The Business of TelevisionFiber Video: What Telcos Can Offer That Cable Can'tTelco TV: Is Fiber Powering a Cable Revolution?
By Timothy Sprinkle The BRIDGE.com
It's tough being a cable provider these days. Although traditional coax services enjoyed a near monopoly on distribution for nearly 30 years, during the past decade they've seen the rise of two new, formidable competitors: DBS satellite TV and fiber-supported video.
Sure, the cable providers have more or less weathered the DIRECTV and EchoStar storms by expanding their product offerings - adding broadband services and interactive video-on-demand to the mix. But fiber is poised to take away that advantage with its big pipe approach to customer networking.
And that's just how the telcos want it. In their eyes, fiber, which is currently marketed as FiOS by Verizon and U-verse by AT&T, is the killer app that will finally overtake the cable industry.
FTTP will enable a new broadband economy through the delivery of a vast array of high-speed, high-capacity data services, along with voice and video products, to consumers and business customers, said Verizon Network Services Group President Paul Lacouture at the FiOS rollout in 2005.
And AT&T is no less convinced of its technology's potential. At a hearing in front of the U.S. House Energy and Commerce Committee in 2005, Lea Ann Champion, senior executive vice president of IP operations and services with AT&T, then called SBC Communications, testified that IP-based television will change the way consumers watch TV while opening a new competitive choice for millions.
The simple elegance of IP technology is that it allows various broadband applications to communicate and work together to enhance the capabilities of otherwise separate services, she said. It is vitally important for U.S. companies to invest in new technologies. It is not enough to repackage the same old stuff. We must bring a new level of integration and functionality to consumers.What FTTP Offers
So what is all the fuss about? What can fiber offer the average television customer that cable can't?
Fiber delivers a lot of bandwidth, for starters. There's enough to handle the interactive and web-driven applications that viewers these days demand. Unlike traditional coaxial cable, which can only transmit so much data at any given time, fiber is virtually unlimited, capable of delivering voice, internet, video and more at high speeds.
Fiber is, in a sense, the communications medium of the future.
Unlike with a lot of the technology that's behind a lot of the other services, with FiOS we know that what we're actually putting in the ground to the customer is the best thing out there, explains Bill Garrett, Verizon's director of broadband services. Nobody's going to put out new copper coax at this point. The question really isn't whether fiber itself isn't a superior way of moving data around, because it obviously is.
Need proof? According to Garrett, the typical fiber connection can deliver speeds up to 15 times faster than a current DSL connection and can be broken down into four separate wavelengths, each focusing solely on a different service.
The technology's 870 MHz cable plant can offer 622 Mbs of data (shared between up to 32 customers per fiber) with segments dedicated to upstream, downstream, video and internet services.
We're able to very efficiently deliver each of the different services that we're trying to get to our customers, Garrett says. On the other hand, when I look at some of the newer products that customers are asking for - DVR, VOD, etc - how would I deliver those if all I had was that cable plant? That's when you find that [the cable model] is very inefficient.
And all of this fiber-supported capacity means that telco providers can offer customers a range of products and services. Verizon's FiOS, for instance, currently offers subscribers nearly 400 digital video and audio channels, including more than 20 in HD, an interactive program guide, off-site DVR technology as well as high-speed internet and telephone service.
And with AT&T's platform, We are very pleased with the service we are able to provide to our customers and their response to U-verse has been strong, AT&T spokesperson Jenny Parker says. Customer feedback on the picture quality, features and overall experience has been positive, showing consumers' demand for more video choice and an enhanced television experience.
Both companies' fiber services offer IP and broadcast TV as well as HD and standard-definition set-top options.Wave Of The Future?
Given the telcos' existing reach, it's not surprising that fiber-supported services have grown fast.
AT&T's U-verse for example, is currently available in 15 markets and claims approximately 18,000 subscribers. The company expects to pass eight million units by the end of the year and have the service available to 19 million units by the end of 2008. A U-verse-driven voice service is expected to launch in 2007.
