While it was clear that major ILECs are a long way from locking in on which platforms they'll use for video, the fact that commercially viable options exist was driven home by the rapidly growing coterie of smaller telcos as well as big Canadian incumbents who are ordering video headends, set-tops and other gear for commercial launches and market trials. Surprisingly, a large share of this activity was focused on use of ADSL rather than higher capacity platforms as the delivery mechanism for video.
"ADSL is now validated as a two-TV solution," says Marcel LeBrun, president of middleware supplier iMagicTV. His company, with customers like Aliant Telecom and SaskaTel in Canada, and his competitors have had sufficient success in commercial deployments to make it clear to the industry that a full-rate ADSL stream at 8mbps can be used to provide high-quality digital TV service to two independently operating TV sets in the home, thanks to the success of innovations that allow the complex combining of MPEG video into IP packets that are then transported over ATM to the set-top.
Livingston Telephone, an independent telephone company in rural Texas, is among the first in the nation to deliver video over DSL services.
The carrier already sells voice, private line, Internet, and some cellular services. Now Livingston is adding video on demand and interactive digital TV service over DSL at an incremental cost, with a return on in- vestment within nine to 18 months, says Steve Garrison, director of corporate marketing at River- stone Networks, which is providing routers to handle the multicast routing functionality for the deployment. Garrison would not disclose the value of the contract. Other vendors for Livingston's VoDSL include Myrio, Minerva and AFC.
The independent telcos of Iowa also lent their support to the chorus of endorsements for ADSL-delivered video following what was described as an extremely rigorous examination of such options on the part of the group-owned intrastate carrier Iowa Network Services. Using its fiber backbone as a distribution conduit, INS plans to build a master headend to provide support for any of its 147 local affiliates who decide to go into video, says Richard Vohs, president and CEO of INS. "Our goal is to provide our participating independent telephone companies with new services that are strategically sound and provide significant new revenue opportunities," he explains, adding that the platform will be sufficient to support delivery of 150 channels of digital video and music as well as high-speed Internet access to the 250,000 customers served by INS affiliates.
This is by far the largest potential market base for ADSL-based video service in the U.S., notes Jeff Strasberg, CFO at Myrio Corp., which was selected by INS as the provider of the middleware platform that will drive its master headend and distribution system. "I think it sends a powerful message to the industry that there's a real opportunity now to develop a new revenue stream in consumer services that has the added advantage of helping to fend off the cable companies," he says.
The cable threat as a motivator behind telco video strategies was a widely echoed theme among vendors at SUPERCOMM. Some ILEC executives sought to downplay their concerns, even to the point of denying that they were seriously considering video at this point, but it was hard to ignore the recurrent comments from vendors, some of whom have newly entered the video platform market based on feedback they've been getting from their customers.
"Some carriers are going out of their way to disguise their true intentions at this point," notes Geof Burke, director of marketing services at Next Level Communications. "We recently were discussing results of research conducted by The Yankee Group on this question, and the analyst specifically quoted one Bell executive as saying this was not something they were contemplating. The funny thing was this same executive had just been to see us to arrange for a trial of our equipment."
Next Level, along with many observers not touting the ADSL video approach, remains convinced that very high speed DSL, in which it is the market leader, is what the big telcos will be looking for when they're ready to deploy video. Qwest Communications, which is using Next Level's gear to deliver 26mbps service to customers in Phoenix and outside Denver, continues to deploy Next Level gear as its digital loop system, leaving the option to insert VDSL line cards later to expand services on a wide scale, Burke says. "We're also talking to BellSouth and Verizon (Com- munications), but those two won't talk about their plans," he adds.
With the ability to deliver three channels of independently switched video to separate TVs in the home, along with voice and high-speed data, Next Level's platform is much better suited to meet the long-term needs of telcos than ADSL, Burke asserts. But Next Level is more than willing to participate in ADSL deployments by supplying the video switching technology that's common to both platforms, he adds, noting that Next Level has been chosen for just such a role in a trial of video distribution over the INS backbone, along with optical transport and switching supplier Metro-Optix.
In fact, with manufacturers moving to make VDSL line cards interchangeable with ADSL line cards and to support video over both platforms from remote terminals, it may well be that the larger telcos will end up making use of both systems for video deployments, depending on local link conditions, observes Reed Majors, vice president of marketing and business development at Minerva Networks Inc. "They're going to have to come up with a mixed model to offer universal services," he says, noting that the model would also include fiber-to-the-home in new build situations.
Majors, like other vendor executives who are benefiting from current video-over-ADSL deployments here and abroad, suggests that ADSL is likely to play a much bigger role in large-scale telco deployments than even the telcos themselves appear to accept at this point. This is because improvements in compression technology and the higher modulation rates embodied in what is variously known as Fast ADSL or ADSL Plus will put ADSL in position to meet telco criteria for commercial video deployments, he says.
Majors says ADSL is being used by Minerva's U.S. customers, now numbering a dozen service providers representing a total voice customer base of about 100,000 households, to deliver two independent broadcast-quality video feeds to the home, just one short of the Bells' threshold requirement. Within the next year or so, Minerva and its competitors will be able to deliver three channels with the help of Fast ADSL at the requisite cost levels, he says. Within two to three years, he adds, the platform will make use of the new compression standard H-26L now taking shape within the ITU, enabling delivery of broadcast video at 1mbps and opening the way to add HDTV to the ADSL video mix.
But this perspective on the future has a long way to go before it becomes mainstream in telco circles. Presently, most Bell executives say they see no future in video for ADSL, even as they hedge about whether they have that much confidence in VDSL or, for that matter, in the whole proposition of getting into the video business.
For example, Rich Wonders, senior director for broadband marketing at BellSouth, says if the company were to move into video, it would require more throughput than even full-rate ADSL can deliver. Further complicating matters, Wonders notes, is the conflict over VDSL platforms, with some people pushing the QAM (quadrature amplitude modulation) technique and others counseling that holding out for chips based on DMT (discrete multitone) modulation, the most widely deployed ADSL modulation scheme, makes more sense and will facilitate easy upgrade of existing ADSL platforms to VDSL. "Right now the carriers aren't driving the standards, the vendors are, and that's not taking us where we would want to go," Wonders says. "We in the telephone industry need something like cable has with CableLabs, where the service providers get together and decide what they need and the vendors come to them to offer interoperable solutions."
But while U.S. Bells have been slow to embrace VDSL, some now are ready to test the technology in earnest, says Bruce Miller, senior product manager for Lucent Technologies' broadband access group. "We're seeing a lot of different elements required for the full entertainment services solution coming to bear in preparations for serious video-over-DSL deployments," he says. These preparations extend beyond the basic technology issues to include the operational support and third-party content affiliations that are essential to get things rolling. "The writing is on the wall," he adds.
