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August 16, 2007
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
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