In this era of consolidation, Atlantic Broadband did something that is becoming increasingly difficult in the age of acquiring scale: It pulled off a major integration without a hitch.

Granted, Atlantic Broadband, one of two providers honored as Multichannel News 2018 Independent Operators of the Year, is a lot smaller than some of the other companies that have tried with some difficulty to assimilate recently purchased operators. But the accomplishment was still noteworthy.

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Atlantic purchased MetroCast Communications in January, a $1.4 billion deal that brought about 76,000 new video customers and 400 more employees to the cable operator. It was the first major deal the operator has made since it was purchased by Canadian cable operator Cogeco Communications.

It helped that the two companies had the same billing vendor, CSG Systems, which helped out with switching over billing and provisioning functions, according to Atlantic Broadband CEO Richard Shea.

“We prepared all fall,” Shea said. “We went from Jan. 4 to Jan. 5 without incident.”

Ensured a Smooth Transition

Atlantic transitioned the rest of the business in stages: new service bundles were available to former MetroCast customers within 30 days. Though the business began operating as Atlantic Broadband immediately after the deal closed, the company took a little more time with other aspects.

“We began offering new services, offered bundled products within the first 30 days,” Atlantic vice president of customer care Courtney Long said. “There were many synergies between the companies, whether that was like systems, from billing systems to provisioning systems. That really allowed us to expand quickly from a coverage standpoint. Most of the integration activity was completed within the first 30 days post-close.”

CSG Systems vice president of strategic business Darla Thompson, who worked with both Atlantic and MetroCast on the billing systems transition, said the long relationship the companies have had played a big role in smoothing out any switchover kinks.

“Anytime you combine companies and combine billing systems, the main goal is to make the transition as easy as possible for the service provider and for the end subscribers,” Thompson said. “For ABB’s acquisition of MetroCast, CSG used a proven process to streamline billing systems and in this case, we had two separate instances of our highly configurable billing solutions to combine. Configurability means that we can combine both billing systems into a single solution that creates a standard customer experience for all subscribers, faster, which makes the overall acquisition process easier for everyone.”

MetroCast has been a strong operator in and around New England for years. In addition to the 76,000 video additions, the deal brought about 120,000 high-speed internet and 37,000 telephone subscribers to the Atlantic Broadband fold at the time the transaction was announced. The MetroCast systems passed about 236,000 homes in New Hampshire, Maine, Pennsylvania, Maryland and Virginia.

“From a rebranding standpoint, we gave ourselves a little more time,” Long added. “We stretched out to May 1 to make sure we were properly outfitted, from trucks to uniforms and signage. The reality is, we operated as Atlantic Broadband on day one. We were able to integrate our call centers and from a customer experience standpoint, nothing got lost in the shuffle of that transition. We got to work very early on so we were ready to roll on Jan. 1.”

MetroCast and Atlantic have had a relationship for about three years — Atlantic purchased its much-smaller Connecticut operation in 2015 — so both companies were familiar with each other and their respective operations. The January deal increased Atlantic’s customer base by about 40% and added 400 workers to its employee rolls.

In the past six years, Cogeco, which has about 780,000 cable subscribers in Canada, had seen Atlantic as a vehicle to extend its U.S. presence.

While Atlantic will continue to look at opportunities as they come, Shea said, it will concentrate on its internal operations for the time being. As larger operators and content producers search for ways to increase their scale, Shea said Atlantic has a different philosophy.

“We like our position,” Shea said. “We’re scrappy, we’re the ninth-largest [U.S. cable operator], we operate well, we serve customers, and we offer the right products in our markets and we’re in the right markets with the network. But there are some megatrends out there that we’re all watching. We’re open to evolve; we’re well-managed to adjust to whatever comes.”

Deploying a Gateway to Bolster Video

To a smaller extent, Atlantic is already growing video and data subscribers the old fashioned way: through superior products and service. Atlantic added 270 video service subscribers in the fiscal second quarter ended Feb. 28, compared with a loss of 1,805 subscribers in the prior year. For the six-month period, video losses were nearly halved to 2,695 customers compared with 4,610 customers in the previous year. Shea gives most of the credit for the video customer improvements to the launch of its TiVo gateway service.

“We’re still experiencing the favor of what we did in Connecticut a year and a half ago,” Shea said. “TiVo was a big win and was actually our fastest deployment. Customers were looking for the next level of a video experience in a home gateway, and it had our fastest take rates ever. That gave us the confidence in why we think the rest of MetroCast will be equally well-received.”

