1.Local Exchange Carriers -
The 1996 Act amended Section 651 of the Communications Act to permit common carriers to provide video services in their telephone service areas. The statute permitted common carriers to: (1) provide video programming to subscribers through radio communications under Title III of the Communications Act;439 (2) provide transmission of video programming on a common carrier basis under Title II of the Communications Act;440 (3) provide video programming as a cable system under Title VI of the Communications Act;441 or (4) provide video programming by means of an open video system (OVS).442
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As we reported last year, there are new signs of LEC interest in providing video services. We previously reported on joint marketing agreements between BellSouth, Qwest, SBC, and Verizon and DBS service providers,443 and noted that several LECs have reported plans to provide video service via asymmetric digital subscriber line (ADSL), very high-speed digital subscriber line (VDSL), or fiber to the home (FTTH) using IP technology.444 The Fiber-to-the-Home Council reports that there are 652 communities in 46 states served at least in part by FTTH networks, with 322,700 “connected homes.”445 Over the past year, the larger LECs have continued and accelerated their plans to roll out video services, with Verizon actually signing cable franchises and beginning service in one community.446
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As has been true for the past several years, BellSouth holds 20 cable franchises with the potential to pass 1.4 million homes and provides cable service to approximately 40,000 customers in 14 of its franchise areas.447 BellSouth reports that it is studying the use of Internet Protocol Video, or IPTV, for further distribution of multichannel video services, and that a full-service market trial could begin next year.448 Qwest provides video services via traditional Hybrid Fiber-Coaxial (HFC) architecture in the western suburbs of Omaha, Nebraska, and is deploying an FTTH network in Lone Tree, Colorado.449 SBC is deploying an IP-enabled broadband network called “Project Lightspeed,” using both Fiber to the Node (FTTN) and FTTH to deliver video and other services to residential customers.450 SBC reports that the network will be available to 18 million homes nationwide.451 SBC separately reports that they will begin commercial service to limited subscribers in neighborhoods in San Antonio, Texas in late 2005 or early 2006, scale to full service in San Antonio in mid-2006, and reach the full 18 million households by the first half of 2008.452
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The efforts of Verizon are noteworthy this year because it has begun commercial service in several communities and committed to beginning service in many additional communities in the near future. Verizon is deploying an FTTH network under the brand name “FiOS” that will allow delivery of multichannel video services in addition to telephony and high-speed Internet access service at speeds above those of ADSL technology. Verizon has received franchises from local communities in California, Florida, Virginia, Texas,453 Maryland, and Massachusetts.454 Verizon began offering multichannel video service in Keller, Texas, a city 30 miles from Dallas, on September 21, 2005, and now offers service to more than a dozen Texas communities;455 in Herndon, Virginia, a suburb of Washington, D.C., on November 21, 2005;456 and in Temple Terrace, Florida, a city northeast of Tampa, on December 6, 2005.457 Verizon commented that it would pass over three million homes and businesses by the end of 2005, and planned to pass an additional three million homes and businesses by the end of 2006.458
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Qwest and a number of smaller incumbent LECs are offering, or preparing to offer, MVPD service over existing telephone lines using VDSL or ADSL technologies.459 Qwest offers video, high-speed Internet access, and telephone service over existing copper telephone lines using VDSL in the Phoenix, Arizona, metropolitan area and in Denver and Boulder, Colorado.460 Cincinnati Bell reports that it is upgrading its existing DSL architecture to provide IPTV services through an FTTN configuration similar to that being deployed by SBC.461 CenturyTel is operating a trial IPTV service over DSL in La Crosse, Wisconsin, and planned commercial launch of the service in the fourth quarter of 2005.462 Cincinnati Bell and CenturyTel both intend to store all available channels at the network node and deliver only the content requested by the subscriber, either by channel selection or program selection, rather than delivering all channels to all homes all the time.463
2.Electric and Gas Utilities -
Electric and gas utilities possess certain assets that have positioned them well for entry into the MVPD market, including access to public rights-of-way, ownership and operation of various infrastructures amenable to the provision of network services, and well-established relationships with customers.464 Some utilities continue to move forward with ventures involving multichannel video programming distribution, though such services are still not widespread.
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As previously reported, some municipal, county, and public utilities provide voice, video, and high-speed Internet access services in competition with incumbent cable systems, generally using fiber optic networks.465 Some utilities have built systems on their own, but many utilities involved in the video distribution market are engaged in joint ventures with other companies.466 It is reported that utility systems are being deployed in urban and rural areas and serve both low-income and affluent communities.467 To some extent these systems are bringing video, voice, and high-speed Internet access to previously unserved communities.
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The American Public Power Association (APPA), created by and for the nation’s more than 2,000 not-for-profit, community and state-owned electric utilities, surveyed its members at the end of 2004, and found that 616 public power entities offer some kind of broadband services, serving about 14 percent of total households in the United States.468 Of those, 102 offered video service, 128 offered high-speed Internet access, 52 offered local telephone service, and 42 offered long distance telephone service. Of the 102 offering video services, 10 are offering video on demand (VOD).469
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