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Homechoice yet to hit play on network roll-out plans

On hold or not?

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Homechoice is trying to flog a "white label" version of its broadband TV service amid speculation that the national rollout of its network is on hold.

Last November Video Networks - the firm behind Homechoice - announced plans to roll out its IPTV network beyond London and Stevenage during 2006, increasing the network's coverage from 2.4m homes to more than 10m. It hired investment bank CSFB to help raise the cash to fund the expansion of its local loop unbundling (LLU) network.

But insiders have told The Register that the firm has found it difficult to raise the massive amount of investment needed to support such a major LLU expansion and the necessary marketing costs to attract new customers.

As a result of this and the increased competition in the broadband market, Homechoice has been speaking to industry players about selling its IPTV service on a wholesale basis, industry sources have confirmed.

A spokesman for Homechoice - which has been touted as a possible buy-out target by Sky and Google - said the company does not comment on "rumour and speculation". However, he said that plans were still in place for the nation-wide roll-out and that the firm was still working with CSFB. In an email toThe Register, CSFB "declined to comment" on whether it had raised the cash for Homechoice.

Whether Homechoice proceeds with its plan remains to be seen, However, it's clear that the telecoms industry is undergoing massive change as operators position themselves to become providers of multiple services such as TV, phone and broadband.

Indeed, the broadband market place is becoming increasingly crowded as a number of big-name firms line up to offer converged services. he merger of NTL and Telewest, which looks set to adopt the Virgin brand following the cableco's acquisition of the cellco, has created a giant TV and communications outfit that is better placed to challenge Sky.

For its part Sky, is also looking to build on its strong position following the £211m takeover of broadband ISP Easynet. Sky is planning to offer broadband access in the summer as it looks to expand its video on demand services.

Then there's incumbent telco BT, which has the largest number of DSL broadband users in the UK and is due to unveil its broadband TV service later this autumn.

And they're just the big boys. Chuck in Carphone Warehouse's ambitious plans to unbundle the local loop (LLU) with the offer of "free broadband forever", Wanadoo's rebranding to Orange and its plans to offer converged services, and it's clear that any operator looking to invest has a big job on its hands.

Matters are muddied still further when you include the practicalities of LLU. The process - which involves installing kit in BT exchanges to provide services direct to end users - is being hampered by technical and administrative issues. For example, in its latest report on LLU progress the Office of the Telecommunications Adjudicator (OTA) said that BT's delivery of backhaul - the lines that link unbundled exchanges to rival operators' networks - was "still unacceptable" and that "this has been an outstanding issue for some time".

Carphone has already warned it would consider legal action if BT failed to introduce on time a new system to make LLU easier. ®

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