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Potential trouble looms for SBC's Net-based TV
By Leslie Cauley USA TODAY
NEW YORK SBC Communications, which promised to launch its much-ballyhooed Internet-based TV service later this year, will almost certainly have to delay a commercial rollout until at least 2006, some analysts say.
A potential trouble spot is Microsoft's IPTV software platform, still in development. That software will form the heart of the operating system for SBC's entire video network, making it critical to the project
The problem? There's a good chance Microsoft won't be able to deliver on the aggressive timetables set by SBC. One other carrier, Swisscom of Switzerland, recently announced delays of its IPTV project because of technology problems. Swisscom is using the same vendors, Microsoft and Alcatel, that SBC is, notes analyst John Hodulik of UBS Investment Research.
"We believe SBC's commercial launch of IPTV could also be pushed back into 2006 from its original target of fourth-quarter 2005," Hodulik wrote in a recent note to clients.
Rick Thompson, an analyst at Heavy Reading, a market research firm, says it could take even longer. "It's possible they might roll out in '06, but what that means to me is a few hundred or a few thousand in select markets, but realistically I expect '07 to '08 to be the service phase."
Any delay would be a setback for SBC, which is pouring billions into its IPTV efforts. It comes as the company is preparing to acquire AT&T. With revenue from local and long-distance service falling, SBC is rushing into the TV business as a way to offset those declines.
A delay in deployment "will hurt them with Wall Street, hurt them with regulators and hurt their stock price," says analyst Adi Kishore of Yankee Group.
SBC insists that things are on track. Lea Ann Champion, who's overseeing SBC's IPTV deployment, notes Microsoft's IPTV software is "working in the lab." Still, she concedes, "We still have a long way to go to get into the marketplace."
Moshe Lichtman, who is heading Microsoft's IPTV effort, acknowledges that things aren't coming together as fast as the company expected. The "eco-system" industry parlance for the gear and software that must mesh flawlessly for IPTV to fly is a concern, he says. "We are a little bit behind where we all thought the eco-system would be," he says.
SBC last year selected Microsoft as its sole vendor for supplying it with IPTV software. At the time, SBC said it planned to begin field trials in mid-2005 and deploy commercial services in late 2005.
SBC in March changed the schedule: It now plans to begin field trials in the third quarter and do a limited commercial launch later this year, ramping up in 2006. It is still planning to make its IP service available to 18 million homes by mid-2008.
Kishore says of SBC's deployment schedule: "I would characterize it as a technology gamble to some extent."
Why? Among other things, Kishore points out, Microsoft is working with a range of vendors that have never worked together before and have limited video experience.