Lightspeed's Slow Start

LIGHTSPEED'S SLOW START
[SOURCE: BusinessWeek]
With completion of the deal to purchase BellSouth, AT&T is on top of the telecom world. The company has virtually remade the old "Ma Bell" through the acquisition of 13 companies over the last decade -- spending $285 billion to do it. Now AT&T is gearing up for the next big telecom battle -- for the supremacy of the Internet. AT&T's weapon of choice is Project Lightspeed, a new Internet network that sends bits of data through copper and fiber-optic cables buried in the ground. The high-speed network and its Internet-protocol television (IPTV) technology are crucial to AT&T's plan to bundle phone service, Net connections, and TV. In theory, the system will let AT&T steal customers from rival phone giant Verizon Communications and cable companies such as Comcast and Time Warner. AT&T says it will pump $4.6 billion into building enough fiber-optic cable and supporting technology to reach 19 million homes by the end of 2008. But despite AT&T's stellar performance of late, the company faces serious questions about whether Project Lightspeed can deliver on its promise. Technology glitches hobbled the rollout last year. And though the TV service is up and running in fewer than a dozen markets with prices that undercut cable bills, a growing chorus of rivals, analysts, and engineers are skeptical that the network will offer enough bandwidth a few years from now to handle phone service, high-speed Internet, and multiple streams of high-definition TV. Cable operators have taken full advantage of AT&T's slow start, gleefully swiping phone customers with their own triple-play offerings. Having invested more than $110 billion in network upgrades over the last decade to provide Internet and digital video, cable companies only have to tweak their networks to offer phone service. As of the third quarter, the five largest U.S. cable operators have signed up about 6 million new Net-based phone customers. By contrast, AT&T and Verizon have swiped a combined 222,000 TV customers.
http://www.businessweek.com/magazine/content/07_07/b4021067.htm?chan=tec...