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  • normboyz normboyz Oct 7, 2005 1:55 PM Flag

    Houston OEN - Houston Chronicle

    Optical breaks into data services
    New network will be available early next year
    By PURVA PATEL
    Copyright 2005 Houston Chronicle

    Cable and phone companies will soon see some competition from a Houston startup planning to sell phone, television and Internet service over one network.

    Optical Entertainment Network will announce its plans to launch the services, including Internet Protocol Television, or IPTV, today at an industry trade show in Las Vegas.

    If all goes well with a pilot program being launched this month in 400 homes in the Cypress-Fairbanks area, the services should be available to other Houston neighborhoods during the first quarter of 2006.

    Optical Entertainment has a 30-year exclusive agreement to use Houston-based Phonoscope's existing fiber optic network, which spans thousands of miles across the Houston area as far out as Baytown, Magnolia and Rosenberg.

    Although that network extends primarily to businesses and schools, it's within 500 feet of 1.6 million households, Optical Entertainment said.

    For households within certain zones near the network, the company will lay fiber for the remaining distance to the home. Optical Entertainment projects that will cost the company an average $127 per installation.

    "If they're not in the zone and if they're willing to share the cost to bring it to them, we will," said CEO and co-founder Thomas Wendt, a former head of government relations for an industry trade group. "We'll find a way to build it."

    Fiber all the way
    Optical Entertainment began in Dallas, but quickly moved to Houston after it landed a deal to use Phonoscope's network.

    The one-year-old company has so far raised $3 million and is about to close on another $15 million. The company also plans to go public next year and provide content through existing fiber networks in Europe.

    Monthly packages will range from $39.95 for basic phone, video and Internet service to $249.95 for premium services.

    For the cheaper price, customers must be willing to put up with listening to targeted advertising.

    Although it's not uncommon for broadband providers to use fiber, most don't take it all the way to the home. Instead, the last leg of the connection is over copper lines, which can limit the amount and speed of information. Replacing the copper with fiber permits a greater variety of multimedia services, such as video programming and online games.

    Wendt, 44, said he decided to get into the fiber business because he believes that existing telephone and cable networks are reaching the limits of what they can offer.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Aside from about 300 television channels, including 50 high-definition channels, Optical Entertainment will offer video-on-demand, pay-per-view, programing created by its own studios, online gaming, video conferencing, 10 megabits per second Internet, phone services, home security and other applications.

      Analysts said breaking into the IPTV market will take more than just video offerings, especially when there aren't that many new viewers to market to.

      The main difference between digital cable or satellite and IPTV is how much faster the data streams to a home. But the difference can be mere milliseconds, said Todd Chanko, an analyst with Jupiter Research.

      The dissatisfied
      More channels won't necessarily do the trick because most TV viewers spend the majority of their time watching four broadcast networks, Chanko said. But those dissatisfied with their provider or early adapters could switch, he said.

      "I think it would be safe to say that group alone is not big enough to make a dent in the marketplace," he said.

      Cable companies have been investing in fiber for several years.

      Time Warner Cable offers digital TV, Internet and phone service with unlimited local and nationwide calling for $99.99 over a fiber and copper network. The information goes out on fiber to nodes, which then connect by copper to about 150 homes.

      "What we have found is you're really not able to launch additional services as a result of the cost of building fiber to the home. So there's no real economic advantage that we can see at this point,"said Time Warner spokesman Ray Purser. Time Warner offers speeds faster than 5 mbps on its high-speed data service, but most customers don't need that much, he said.

      'Scratching the surface'
      Verizon and SBC Communications are spending billions to upgrade their networks with fiber-optic lines that can deliver video, telephony and high-speed data in a bid to compete with cable's similar three-pronged offerings.

      Verizon was the first phone company to offer a video product to consumers with its launch of FiOS TV service in Keller, a small town north of Fort Worth.

      Earlier this year, SBC began construction on Project Lightspeed, a three-year, $4 billion initiative to deliver TV, data and phone service to 18 million customers by 2007.

      Wendt seems undeterred by the competition, saying initial growth will likely come from niche programing.

      The company's offering will include various channels in Spanish, Vietnamese, Hindi and other languages.

      "A lot of early adopters will be people who want ethnic programming," he said. "We also provide a superior picture quality. Cable companies have to choose, are they going to drop channels to add HDTV channels? They're reaching their physical limits of their plans. We're scratching the surface. "

 
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