Ameritech to build ?ber-video system

March 1, 1995

Ameritech to build ?ber-video system

paul a. palumbo

The Federal Communications Commission`s approval of Ameritech`s section 214 video dial-tone application has cleared the way for the Chicago-based regional Bell operating company to begin building its in-region, fiber-rich dedicated digital video network.

During the first phase of its construction project, Ameritech plans to invest $350 million to install a standalone, bidirectional video network architecture that will pass 1.2 million homes covering 134 counties in its Midwestern operating region.

Ameritech forecasts that its building thrust will proceed simultaneously in the Chicago, Detroit, Indianapolis, Milwaukee, Cleveland and Columbus, OH, metropolitan areas.

In Chicago, Ameritech has budgeted approximately $158 million to pass 500,000 homes with hybrid fiber/coaxial-cable plant. In Cleveland and Columbus, the telephone company will spend $83 million to pass 260,000 homes. And in Detroit, Ameritech will pour in an additional $55 million in capital expenditures to reach another 232,000 homes. However, local community permits must still be secured, which might cause service roll-out delays in the short-term.

Bottlenecks could also arise if, as expected, the National Cable-TV Association continues to challenge the telephone company`s rights to own and transport network programming. In fact, the FCC has not yet granted regional Bell operating companies the right to program--and own--such content services as home shopping, games, entertainment and movies. On the other hand, several lower court rulings have rendered decisions favorable to the telephone companies.

Ameritech apparently won FCC approval because the company does not initially plan to use its video network for voice service; it also operates under a price cap policy in all its operating areas. Therefore, telephone rate payers are not being forced to cover the cost of the company`s unregulated video services.

Service flexibility

Ameritech`s long-term goal is to pass 6 million homes with a mix of fiber and coaxial network topography. The price tag to install the digital video plant is estimated to surpass $4.4 billion over 15 years, or an average of $293 million per year.

Cablelabs spokesperson Michael Schwartz, director of communications, says the telephone companies are "smart to use hybrid fiber/coaxial cable," noting that the technology has stabilized during the past several years and provides plenty of bandwidth to deliver a range of services.

The base configuration of a hybrid network is a local-loop platform that combines optical feeder transmission capabilities in analog and digital modes. The network employs coaxial cable as the final distribution link to homes.

To accommodate its transport platform, Ameritech will lay approximately 3128 route miles of fiber and 32,000 route miles of coaxial cable while passing the first 1.2 million households.

Network support equipment will be purchased from AT&T Network Cable Systems, Morristown, NJ, and ADC Telecommunications Inc., Minneapolis. AT&T will supply the asynchronous transfer mode switch and ADC will provide $50 million worth of multiplexing and optical transport hardware.

ADC is supplying Ameritech with the DV6000 digital, 16-channel, fiber-optic transmission system and Homeworx video system. Homeworx, an integrated loop access and transport system, enables service providers to send digital video signals to four nodes per transmitter. At the node, the signal is split and converted to ride on coaxial cables to 500-home serving areas.

The DV6000 digital transmission system operates at 2.4 gigabits per second and simultaneously transports 16 channels of broadband traffic. Interfaces for the DV6000 include one to support 45.75-megahert¥intermediate-frequency signals (found in many cable-TV headends) and one to support DS-1/DS-3 telephony signals. The system also includes a DV6010 module that furnishes bidirectional transport of eight video signals.

Digital Equipment Corp. is being considered as a supplier of video servers, and Scientific-Atlanta Inc. has been mentioned as a potential supplier of set-top boxes.

Ameritech spokesperson David Onak says the video network will overlay existing telephone plants and operate independently as an interactive video transport and delivery pipe.

This approach means the $2 billion that Ameritech is budgeting for its fiscal 1995 capital expenditures will not be used to offset the new video network`s core infrastructure costs.

Other regional Bell operating companies have opted for different approaches. For example, US West`s original video dial-tone architecture in its first FCC section 214 application featured parallel video and telephony paths with little integration other than the use of common structures (for example, cable sheaths, conduits or pedestals). But in its latest 214 application, which was approved by the FCC last year, US West decided to use a modified architecture that integrates digital video, voice and data signals.

Fiber to the node

Similar to the network architecture being installed by Tele-Communications Inc., Ameritech will run fiber-optic cable to distribution nodes, each of which can serve 500 customers. Coaxial cables will connect the neighborhood nodes to homes.

At the node, downstream optical video is received and converted into a 54- to 750-MH¥radio-frequency signal and distributed over the coaxial cables. In the upstream direction, the node receives return radio-frequency signals in the 5- to 42-MH¥range.

The noteworthy financial difference between Ameritech and TCI, however, is that Ameritech has a total market capitalization in excess of $29 billion, and can afford to allocate the $500 million per year in additional video-dial-tone network-build costs.

The immense video-dial-tone costs, coupled with an uncertainty over how much demand there really is for interactive services, are two reasons why TCI`s President John Malone attempted a merger with Bell Atlantic Corp. For the same reasons, Time-Warner Inc. sold a 25% stake to US West.

Although the telephone companies have installed an estimated 10 million miles of fiber in the United States during the past decade (based on an analysis by the San Jose, CA-based consultancy Microunity), little of fiber`s potential bandwidth has been exploited by the regional Bell operating companies and offered to consumers as services. In fact, the vast majority of fiber (73%) has been installed by local access providers.

Ameritech and the other regional Bell companies appear convinced their network designs are the interactive backbones of the rapidly advancing digital era. Hybrid networks will theoretically allow Ameritech to leverage content and transport into seamless services. What is more important, the networks are being installed today. q

Paul A. Palumbo is a freelance writer based in Monterey, CA.

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