BellSouth said today that it has a small trial of IPTV operating today with a handful of employees and expects to test the service with about 1000 customers in Atlanta next year. However, the move should not be interpreted as an endorsement of the technology or as a precursor to any large-scale rollout.

Speaking at the company’s annual analyst meetings in New York, Mark Feidler, president and COO of the RBOC said the company has been impressed with early tests of both newer compression technology as well as VDSL2. At the same time, there are too many moving parts of the overall equation to give a deployment plan.

“We are working with the IPTV technology and taking steps to test it,” he said. “We still have questions about the economics and still have not made a final decision on IPTV.”

Feilder made the point of noting that BellSouth has been in the video business with about 40,000 customers. Additionally, it has sold 460,000 DirecTV plans as part of its BellSouth Answers bundled package.

Economics also led the company to refine its plan of expanding fiber into its access network. Previously, BellSouth had planned to have fiber within 5000 feet of more than 75% of its customers at an average cost of $225 per home by 2009. Today, Feidler said the company was readjusting that goal to 50% of its customers but at an average cost of $150 per home. The company continues to have a long-term goal of reaching that 75% level, he added.

“We had always planned on doing the easier work first,” Feidler said. “We just refined our plan.”

On the technology side, the company has done a few small lab tests of VDSL2 and continues to test ADSL2+ with a goal of having 60% of its customers capable of receiving 6 Mb/s Internet access by lat 2006.

“We’re very encouraged with the results we’re seeing with ADSL2+,” Feidler said. “With the rollout of ADSL2+ cards we’ll have the ability to offer 12 Mb/s across the majority of our marketplace.”