Digital video gets another look: GTE and RHCs mix up delivery platforms to send data to the TV and the PC

Two months ago, the island paradise of our 50th state became home to GTE Media Ventures' latest venture into digital video. The wireless platform, based on multichannel multipoint distribution service, is the carrier's third launch of digital video services, each in a different state.

Thanks to the speed of wireless deployment, GTE turned up the system less than a year from the day it acquired Oahu Wireless Cable. The service gives Oahu residents a choice of cable providers and a package of 68 video channels, 32 music options and near video-on-demand with 40 channels of pay-per-view. As GTE's first MMDS operation, the Oahu project fortified the carrier's video position by adding another dimension to its digital repertoire.

In September 1997, GTE became the first telco to offer digital video services with the launch of its system in the Tampa Bay area (Figure 1). Two months later, it rolled out its Ventura County, Calif., digital video network and added cable modem service to the package. Both the Tampa Bay and Ventura systems are based on a hybrid fiber/coax (HFC) platform that transmits at 750 MHz downstream and 40 MHz upstream (Figure 2). All three of the carrier's video ventures are part of americast, a partnership that teams Ameritech, BellSouth, GTE, Southern New England Telecommunications and Walt Disney Co. In addition to these disparate enterprises, GTE is reportedly completing plans for very high bit-rate digital subscriber line (VDSL) technology, through which it intends to deliver digital video and other broadband applications. It also has agreed to market DirecTV's direct broadcast satellite (DBS) service, initially in several major metropolitan markets and ultimately throughout the country. This wide base of platforms is part of a strategy to reach 7 million homes in 66 U.S. markets with video service by 2004.

"The dynamics and the demographics from the GTE market perspective are varied to the extent that we don't see one particular architecture being the architecture of choice," says Jim Miles, GTE vice president and general manager of video services.

The evidence is clear: The carrier is identifying the best DBS sites, preparing for a VDSL trial later this year and deploying two HFC networks and one wireless network.

Ripe timing In and of itselft, the ability to deliver consumer digital video is not the stuff of headlines. The fact that Bell regional holding companies are back in the game is.

GTE never really left. Through its mainStreet program, it introduced news, shopping, financial services and interactive video games.

Most carriers jumped the interactive ship in the early 1990s and, until recently, have been tentative about stepping back on board with any digital video options. Even recent efforts, such as SBC Communications' north Texas switched digital video trial, have been abandoned.

Yet the weight seems to have shifted in favor of digital video applications. This spring, U S West debuted its VDSL platform in Phoenix, giving subscribers integrated digital TV and high-speed Internet access. Included in U S West's TeleChoice bundle are on-screen caller ID, voice messaging and 120 channels of programming, including pay-per-view. Some 400,000 homes are expected to have access to the 256 kb/s service by the end of the year.

"At last, people will be able to marry the convenience of television and telephones with the power of the Internet," says Solomon Trujillo, president and CEO of U S West Communications. "This new digital TV and on-line service will give customers a much sharper picture and CD-quality sound. They'll even be able to see who's calling on the phone and scan the Internet, all as they're watching their favorite shows on TV."

BellSouth is in the midst of delivering video through an HFC deployment in Atlanta and an MMDS launch in New Orleans. And although for now Ameritech's digital focus is on videoconferencing, it offers enhanced analog service that rivals some digital applications in 54 of its 75 Midwestern cable franchises.

Other telcos have announced plans to launch digital video but have yet to make good on the proposals. They appear to be sitting the fence with "digital-ready" platforms that can support the applications when they decide to take the plunge.

"The demand for bandwidth has been growing very rapidly in recent years. For a long time, it was very flat with a small and steady growth because the vast majority of communications on a corporate level were just voice communications," says Alena Brezinova, a video communications analyst at Frost & Sullivan. "When data entered the picture, the demand for bandwidth increased significantly. Now, with video increasingly a mainstream application, the demand for bandwidth has accelerated even more," she says. Corporations are upgrading their networks as a result.

The Bell companies and the interexchange carriers realize that video represents growth potential, but they will no longer be pioneers.

"They were willing to increase their offerings of ISDN installations when the demand came," Brezinova says. "The same thing is going to happen with video. With video, they are going to make sure that their networks are ready when corporations call and ask for the service."

The business of video There may be a newly found enthusiasm for the consumer video market, but that's just the tip of the iceberg. Beyond the programming applications that generally arrive at the set-top, a much broader world awaits that encompasses videoconferencing, distance learning, telemedicine and collaborative desktop video. Business customers are particularly hungry for such applications and can increasingly get them from a variety of service providers.

"What we're seeing is demand for video in all parts of the service provider environment," says Lee Rainey, director of marketing for Video Tele.com, a new division that Tektronix formed to support this market (Figure 3).

