Bellsouth extended its marketing alliance with DirecTV Inc. but also has made moves toward expanding its Internet protocol (IP) TV services going forward.

As part of its longstanding deal with DirecTV, Bellsouth is able to bundle local, long distance, wireless, Internet and digital video services in a single offering. As part of its new five-year agreement with DirecTV, Bellsouth also created a new sales channel, Bellsouth announced Feb. 14. Bellsouth will be responsible for the sales and ordering functions, and DirecTV is responsible for the installation and ongoing service for Bellsouth customers who subscribe to DirecTV service through Bellsouth.

As part of the extension, DirecTV residential customer across Bellsouth’s nine-state service area will be able to Bellsouth DSL services directly from DirecTV.

Separately, Bellsouth most likely will introduce its first full IPTV services a year from now, Don Granger, Bellsouth’s president of entertainment, said. "We will be expanding our current technical trial into a market trial in the middle of this year, where we will step it up to 1,000 participants," he said. "Depending on the results of those trials and our market evaluations, we would expect that we could go to a commercial launch in either late 2006 but more likely in early 2007."

Cautious IPTV Rollout

In January, Bellsouth signed an agreement with SES Americom to test a satellite-based video distribution service. Bellsouth will test IP Prime, which enables telcos to bundle and distribute standard-definition and high-definition TV programming with voice and broadband services. SES Americom will provide Bellsouth with video aggregation, encoding, monitoring, and transport over the IP Prime platform, which is based at the SES Americom IPTV Broadcast Center in Vernon Valley, N.J.

"SES has a long history in the satellite-distribution arena and has been moving in the direction of advanced CODEC processing of satellite services," Granger said. "We began talking with them about the possibility of using their IP Prime platform to encode and encapsulate, in an IP fashion, a number of the national networks that were available to us through our contracts, and then to transport those to us so we could interject them into our ADSL2+ platform and test them as part of our overall technical trials."

Granger admits Bellsouth is very much in education mode this year as it tracks its trial. "We have learned that it takes a long time for the whole ecosystem to come together, to really make the whole process work," he said. "When I say ecosystem, I am talking about the network facility vendors, the IPTV software vendors, and the encoding and the [set- top box] vendors who really develop the next-generation transport-processing equipment that is necessary to make this a viable service. That is coming together very well."

The Microsoft Question

One of the key questions facing Bellsouth as its gets nearer commercial launch is whether it will fully commit itself to launching IPTV on the Microsoft TV platform. "We are very aligned with them on the technical trials," Granger said. "We are using the current generation of their middleware and their digital rights management system to deliver IPTV services to all of our technical trial participants. They are a fundamental part of that trial initiative. As we move forward with the market trial, they will be the foundation service for that trial as well. In terms of an overall commitment, that is still an issue that is being addressed.

"As we get more comfortable with the technology and the economics around the business, we can move very rapidly forward with the signing of a commercial contract. But we’re not there yet."

Bellsouth is not waiting to see how the Microsoft platform works elsewhere and, in particular, at the reborn AT&T, Granger said.

It does not seem to bother Granger that rival AT&T will likely launch commercial IPTV services this year ahead of Bellsouth, as such work "has paved the way for others.

"I think they are on the right trajectory, and I applaud them at being the leaders in this space. They have driven a lot of the ecosystem, the chip manufacturers, the set-top box (STB) manufacturers and encoding industry as well as the network equipment manufacturers to really step up to the plate and address the needs of the North American telcos," he said. "We are riding the same curve as they are. They are just a little bit ahead on the curve."