Atlantic Broadband has been a TiVo affiliate since 2013 in its legacy systems. Atlantic vice president of programming Heather McCallion said the operator plans to roll out the gateway product to the rest of the former MetroCast systems soon, with completions expected by the late fall.

“As we move toward the gateway experience in the household, it is even more important,” McCallion said. “TiVo is the only platform that has the deepest search across all metadata of content that is coming in through apps and linear channels and on demand. We were one of the first to launch with Netflix, and we see major usage of Netflix among our subscribers. We continue to launch other apps as they become more relevant and requested. We want to make sure whatever content our customers are looking for is readily available and a few clicks away.”

TiVo has had a relationship with Atlantic Broadband since 2013; the operator was one of the first to partner with the DVR pioneer, TiVo vice president of sales for North America Jeff Glahn said. Atlantic’s success with the product has largely been due to its management commitment, he added.

“It was clear that they made it a priority to launch video,” Glahn said. “They talked about their commitment to growing the business, whether it was residential, and even going into new markets like MDUs. From the beginning Atlantic Broadband always looked and talked to their customers and would take that feedback to us.”

While distributors grapple with the need and desire for more scale, programmers appear to be the ones taking the most action at present. The Walt Disney Co. is in the middle of what could be a lengthy battle with Comcast over certain 21st Century Fox programming assets. Other programmers, fearful of losing clout with both over-the-top and traditional distributors, are expected to continue to contemplate adding more heft.

For smaller operators, that poses a particular dilemma, because they have been paying among the highest prices for programming for years. More powerful content creators can only mean one thing for small-to-midsized operators: higher programming prices.

“Scale is really important on the programming front,” McCallion said. “It’s not about subscriber count. It’s about where you operate, how much influence you have over advertising dollars in addition to subscriber fees. We are small in that respect.

“We buy a lot of our content through the NCTC, and some of it we buy on our own,” she added. “So anytime when these consolidations happen, especially when they happen without any guardrails or with few guardrails, it’s concerning. But we hold our own and we make the tough choices every single day. We have strategically removed content in the millions of dollars’ worth of value, with very little impact. This is not leveling off anytime soon, and it’s concerning.”

Those content assets that were removed were mostly regional sports networks that weren’t widely viewed, McCallion said.

Operators must learn to adapt to the changing landscape and how customers are getting video, Shea said. “You’re seeing a customization of video,” Shea said. “We’re much more concerned about, are we getting the right customers the right content? So, the mass delivery stuff, which costs a lot of money, is something we can’t do. We’re kind of edging very, very gradually to get customers what they want, and it’s not going to be 300 channels.”

That strategy fits in with the overall push to focus on broadband services throughout the industry. But it has been small and midsized cable companies that have led the charge toward broadband-centric operations.

For the two largest U.S. cable operators — Comcast and Charter Communications — broadband customers have outnumbered video subscribers since 2015 and 2013, respectively. Smaller operators like Atlantic, co-Independent Operator of the Year Vyve Broadband and others are seeing new life in the high-speed data business.

Small operators aren’t abandoning video service, though. They’re just finding a better way to deliver it.

Serving the Right Products

Through services like TiVo and others, companies like Atlantic are marrying subscription video-on-demand platforms like Netflix and Hulu with traditional pay TV offerings and lightning-fast broadband. It is a mix that, at least for the time being, appears to be working.

“We are still in the video business,” McCallion said. “There is content that people can only get through us in the full living-room experience. We continue to wholesale that and offer that through our lineup. We make tough choices every day from a content perspective.

“Our willingness to pay the same premiums has gone down,” she continued. “Quite frankly, the content is readily available, and if we can get a gateway experience with somebody in the home and still keep that customer happy consuming our broadband service and our video service to some extent, that’s a happy customer and that works for us.”

Atlantic has also undergone a major push to bring 1-Gigabit per second speeds throughout its footprint. It plans to have about 50% of its footprint covered this year, with the rest of its markets offering the service in 2019.

The 1-Gbps service is the leading product, but Long said Atlantic has also introduced faster speed profiles in between and let customers try out a 1-Gbps service to determine if it is right for them.

“It’s really hard to translate in a marketing piece the difference between 250 [Megabits per second] and 1G,” Long said. “We are working through our product and marketing efforts to make sure that our customers fully understand what’s available and that they’re trying it out and using it.”

Demand for higher and higher speeds is strong, even in rural America, Shea added.

