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. "