RBOC IPTV: The Quiet Ones

Being North America's IPTV poster children has been a bittersweet experience for AT&T Inc. (NYSE: T) (SBC) and Verizon Communications Inc. (NYSE: VZ), as their plans have been under intense scrutiny in the past 12 to 18 months. (See AT&T, Verizon Tout Telco TV .)

But while the glare of publicity has been focused on the two RBOC giants, BellSouth Corp. (NYSE: BLS) and Qwest Communications International Inc. (NYSE: Q) have avoided the limelight, despite each making advances with their IPTV preparations.

And some interesting details have filtered through lately.

Verizon, which is walking the walk with its cable-like RF overlay video offering, says it is now serving up FiOS TV in a handful of cities in Texas and Virginia. AT&T, meanwhile, says it is doing a "controlled market rollout" in San Antonio and hopes to scale up rapidly this year. (See Even Video Is Big in Texas.)

But BellSouth and Qwest are subject to the same competitive pressures from the triple play offerings of cable companies in their territories, and can't afford to stand still. (See BellSouth's Smith Details IPTV Plans.)

"We believe that both BellSouth and Qwest will move ahead with their own terrestrial video strategy in 2006," says UBS AG analyst John Hodulik in a recent brief. "We believe that recent comments by the CEOs of BellSouth and Qwest support our view and suggest a more favorable outlook towards facilities-based video."

BellSouth has been lab testing the Microsoft Corp. (Nasdaq: MSFT) middleware solution for some time, and recently announced a content aggregation deal with SES Americom . (See BellSouth Picks SES Americom.)

Under the deal, BellSouth will get hundreds of standard and high definition channels beamed via satellite to its video headends. With the new content, the carrier says it will soon begin trialing its IPTV service with real customers. (See Siemens: IPTV Game Not Over.)

BellSouth CEO Duane Ackerman said at a recent investor conference that he is "very encouraged" by the carrier's lab trials of IPTV. (See BellSouth Restructures.)

The Atlanta-based carrier is focusing on beefing up its broadband offering in advance of its IPTV push. Hodulik says BellSouth expects to offer between 12 Mbit/s and 24 Mbit/s to more than 50 percent of its households, and achieve more than 70 percent coverage in its top 30 markets by the end of 2007. By 2009, more than 75 percent of all households should have this improved bandwidth.

Qwest's approach to telco TV is a little more ambiguous. The carrier has been building its video offering since 2001. "CEO Dick Notebaert continues to present a cautious view on terrestrial video even as the company has deployed three video head-ends in its territory, and obtained franchise agreements in Phoenix, Omaha and Salt Lake City, and is close in Denver," Hodulik writes.

A Qwest spokeswoman told Light Reading the carrier is delivering its Qwest Choice video service to subscribers in Omaha, some Denver suburbs, and in the Phoenix metro area, but actual subscriber numbers weren't immediately available. The deployments, she says, are fiber-to-the-node (FTTN), then VDSL over copper out to the premises.

Like BellSouth, Qwest is focusing resources on pumping up its broadband offering to support the demands of video. It is aiming to provide, at the very least, between 25 Mbit/s and 30 Mbit/s to each household to deliver a triple play offering including IPTV. Qwest says it is now selling DSL in 75 percent of its footprint and will push to increase bandwidth using VDSL technology during the next few years.

Qwest is also dabbling in fiber-to-the-home (FTTH). The carrier is building a greenfield FTTH deployment in a new South Jordan, Utah subdivision, where Qwest Choice will go head-to-head with video services offered over the Utopia municipal broadband network. (See Utah's Broadband War.) Qwest says it will also roll out FTTP this spring in Denver's Lone Tree suburb.

— Mark Sullivan, Reporter, Light Reading