SBC Official Clarifies Stand on Franchises and Launches

An SBC official this week conceded technical issues could delay the carrier’s IPTV launch beyond the end of the year but indicated the only real stopper to its grand strategy would be a legal declaration that it must seek local cable franchises.

Jeff Weber, SBC vice president for product and strategy, for the first time articulated the depth of the carrier’s commitment to a no-franchise policy in an interview at SUPERCOMM. “We don’t believe we need a cable franchise, and we don’t intend to seek any,” he said.

He said the carrier believes its case that IPTV is an information service, not a cable service, is strong enough to withstand any legal challenges and is willing to take its chances in the courts rather than wait for the legal issues to sort themselves out in Congress or at the FCC.

Asked how SBC would react to a legal clarification that declared cable franchise rules under Title VI of the Telecom Act must be applied to IPTV, Weber replied, “If the rules are clarified to say we have to have a franchise it will put an absolute chilling effect on our plans.”

He added: “We’re off and running. We think we’re right legally and we’re right with regard to the policy we’re pursuing.”

At the same time, he said, the carrier would welcome clarification on the issue, including new rules that might transfer the local franchising obligation to some sort of state- or federal-level licensing process that would assure the public’s interests are served, even to the point of levying some kind of local service tax on providers to compensate cities in lieu of franchise fees.

While SBC supported just-defeated Texas legislation that would have provided for a state-wide franchise process to supercede local franchising, Weber made clear that support was offered in the spirit of achieving clarification on how everyone interprets the law, not because the carrier thought it needed new legal dispensation.

Weber asserted it was “disingenuous” of the cable industry, which led the battle against the Texas bill, to be campaigning for heavy regulation of IPTV after avidly supporting a “light touch” policy for voice over IP. “VoIP [deregulation] hurt us, but we supported it because we thought it was the right policy,” he said. “The cable guys don’t like the policy when it hurts them.”

As for the ultimate timing of the carrier’s IPTV rollouts, Weber acknowledged the set-top chip question “causes me to stay up at night.” As reported previously, set-top boxes with low-cost single-chip solutions running advanced compression may not be available for commercial deployments until 2006. Confirming this, Keith Wehmeyer, general manager for Thomson’s IP video business, said his firm has anticipated all along that it would not be able to deliver single-chip set-tops this year. “Late first quarter to mid 2006 is when we’ll see those boxes available,” he said.

Weber downplayed the prospects of any delay. “When I look out over the next two to three years, do I have a product to deliver that is right for the market, with the right capex, opex and ROI? That’s the question we have to answer to our satisfaction,” he said. “If [the starting date] is Jan. 15 or March 15, it doesn’t really matter as long as we’re delivering on our goals. And we’re confident we have the right product and the right strategy to do that.”

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