[April 20, 2005]

SBC: IP Video Service Isn't Cable

BY ROBERT LIU

Senior telecom officials wanting to offer IP-based television programming implored lawmakers on Capitol Hill that they shouldn't be considered cable companies, sparking the ire of the cable industry officials who advocated a level playing field.

Testifying before a U.S. House Energy & Commerce panel, a senior SBC official today implored lawmakers to adopt a hands-off 'minimal' approach to regulating IP-based video services -- similar to the approach governing voice over IP.

"The FCC and Congress have so far employed a light-touch approach to regulating the Internet and IP-based services. We need to extend this minimal regulation approach that has been applied to VoIP - only now the "V" stands for video," said Lea Ann Champion, senior executive vice president of IP Operations and Services for SBC Communications.

"In short, we are not building a cable network, nor do we have any interest in being a cable company offering traditional cable service," Champion said in a prepared statement. Telecoms in general take this position because their service is based on IP technology and therefore should not be regulated by the same rules governing cable.

But if phone companies offer IP-based video services such as the previously announced initiatives by SBC called "Project Lightspeed" or Verizon's FiOS TV service, then it must abide by rules governing all providers of a similar service -- no matter of what technology is used to deliver the service, said David Cohen, executive vice president at Comcast.

"Congress and the FCC are now considering how IP may change the competitive landscape, and what the implications are for regulation. Some phone companies want to use IP to bring another competitive video choice to consumers. We say, 'Welcome.'" Cohen said.

"On what basis do we regulate? Do we make regulatory distinctions based on technology? Or do we treat like services alike?" the cable industry official continued. "Like services should be treated alike, and everyone should play by the same rules."

Cohen's prepared remarks were made available to TMCnet.

According to the cable provisions of the Communications Act known as "Title VI," a cable operator must obtain a local franchise in the municipality in which they serve and that usually dictates service must be deployed to every neighborhood in the whole community regardless of income level or economic conditions.

"A cable operator may not discriminate based on the economic characteristics of a community," Cohen explained. "Every cable operator in business today lives under this rule and has built out its systems to avoid redlining."

Yet Verizon’s Retail Markets President Robert Ingalls told the lawmakers that because local telephone companies already have a franchise to operate networks, obtaining a second franchise is needless and redundant.

“We believe this redundant franchise process is unnecessary and will delay effective video competition for years unless a federal solution is enacted soon,” Ingalls said in his prepared statement.

To be sure, the Comcast official wasn't trying to suggest that the cable industry should become community activists. In fact, Cohen said "we believe that this additional competition warrants a comprehensive reexamination of an existing regulatory framework adopted when the video marketplace was far less competitive."

"Let me be clear. We do not oppose a review of Title VI. In fact, we think the level of competition today justifies elimination of many of the requirements of Title VI for all providers," he added.

"For years the phone companies have protested the disparity between the way the law treats their DSL service and the way it treats cable's high speed Internet service. Their plea has been, 'Treat us like the cable companies.' And I would note that Comcast has never objected to that."

"Now that the phone companies plan to offer video, we say 'welcome... and we agree – you should be treated like cable companies, because that is what you are.' And whatever rules apply to one should apply to all."

SBC Champion said $4 billion Project Lightspeed initiative, which will deploy fiber-to-the-neighborhood and fiber-to-the-premises technologies to 18 million households across 13 states, will begin construction in the coming months. It was first announced at Supercomm 2004 last summer as a five-year initiative but a ruling by the FCC in October 2004 that telcos didn't have to share newly installed fiber optic lines with its competitors caused SBC to accelerate the deployment to three years. SBC understood that ruling as a clarification that "old rules designed for traditional telephone networks won't be applied to new, advanced broadband and Internet protocol (IP) networks and services."

Verizon, which earlier this week signed a distribution deal with NBC's family of TV channels, expects to launch its FiOS service by the end of the year.

Robert Liu is executive editor at TMCnet.  Previously, he was executive editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg.  He can be reached at [email protected].