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TV by phone

AT&T, the phone company, is getting into television. Comcast says they aren’t playing fair.

by and

HOLD THE PHONE: Cable TV spokesmen have questions.
  • HOLD THE PHONE: Cable TV spokesmen have questions.

We don’t know how it goes around your office, but around the halls of the Arkansas Times, people love to gripe about three things (when the Hogs aren’t playing, that is): weather, politicians and cable television — not necessarily in that order.

To be fair, when cable works, it works well. When it doesn’t, you’d expect to hear less moaning from the 10th circle of hell; you know, the circle where departed telecom execs are damned to wait for the cable repair guy, who’s scheduled to be there sometime between Wednesday afternoon and the final trump of Jubilee.

Forgive us, then, for getting the teensiest bit excited about word that IPTV — Internet Protocol Television — will be coming to Central Arkansas in the next three years. Pioneers in the technology, a fiber-optic-based system that uses the Internet to deliver digital-quality video, promise a slew of Buck Rogers-grade features. In short, IPTV looks like the wave of the future when it comes to the entertainment of Central Arkansas couch potatoes — especially when you hear that the muscle and money behind the effort is newly reconstituted telecom colossus AT&T.

All this is not to say that the state’s cable providers are just sitting around, waiting for their market to evaporate. IPTV, they say, is mostly the same thing they’ve been offering for years in a sexy new wrapper. What’s more, cable says, AT&T is trying to get around city franchise rules that require traditional cable providers to reach all customers in Little Rock, with plans to provide IPTV service in affluent (and most profitable) neighborhoods while letting poor folks fall behind.

By anybody’s estimate, AT&T’s plans for IPTV are ambitious. Dubbed “Project Lightspeed,” the project will cost AT&T $4.4 billion over the next three years, with a goal of bringing ultra-fast Internet connections to 18 million homes in 13 states (including Arkansas) by 2008. To make that a reality, the company plans to push fiber optic cable right up to the doors in new neighborhoods, while installing a series of fiber optic switching boxes called “nodes” in existing neighborhoods. These nodes will service all the customers in a 3,000-foot radius, with the balance of the distance from the node to the residence run over copper line. A set-top box (complete with an internal DVR system) will bring it home.

By investing in all that pick-and-shovel work, AT&T hopes to send Internet speeds of between 20 and 25 megabits per second into the homes they serve. To put that into perspective, most current high-speed Internet service runs at around 6 megabits per second.

“That’s why the video can be full motion,” said Ted Wagnon, a spokesman for AT&T Arkansas. “None of this herky-jerky stuff you see sometimes in video now when you go on the Internet and watch a news clip. It’s as fast as you can push the remote.”

Wagnon has seen demos of the still-under-wraps AT&T system, and says it’s “next-generation stuff.” In addition to 200 channels of all digital video with more to come, AT&T’s plans call for picture-in-picture tuning, an on-demand video library featuring thousands of titles, on-screen caller ID, and no “lag” when switching between channels (a problem common to both satellite and cable-based digital TV systems). Future additions, Wagnon said, could include the ability to switch between camera angles while watching a sporting event, and the long-sought a la carte programming, which would allow consumers to pick the channels they want, and pay only for those. Pricing, he said, would be “very competitive” with cable and satellite programming packages, with the added benefit that consumers will be able to “bundle” their service, paying for television, broadband Internet, and telephone service on one bill — the much-ballyhooed “triple play” that telecom companies have been scrambling to provide for years. “Consumers have control,” Wagnon said. “Because IPTV users download programming similar to anything else off the Internet, the only programming that comes into their home is what they select. With cable, you buy a bundle and it’s all piped into your home, whether or not you want some parts of it.”

Denise Koenig is a spokesperson for AT&T corporate headquarters in Texas. Since December 2005, a few hundred residents of San Antonio have been participating in what Koenig called a “controlled market entry” — the first full-scale rollout of AT&T’s IPTV service, called “U-Verse.” While Koenig wasn’t able to provide many details due to “competitive reasons,” she did say that the company has been seeing some good reactions from consumers, adding that participants have been impressed with the video quality and the picture-in-picture tuning.

The controlled market entry will help AT&T work the bugs out of an entirely new system before U-Verse hits the broader market. “The purpose of this period is that we have new operating and billing support systems,” Koenig said. “We’re exercising the new systems as well as providing any fine tuning of the service.”

Koenig would only say that “U-Verse” would be available in “multiple markets” by the end of this year. With communities in 13 states in line with us, that might seem to leave Little Rock in the lurch if not for the fact that AT&T showed off a recently installed “node” for the press last week, in the Twin Lakes neighborhood behind Baptist Hospital.

Though that might seem like cause for hope, there’s still a few cubic tons of red tape standing in the way before we ever see our first frame of IPTV.

In Little Rock, a large part of that red tape will be generated in a coming dustup between AT&T and current city cable franchise holder Comcast over how many of the rules the new kid on the block will play by when it comes to providing television to Little Rock residents.

Under the terms of its current franchise agreement with the city, last revised in 1998, Comcast pays Little Rock 5 percent of the gross revenue collected from customers within the city limits. They have similar agreements with several other Central Arkansas municipalities.

