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BellSouth Is Testing ADSL+2 for Data

12/12/2004 7:00 PM Eastern

BellSouth Corp. is testing new ADSL+2 (asynchronous digital subscriber line) technology it says would allow it to offer high-speed data at 4 to 6 Megabits per second, as well as standard-definition television service.

But at a half-day analysts’ meeting last week in New York, the regional Bell operating company stopped short of announcing any full-blown video commitment, other than its marketing pact with DirecTV Inc.

That’s in contrast with Verizon Communications Inc. and SBC Communications Inc., both of which announced new technology pushes that will put them in the wireline video business next year.

“We want to be sure,” said chairman and CEO Duane Ackerm in discussing BellSouth’s more cautious video plans. “Do we have a business model that we can produce another growth opportunity?”

Ackerman emphasized that BellSouth is already in the video business, with its marketing agreement with satellite provider DirecTV that’s produced 90,000 subscribers. “We’ve enjoyed good success with DirecTV,” said Mark Fielder, chief staff officer at BellSouth.

90,000 VIDEO SUBS

It’s a relatively painless strategy. “We’re not making a lot of money,” Ackerman acknowledged. “But it’s not costing us a lot of money.”

Verizon plans to launch video using fiber-to-the-home technology next year. SBC is also pursuing a wireline video strategy using fiber-to-the-node technology.

BellSouth does deploy FTTH in greenfield areas, Ackerman said. Fiber passes 1 million homes, he said, with 150,000 to 200,000 FTTH homes coming online each year. About 200,000 of those homes are now are offered wireline video service, BellSouth said.

BellSouth is banking on new ADSL+2 technology that would allow it to offer a more competitive high-speed data product, as well as a potential video service.

“We need to continue to extend our footprint and work on the technology to get increased speeds” for data, Ackerman said. That’s because of the new bandwidth-heavy applications coming down the pike.

By using ADSL+2 in areas where BellSouth’s copper loops are within 5,000 feet of homes, the company can provide 12 Mbps of bandwidth per home, Fielder said — enough to offer voice, high speed data and standard definition television service. Construction costs would be $225 per home passed, he said, plus another $80 in success-based capital for each ADSL port that’s deployed.

Fielder said BellSouth is currently evaluating the stability of the ADSL+2 technology. “We’re testing that technology now. It’s been vetted in the lab,” he said, with tests scheduled for completion in the first half of 2005. “Early indications are encouraging.”

If the company chooses to deploy ADSL+2 next year, if could reach one third of the homes in its top 30 metro markets by year’s end, he said. What’s more, that rollout could reach more than half of BellSouth’s highest revenue producing customers, Fielder said.

ON-DEMAND BANDWIDTH

In the meantime, Fielder said BellSouth will test a 4 to 6 megabit product next year, as well as bandwidth on demand, allowing customers with an always-on 56 kilobit connection to boost speeds to three megabits for a higher fee.

BellSouth also plans to test a new ADSL +2 technology called “bonding.”

In essence, bonding allows the Baby Bell to put ADSL+2 on two separate pairs of cable to the home, effectively doubling bandwidth to 24 Mbps. That would open the door to HDTV service, Fielder said.

Those tests won’t occur until next year, he said.

On the phone front, Fielder said BellSouth will test a VoIP offer next year. There will also be trials of new and different video bundles, he said. “We can do trial offers to VoIP susceptible subscribers,” he said.

For instance, in exchange for a long-term commitment, BellSouth might offer discounts for a wireline and wireless bundle to prevent subscribers from heading to cable.

Although BellSouth has seen a drop in its wireline phone business, it’s gaining subscribers in wireless, long distance and DSL. The company announced it passed 2 million DSL subscribers last week and produced record gains in October and November after dropping prices by $7.50 a month. “We’re pleased with that decision,” Fielder said.

In addition to the VoIP test, BellSouth said it will test Microsoft Corp.’s IPTV software in 1,000 friendly homes next year.

September