After several dull years of darkness and feeling like dinosaurs doomed to extinction, the incumbent operators and competitors of fixed telephony suddenly feel young again and at the industry’s cutting edge. The expo Supercomm 2005, that had been obscured lately by the advances of the wireless operators of CTIA, was reborn with all its might. A new phase is opening in telecommunications competition: tactics to counterattack the advance of the CATV operators in triple play
The thousands of visitors to Supercomm 2005, that for the second time is taking place at McCormick Place in Chicago, between the 6th and 9th of June, are not surprised when entering the gigantic exhibition. Hundreds of video screens make it similar to the traditional show of TV paga. The providers of TV over IP (IPTV)) are multiplying and are a sign of the times.
The three major incumbent operators in the US (SBC, Verizon and BellSouth) have launched their plans to bring video and triple play by the end of 2005, and all Latin America is paying attention to this tendency. SBC leads the way, along with Alcatel, the largest driver of triple play systems. It announced an aggressive plan that in 2007 should reach 18 million cable wired homes with an infrastructure capable of supporting advanced high speed video and Internet services.
The SBC Project (called Lightspeed) is a digital video switching architecture that will provide both classic paid TV programming and video on demand (VOD). To that end, it has hired Scientific Atlanta to erect two super headends to connect 41 regional offices and in turn 140 local offices with video services. The more popular the video, the closer to customers it will be stored. Verizon, for its part, plans a variant of IPTV with VOD, and BellSouth’s plans are still uncertain.
The great debate in the industry, and that has exploded in Supercomm 2005, is about the type of access infrastructure that should support these services. The incumbent operators attempt to take maximum advantage of their wire lines, and to that end have the tools of ADSL 2+ (the last generation ADSL) or VDSL2, that allows speeds in excess of 20 Mbps. This modality uses FITN (fiber-to-the-node, from which 300 to 500 customers could be serviced) However, most of the industry thinks that the best approach would be to upgrade with FTTP (fiber-to-the-premises, from which each of 32 customers are also connected via fiber) with Metro Ethernet to exceed 40 Mbps. That would allow the offering of HDTV (high definition TV), a system that broadcasters and cable TV operators will have ready in a short time, and also advance gaming systems. While TV channels only consume 1.5 Mbps of wide band, HDTV would consume between 6 and 10 Mbps each.
The SBX plan is to link FTTN with VDSL2 for buildings that have copper cable installed and leave FTTP for new buildings. It is estimated that the upgrade with FTTN for copper wiring costs US$ 250 per line, while that FTTP will cost US$ 1,350. in its cheapest form, Verizon seeks to move their infrastructure to FTTP. Bellsouth’s plan, never officially revealed, would be less ambitious: install ADSL 2+ for buildings that have wiring installed and VDSL for new ones.
Supercomm has a very important space in the Metro Ethernet Forum (MEF) in which great providers participate like Alcatel, Cisco, Nortel and Tellabs, together with more than twenty smaller manufacturers, which presented different service demos like IPTV, gamming and VoIP. The possibility of taking this technology from LAN up to a metropolitan carrier level through fiber optics is the greatest advance in fixed systems that the 2005 show presented.
The most efficient way to offer triple play services was the subject that was discussed in different conferences, so much as in the IEC (International Engineering Consortium) carried out within the Supercomm, as in the different plenary conferences. The great question has left us an example of war on prices between NTT and Yahoo!BB, in Japan, that is the country with greatest fiber development and therefore it is observed with detail in the United States. In spite, the millionaire investment no broadband provider in Japan makes money. And it seems very difficult to redeem a superior cost to US$ 1,000 for each line with prices that are under US$ 20 per month. Metro Ethernet`s business model is the one that is in question. Some Latin American carriers, like Impsat, followed with detail the debate. For the smaller incumbents of the region, like the brazilin CTBC, seemed like science fiction.
Also for the American independent operators, the debate is very far away. According to a study from the National Telecommunications Cooperative Association, that the groups, less than 30% of the operators that currently offer 3Mbps service, that is the minimal requirement to begin to offer elemental triple play services. Like the Latin Americans, will have to make very strong investments to be able to compete with paid TV cable providers, with an unsure return. The fierce competition that is in triple play will have a clear winner: the joint providers of equipments that will sell infrastructure to cable providers as to traditional telcos. Like in every war, the great defeaters are the weapons manufactures.