SBC Ready To Take on Local Governments

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SBC is all set to take on the local city/muni governments as it plans to roll out its IPTV service over next 18 months. The company has been running into head winds of federal and state regulations for cable television franchises that dictate what is offered over the cable pipes.

“If we have to go through and get 2,000 franchise agreements, we won’t build this in three years,” SBC Chief Operating Officer Randall Stephenson said in a conference call with analysts. “We’re going to have to do something to make this quicker or it’s going to hit a brick wall.” UBS analyst John Hodulik said franchises were a “major roadblock” that would delay SBC and Verizon’s video roll-outs, giving cable companies an even larger head start on selling voice, video and data services in one package.

This is going to be the analog problem of rolling out IPTV, as many are finding it out the hard way that dealing with local governments is a painfully slow process. Verizon has acknowledged that the molasses like speed at which local governments work can be very frustrating. It has managed to convince six out of a total of 10000 in its footprint.

Typically, local governments require cable franchises to pay 5% of their revenue to the community. SBC thinks that those rules don’t apply to them, because the system will send the information as data stream. If this arguments works, then I am sure cable guys will be quick to change their systems to IP (technology exists) and contest the franchisee fees. Expect this to become a whole new can of worms.

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Kevin Glunt

The problem for the telcos is much more than just dealing with
10,000 bureaucracies.

Most communities have “equal access” rules that say you must provide
the TV service to the entire community and not just cherry-pick the
wealthier areas.

Since the fiber to the home/node strategies of SBC and Verizon are
based upon targetting the high demographic areas first, poor areas
may not get access to IPTV for years, if ever.

And what politician would allow a telco to offer sexy new services
to the rich people in town while consigning the lower income people
(who actually are a larger percentage of eligible voters) to
inferior services.

This was a battle the cable companies fought 30 years ago.

The telcos are just waking up to the problem.

And the cable companies are making sure that local communities are
aware of this. Comcast has already started making noise within the
communities where it already has been granted a franchise that the
telcos should be barred from offering IPTV unless they cover the
entire area.

This could be a MAJOR problem for telcos trying to offer a “triple
play” in competition to what the cable companies are offering.

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