“It is a No. 1 need,” Shea said of fast, reliable broadband service. “We operate in Tier-2 markets from Maine to Florida, and our customers have no different needs for broadband than anybody else; sometimes, in fact, even more. Our outlook is that people want three things out of life: They want power, they want water and they want broadband. It’s our job, starting with WiFi and the right products, to get there.”

When they set out on their own in 2012 after more than two decades working for one of the most revered names in the cable industry — the late Bill Bresnan, founder of Bresnan Communications — Jeff DeMond and Andrew Kober had a clear vision of where their respective futures lay. Broadband was the key.

But not just any broadband. DeMond, CEO of Vyve Broadband, one of this year’s Independent Operators of the Year, said he and Kober, Vyve’s chief financial officer, specifically looked for rural markets, territories that were essentially being shunned by larger, more established operators.

Related | Atlantic Broadband:  Small Op That Pulled Off a Big Task

“We still thought upgraded broadband networks were the best delivery platform for all the advanced services that were known and seemed to be coming, and that rural markets were still attractive and obviously still are underserved,” DeMond said. “They have lower competition and, important to our investment, they had slower broadband adoption. That gave us a window to say, ‘Where could we go to do what we believe we do well, based on the experience of our core team and all that have joined since?’ We looked around for that kind of opportunity and we ended up finding two companies.”

Saw Opportunity From Trouble

Those two companies were Allegiance Communications, a small operator with systems in Oklahoma, Texas, Arkansas, Kansas and Missouri; and James Cable, with operations in Oklahoma, Texas, Louisiana, Tennessee, Georgia and Wyoming. Both companies had experienced some trouble. James had gone through a 2003 bankruptcy and several failed buyout attempts, and Allegiance was hampered by outdated plant.

“We looked at [the acquisitions] and said it’s the perfect opportunity for us to create a platform,” DeMond said. “And we think we have enough time to build a very advanced network throughout that footprint.”

While both companies were “capital-starved,” Kober said, Vyve (then called BCI Broadband) replaced set-top boxes and CMTS equipment; swapped old DOCISIS 1.0 and DOCSIS 2.0 units with DOCSIS 3.0 gear; and started construction on a 550-mile fiber ring network linking the systems and the surrounding communities.

Only about 30% of the former James Cable systems were 750 Megahertz or better when Vyve first closed the deal, Kober said. And though sinking large amounts of capital into a rural rebuild was something other companies looked at but found too costly to justify, DeMond and his team had been down this road before.

“In 30 or 40 years of doing this, we figured out what the hard parts are and we try to design solutions that are cost-effective to address those,” DeMond said. “These two companies had been hurting for a while. They were undercapitalized; their customer bases were underserved. It was a heavily, heavily video-centric customer base. … We have converted that entire customer base into a very heavily data-centric customer base of much higher credit quality. The whole business, including its customers and the network, has been turned upside down.”

The network rebuild was completed for the most part in 2016 and required about $150 million in additional capital investment. But a faster, higher-capacity backbone meant the company could provide faster internet speeds and stack more services on a thicker network. It also opened the door to a commercial services business that neither James nor Allegiance could offer before.

“That was our objective from the beginning, to position ourselves with data-hungry customers,” DeMond said. “Today, if you worry about losing video customers in the traditional sense, what you’re gaining are data customers that watch YouTube or video over the top. That’s the customer base we have today. We’re happy with that.”

That data-hungry base is growing. Vyve doesn’t release specific customer data, but it says it passed 300,000 homes and has about 70,000 total customers. Broadband subscribers outnumber video customers by a 2-to-1 margin.

In some of the markets where Vyve launched higher-speed data service first, it has seen an increase in service penetration of greater than 10 points, Kober said. Recently, in other markets where high-speed data is launched initially, DeMond said it is typical to see greater than 20% data penetration within a year.

Plus, with overall data penetration across the footprint at less than 30%, there is ample runway for growth.

Getting the Message Out

With the nuts and bolts of building the network finished, the emphasis now is on getting the message out. Vyve has evolved from “a construction company to a sales and marketing operation,” DeMond said, doubling its sales staff in the past year.

“It shows that we’re out there trying to optimize and monetize the investment that we’ve made,” he said, adding that in its 550-mile fiber ring, it currently only uses a fraction of the fiber lines available in the network.

“We only use four fibers out of a minimum of 48 around the ring, and it goes as high as double that or more,” DeMond said. “We’ve got tremendous capacity to sell and to use to extend service to customers, commercial and residential.”

Commercial services continue to be an untapped but growing opportunity, DeMond said. Such business currently represents 12% of total revenue and is growing at double-digit rates year-over-year on the back of Vyve’s 550-mile fiber network.