Our video strategy is showing strong momentum as we add new subscribers at an increasing rate, says Ralph de la Vega, group president -- Regional Wireline Operations, AT&T. Consumers are clearly hungry for an alternative to the cable companies, and AT&T U-verse is a very attractive choice. We offer more high definition channels than local cable companies in the markets we serve, the ability to record up to four programs at once, and the ability to set DVR recordings remotely using the AT&T Yahoo! portal or, soon, a mobile device.
Verizon's FiOS, on the other hand, is available in 16 states, making it the largest fiber service in the U.S. The provider expects to pass 9 million premises by the end of 2007 (18 million by 2010), which would represent about 60 percent of the company's total footprint. At the end of last year, FiOS had 207,000 customers on the books.
Looking forward, the company is planning to eventually open 17 million homes and manage a base of six to seven million customers.
It's about convergence in general, Garrett says. The idea is that Verizon now has all the networks that you're using to get everything in one place. The question is how do we take all those networks and bundle them together for you so you have the easiest access to all the information you need. The goal is to tie them all together in to a single experience.Down The Road
Of course, what good is a wide-open fiber connection if you can't push it a little bit? Although both AT&T and Verizon currently offer a variety of standard video services like VOD, DVR and pay-per-view, both have their sights set on loftier goals.
Ultimately, it's about delivering a better TV experience to customers, says AT&T's Parker. The IP platform enables features and integration that improve how customers watch and personalize TV and allows for future capabilities beyond what's in the market.
What future capabilities should we expect? More interactive features, for starters, including remote gaming systems and video-on-demand, as well as increased home networking capabilities.
According to Parker, AT&T plans to expand its U-verse service this year with the U-bar, an interactive component to U-verse TV that allows users to access stock, weather, sports or traffic information on the television screen. Users can set bar preferences in advance through the control panel so they only see what they want to see. In addition, users will soon have the ability to access online photos through a dedicated photo channel and gain the ability to call up their caller ID on the TV. Just a few weeks ago the company rolled out its mobile control package, which allows users to manage DVR recordings and control their system settings via an AT&T wireless phone.
And it's the same thing at Verizon: customer control is the key.
We know that customers want to run games, Garrett says, but we also know it's starting to become an issue because not everyone wants to spend $700 on a new Playstation.
The solution, he explains, is what Verizon calls on demand gaming. Using the interactive capabilities of the FTTP network, FiOS customers will soon be able to sit down on their couch, plug a controller into their set-top box and play a video game. The application itself will be hosted at the Verizon server and sent to the customer's TV as a standard video stream, using the interactive set-top to control the action off-site.
Along the same lines, the company is looking at a network DVR that will take the time shifting concept started by hard drive DVRs to the next level.
Right now you've got a DVR in your home and then you've got the VOD service, Garrett says, explaining that the problem with existing DVRs is capacity. You can only save as much programming as your unit's hard drive can hold.
With the network DVR what we're looking at doing is capturing broadcast content in real-time and immediately putting it on the VOD system, he explains. So even if you forget to record a program to your DVR, you'll still have access to it.The Cable Response?
What does the cable industry think about all this? How are the traditional providers reacting to these new competitors?
Certainly, they're not taking it lying down, and many companies are looking for ways to do more with their limited bandwidth. After all, the high-definition video and broadband internet that customers want require a lot of resources, forcing providers to get creative when developing ways to meet customer demands within the limitations of their hardware.
Switched-video providers like BigBand Networks are playing a role, allowing providers to save bandwidth by delivering channels to a home only when a viewer asks for them. And industry watchers expect providers like Vyyo to be involved as well, integrating IP services with the standard cable stream.
Cable is going to have to invest in some way in all of these different technologies until they make the leap to full fiber, Janco Partners analyst Cameron Cooke told Reuters earlier this month. I'm thinking about 10 years from now you'll start to see cable operators taking cable into the home.
Does cable have 10 years to wait? Will fiber take over the world between now and then? And how will the satellite TV respond? We'll have to wait and see. But, whatever happens, clearly the video entertainment landscape is changing.
(For a free subscription to The Bridge write to firstname.lastname@example.org