBC) told broadcasters here this week that it's an idea whose time has come.

“So why now?” asked Jeff Weber, SBC's VP of product and planning for Project Lightspeed. “I’ve already been asked this question a thousand times and it’s already come up today: 'The telcos have been down this path before -- what is it that makes you think that SBC can pull it off this time?' ”

Weber’s fellow panelist, Steve Hawley of Seattle-based IPTV consultants Advanced Media Strategies, raised the point just minutes earlier. “The telephone companies were doing this as long as 12 to 15 years ago," Hawley noted. "Some of you may remember the Bell companies' video-on-demand trials back in 1993.”

One example: Pacific Bell (now part of SBC), said in 1993 it would spend $16 billion to hook up 5 million homes to a fiber optic "information superhighway" that would provide multimedia programming, video on demand, and support videophones by the year 2000. California residents are still waiting for those videophones, by the way.

But Weber says that past failures aren't indicative of future projects. "At the highest level, the economics look dramatically different today than they did ten years ago,” he claims.

“The improvements in compression technology, the ability to do switched video instead of broadcast video, the technology development on a scale around the world makes [IPTV] real. As these standards evolve -- and I think SBC can help provide that -- the scale and the economics come down, driving the deployment costs [down].

“Because we don’t have to take fiber all the way to the house to enable video into the house, rather than spending $40 billion dollars, we can spend four, five, or six billion dollars."

And Weber didn’t fail to mention the defensive motivation behind SBC’s IPTV effort: “The competitive environment is meaningfully different than it was 10 years ago -- wireless has taken a meaningful share of our total voice business, which we all know cable is getting in.”

For the most part, broadcasters and other content creators here say they're excited about the entry of telcos into IPTV, because it creates a new, competing distribution channel. They say IPTV will give broadcasters more leverage when negotiating content licensing agreements with cable and satellite players (see MSOs Yawn at Lightspeed).

Weber then progressed to the “slideware” portion of his presentation. He displayed several mock-ups of SBC’s Project Lightspeed interface, which included a rough-looking interactive channel guide, a box for chat, and an IPTV content panel. Another slide displayed user interaction services like photo and music file sharing with chat (see Inside SBC's IPTV Factory).

SBC says it will indeed spend between four and six billion dollars to deliver the fiber optic cable needed for IPTV and other services to 18 million U.S. homes. The fiber will give SBC customers connection speeds of 25 Mbit/s to 30 Mbit/s, Weber says.

Interestingly, he says SBC will not attempt to compete on price. “That is not where we think we can demonstrate our value to the marketplace. We’re going to have a superior product, and we want to be priced accordingly...

“I am scared and greedy,” Weber said, playfully mocking an earlier panelist's description of the big telephone companies (see SBC Puts on a Happy Face).

Whatever the motivation, SBC believes that the revenue opportunities in IPTV are substantial. “There’s upside, there’s real revenue, and we can do it because of the economics in a way that makes sense. The time is right -- that much is clear.”

— Mark Sullivan, Reporter, Light Reading

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