AT&T enters TV market

Company offers Internet-based TV service to a limited number of customers in Texas.

AT&T has quietly entered the TV market with the launch of its new Internet-based service in Texas.

The company, which has been developing its TV network based on Internet Protocol technology for more than a year, is offering the service to a limited number of customers in San Antonio, where the company is headquartered.

In this initial launch, AT&T is offering 200 channels, including HBO, MTV, ESPN, Discovery Channel and A&E, along with all three major broadcast networks. It is also offering several hours of on-demand programming.

AT&T, formerly SBC Communications , has built its network using IP technology, which will allow it to offer viewers much more interaction than typical TV viewing over today's cable networks, the company said. But in this initial release of the service, many of the features aren't available, admitted Denise Koenig, a spokeswoman for the company.

Still, Koenig said that AT&T's offering differs from the TV service already available from cable companies. For example, AT&T is offering fast channel changes, so that when viewers flip through channels on their TVs, there is no lag. This is a common problem with many digital cable TV systems.

The AT&T TV service also offers picture-in-picture channel surfing, so that viewers can continue watching their current show while getting a glimpse of what is available on other channels.

Koenig said the company plans to add more channels and features to the service when it is launched more widely in the middle of 2006. Some of these new features include high-definition programming and home digital video recording that will allow shows recorded on a digital video recorder in the living room to be shown on televisions throughout the house.

AT&T's launch comes as Verizon Communications, which offers TV service over its fiber-to-the-home network, rolls out service to seven more communities in Texas. The company introduced its Fios TV service in Keller, Texas , in September, and has been adding service in other states, like Virginia and Florida, ever since.

Verizon said Thursday that it expects to announce the introductin of service in parts of New York, California and Massachusetts later this month.

AT&T and Verizon have both spent billions of dollars to build or upgrade their networks to accommodate the bandwidth-intensive nature of TV service. But the companies have taken different approaches from a technology standpoint.

Verizon has chosen to build a fiber network that extends directly into people's homes , providing almost limitless bandwidth capacity. In its initial deployments, the company is also using existing broadcast TV technology to deliver service.

By contrast, AT&T is extending fiber only to nodes close to homes. And from the nodes, the carrier will use the existing copper infrastructure to deliver service. Because it has limited bandwidth to devote to its video service, AT&T is delivering it using IP technology.

Even though AT&T's approach costs about half that of what Verizon is spending, AT&T's network is riskier from a technology perspective because it uses new and evolving technology. But experts agree that eventually all TV networks will use IP to provide more interactive content, which means all eyes will be on AT&T as it expands its service later this year.

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