SBC is setting an aggressive rollout schedule. Project Lightspeed will include both FTTN and FTTP deployments. Lab and field trials are currently underway and network construction is scheduled to begin in Q1 2005. Commercial launch of IPTV services is slated for Q4 2005. SBC is aiming to reach some 90% of its "high-value" residential customers by 2007 -- about 18 million households.
Some highlights of the announcment:
* the FTTN service will deliver 20 to 25 Mbps to each user with "Everything over IP." The FTTP service will deliver up to 39 Mbps to the customer.
* the IPTV service will deliver 4 high-quality TV streams, including HDTV and VOD.
* the network will provide full-featured IP voice capabilities. SBC will provide integration with its Cingular wireless service.
* the data service will provide 6 Mbps downstream and 1 Mbps upstream. SBC will also provide additional bandwidth-on-demand for additional fees.
* in existing neighborhoods, or "overbuild" situations, SBC plans to use an FTTN architecture, which on average takes fiber to within 3,000 feet of homes being served. the company expects that FTTN deployment can be completed in one-fourth the time required for an FTTP overbuild and with about one-fifth the capital investment. FTTP will be used in new housing developments, as well as in some multi-dwelling units.
* the 3 year deployment plan calls for 17 million FTTN homes and over 1 million FTTP homes.
* customers will be migrated to the network on their schedule.
* the three-year deployment costs for Project Lightspeed are expected to be approximately $4 billion, at the low end of SBC's previously announced range of $4 billion to $6 billion. In addition, there will be customer-activation capital expenditures of approximately $1 billion spread over 2006 and 2007. Because a significant portion of capital expenditures for Project Lightspeed will replace and refocus ongoing spending for its current network, SBC expects incremental capital investment for this project to be relatively small.
* the new network is expected to deliver substantial operating cost savings in installation, maintenance and customer care. FTTN is expected to provide approximately 70% of the network operational expense savings available from FTTP.
* SBC's video network architecture will include 2 national "Super Head Ends" where national content will be aggregated and VOD encoding will occur. SBC will build 40 Regional Video Hub Offices, which will provide video content storage, time-shifted TV and interactive applications. Local content aggregation will also occur in the Regional Video Hub Offices. The SBC video network architecture will also have a large number (about 140) Video Serving Offices for local distribution.
* expected deployment costs per subscriber are about $1,100 in new builds for FTTP. For overbuilds, the cost is $250 for FTTN and $1,350 for FTTP.
* per subscriber installation costs (including set-top-box, home gateway, in-home wiring and truck roll) are estimated $500-600 in 2005, declining to $300-450 by 2007. Within five years, SBC expects technology will have advanced sufficiently to provide a low-cost system-on-a-chip for the CPE functionality.
* in 2005, SBC expects that its total capital expenditures will be at the high end of its 2004 guidance range of $5 billion to $5.5 billion.
* the U.S. video market is expected to grow from $54 billion annually in 2004 to $63 billion in 2008.
* the U.S. broadband market is expected to grow from $16 billion in 2004 to $29 billion in 2008.
* SBC expects to be the second largest video provider within its fiber footprint within five years. This assumes a 20% market share within five years.
* regarding the home gateway, SBC expects to make its first vendor selections early next year. The in-home wiring is likely to leverage both existing twisted-pair (phone or Cat 5 wiring) or existing coax cabling. The gateways are also expected to have Wi-Fi capability.
