SBC's Project Lightspeed: Fiber Gets Closer to Your Home

The Baby Bells have spent the last five years getting their lunch eaten by cable companies. Cable internet outsells DSL by nearly two-to-one. Cable TV revenue dwarfs anything the phone companies can offer. And as soon as cable operators figure out telephone service over their networks (which they're working on), the Bells lose their last protected revenue stream.

SBC Communications just announced its counterpunch, and it's a big one. Project Lightspeed is a multi-billion-dollar plan to deploy fiber-optic cable deep into SBC's network — not all the way to your house, but close enough that DSL speeds can finally compete with cable on a level playing field. And SBC plans to use this faster network to launch a competing television service.

If you're an SBC customer (and SBC serves California, Texas, Illinois, and 10 other states through its various Ameritech, Pacific Bell, and SNET subsidiaries), this affects your future broadband options.

What FTTN Actually Means

Let's clear up the jargon first. There are several flavors of fiber deployment, and they're not equivalent:

• FTTH (Fiber to the Home): Fiber-optic cable runs all the way to your house. This is the gold standard — symmetric, gigabit-capable, future-proof. It's also extraordinarily expensive to deploy because it requires digging up streets and trenching to every home.
• FTTC (Fiber to the Curb): Fiber runs to a small cabinet on your street, with copper covering the last few hundred feet to your home. Less expensive than FTTH, still very fast.
• FTTN (Fiber to the Node): Fiber runs to a neighborhood cabinet — the "node" — typically serving a few hundred homes. From the node, existing copper telephone lines carry the signal the rest of the way (typically 3,000-5,000 feet).

SBC is going with FTTN, which is the cheapest fiber deployment option. The decision is pragmatic: full FTTH would cost SBC tens of billions of dollars and take a decade to deploy. FTTN can be rolled out faster and cheaper by leveraging the copper telephone wires already in the ground.

Why FTTN Makes DSL Faster

Standard DSL speeds depend heavily on the length of the copper wire between your home and the DSLAM (the equipment that handles the DSL signal). The longer the copper run, the more signal degradation, and the slower your connection. This is why DSL availability and speeds are so spotty — homes more than 18,000 feet from the central office often can't get DSL at all.

By placing DSLAMs in neighborhood nodes connected to fiber, SBC dramatically shortens the copper run for every customer. Instead of 12,000 feet of copper to the central office, you might have 3,000 feet to the local node. Shorter copper means less signal loss, which means much higher speeds.

Specifically, FTTN enables VDSL (Very-High-Bitrate DSL), which can deliver:

• 20-25 Mbps downstream at distances under 3,000 feet
• 10-15 Mbps downstream at distances of 3,000-5,000 feet
• 2-3 Mbps upstream at typical distances

For comparison, standard ADSL today tops out at about 6 Mbps downstream for most customers, and many SBC subscribers are stuck at 1.5-3 Mbps. Project Lightspeed could quintuple their broadband speeds.

The TV Play

Fast broadband isn't the only goal. SBC is openly planning to use Project Lightspeed to launch its own television service, competing directly with cable TV and satellite providers like DirecTV and Dish Network.

This is "IPTV" — television delivered over the IP network instead of as broadcast video. With 20+ Mbps of downstream bandwidth available, SBC can stream multiple high-quality video channels simultaneously to a customer's home. They're talking about offering hundreds of channels, video on demand, digital video recorder (DVR) functionality, and multi-room viewing.

If it works, it would let SBC offer a "triple play" of voice, internet, and television — exactly the bundle that the cable companies have been pitching. Phone customers wouldn't need to call up the cable company anymore. SBC could be the one-stop shop.

If it works. There are huge questions about whether IPTV over VDSL can match the picture quality and reliability of traditional cable TV. The cable companies aren't going to roll over.

The Cost and Timeline

SBC says Project Lightspeed will cost approximately $4-6 billion over the next five years. Initial deployments will target neighborhoods in Texas and California, with broader rollout planned in phases.

The company expects to pass roughly 18 million homes with the upgraded network by 2007. That's a lot of homes, but it's also less than half of SBC's total service area. Project Lightspeed is being deployed selectively, in areas where the company believes the investment will pay off — typically denser suburban markets where cable competition is fiercest.

Rural and lower-density areas in SBC's footprint won't get FTTN anytime soon. If you live in a small town served by SBC, your DSL speeds aren't going to magically improve in 2005.

What This Means for Consumers

For SBC customers in covered areas:

Faster DSL. When Project Lightspeed reaches your neighborhood, DSL speeds will jump dramatically. The current 1.5-3 Mbps tier could become 10-20 Mbps for similar pricing. This finally gives DSL a fighting chance against cable internet, which has been winning the speed war for years.

TV competition. Having a credible third option for television service (alongside cable and satellite) should put downward pressure on prices and force everyone to improve their offerings. Whether SBC's IPTV product is actually any good remains to be seen.

Bundled pricing. Expect SBC to push hard on triple-play bundles once Lightspeed launches. Phone, internet, and TV from one provider could undercut comparable cable bundles by $10-20/month — at least initially, before the prices creep back up.

For SBC customers in uncovered areas, the news is less encouraging. The digital divide between dense and sparse areas is going to widen. Suburban Dallas might get 20Mbps VDSL while rural East Texas remains stuck on 1.5Mbps ADSL or worse.

The Bigger Picture

Project Lightspeed reflects a strategic choice that will define the next decade of broadband in America. SBC is betting that good enough fiber, deployed cheaply, beats perfect fiber deployed slowly. Verizon, by contrast, is taking a different approach with its FiOS plans — running fiber all the way to the home, even though it costs much more.

Both approaches have merit. SBC's FTTN gets faster speeds to more homes more quickly. Verizon's FTTH delivers a future-proof network capable of speeds that even cable can't match. Five years from now, we'll know which strategy was the smart one. Or maybe both will look smart for different reasons.

For now, SBC customers should mark Project Lightspeed on their calendars as something to watch for — and to ask about when their cable bill goes up next year.