Telephone companies are seeking to leverage their infrastructure, whether they have traditional copper or new fiber rights of way, to grow revenue.

"In both cases, they are looking for the best quality video that can be delivered over any given bandwidth because that's the easiest thing for them to sell to their customers," Rainey says. "Video is becoming a mainstream part of many other non-broadcast applications."

The video transport market also is thriving, particularly in the entertainment industry. Pacific Bell may have scaled back its residential cable holdings, but it beefed up its transmission of high-quality graphics and digital video for film studios and production houses.

Vyvx Inc. initially made its mark by hauling traffic from sports venues to network facilities across the fiber optic network of its parent Williams Communications Group. Throughout the 1990s, Vyvx expanded its services and grew its market share to an enviable 60% of the back-haul video transmission sector. Today, it's positioned to take advantage of Williams' $2.5 billion network expansion that will grow the 11,000 mile fiber network to 19,000 miles by the end of the year and up to 32,000 miles by 2000 (Figure 4). That reach and the technology that fiber affords are likely to be the launching pad for what will become a new view of digital video.

"We're driving to be more of a multimedia-based company. The whole industry is moving that way," says Mike Schlesier, vice president for Williams Vyvx Services.

Vyvx plans to roll out MPEG service in the fourth quarter, according to Schlesier, and expects to incorporate asynchronous transfer mode in the near future.

"Once we get into our ATM network, we will be able to offer multimedia solutions. We can transport video using store-and-forward data files instead of using streaming video. These components are obviously going to open up new opportunities for our customers and also new revenue opportunities for ourselves," he says.

Videoconferencing is expected to be another fertile field. Three years ago, the U.S. videoconferencing market was valued at $2.94 billion, according to a study by Frost & Sullivan. That figure is expected to jump to $5 billion in 2002.

Sprint's digital virtual private network, Drums, may be best positioned to capitalize on that anticipated growth. The carrier's recently announced Integrated On-demand Network is likely to lower the cost and increase the speed of the collaborative video product-an attractive and unusual combination.

"What we'll find as you run a 384-compressed video or videoconference-which is cheaper than a long-distance off-net call-is that people are going to communicate differently," says Marty Kaplan, Sprint chief technology officer.

Driving forces Whether from a long-distance or incumbent local exchange carrier perspective, the video picture never looked so good.

The arrival of DSL technologies and ATM's extending reach make digital video applications more technically viable than ever. The FCC's mandate to bring digital TV to the masses further compels carriers to give digital video another look. The federal government is driving the idea that video can bring equality of educational opportunity to disadvantaged areas, particularly by using distance learning in rural areas and inner cities, Rainey says.

A related initiative focuses on telemedicine to provide health care in rural areas.

"The phone companies are seeing demand for this type of service, some of it through the subsidized funding from the federal government," he says.

Rapid deployment of large amounts of bandwidth and the extension of bandwidth into rural areas is creating its own phenomenon.

"There are not too many places nowadays that are still beyond the reach of a fiber connection," Rainey notes. "And that basically is enabling the phone companies to offer a much better quality of conferencing service. At the same time, we're seeing an intent to deploy more standardized types of service and a move to ATM as opposed to a switched overlay type of network."

The northern view Many domestic carriers have chosen a single path-either the TV or the PC-to deliver digital video applications. The Canadian approach is more universal, however: Bell Canada is making an assault on both fronts.

In separate two-year trials conducted under the TotalVision banner, the carrier is testing a slew of applications, including digital TV, high-speed Internet access from the TV and high-speed access from the PC. Each appeals to unique demographic groups. The high-speed TV audience is either new to the Internet or less exposed to it than the PC audience.

Using HFC with 10 Mb/s downstream and 1 Mb/s upstream, Bell Canada's first TVi product offered Web browsing and e-mail access. The carrier recently upgraded the service, now known as TVi Plus, and added a picture-within-a-picture application that lets subscribers go on-line and watch television from the same screen simultaneously.

"We did experience a fairly high churn rate on the first service, and we think that the broadcast component of this new service is going to take care of that," says Glenn Ward, vice president of broadband development for Bell Canada.

The carrier is treating these trials purely as a test bed that will steer future commercial development. The network, for instance, has two coax drops going into each home: one for the PC; the other for the TV. That's not a design that the company will replicate on a commercial basis. For now, though, it gives the carrier a wide berth for experimentation. Ward predicts that the way of the world is an Internet protocol format, regardless of how that format is displayed in the home.

"More and more interactive applications-digital, audio and video-are being carried over the Internet," Ward says. "The next step from a consumer perspective is to start to make some of this stuff transparent across various appliances so [people] can get the same kind of applications on their TV as they do on their PC."