Vyve was recently certified by Verizon as a preferred provider, building a small-cell backhaul network for the phone company in Kansas, and it’s doing similar work for T-Mobile.

“We’re providing carrier-level products and services that none of the predecessors have thought about, let alone committed and invested enough to do it,” DeMond said.

Vyve is offering commercial service to mostly small and medium-sized customers — there are a large number of home-based businesses in its territories — but is also putting its foot forward with larger institutions like hospitals, government and education.

“We try to make sure we have every hospital, significant school system or college that we can legitimately serve well; we partner with them to make that happen,” DeMond said, adding that Vyve has had growing success transitioning from being the backup network for commercial customers to becoming the primary provider.

“It’s constant relationship-building and sales and marketing effort,” he said.

Broadband, with its higher margins, has been the focus for several operators for years. Beginning in 2015, large and small operators alike watched high-speed data customers outpace video subscribers, with broadband taking the lead for good in most operations in the following year.

Many smaller cable operators have focused on broadband for a simple reason: It costs less, Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said.

“They simply don’t have the scale, even when getting programming through the NCTC [National Cable Television Cooperative], to make a return offering video,” Wlodarczak said of small operators. “Given that content players are getting bigger through M&A and a big part of their ‘synergies’ is using their increased size to push through even greater price increases, it is inevitable the smaller players are going to focus mainly on data.”

Smaller operators like Vyve have led the way for broadband-only service. And as streaming video quickly gains steam — Netflix has 57 million domestic customers and Hulu claims 20 million — the need for speed is growing exponentially.

With the new fiber network, speeds are rising rapidly. Kober noted that when the James Cable and Allegiance systems were first bought, they offered speeds barely faster than DSL.

Earlier this month, Vyve announced that 300 Megabits-per-second service was available in 90% of its footprint, with plans to expand 1 Gigabit-per-second service across 70% of its service area.

Vyve hasn’t given up on video, which remains an important part of the business. But it has figured out different ways to package and present video that are more appealing to a growing number of younger customers.

For example, Vyve in the first quarter launched XStream TV, a hybrid video and data offering that allows customers to watch some traditional networks as well as streaming staples like Netflix, Hulu and YouTube. Powered by TiVo, the product already is having an impact.

Like Comcast's X1

The XStream TV service is a lot like Comcast’s X1, DeMond said. It has a state-of-the-art user interface (from TiVo), a universal search function and a voice remote due in early fall. That functionality, and its focus on streaming video, also means that customers need higher data speeds to accommodate it.

“It is really focusing the customer on taking 50- to 105-Mbps data service from us, because that’s who that customer is,” DeMond said. “They get this XStream box, and they enjoy that video experience, but what we’ve done is positioned, now almost more than any other speed, that 105-Mbps customer.”

That customer is one who can’t be served by the competition. According to Vyve, most of its rivals — AT&T, CenturyLink and Windstream — mainly offer digital subscriber line-like speeds (of up to 8 Mbps) in Vyve’s service areas.

Providing robust and reliable data streams are a key part of the customer equation, but Vyve believes what sets a small operator apart is its commitment to the local community. Whether it’s bringing the C-SPAN bus to local schools, honoring teachers in their respective communities each month or just passing out snow cones at a local splash park on a hot day, Vyve sees community involvement and commitment as an integral part of its success.

“The C-SPAN Cities Tour and C-SPAN’s Bus recently spent time in Oklahoma profiling the history and literary life of Shawnee and visited schools, universities and city hall,” C-SPAN’s Peter Kiley said. “Vyve’s dedication to serving small towns, particularly their support of local educators, is a testament to the good things cable offers in communities nationwide.”

Senior vice president of marketing and customer experience Diane Quennoz said that is particularly essential in smaller communities.

Vyve events can become a big deal in the towns it serves. Quennoz highlighted one such event: its annual Christmas Card Art contest, a partnership with Hallmark Business Connections in which preschool to junior high school students compete to have their art selected for Vyve’s official Christmas card, which is distributed to 200,000 homes. The party to announce the winner regularly gets hundreds of attendees.

“If you do this in New York City, it gets a ‘What, Who?’ [With] this, the mayor, the city, the council, the county, everyone comes out,” Quennoz said. “There are probably 700 people that come out to celebrate that winner and that town.”

The company regularly conducts other weekly events, Quennoz added, like “Friday Night Vyve Player of the Week,” where the company highlights an outstanding high school athlete; “Random Acts of Vyveness,” where employees do something nice for the community, like passing out doughnuts at city hall, buying lunches or handing out free snow cones at the local splash park; and “Guns and Hoses,” where local chiefs of police and fire chiefs speak to the community.

