Carriers see key rulings soon

Competing companies look to the FCC for guidance

LAS VEGAS - The major U.S. regional carriers want to leapfrog cable operators with advanced video services over IP (Internet Protocol), and expected upcoming U.S. Federal Communications Commission (FCC) rulings may help pave the way for those roll-outs.

SBC Communications Inc. expects the agency to issue a favorable ruling Thursday on whether and how SBC has to make its planned fiber network available to competitors, said Christopher Rice, executive vice president and chief technology officer at SBC, in a Tuesday interview at the Telecom '04 trade show. Fiber is a key element to SBC's planned video service, which the San Antonio, Texas-based carrier plans to launch commercially by early in the fourth quarter of next year. It envisions an offering that includes an interactive program guide, multiple streams with different camera angles and other features.

SBC plans to begin early next year deploying fiber to neighborhood nodes, with short copper connections to homes and businesses, so it can deliver much faster broadband services. Not knowing how it might have to treat that network has forced the carrier to hold back on deployment, Rice said. Even if the FCC's decision is less favorable, just having one will help kickstart SBC's deployment.

"We're feeling pretty good that there's going to be some clarity," Rice said. If the decision favors SBC, the carrier may even be able to finish that roll-out in two or two and a half years, compared to the four or five years that SBC has been projecting, he added.

Verizon Communications Inc., which is laying fiber all the way to customers' homes and businesses, also expects a favorable FCC ruling soon on sharing requirements for its network, said Paul Lacouture, president of Verizon's network services group, in an interview Tuesday. Verizon hopes to offer video services in some markets in the first half of next year, though it believes it can draw in consumers in the early stages even without many gee-whiz features, he said.

Regulatory uncertainty has held up carrier video services, which in most cases will require significant network upgrades, executives of the four big regional carriers said in a panel discussion Tuesday morning.

BellSouth Corp. Chief Technology Officer Bill Smith would not comment on timing but said the carrier is testing IP TV technology and creating a work plan for rolling it out. Qwest Communications International Inc. has rolled out video services in some locations, with special features such as a screen pop-up to alert users to incoming calls, and has seen a strong response from customers, said Balan Nair, the company's chief technology officer.

The investment required for network upgrades -- US$4 billion to $6 billion planned by SBC, for example -- is hard to make without a clear picture of the laws that will cover what's built, the executives said.

"It's kind of like being down in the casino and dropping your money down, because you're trying to make an investment and you don't know what environment you're going to be operating in," BellSouth's Smith said.

Despite the positive rulings that may be coming, states may continue to muddy the waters, the executives said. They expressed alarm at a Sept. 22 ruling by a California Public Utilities Commission (CPUC) administrative law judge, who ruled Verizon would have to "unbundle" an IP packet switch it had installed, leasing it to competitors under regulated terms. The FCC has already ruled that this type of equipment doesn't have to be unbundled, the executives said. The switch, part of a gradual upgrade that eventually will help Verizon offer a wide range of video and other advanced services, was only two days away from activation and now sits idle because Verizon had not set it up to be unbundled, Lacouture said.

"This thing in California is incredibly scary to me, because it says that even when you get something that's supposedly cleared up at the federal level, then you have a change at the state level ... I think that's going to have a horrible dampening effect," BellSouth's Smith said.

Verizon has complained to the CPUC and expects a decision on the issue to come in March next year, Tim McCallion, Verizon's Pacific region president, said Tuesday.