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BellSouth's Smith Details IPTV Plans

BellSouth Corp. (NYSE: BLS) CTO Bill Smith says his company hopes to trial its new IPTV service with hundreds of subscribers by the end of this year, and to roll the service out commercially in 2006.

Smith spoke to Light Reading TV (LRTV) in a feature interview during Supercomm in June. The entire interview is available on Light Reading right here: Full Transcript of LRTV's Interview With Bill Smith, BellSouth CTO .

Smith's comments are a marked departure from the low-key posture BellSouth has taken on its IPTV plans since announcing its participation in Microsoft Corp.'s (Nasdaq: MSFT) "Early Adopter" program for Microsoft TV in January (see BellSouth Trials Microsoft's IPTV). The RBOC hadn't previously stated when it would deliver IPTV to real customers (see IPTV Tidbits: Microsoft, China & More).

"We would like to go to a trial with maybe 300 to 500 customers later this year," Smith says in the LRTV interview. "And assuming all that works, then we'll look at potentially rolling out IPTV services some time next year."

BellSouth is now trialing its solution, powered by Microsoft and Alcatel (NYSE: ALA; Paris: CGEP:PA), in the homes of "a couple dozen employees."

Smith soon cuts to the chase on his company's involvement with IPTV: "From a competitive perspective, voice over IP has been a very good vehicle for cable companies to come in and attack our core business. I think IPTV may be an equally good opportunity for us to go in and attack their core business" (see BellSouth's Earth Is Flat).

However, in the wake of reported technical concerns at Swisscom AG (NYSE: SCM) and SBC Communications Inc. (NYSE: SBC), the Microsoft/Alcatel solution is still unproven in support of a large-scale IPTV service (see Swisscom IPTV Stall Sends Shivers). BellSouth, interestingly, has never denied keeping other IPTV solutions warmed up in the lab, just in case the Microsoft solution doesn't pan out.

"We are looking at all options that are available; we’ve had various solutions in the labs," says spokesman Brent Fowler. "We are aware of everything else out there that could possibly work" (see BellSouth Picks IPTV Finalists).

"But as far as the customer trial," Fowler clarifies, "that will be based on the Microsoft TV platform."

In contrast to the "failure is not an option" attitude of some other large U.S. carriers now rolling out IPTV service, BellSouth, at least in its public statements, seems to be approaching the service pragmatically, even skeptically (see SBC, Microsoft Defend Lightspeed).

"We're still in the process of testing the technology, testing the way users feel about the service, and making sure that there’s a viable business opportunity for us," Smith told LRTV. "We’re not, you know, just kind of blindly chasing the technology."

This attitude may come from experience. Lisa Hobbs of Tandberg Television, a Microsoft partner, remembers BellSouth's rollout of video service in Atlanta ten years ago.

The RBOC rolled out a cable-like video service to about 250 customers in the Chamblee suburb in 1996. The service offered 56 basic channels (including six local broadcast channels) and 25 premium channels; it went head-to-head against offerings from Comcast Corp. (Nasdaq: CMCSA, CMCSK). BellSouth was soon unsatisfied with the customer uptake and the return on investment, so the service was discontinued.

Fowler doubts history will repeat itself, but he believes the same central business questions apply: "We're looking at: 'Is it a service that our customers will want to use?' And: 'Does it make sense from a business standpoint to provide that service?' "

"We just want to make sure that it is a positive for the customers and a positive for BellSouth in terms of return on investment," Fowler concludes.

Today BellSouth resells Direct TV service and offers another cable TV service ("Americast") in 14 markets in three states.

— Mark Sullivan, Reporter, Light Reading

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