“It’s not stiff,” DeMond said. “It’s not some corporate suit coming in and giving them a big check. We do the big check thing for photo ops, more for their benefit than ours. It’s local people they see and talk to all the time.”

Sometimes those local communities can step up in other ways. DeMond remembered one local community that wanted Vyve’s Broadband service but was located too far outside its network for the company to offer it economically.

“They said, ‘Let’s not stop talking about it, let’s figure out what the community can contribute to the construction costs to get over the hurdle of getting here, because we want your service,’ ” DeMond said. “Through some extended negotiations around that to get all the constituencies on their side, to get it approved, it was successful. We did it and we’re building that market now.

“The short answer is we work harder,” De- Mond added. “It’s easy to not do things. It’s sometimes very hard to do things. But you can put your shoulder into it and work with smart people, of which there are many in these rural communities. They’ve got extremely vibrant, excited economic development people. They’re just trying to make it work. They’ve been living on 8-Meg DSL, and it’s killing them, and they’ve got to solve the problem. And they are motivated to do so.”

Space may be the final frontier for sci-fi fans, but for cable operators, the last frontier lies square in the home territory of Anchorage-based General Communication Inc.

No marathon of Ice Road Truckers or Alaskan Bush People can prepare even grizzled cable veterans for Alaska’s harsh climate and the rugged terrain of the cold and, some say, lonely state.

All this came into focus when GCI undertook its most ambitious construction project to date — a 10-year sojourn to bring a hybrid terrestrial fiber and microwave based high-speed data network to all Alaskans, dubbed TERRA for Terrestrial for Every Rural Region in Alaska.

The project was spurred by $88 million in funding from the federal broadband stimulus program in 2010 (consisting of a $44 million grant and a $44 million loan). It subsequently grew to a $300 million undertaking, connecting rural customers to health care, educational and governmental services that would have literally taken days to access prior to the construction of the network.

Also: GCI Starts Down Video’s IP Pathway

Alaska is the least-dense state in the union: It has about 1.2 people per square mile, compared to 1,200 for the densest state, New Jersey. While that could present economic challenges, senior vice president of GCI Business Martin Cary, who was in charge of building the network, said that sense of sparseness could be a little misleading. Though small, he said, Alaskan villages are very highly concentrated.

The Long Middle Mile

“The great distances are between them,” Cary said. “Instead of the country road, where you have a house every four or five miles, these are villages of 100 to 1,000 people and the middle mile is the challenge.”

The biggest boost comes from the anchor tenants in each area, he said, hospitals and schools that are supported by the federal government’s Universal Service Fund to help pay the bills.

Even with that support, though, the actual construction of the network presents difficulties that the average cable operator can’t fathom.

For example, Cary said that most telecom networks follow the area’s highway system. Alaska has few highways, meaning that networks have to span huge tracts of open land. In addition, a large portion of the state consists of land owned and run by the U.S. Bureau of Land Management, which doesn’t give out permits to dig fiber trenches easily or often. In areas where telecom providers can dig, they have to be sensitive to native wildlife. And all of this must occur during an incredibly short building season. Alaskan summers are notoriously short, and only get shorter the further north you go.

“Everything in Alaska happens in the summer, including birds nesting,” Cary said. “Our permits are very much structured around the breeding habits of all of these animals. We can’t fly helicopters for certain months; we can’t disturb caribou. It really becomes a huge logistical challenge.”

Once those hurdles are cleared comes the challenge of working in the harshest climate in the country.

Braving the Elements

As part of the TERRA construction, workers had to install 22 mountaintop repeaters — essentially towers in remote areas that pass the microwave signal from one point to the next. One of the largest, the Harvey Repeater, sits atop a 2,400-foot mountain that is 400 miles from the nearest paved road. In the winter, they braved temperatures that could drop as low as minus-30 and minus-40 degrees.

GCI workers and contractors laid fiber across Lake Iliamna, the largest lake in Alaska, crossing inlets with 39-foot tides. “It’s like a river that runs both ways,” Cary said.

They hoisted 20,000-pound buildings up mountains using helicopters and sky cranes; they dealt with bears — brown bears apparently see fiber installations as play toys — and braved avalanches and long, cold nights. GCI, because of the harshness of the terrain and the unpredictability of the weather, builds camps at the job sites for workers, who usually stay for long stretches of time. But even the short jobs require that food, water and shelter be provided in the case of a freak storm or other unplanned event.

