CABLE'S HIGH-DEFINITION EFFORT FATALLY WOUNDING ADSL VIDEO

Bandwidth limitations keep DSL format confined to data transport

The high-definition video offerings cable operators are launching to compete with direct broadcast satellite also threaten to encroach on telecom carriers' video-over-ADSL efforts. As a result, telcos are reconsidering using video over VDSL as a way to compete with cable and satellite.

Cable operators such as Comcast and Charter Communications are deploying high-definition offerings on the theory that cable's localized HDTV content will crush satellite's nascent threat. Cable's pipe is wide enough for local high-definition network broadcasts, sports programming and premium services such as HBO and Showtime.

Satellite, while fully digital, has more bandwidth constraints but still is moving into the HDTV space with products such as HDTVNet, an all high-definition national television network available on DirecTV. By contrast, ADSL is lucky to push through broadcast-quality signals; HDTV over ADSL is impossible.

“Bandwidth efficiency is at a premium,” said Seth Kenvin, vice president of corporate development for BigBand Networks, which offers a dynamic bit-rate adaptation technology that delivers three HDTV signals in a single 6 MHz cable channel, at 12 Mb/s or 13 Mb/s. Conventional HDTV delivery mechanisms require 19 Mb/s. ADSL can, at best, fire up 8 Mb/s to 10 Mb/s and generally offers 6 Mb/s.

HDTV is certainly another chink in the armor, said Ryan Jones, an analyst with The Yankee Group. But Jones stopped short of nailing shut ADSL video's coffin. “It's clearly another item on the laundry list of why it's tough to deliver video over DSL, but I hesitate to say that it puts ADSL behind the eight-ball,” he said.

Video, of course, needn't be high definition. Minerva Networks has partnered with Royal Philips Electronics to meld its digital video-to-IP management software with Philips' 2 Mb/s compression technology to squeeze broadcast-quality IP video onto ADSL networks.

While conceding that ADSL video transport has more promise in overseas markets where cable and satellite are less entrenched, Mauro Bonomi, Minerva's president and CEO, said he is confident that HDTV over DSL will happen in the U.S.

“By the time high-definition is a reality as a technology that consumers will ask for, you're going to see that even the IP infrastructure of telcos will meet the requirements,” Bonomi said.

VDSL meets those requirements now. The technology was “always the way to do it right,” said Jones. “There are no technical limitations in terms of the range of services you could offer to a subscriber. Now that HDTV is gaining traction in the market, it's proven again.”

How much traction HDTV is gaining is debatable. Jones estimated that there were only 1.5 million HDTV-capable sets in the U.S. at the end of last year and that only about 10% of them had off-the-air or cable HDTV converters. That was enough, though, to spook Blue Ridge Communications, a 180,000-subscriber cable operator in Northeast Pennsylvania. Blue Ridge installed BigBand's gear to deliver at least six HDTV channels and paid $500 a pop for 200 Scientific-Atlanta boxes to receive and decode HDTV because its most valuable customers “have no loyalty.”

“The high-end customers we don't want to lose are buying digital TVs,” said John Slanina, Blue Ridge's vice president of research and development. “They're going to satellite dishes. We see HDTV as a retention tool. It's not a moneymaker for us.”

Those fickle subscribers have deep pockets and a pioneering spirit that could benefit VDSL, said Jones. The problem is, most telcos are looking to “walk before they can run, and offering HDTV services is not on their list of high priorities,” he said.

Qwest, which is offering VDSL video in three markets, has made no concrete plans for HDTV delivery. A spokeswoman said the company is aware of VDSL's ability to deliver high-definition video and “will continue to work with our vendors to determine the optimal configuration and timing for deploying the service.”

Telcos should be wary of investing in ADSL systems that will put them only on par with cable operations because cable is continuing to expand its video horizons, Jones said.

Geoff Burke, marketing services director for VDSL vendor Next Level Communications, agreed, saying that HDTV is an ADSL killer. Next Level sees HDTV as an opportunity. “We really like a lot of the publicity that is surrounding HDTV because VDSL is the only DSL technology that can deliver HDTV successfully,” Burke said.

In the ideal system, service providers deploying an efficient switched digital fabric architecture can dedicate 26 Mb/s to a household using VDSL, he added. ADSL is by default confined to a moderately fast, always-on data service in a competitive space that includes cable modems and two-way satellite Internet services bundled with video — and soon, voice.

Those bundled packages will make it difficult for ADSL providers to compete in the video realm, although Jones said ADSL's data and voice package matches well with satellite's bundles of video and data applications. To get all three, though, VDSL “was always the right way to do it. Video is the handicap to ADSL.”

Some telcos have toyed with using ADSL networks to deliver video to computers, but they've found that it's not realistic, said Charles Hoffman, CEO of competitive carrier and ADSL provider Covad Communications.

“When you're working on your computer, you're not watching movies. When you're watching movies, you're leaning back, you're relaxing,” Hoffman said. “I just can't believe people want to do their e-mails while they're watching television.”

Even in the data-only space, ADSL faces tough competition. Cable modems dominate the residential market and are now making inroads into the commercial space, although Hoffman dismissed the threat.

“The cable companies I know are totally consumer-oriented,” he said. “That's where the cable goes. It doesn't go to businesses.”