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In a conference call yesterday, SBC provided more detail on Project Lightspeed, its plan to bring fiber-to-the-node to half of the 36 million households in its customer base.

To start with, SBC representatives adjusted the anticipated cost of Project Lightspeed in 2004 to $4 billion, the low end of the range previously provided. In 2005, SBC will spend between $5 billion and $5.5 billion on FTTN, at the high end of its previous guidance. And whereas SBC previously boasted an FTTN rollout would take a fourth of the time and a fourth of the cost of a fiber-to-the-premises (FTTP) network, the company now says the rollout will incur a fifth of the cost of FTTP.

SBC expects to spend about $250 per household to deploy FTTN, whereas the company calculates new FTTP builds to cost $1100 per home passed and FTTP overbuilds to cost $1350 per home passed. Installation costs for FTTP and FTTN should fall between $500 and $600 per subscriber next year, SBC said; by 2007, they should fall to between $300 and $450, and by 2009, a "system on a chip" environment should include televisions with the necessary equipment already built in.

FTTN should yield $300 million in annual operational savings by the end of 2007, SBC said, but that figure could increase over time.

"We’re not counting on any one product, service or benefit to enable us to earn a solid return on the investment we’re making here," said SBC chief financial officer Rick Lindner. "We’re going to get a portion of our return on cost savings, a portion through retention of voice customers. We’re also looking at data growth and continued data penetration and the ability to sell higher bandwidth speeds. Finally we have opportunities in video."

"The value comes from multiple sources, and that serves to reduce the overall project risk," he said.

SBC’s FTTN will target what the company calls "high-value" and "medium value" customers. A fourth of SBC’s residential customers are high-value customers, who spend an average of $160 to $200 per month on SBC and "other providers," the company said. Project Lightspeed will reach 90% of them. Medium-value customers spend between $110 and $160 per month on average. Project Lightspeed will reach 70% of them. Between them, the two groups represent 75% of the total expenditures SBC receives from its residential customers.

SBC will apply FTTP to greenfield developments, multi-dwelling units and areas where the copper plant needs to be rehabilitated.

Project LightSpeed will deliver 20 Mb/s to 25 Mb/s to each home, which includes four streams of IP television (featuring high-definition television and video-on-demand [VOD]), IP voice and Internet access speeds of 6 Mb/s downstream and 1 Mb/s upstream. Down the road, said Lea Ann Champion, SBC’s senior executive vice president of IP operations and services, customers will have the option of bandwidth-on-demand adjustments.

While the company said its partnership with Echostar for video services will continue as an important part of its bundle, SBC also described its aggressive plans to deploy IP video starting in next year’s fourth quarter, with the goal of becoming the second largest video provider in its footprint in five years.

"We’re going to be loud in the marketplace when we enter," Champion said.

Two national "super headends" will aggregate SBC’s video content and encode VOD, while 40 hub offices will store VOD libraries and other content along with interactive applications. And 140 local offices will distribute content. Only content selected by the consumer will flow to the home, SBC said.

SBC should issue a request for proposals for home network gateway equipment later this month, the company said, and select vendors by February.

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