“You can easily go to a mountain top and the weather changes and have people stuck there for seven days,” Cary said.

GCI director of corporate communications Heather Handyside put it a little more bluntly.

“Have you ever interviewed anyone else who said, ‘One of our goals is to ensure our technicians survive?’ ” she asked.

It also means that GCI has to think of a lot of things other operators wouldn’t have to.

Cary pointed to part of the TERRA project that involved stringing fiber in a steep valley that was prone to avalanches. GCI came up with the idea of designing an aerial fiber run where the wires were loosely strung on poles that were placed far apart. In the case of an avalanche, the poles would snap but the fiber would flow with the snow. The idea was that there was enough slack in the cable to ensure its survival.

Said Cary, “So far, we’ve made it six years.”

Animals can be an obstacle, too. One day, a group of splicers came upon a vault near Prudhoe Bay that had been broken into by a large brown bear.

“He [the bear] had basically pulled the cable out of the vault and was running around playing with it,” Cary said. “We’ve had bears chew on cables in the southeast of Alaska. You just can’t leave anything exposed.”

But the benefits of TERRA far outweigh the hazards of building it.

Networks Save Lives

For some Alaskans, it means the difference between life and death. Cary noted that with the TERRA Network, a rural hospital can transfer an X-ray electronically to a hospital in Anchorage and receive a diagnosis in minutes. Before TERRA, that X-ray had to be loaded on a plane and flown to the bigger hospital, which could take days.

TERRA has also transformed the way rural schools teach students. In one remote community, the local high school only has 10 students with a handful of teachers teaching all subjects for all grades. TERRA allows them to offer courses via distance learning that may not have been possible.

While TERRA is bringing rural Alaska into the Internet Age, GCI has been offering high-speed data and business services to other, more-populated parts of the U.S. for decades. Business services, which make up about 55% of GCI’s total business, have expanded to the Pacific Northwest: GCI purchased a network engineering company, Northpoint Consulting, earlier this year and opened its Pacific Northwest headquarters in Seattle last summer. Today, GCI handles communications for the National Football League’s Seattle Seahawks and for Alaska Air. ▪️

Independent Operator of the Year:Northern Exposure|Cable’s Last Frontier

Though legacy QAM-based video platforms will stick around for years to come, cable operators big and small are already migrating to live, on-demand and even cloud DVR services delivered over a more flexible internet-protocol path.

GCI, honored as the 2017 Independent Operator of the Year by Multichannel News, has already begun to blaze that trail in the wilds of Alaska, starting with video-on-demand.

“I don’t think there’s anybody in the operator space that I’m aware of that … doesn’t believe that IP is the future for video,” Duncan Whitney, vice president of product management at GCI, said.

It’s a tricky proposition: GCI will have to push ahead to new platforms while supporting a legacy QAM video architecture that has significant headend, advertising and data management implications.

“You can’t flash-cut from legacy QAM video over to IP for every customer overnight. We have to be able to maintain both products,” Whitney said. “The challenge for us smaller operators is to trying to meet the modern customer need while not stranding our legacy customers who don’t want change. If you force change too quickly, you’re going to upset one side while you’re attempting to please the other.”

Adjusting to Changing Habits
But he also acknowledged that consumer viewing habits are changing as subscribers become more accustomed to options that allow on-demand access on a multitude of mobile and TV-connected devices.

To that end, GCI recently agreed to deploy Evolution Digital’s managed eVUE-TV IPTV platform in “select service regions,” including all markets serviced by GCI where VOD is available.

GCI’s eVUE-TV deployment is expected to begin this fall, and follows one announced last November in which GCI agreed to deploy the eBOX, a hybrid IP/QAM device from Evolution Digital that integrates linear TV, over-the-top apps, pay-per-view service and VOD on a common platform tied together with a TiVo-powered interface.

GCI, which ended Q1 with 106,100 basic video subs, will later expand that IP VOD offering to its more widely deployed base of IP-capable DVRs that also run the TiVo interface/platform.

GCI already offers a robust VOD service using QAM transport, but the move to IP-based VOD is “considered a first step in their [IP video] transition plans,” Marc Cohen, executive vice president of sales at Evolution Digital, said.

GCI’s QAM VOD platform will likely remain in place for as long as there are QAM-only boxes still in the field. But the transition will eventually have GCI move all of its VOD under the IP umbrella and to take more advantage of the capacity that’s fueling its DOCSIS network. That transition will also enable GCI to move on-demand services to a more advanced interface that offers the kind of look and feel and navigational features that consumers are getting with popular OTT services such as Netflix.

