Is Lightspeed Slowing?
1:00 PM – Like an HDTV picture itself, AT&T Inc. (NYSE: T)'s broadband access challenges are crystal clear.
The company is mostly targeting affluent consumers with its Project Lightspeed rollout. But the company's U-verse service launched without HDTV channels and the carrier won't say how soon they'll be able to carry HD signals.
And aren't "early adopter" consumers (I'm not referring to Angelina Jolie here) the types that would (1) take a chance on Lightspeed and (2) expect to have HDTV service in more than one room?
Meanwhile, Wall Street analysts are piling on. This week analysts Tom Watts and Shaun Parvez of SG Cowen Securities wrote:
AT&T has reconfirmed its intention to roll out video to 15-20 markets by the end of this year. However, as we understand, these rollouts will have Standard Definition (SD) television only, and will carry no High Definition (HD) programming. Also, we believe AT&T will postpone deployment of video to any additional markets until its architecture can support HD. The primary constraint appears to be the bandwidth achievable using AT&T's FTTN architecture. Many 3,000 foot loops appear inadequate of supporting necessary transmission speeds. Moreover, the initial specifications for the DSLAMs/Edge Routers purchased by AT&T appear inadequate. AT&T may re-open the procurement for network equipment adding higher speed specifications and adding an additional vendor to supplement Alcatel. This would certainly result in capex increases, but would not solve the bandwidth constraints in markets with longer loop lengths. Ultimately, we expect AT&T to move to FTTC or FTTH in at least some of its markets.Last month, Anton Walhman of ThinkEquity LLC had similar suspicions about AT&T's broadband plans:
Hey, all we're saying about Lightspeed anyway, is that we believe it probably won't happen as planned, with 25 Mb/s VDSL2 to 18 million homes by 2008. Rather, we believe AT&T will first focus massively on HomeZone, rolling it out first in its own territories (roughly a third of America, before buying BellSouth), and then nationwide with the support probably of a WiMax interactive IP pipe, or perhaps even some Covad in certain places. Then, it will have to find a way to crank up those speeds from the tiny 25 Mb/s, perhaps using shorter copper loops but retaining VDSL2 to reach close to 100 Mb/s. AT&T may also wait until the second half of 2007 and do GPON in some areas.If AT&T were anywhere near succeeding with Lightspeed, why would there be so much sentiment to the contrary?
— Phil Harvey, Lightspeeding Editor, Light Reading