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AT&T U-verse Doomed?

February 13, 2007

Many have heard of the difficulties in implementing AT&T’s U-verse IPTV service. AT&T’s U-verse network is actually a fiber/copper hybrid, which pulls fibers to 3,000 to 5,000 feet from the homes they serve, where it then connects to mini-DSLAMs called "52B" boxes and then it runs copper the last mile to the home. This hybrid approach is a bargain when compared to the $20 billion Verizon is spending to build-out fiber all the way to the home. This hybrid fiber/copper approach gives AT&T a 20Mbps+ link to customers, enough to offer high-speed Internet, VoIP, and the company’s IPTV service. The problem is getting towns to grant public right of ways for these massive 52B boxes, which hold DSLAMS, batteries, and cooling gear in rugged, weatherproof cases. Many towns objected or wanted AT&T to sign video franchise agreements. Lawsuits were filed, including cable companies that want to classify U-verse service as a "cable service" to force AT&T to abide by the same build-out rules, which has drastically affected U-verse deployment . In addition, the IPTV service uses proprietary set-top boxes from Microsoft, which had their own share of problems - mostly software related.

On top of all this, a new IPTV standard (DVB-IPI) is about to be ratified (later this month) by the Digital Video Broadcasting (DVB) standards body. This standard takes a very different technical approach than the strategy embodied in the Microsoft solution that AT&T has implemented, and addresses many of the inherent challenges with IPTV, including quality of service, scalability and fast channel change times. Which reminds me, I really hate the slow channel changing times on satellite TV. I wish the set-top boxes would buffer the next channel UP and the next channel DOWN, so at least changing up or down one channel is fast.

In any event, The DVB-IPI standard is based largely on a hybrid of well-established forward error correction (FEC) technology from Digital Fountain called DF Raptor and a public domain technology known as Pro-MPEG COP3. These technologies are currently being evaluated by most IPTV providers in the U.S. and elsewhere. Several new deployments using this technology are expected to be announced later this year. According to Rose Anne Raphael, a representative of Digital Fountain, "Whatever the actual problems in the AT&T/MS deployments (since we’re not part of these deployments, we have no firsthand knowledge), the strategy employed is one that inherently poses scalability problems and bucks certain foundation assumptions on which IP networks and broadcast architectures are based."

Could this new standard make AT&T’s and Microsoft’s gamble on their own proprietary technology be the nail in the coffin for U-verse? Certainly, a standards-based approach will eventually result in lower costs to deploy due to economies of scale when multiple vendors all use the same technology. This could give AT&T/Microsoft’s competitors a cost advantage. Who would have thought that mega-titans AT&T and Microsoft would bet on the wrong horse using proprietary technology? Wait a minute, AT&T and Microsoft are the KINGS of proprietary technology, so I shouldn’t be surprised. The difference is that 20 years ago you could get away with it - now with open-source and standards along with a global economy, a standards-based approach is the only way to go.