Embarq to Test Telco TV Service

Embarq Corp. (NYSE: EQ) announced today that it will begin testing its own TV service next year. The service will run over Embarq's own network, but beyond that, the company isn't divulging anything about what type of technology it's using.

"We plan to do a small facilities-based video trial in a single market next year. We have no current plans to deploy this new technology more widely, and we envision satellite TV as a key element of our bundled offerings in most of our markets for many years to come," an Embarq statement reads.

Embarq is declining to comment further on whether this would be a fiber-to-the-home deployment like Verizon Communications Inc. (NYSE: VZ)'s FiOS or a fiber-to-the-node deployment like AT&T Inc. (NYSE: T)'s U-verse.

One factor to consider is that Embarq -- having spun off from Sprint last year -- doesn't have the same resources as AT&T or Verizon. (See Is the Future Dark for Embarq? and EMBARQ!)

"Unlike the big Bells, they didn’t embarq on a big fiber construction project a few years ago," says Alan Breznicq, a senior analyst with Heavy Reading.

"If you're going to do anything with video, you've got to go with deep fiber," says Tom Nolle, CEO of CIMI Corp. , a strategic consulting firm. But the problem with this strategy, according to Nolle, is that a massive fiber deployment can be prohibitively expensive if you don't have extremely deep pockets like, say, Verizon.

Verizon's deployment costs of FiOS have been reported at anywhere from $1,000 to $2,000 per customer. For a smaller outfit like Embarq, costs that high would make it "really hard to get a real return on investment to get the capital markets happy," Nolle says.

A cheaper option for Embarq would be a VDSL-based service, but that wouldn't necessarily come cheap either, since in place of a PON architecture, Embarq would need to install remote terminals. Moreover, VDSL would provide significantly less bandwidth than PON.

Embarq offers satellite television service through a partnership with EchoStar Satellite LLC But, like all telcos of all sizes, it has faced mounting pressure from cable companies that are stealing its traditional phone subscribers with offers of bundled voice, video, and data.

The company lost 146,000 subscribers in the second quarter of this year and 6 percent of its subscribers in the past year. (See Embarq Reports Q2.)

— Raymond McConville, Reporter, Light Reading

doctorno 12/5/2012 | 3:03:55 PM
re: Embarq to Test Telco TV Service I think they might be going with EPON. Prices I've seen there are in the $300-$500 range, and that was before serious negotiations.
Raymond McConville 12/5/2012 | 3:03:54 PM
re: Embarq to Test Telco TV Service Are you speculating this, or have you heard something?
Polder 12/5/2012 | 3:03:50 PM
re: Embarq to Test Telco TV Service You would be surprised how much a company cares. The ONT is about 80% of the cost of the electronics in FTTx. EPON chip set volumes give GPON a 10-15% cost advantage over GPON.

That being said, the two access vendors that are currently approved at Embarq are Calix and Entrisphere. Neither of them make an EPON FTTx solution. Embarq also has a huge embedded base of Tellabs (AFC) equipment.

One would suspect that they are looking at GPON but if they are reselling Dish...do they need FTTx?
MorningWd 12/5/2012 | 3:03:50 PM
re: Embarq to Test Telco TV Service The cost to serve a subscriber isn't linked so much in the electronic equipment used for the last mile. The biggest expenses are in the home with installation, wiring, STBs, gateways, etc. Naturally the cost to physically get the fiber out there is huge, too. EPON versus GPON? Since such technologies aren't the real cost drivers, from a price point, who cares?
OldPOTS 12/5/2012 | 3:03:49 PM
re: Embarq to Test Telco TV Service The cost for those Core networks are also an expensive proposition that is almost always overlooked until the new network is hooked up. This cost comes at the time when network money is committed and true costs,over runs, appear.


Been there done that.
OldPOTS 12/5/2012 | 3:03:49 PM
re: Embarq to Test Telco TV Service As a retire Proposal response person for a wide range of this type of equipment and installations, I agree with all of you. I am always amazed at the emphasis put on the technology of the electronics/software boxes that constitue such a small part of the bid. I have seen many bids won for a technologist wanting a much more expensive network to support the least cost (cost per port)/greatest technology box.

What happened to business cases?
MorningWd 12/5/2012 | 3:03:49 PM
re: Embarq to Test Telco TV Service ONTs may be 80% of the electronics, but the electronics are less than 25% of the total cost to hook up a sub. EPON vs. GPON would be about 2 or 3% of the total sub cost.
paolo.franzoi 12/5/2012 | 3:03:48 PM
re: Embarq to Test Telco TV Service
There is no advantage in the electronics to EPON. There is today an advantage in the optics. Most GPON systems have triplexers, EPON systems today use diplexers.

Your percentage of the total cost of the ONT is incorrect as well. It is about 2/3rds of the total electronics cost.

paolo.franzoi 12/5/2012 | 3:03:47 PM
re: Embarq to Test Telco TV Service
The issue is that Verizon is basically all the PON volume so even though one could build a diplexer based system...nobody does in any volume.

You would have to define your terms in flexibility. Nobody knows if IPTV systems provide any actual useful features.

opticalwatcher 12/5/2012 | 3:03:47 PM
re: Embarq to Test Telco TV Service "Most GPON systems have triplexers, EPON systems today use diplexers."

GPON has triplexers so that a third wavelength can be used for cable-like video distribution, so that an IPTV infrastructure is not needed. This makes the overall system simpler and possibly even less costly overall, though it is certainly less flexible than an IPTV video distribution system.

I'm assuming Verizon is using the third wavelength for this because they didn't want to put in the IPTV infrastructure initially.

But you could certainly build an all-IPTV version of GPON without the triplexer.
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