As IP video transitions go, VOD offers a great place to start, as it can be offered on a fresh interface and on both DVR and non-DVR boxes with IP capabilities, Chris Egan, Evolution Digital’s CEO and co-founder, said. It also opens new doors to dynamic ad insertion.

And GCI’s rollout of eVUE-TV eventually will extend beyond the set-top box. By leveraging IP transport, GCI will also lay the foundation for future offerings that, for example, will allow it to extend its VOD service to an array of other types of devices, including smartphones, tablets and PCs.

“We’re setting up ourselves architecturally to be able support customers so they can consume the content on whatever device they want as we work out the rights issues,” Whitney said.

eVUE-TV also provides the basis for future phases that could include linear channels as well as network DVR implementations.

On the linear side, GCI could create an IP-powered avenue for TV on authenticated mobile apps or to set-top boxes. And with proper rights secured, the underpinning technology could also become the foundation for operators to develop and deploy slimmed-down, OTT-based video packages that could be tailored to cord-cutters or to broadband customers who have yet to add pay TV to their bundle, while also employing a bring-your-own-device model.

OTT in the Content Mix
At the moment, GCI is embracing different sources of OTT content, starting with its rollout of the TiVo platform, which provides unified access to GCI’s video service alongside services such as Hulu, Netflix and YouTube.

Focusing on cord-cutters and cord-nevers, GCI has also teamed up with Sling TV on a unique promotion whereby GCI’s broadband customers can get a 30-day free trial of Dish Network’s OTT TV service (Sling TV regularly offers a seven-day free trial).

“We want to enable customers to have good experiences and get what they want, whether it’s our video product or somebody else’s,” Whitney said.

That promotion, which is being marketed online and featured at GCI stores that also offer Roku players and Apple TV devices that can run Sling TV, is “part of a recognition that there’s a multitude of ways customers may want to have a video experience,” he said. “We’re trying to modernize the video product offering so that it’s not a one-size-fits-all offering for the differing types of customers that exist today.”

GCI has also been speeding up the pipes that can deliver that OTT content as it now offers service at 1 Gbps across the bulk of its fiber and HFC plant.

As cable operators of all shapes and sizes descend on the Walt Disney World resort in Orlando, Fla., this week for The Independent Show, the pay TV business is at a crossroads. Over-the-top services, changing viewing habits and the continued emergence of broadband as the dominant product are forcing small and large operators alike to rethink the pay TV business.

That transformation is occurring in the organizations that represent these businesses, too. The National Cable Television Cooperative, created decades ago as a buying group, is no different. While negotiating programming contracts will continue to be a big part of its mission, the NCTC is gradually shifting toward helping smaller operators cope with the ever-changing market.

Rich Fickle, president and CEO of the NCTC, spoke with Multichannel News senior finance editor Mike Farrell about those topics and others recently. An edited transcript follows.

MCN Independent Operators of the Year:WideOpenWest Covers Its Bases | Buckeye: Building on Broadband

MCN:What should NCTC members expect to get out of the Independent Show?

Rich Fickle: We always find that members get a lot out of hearing from other members. We started about a year ago diversifying some of the content, and we’ll have a good breakout session on company culture and customer service. But probably the bigger one is the whole IP-video space. You’ll see several exhibitors in that category, both platforms and OTT providers. That seems to be a key for the continuation of video.

If we can find ways and help these guys make that migration happen, to go from analog and [quadrature amplitude modulation] to IP, I think that’s really important. I think, we’re seeing some of the larger guys doing network DVR and more extensive on-demand offerings. The good news is that we’re finding ways to do that, too.

It’s probably unlikely programmers are going to stop raising rates, so they have got to embrace a different model. And our hope at the NCTC is that we can be a helping hand in providing options for them [small operators] in that new model.

The existing programming model is probably going south. [Operators] have to find other ways to keep customers happy with video.

MCN:What’s the alternative? OTT?

RF: OTT means a lot of different things to different people. One flavor of OTT is current programmers like premium-service providers like HBO. In an OTT world, maybe it’s the same programming relationship with the operator, but the OTT app for HBO offers well over 2,000 titles, compared to what you can get on VOD or a linear stream. The other application is niche content. Some of these guys are pretty well suited to fit some niches in an IP world that doesn’t take up full-time bandwidth.

Then, you’ve got bundled services like Sling TV and Sony [PlayStation] Vue. Hulu is trying to emerge as a vehicle for some of the large content groups. Some of those make sense to investigate. We’ll embrace other content sources and other forms of the same content but with a better experience for the consumer.

