SBC Communications will use set-top boxes from both Motorola and Scientific-Atlanta for its new internet protocol television service, and says $4 billion is “not much money” for the communications company.

The contracts will give equal market opportunity to both set-top box vendors and continue through to the end of 2008. SBC provided a common set of specifications for the set-top boxes to both companies. Financial terms were not disclosed.

“This is a major technology milestone for IPTV,” said Lea Ann Champion of SBC. “A number of different technology components have come together to ensure the set-top boxes can efficiently support the features and functionality we plan to deliver to our customers.”

“We remain on track to give consumers more video entertainment choices through SBC U-verse TV,” said Champion. “The planned set-top boxes will offer many outstanding capabilities and we can add even more features in the future by upgrading the software in the boxes remotely.”

“SBC U-verse TV will change the viewing experience in fundamental ways through potential features like instant channel changing, tunerless multiple pictures-in-picture and whole-home DVR capabilities,” Champion continued. “In the end, it is about bringing a better experience to our customers through integration and the new features that an IP-based platform enables. The platform allows for future capabilities beyond what’s in the market today.”

The set-top boxes will operate the Microsoft TV IPTV Edition software. Unlike a conventional cable television system, they will not require tuners, allowing multiple video streams to be displayed. They will use either MPEG-4 or VC-1 compression, which will also enable storage of twice as much programming for a given hard disk size than a digital video recorder using MPEG-2.

The decision to award the set-top box contract to Motorola and Scientific-Atlanta, which have both been long-term suppliers to the cable television industry in the US, comes as little surprise. However, both companies will be required to embrace Microsoft middleware, rather than their own proprietary platforms.

“Motorola’s IP set-top platform, built on our decades of experience as the global leader in digital set-top technologies, will establish SBC U-verse TV as an industry-leading IP video service,” said Dan Moloney, of Motorola. “Our vision of seamless mobility begins with bringing high-quality, IP video into the connected home, and our role in the launch of SBC’s entertainment service represents yet another step forward in making that vision a reality.”

“The dynamics of interactive video systems and integrated services over an IP network will require set-tops with groundbreaking, innovative technology to deliver a wide range of advanced capabilities,” said Jim McDonald, chairman, president and chief executive of Scientific-Atlanta.

In March 2005, SBC awarded a contract to Scientific-Atlanta to provide internet protocol video network equipment for acquisition, processing, encoding and distribution of programming to subscribers.

SBC is planning an initial controlled market entry in late 2005 or early 2006, and expects to use Motorola set-top boxes initially, with Scientific-Atlanta boxes soon thereafter.

$4 billion is not much money
Randall Stephenson, chief operating officer for SBC, says that the $4 billion that his company plans to spend on its Project Lightspeed is “not much money”. The company turned over $10 billion in the last quarter.

“If I bet wrong, I didn’t break the future of this business,” he told USA Today. “For a company of this size, $4 billion is very little money. If I bet wrong, it’s not much money for us to burn.”

He conceded that SBC is running about four months late with the project, but remains characteristically bullish. “There’s not much I can do to quiet the doubters,” he said. “All I can do is execute.”