BELLSOUTH TAKES BABY STEPS INTO ENTERTAINMENT MARKET

BellSouth made a significant—if tentative—move last week into the realm of paid premium content, the new Holy Grail for ISPs and carriers. Through a deal with Movielink, the carrier will now offer on-demand downloadable movie “rentals” out of its DSL portal, BellSouth.net. While the service is unlikely to produce an explosion of customers watching blockbusters while sitting in front of their computer screens, it at least demonstrates that BellSouth is determined not to become a dumb pipe.

Still, the carrier's move into the entertainment realm is a small one. Under the terms of the partnership, BellSouth does not even own the customer per se, since Movielink separately bills customers for downloading any of the several hundred movies in its library. But BellSouth does get portion of the $3-to $6-a-movie revenue charges, and, more important, the carrier is taking steps to optimize its networks to offer specific content services—meaning this deal likely won't exist in a vacuum.

“This is just a starting point,” said Bill Smith, BellSouth's chief technology officer. “We're trying to move DSL into an entertainment context. We're not looking at this as a replacement for broadcast television or anything like that, but as an element that appeals to a portion of our users. Other sets of customers out there have other particular sets of interests, and we'll begin adding on those content elements.”

The development definitely marks a shift in thinking. Other carriers and ISPs offer premium content, but in most cases—like that of America OnLine—the content is included in the subscription cost. By definition, it also tends to be very general, appealing to the broadest audience possible. Other ISPs also sell specific services such as firewalls or access to gaming portals, but usually as one level of a tiered pricing structure.

To specifically target content and to charge for it incrementally is a model none of the major carriers have developed the courage to try just yet. That may change soon, however, according to Jonathan Hurd, an analyst with Adventis.

“[Apple Computer's] i-Tunes service showed that you can be successful with an on-demand paid content service if you have a great customer experience,” he said. “It's up to the RBOCs to give their customers that experience. If they can, it could be their answer to avoiding becoming big dumb pipes.”

BellSouth seems to be taking at least some of those precautions. Before soft-launching the service last year, BellSouth moved Movielink's content servers onto its OC-192 multiprotocol label-switching network. Movie downloads and preview streams were given priority over standard consumer Internet traffic, and caching points were created.

The end result is that most customers are able to download the sample 500-megabyte files at the maximum speeds supported by their loops—usually 1.5 Mb/s, according to Smith.

Smith also said BellSouth is in the process of upgrading its networks with on-demand content services in mind. While the main goal of the gateway upgrades is to tier speeds, BellSouth is allowing for a “turbo button” that would temporarily give customers access to full bandwidth capacity of their loops when an on-demand bit-heavy service is ordered. For example, a customer paying for a 128 kb/s DSL line could download a movie between 3 Mb/s to 5 Mb/s, Smith said.

But those plans are still far in the future, Smith said. For now, BellSouth will work on developing its relationship with Movielink and other partners. The carrier is looking into consumer networking devices that would function like set-top boxes to bring content from the computer to the TV, as well as looking for content providers that could give BellSouth an edge over the cable companies, Smith said.

“There are a number of entities that have content libraries that are difficult to monetize,” Smith said. “There's someone out there right now who wants to watch the 1995 Master's Tournament but he has no way to get it. If we can give him instant access to that event online, he'll pay for it.”

Read the related article CenturyTel rethinks video options.

For continuing coverage of carriers' quest to put content on their networks,
visit the Broadband Services department page.