between 20mbps to 25mbps," said Buckingham Research's Hasan. "If BellSouth can't get bonding to deliver these data rates, they won't be able to compete as effectively."
To its credit, that early start on fiber optics has allowed BellSouth to avoid a costly, speedy upgrade of its network. By comparison, SBC and Verizon have announced multibillion-dollar initiatives to upgrade their networks with fiber-optic cables, which they also plan to use to deliver TV service. With optical transmission technologies, a single strand of fiber can provide nearly infinite amounts of bandwidth.
"We want to make sure that the IPTV technology really works, and we need to make sure the business model works too."
--Michael Bowling, vp of broadband services, BellSouth
In January, BellSouth announced plans to test Microsoft's IPTV software, which is also being tested by Verizon and SBC. BellSouth execs said that so far testing is going well. A preliminary trial of the service will be launched later this year, said Michael Bowling, vice president of broadband services for BellSouth. BellSouth also has a partnership with DirecTV.
"We want to make sure that the IPTV technology really works," Bowling said. "And we need to make sure the business model works too."
Duane Ackerman, BellSouth's chairman and CEO, said he isn't worried about pulling all the pieces together.
"Historically, BellSouth has maintained a low profile, but we've never been absent from the competitive landscape," Ackerman told reporters after his Supercomm keynote speech Wednesday. "We are currently evaluating all these different technologies. And then we'll decide what to do."
Regulatory issues could be far more vexing. BellSouth's success also hinges on revamping the TV franchising system.
Under current law, new entrants in the television market must negotiate separate franchise agreements with cities and municipalities. Obtaining agreements is not impossible, but phone companies complain that it is a slow and laborious process.
Verizon, which has been lobbying state and federal officials on this topic, has begun filing franchise applications throughout the country. So far, it has successfully negotiated six contracts. SBC hasn't yet begun filing for franchises, because the company has taken the stance that its service, which will be based on IP, does not need a franchise agreement.
BellSouth also has not begun filing for franchise agreements. If new laws either at the state level or in Congress are not passed, the company could find itself years behind competitors.
"BellSouth is in a good position," said Hasan. "But these other factors really need to fall into place for the strategy to pan out."
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