USTA speaker says movies will drive broadband adoption

LAS VEGAS – It long has been said that video is the killer app that will drive broadband adoption, which continues to languish in the U.S. at about 20 million homes nationwide. But James Ramo, CEO for Movielink, speaking yesterday at the U.S. Telecom Association conference here, told attendees they needed to refine their thinking and focus on movies.

"You have to have movies. They’re a staple product," said Ramo.

Movielink, a movie distribution service funded by five major studios, currently is partnering with BellSouth to offer movies to the RBOC’s broadband customers, who can download movies to their hard disk, where they remain for 30 days, for a fee that is comparable to retail rentals. Once the customer hits the play button, unlimited viewing ensues for the next 24 hours. The file is encrypted to prevent sharing or illegal copying.

While the arrangement puts incremental revenue in BellSouth’s pocket, that’s a secondary advantage, according to Ramo. "This is an acquisition tool. Movielink only distributes over broadband networks, so this offers carriers the opportunity to attract customers and get them to stick."

It takes about 30 minutes to download a movie via a 1.5 MB/s connection. Customers with a very high-speed connection can download in about 15 minutes, said Ramo. He added that Movielink wants to provide streaming services too, but can’t because broadband networks currently are not sufficiently robust.

Three of the RBOCs are working on the problem. Verizon Communications, BellSouth and SBC Communications, in the aftermath of the FCC’s decision in its Triennial Review Order (TRO) to release incumbents of their obligations to unbundled fiber-to-the-home and hybrid loops, issued a joint RFP for a fiber-to-the-premises initiative. Representatives of the three companies offered a progress report yesterday.

Keith Cambron, president and CEO for SBC Laboratories, called the architecture developed for the initiative, which is based on the FSAN-ITU G.983 standard, "very rich" for the delivery of video services. He said the architecture would allow telcos to distribute IP video to computers as easily as digitized music is sent to televisions.

"The architecture enables cost-effective video deployment, which can be added at the discretion of the carrier," added Mark Wegleitner, chief technology officer for Verizon Communications.

While excited about the technical capabilities of the architecture, the RBOCs are concerned about the costs associated with a massive fiber deployment, particularly in a brownfield situation. "You don’t want to have a high fixed cost," said Wegleitner. "That’s been the problem with fiber deployment for 20 years."

However, Wegleitner said Verizon has a success-based solution that allows the carrier to defer up to 50% of its deployment costs for an overlay build, by deploying fiber and the fiber feed, but incrementally upgrading central offices as it builds its customer base. "That makes it more cost-effective to deploy," Wegleitner said, adding that Verizon would be "in a lot of economic trouble if we don’t move away from the copper network."

While agreeing that the deferment strategy makes sense, one investment banker attending the conference said Verizon won’t receive full value due to the TRO’s requirement that incumbents make available to competitors a separate copper line for voice traffic, or a portion of the fiber loop should the incumbent choose to retire its copper infrastructure. "That’s a limiting factor," he said.

Lab tests of the architecture are scheduled to begin Nov. 14, with field tests to commence in the first half of next year. Though the RBOCs are leaning towards working with a single supplier in the beginning stages to simplify and speed deployment, Wegleitner said "It is inconceivable that we would be focused on a single supplier for anything other than the short term."