SBC Voices Two Approaches to Video

By Drew Clark

The Bell companies' entry into the video marketplace has the potential to shake the cable, satellite and broadcasting businesses, and SBC Communications has been aggressive on the policy questions it raises.

But SBC has been saying different things about its Internet-protocol television (IPTV) to different audiences. As the company has suffered policy and public-relations setbacks, it has changed its message to suit its needs.

Company executives have offered different stances on: whether the company will provide a la carte, or channel-by-channel, programming; whether it must pay franchise fees to local governments; and how much it will build out its high-speed Internet service.

The company also is defining itself as a cable provider not under telecommunications law but under copyright law -- further tangling the policy issues surrounding Bell entry into the video marketplace.

Some of SBC's divergent messages have been delivered at almost exactly the same time but to different audiences. At the June SuperComm telecommunications conference in Chicago, a company executive dismissed the a la carte approach to a content-centered audience while a higher-level group president promoted that model to a group of policy officials.

On Monday, at a downstairs conference session devoted to IPTV and heavy with officials from the movie and television industries, Vice President Jeff Weber said SBC's technology would uniquely utilize digital video recorders and high-definition television.

"Which is all different than saying we are going to do something crazy like a la carte or something that is completely and totally disruptive in the marketplace," he said. "We can't, because our content providers won't allow it, and I'm not sure it would make sense even if they did."

Upstairs, at a policy session the same day, SBC Group President Forrest Miller told a different story. "We know that consumers want more choices in video," including different packages than are currently available from existing cable "tiers," he said. "We believe in a consumer-driven market."

Last year, SBC executives including CEO Ed Whitacre spoke favorably of offering consumers more choice in their television network selections, but they have not been as vocal on the subject this year. Companies that provide pay television to cable and satellite, like Walt Disney's ESPN and Time Warner's HBO, do not favor the a la carte approach.

Asked about the discrepancy, SBC spokesman Michael Balmoris said Wednesday that pricing and features for its bundles of video programming have yet to be determined. "Since it does use Internet protocol, there are many more functionalities," he said, adding that packages could encompass a la carte offerings.

It may be necessary to package programming differently in order to get consumers to switch from cable television to Bell television. "The first thing I would do if I were the phone company is to offer a family-friendly tier," said Robert Clasen, CEO of the Starz cable network. "If you have a family-friendly tier, you would have friends in Washington."

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