SBC, Microsoft Defend Lightspeed

SBC stays true to its timeline despite rumblings of Project Lightspeed delays

June 3, 2005

5 Min Read
SBC, Microsoft Defend Lightspeed

SBC Communications Inc. (NYSE: SBC) is close to announcing delays to the commercial rollout of its fiber-based triple-play offering, stemming from difficulties in trialing its IPTV service, Light Reading has learned from sources close to the situation.

SBC has said it expects to roll out new commercial services by late 2005 or early 2006. The services will be offered over a massive new fiber network slated to reach two thirds of SBC’s customer base, or 18 million households, by the end of 2007 with a capital cost of $4 billion to $6 billion.

Our sources' talk of rollout delays underscores the complexity of SBC’s ambitious plan of rolling out a bundle of new IP-based services via a fiber-fed network in such a short time (see SBC Sheds Light on 'Lightspeed' and Swisscom IPTV Stall Sends Shivers).

“You can expect SBC to announce delays,” a source close to SBC’s procurement process told Light Reading on Wednesday. “They have said they will roll the product out commercially by the end of the year, and they are not even close to being ready for [commercial] trials.”

What's the holdup? Sources say it has to do with how quickly and elegantly the Microsoft Corp. (Nasdaq: MSFT) TV solution will scale.

In trials so far, the source says, a single server has been required to support every 10 users. This is because of the processing power needed to support the Microsoft platform's coveted instantaneous channel-changing capability, one source says.

"Things like scaleability are obviously a big part of the focus of [developing] the platform," says Ed Graczyk, director of marketing for Microsoft TV. "I would argue that one server for every 10 households -- that just doesn’t ring true. You wouldn’t have a solution then." But, he insists, "the scaleability in beta versions is not what it will be in the released version."

Microsoft's IPTV system -- and IPTV systems in general -- deliver video channels differently than traditional cable networks, where the customer's set-top box receives all available channels and channel changes happen right at the box.

IPTV is different. The 200-some available channels are delivered only as far as a network server, and only one channel at a time is sent to the set-top box in the customer's home. When a channel change is made by the consumer, it takes a couple of seconds for the box to ask the server for a new channel and for the server to send it down.

Microsoft's flavor of IPTV, according to industry sources, has a unique way of creating the experience of an instantaneous channel change. The server immediately sends a burst of buffered digital "frames" from the newly selected channel down to the set-top box, then uses buffering again to gradually catch up with the real-time broadcast. There is no latency in the signal, only a brief moment where the user is watching somewhat less-than-live programming.

Graczyk disputes our description of how Microsoft's IPTV channel changing works. He does, however, admit that buffering is involved.

Regardless, it's clear this scheme requires some heavy duty processing power, especially when numerous set-top boxes are making demands on the server at once.

SBC denies any problems serious enough to shift the timeframe of the rollout. “We said that we are going to roll out IPTV commercially by the end of ’05 or the beginning of ’06, and that is the target that we’re aiming for absolutely,” says SBC spokesman Wes Warnock.

But our sources are only piling on what's already been talked about. Jefferies & Co. Inc. equities analyst George Notter has a similar take on how SBC's project may be met with delays. “We understand that SBC is still working through a host of back office issues associated with rolling out video services in commercial volumes,” Notter writes in a brief released Tuesday.

Most people believe that Microsoft (with partner Alcatel) has the intellectual and monetary resources needed to work through any scaleability problems with its IPTV platform (see Alcatel & Microsoft Going Steady). But many believe that the software giant, like its client SBC, has simply over-promised on the time it will take to deliver a commercial-grade product.

SBC has so far completed a 10-user, video-only trial with SBC employees and family, and has moved on to a 250-user customer trial featuring voice, video, and data services, Light Reading sources say.

“We’re told that the carrier is working through issues with Microsoft’s IPTV middleware software in relation to delivery of HDTV services -- the codecs for HDTV set-top boxes aren’t ready,” Notter says in his brief (see IPTV: Microsoft's Window to Carriers).

Notter notes that SBC has already shifted the timeframe for the launch of its triple-play offering. The launch of IPTV services was originally planned for the fourth quarter of 2005, but SBC officials say it may sneak into early 2006.

Notter also believes that the delays result from overaggressive goal-setting by SBC as much as they do from actual technical obstacles. “Like so many other RBOC initiatives we’ve seen over the years, the rollout appears to be slipping from the original schedule,” he writes.

SBC’s Warnock says people within SBC are working furiously to deliver the IPTV product on time, but he is conscious of the skeptical gaze of the outside world. “Sometimes I think these things are played up a little too much,” he complains.

— Mark Sullivan, Reporter, Light Reading

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