AT & T; Inc. says it is in talks with other Southern California cities, including more in Orange County, about offering TV service using the Internet and phone lines.
The effort could make the county a battleground for telecommunications and cable companies.
Last week, Anaheim Mayor Curt Pringle said the city is in talks to be a test site for San Antonio, Texas-based AT & T;’s “IPTV” services.
IPTV stands for Internet protocol TV and offers channels typically found on cable.
Nothing is final yet.
And only a couple of other cities have such services.
Verizon Communications Inc., the county’s other dominant local phone player, could do its own TV rollout here.
AT & T;, formerly SBC Communications Inc., provides phone service to most of OC with Verizon serving the coast.
Customers want telephone, Internet and TV from one source, said Jon Davies, a Verizon spokesman.
Despite likely regulatory headaches and costly upgrades, phone companies have moved ahead with their TV plans in the past few months.
The companies are scrambling to shore up waning business for their old phone lines, which are suffering from fresh competition.
Verizon said its number of “wholesale voice connections” dropped 12% in the third quarter from a year earlier.
“They know their wireline business will continue to lose business,” said Gary Schultz, an analyst with Multimedia Research Group Inc. in Sunnyvale.
Blame cable companies, including Time Warner Cable Inc., Cox Communications Inc. and Comcast Corp. They’ve stolen customers from the Baby Bells by offering phone services over the same wires that carry cable TV.
They offer digital quality with extra goodies, such as free long-distance.
Time Warner is set to take over the operations of bankrupt Adelphia Co-mmunications Corp., which serves much of North County. Cox serves South County.
The move will make Time Warner the largest cable provider in OC.
Time Warner plans to roll out phone services after the deal is done, a spokesman said.
The phone companies also are seeing users ditch landlines for wireless phones.
But that trend isn’t as worrisome: AT & T; has a majority stake in Atlanta-based Cingular Wireless LLC. Verizon has its own wireless arm.
The new TV offering goes right to the heart of cable’s core business.
Using wires already in homes, users can get hundreds of channels from the phone companies, plus movies on demand.
Combine that with high-speed Internet access and phone service, and AT & T; and Verizon can offer the same thing as any cable company.
Of course, phone companies have taken a run at TV before, with little luck.
First there were microwave transmissions, which used towers to send signals to homes. More recently, phone companies have allied with satellite TV providers.
The threat to cable isn’t big now.
It could take years for 10% of households to adopt IPTV, according to Multimedia Research Group.
“Cable’s biggest concern is still satellite, but telco TV, or IPTV, competition is becoming more important to them,” Schultz said.
The phone companies face regulatory and cost issues.
Because AT & T; and Verizon essentially want to offer the same thing cable companies provide, the phone companies must get franchise pacts with every city they target.
That means dozens of cities in OC alone, and thousands regionally.
Verizon is asking for legislation that would allow the phone companies to get approval for new rollouts at the state level.
Texas passed such a measure. Already a couple of Lone Star cities, including one outside Dallas, are getting the new services.
Verizon hopes California is next.
“We are actually working with legislators to introduce a bill,” Davies said.
Phone companies will have to open their checkbooks as well.
AT & T; is planning to spend about $4.5 billion upgrading for IPTV nationwide in the next few years, according to a spokesman.
The company has to replace copper wires with fiber from its central operating units to “nodes,” which must be within 3,000 to 5,000 feet of a customer’s home for the services to work.
Verizon’s plans are even more aggressive. It wants to extend fiber all the way to each home.
That would quadruple the bandwidth Verizon can offer customers compared to AT & T;’s plans.
So far, Huntington Beach and parts of Fountain Valley and Westminster have the upgrade.
OC’s wealth and affinity for tech makes it an attractive market.
“You’ll see both Verizon and AT & T; picking the so-called plumb markets,” analyst Schultz said.
