US cable regulations threaten IPTV rollout

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US telecommunication group SBC has warned that federal and state regulations covering the cable sector are threatening the rollout of its hugely ambitious $4bn internet protocol television (IPTV) service.

SBC Communications plans to launch its IPTV service—dubbed Project Lightspeed—later this year. It aims to reach 18m homes in 13 US states by 2008 using a combination of fibre optic and DSL network technologies.

But the company has come up against rules governing cable television groups which are forced to obtain franchise contracts from cities in which services are offered. SBC chief operating officer Randall Stephenson told an analysts' conference in Washington: "If we have to get 2,000 franchise agreements, this will not get built in three years."

SBC has argued that since its service is based on internet technologies it will not require local franchise agreements.

Rival telecommunications group Verizon, which is also rolling out an IPTV service, shares that view, but is seeking local franchise agreements.

According to Reuters, cable TV franchise contracts require operators to pay up to 5% of their revenues to local authorities.

Reuters quoted UBS analyst John Hodulik saying the franchise agreements presented SBC and Verizon with a "major roadblock".

His research note added: "Municipalities and states desire the consumer benefits that result from increased competition and will likely end up granting video rights after extracting their pound of flesh."

Lovelacemedia  |  06.05.2005

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