While just how much AT&T plans to pay the city to be allowed to sell its new IPTV service is still up in the air (details are being worked out behind closed doors right now), the bone of contention for Comcast is trying to assure that AT&T is held to what they call “100 percent build-out.” AT&T, meanwhile, paints Comcast as a dinosaur monopoly, determined to throw up roadblocks to competition wherever they can. As it turns it, it’s one of those situations where it’s hard to know who is right.

Under a non-discrimination clause written into the original Comcast franchise agreement with the city in the early 1980s, the company was required to provide equal service to all residents of the city within 36 months of signing the contract — a task they completed in two years.

“We serve 100 percent of the city of Little Rock,” said Mike Wilson, vice president of governmental affairs with Comcast. “We provide the same quality service in the wealthier areas as we would anywhere else in the city… If you live in Chenal or you live in College Station, you have access to exactly the same level of service.”

Wilson and others in the cable industry believe that AT&T should be made to do the same with their IPTV product, with the company made to work a “level playing field” and commit to 100 percent build-out if they want to compete. Without that, Comcast says, AT&T will spend money and resources in the most profitable and affluent neighborhoods while leaving the city’s poorer residents without onramps to the forthcoming information superhighway.

Len Pitcock is with the Arkansas Cable Telecommunications Association. “I think it’ll be interesting to see what parts of the city of Little Rock they serve when they come into the market,” Pitcock said. “Will the folks in the less-affluent parts of the city have the same access as the folks in the Heights and Chenal Valley?” As proof of his suspicions, Pitcock cites a 2004 report to AT&T shareholders in which the company said that during its initial phase, Project Lightspeed would reach 90 percent of “high value” customers, 70 percent of “medium value” customers, and only 5 percent of “low value” customers. In the report, “high value” and “medium value” customers were defined as those who the company believed would be able to pay at least $110 a month for telecommunications services.

“That’s cherry-picking customers,” Pitcock said. “They’re only going to offer this thing in the areas where they think they can make the most money.”

In response to Comcast’s claims, Ted Wagnon with AT&T says that Comcast’s call for 100 percent build-out is simply a move meant to stifle competition by making the start-up costs too steep for any Comcast rival. If AT&T was offering any other product, he said, the idea of requiring 100 percent build-out would be laughable.

“Wendy’s wasn’t the first hamburger chain,” Wagnon said. “What if, in order to start selling hamburgers in Little Rock, Wendy’s would have had to commit to building out citywide, putting stores across from every competing hamburger stand, before they could sell their first burger? What if any new retailer coming into an area dominated by an incumbent had to make a specific commitment to build out x percent in a given time period when they didn’t have one customer yet?” The answer, Wagnon said, is that not many new businesses would get started, especially when competing against a much larger competitor. “Every business has got to start somewhere,” he said. “And in today’s competitive environment, requiring a new competitor to build its networks everywhere before it has made one sale will likely mean that new competitor can’t afford to build anywhere.”

While Wagnon said AT&T will try to reach the most “high value customers” with its initial investment, he disputes the idea that the phrase should automatically be taken as an economic statement, and insists it doesn’t mean the company will only go after Little Rock’s wealthiest residents.

“That is not the plan whatsoever,” he said. “The way to reach the most customers with that initial investment is to go into the densest neighborhoods. In Little Rock, that would be apartment complexes and residential areas with standard-sized city lots.”

To wit, Wagnon points out that AT&T recently installed one of the first IPTV nodes in Twin Lakes, a working class neighborhood off Kanis Road. Too, Wagnon said, because IPTV isn’t the same technology as traditional cable, it shouldn’t be forced to work under the same regulations as cable. Satellite-based television services like Dish Network and Direct TV, he points out, aren’t required to pay a franchise fee or 100 percent build-out, and there are hundreds of satellite TV viewers in the city.

Still, many in the cable industry remain unconvinced. The issue, they say, is one of fairness — that everybody should have to play by the same rules in order to compete for Little Rock’s viewers. “If your burger stand is a McDonald’s,” said Comcast vice president and general manager Ronnie Colvin, “you’re going to be required to operate under the franchise agreement. That’s what we’re doing: there was a franchise agreement signed by Comcast and the city of Little Rock and we’re living up to that every day.”

While not quite pie-in-the-sky stuff, IPTV is — for now — still a bit hazy on the horizon. AT&T won’t release many details of when it’s coming, exactly what it’ll offer, and how much it’ll cost — beyond the old “highly competitive” saw. Too, with the coming skirmish with Comcast over build-out (and other issues — a major lobbying project of the Arkansas Cable Telecommunications Association in the last session, said Len Pitcock, was making sure AT&T, then SBC, didn’t receive tax incentives for providing broadband to underserved parts of the state) and a franchise agreement still to be hammered out between AT&T and the city, it’s anybody’s guess when you’ll see a U-Verse box on top of your set. For its part, Comcast says you can already get many of the whiz-bang features promised by IPTV through its digital lineup, including 4,000 titles of on-demand programming and pay-per-view goodies like NASCAR In-Car, which allows you to flip between live, in-car cameras during stock car races.

Still, with the might of AT&T behind U-Verse and billions in new infrastructure already spent, we’re sure it’s coming soon to a TV near you. We’re equally sure that, being the gadget geeks we are, we’ll have to check it out.

Will the grass truly be greener on the other side, or will it all be cud? Stay tuned.

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