TV Over Copper: Telcos Get in the Game - Industry Trend or Event

Telecommunications, Sept, 2000 by Ronald A. Durando

As technologies continue to merge and customers increasingly demand a single source for their communications and entertainment, the lines of competition are starting to blur. Cable companies have aggressively offered high-speed Internet access over wire that previously brought only television programming. Now telephone companies are beginning to extend their boundaries by offering digital television over copper.

With over 827 million copper phone lines installed worldwide, carriers have the avenue to a massive customer base. But they need a way to provide additional services, particularly Internet access and high-margin television service, to gain additional revenues from this enormous asset.

The competitive threat to phone companies is very real. Cable providers have upgraded their facilities and introduced always-on Internet service. In some areas, cable providers have begun offering voice services. Direct broadcast satellite providers offer rich television programming and narrowband Internet access. Over the next few years, satellites will improve the quality and speed of both services substantially. Telcos with copper-based infrastructure have much to fear. However, by integrating the right equipment and expanding their product offerings, a terrific opportunity awaits.

DSL: The Telco Weapon

In the broadband battle, the telco weapon of choice is DSL. The development of digital video and data delivery system based on RADSL (rate adaptive DSL) technology supports simultaneous use of the telephone, Internet and television programming over the existing copper infrastructure.

DSL allows telcos to take advantage of the full bandwidth capability of existing wiring while providing a complete service to the customer. Also, the time it takes to install DSL equipment is similar to a standard cable installation. The total solution consists of two main components, one at the telephone company and one at the customer's home.

One proposed solution would be located at the CO, where it would combine the voice traffic from the telephone network with video programming and a dedicated Internet connection to deliver a single service to the customer.

By eliminating the need to install separate cable wiring, phone wire or install satellite dishes, RADSL speeds the deployment of broadband services and lowers consumer costs. The customer installs a small box similar to a set-top cable box that directs the voice, Internet and television signals to the phone, computer and television respectively. RADSL solutions can automatically determine the length and quality of each individual line and adjust the signal accordingly for an optimum connection.

More Choices

Today, a DSL solution can deliver 192 digital television channels and will soon be able to deliver 400 broadcast-quality channels without interfering with the Internet or voice connections. This is a significant advantage over cable providers, which typically offer no more than 60 channels, or satellite television providers, which offer 175 channels. By running television over dedicated lines, there is the added advantage of eliminating piracy of the video signal, which is common in cable television.

Using MPEG-2 compression, a television channel uses approximately 4 Mbps to achieve broadcast quality. Even with this, Internet content can be delivered simultaneously at 1 Mbps without affecting phone service.

Customers can allocate capacity dynamically as needed. A user can download large Internet files, temporarily reserve bandwidth for this purpose, and have unprecedented flexibility over his communications services. This is a distinct advantage over cable modems and extends the target market from the residence to the small to medium-size business. Even large enterprises or government agencies can use DSL for internal networking applications using a proprietary transport scheme, which delivers television service with the reliability of the telephone network.

Service Is Key

To win the loyalty of consumers, telcos, cable carriers and ISPs are racing to deliver the best combination of services and provide a single bill. The convergence of services is inevitable. What's yet to be determined is who customers will trust to be their single "infotainment" provider. Cable companies have long had the reputation of being inflexible and difficult to work with. In contrast, telcos (since deregulation) seem eager to provide high-quality services at competitive prices. It may be that the short-term luxury of not having competing cable providers in their local markets may prove to be a long-term curse for the cable industry. Cable has clear advantages over broadcast TV, but if telcos can offer more channels with better quality at lower prices, those advantages will quickly disappear.

Although they have been slow to react thus far, many feel telcos have the advantage over cable carriers and ISPs since their copper plant has provided reliable phone service for decades. By unlocking the potential in those wires, they will be able to distance themselves from the competition before it has a chance to catch up.