November 28, 2005

More on Telco's Entering the TV Business

Local incumbent telco SBC (now known as AT&T after the acquisition) is evidently not going to bring fiber to the home. Rather, they are planning to use the long since paid for by us copper to the home infrastructure to send TV to subscribers.... competing with the cable companies (Verizon is installing fiber to the home). This all seems to me to be ill-advised. Why not help all of their customers grow their own media. That's where the market is going... Lorne Manly and Ken Belson have more:

"It's awfully difficult to see how a late entrant operating at a dramatic cost disadvantage and employing a strategy of charging less for more has any shot at earning acceptable returns," said Craig E. Moffett, a cable and satellite analyst at Sanford C. Bernstein & Company.

Verizon's decision to run fiber-optic cable all the way to customers' homes is a calculated - and expensive - risk, and a counterpoint to AT&T's television strategy. Verizon will spend an estimated $22 billion through 2010 burying high-capacity cables, according to Sanford C. Bernstein research. But that substantial investment gives Verizon the flexibility to add data-hungry high-definition programs, faster broadband speeds and other features that customers like Mr. Rodges are already enjoying. Though costly, these fiber connections are seen by Verizon as the only way to reliably leapfrog the competition. By the end of 2006, the company expects to make these fiber-based services available to six million homes in its territory, including Fairfax, Va., and Huntington Beach, Calif.

By contrast, AT&T is installing fiber cables only to within 3,000 feet of homes and using compression technology to make sure that television, phone and broadband signals can travel the rest of the way over older and narrower wire already in the ground. That will save billions of dollars in construction costs and help AT&T start selling television faster. Sanford C. Bernstein estimates that AT&T will spend more than $7 billion through 2010; the company has said that it will spend about $4 billion through 2008.

Posted by James Zellmer at November 28, 2005 12:01 AM | Subscribe to this site via RSS:
Posted to Broadband