Related >Big Government vs. Smaller Ops: A Q&A With the ACA's Matt Polka

MCN:Is this like a build-your-own-skinny bundle offering with services like Hulu and Netflix, because the cable networks won’t let you do it?

RF: You’re kind of removing a barrier by adopting IP, removing the barrier of having the shelf space dominated by eight companies. Now, you can allow the consumer to have more choices. That’s what the business has always been about.

It’s hard to know who’s going to win the OTT contests, especially those that are recreating packages. But if you set it up right, you can let the market decide that. The cable operator takes on a role of providing the best choices he possibly can, the very best broadband network, the very best in-home WiFi experience and maybe an IP video set-top or apps. It could be an app business one day.

MCN:Apps are gaining traction with distributors across the board. I’ve heard people say one day that is how all services will be delivered — through apps, not set-tops.

RF: That’s right. You’ll hear at our show about a couple of members who will move that way next year. I think it’s probably too early for a broad number of companies to do that. But as usual, we have a couple of companies that are very entrepreneurial and they are going to move toward app-driven video delivery on Roku devices or Amazon Fire, and they’ll probably have that up and running this year.

MCN:Can you say who they are?

RF: I can’t. They want to make an announcement at the show. I don’t want to steal their thunder.

MCN:You recently launched VU-IT with Evolution, a new platform that includes a solution for back-office integration, OTT apps and enables IP-based linear and OTT services.

RF: There are two pieces to it. The initial impetus was to try to find a way to lower the cost structure of deploying TiVo for small and midsized operators. We’re also taking a more active role in some of the apps that show up on the TiVo box on behalf of those companies. There is a healthy pipeline of 15 or so companies either in the launch process or close to making that commitment and some already up and running.

In the process of doing that, we had to build out a back-office platform, we call it Bravo. We finished that and turned it up about a month ago. We’re finding that maybe there are some other opportunities for it. It is a way to facilitate back-office integration for mobile devices, OTT partnerships or some other things we’re working on. You’ll hear more about Bravo in the future.

MCN:That seems like a good example of how NCTC has evolved, you’re not just negotiating programming deals anymore.

RF: Our board told us about three or four months ago that the major programming renewals are still important, but maybe as important if not more important is finding ways to help members with these types of services, so we can create virtual scale if needed and bring the right partners or expertise to the table and help these guys move fast.

MCN:How are you going to do that?

RF: We have a list of about 10 projects. Some are a little further along than others. We have an IP VOD project that we are about to finish phase one on [with Evolution and its iVelocity unit]. There will be a couple of other phases to it and that will marry up with TiVo or a couple of other platforms. The idea is to provide a deep library of on-demand content with a very low cost structure and a good user experience. It’s all IP so it takes away the need for local markets to invest in VOD servers and that whole infrastructure. We treat it just like an OTT app so it can sit on mobile devices as well as set-tops.

That’s probably the most obvious. There are a halfdozen others, ranging from advanced advertising [to] network DVR.

The cable industry’s regulatory environment has heated up in the past year, with potential new set-top-box rules and the Federal Communications Commission’s decision to back off on retransmission-consent reform just the latest in a long list of cable-centric rules that could place undue burdens on operators large and small. While limited resources would make it hard for small, independent operators to fight lengthy regulatory battles, they have the American Cable Association to do it for them.

As The Independent Show in Orlando, Fla., drew near, ACA president and CEO Matt Polka spoke with Multichannel News senior finance editor Mike Farrell about how small operators can deal with the changing climate. An edited transcript follows.

MCN Independent Operators of the Year:WideOpenWest Covers Its Bases | Buckeye: Building on Broadband

MCN:What are the biggest issues for small operators going into the show?

Matt Polka: The theme of the show is, “Refocus and Reconnect.” I think that is appropriate in many ways. I would also say recommit. We’ve never had a year like this where we are under such enormous regulatory strain, where the types of important rulemakings that are moving at the commission, each on their own, could have a significant impact on our members’ ability to deploy more broadband service. We’re telling our members to refocus, reconnect and recommit, so you can be strong in the face of this storm.

As part of that recommitting, we’re saying, “Recommit with us at ACA so your voice can increasingly be heard.” We’re also telling our members to look at their customer service as a key differentiator that will help them maintain a strong positon and will also keep them from scrutiny.

A couple of weeks ago, Sen. [Claire] McCaskill (DMo.) and Sen. [Rob] Portman (R-Ohio) had a hearing regarding customer service for primarily the larger MVPDs. And while that hearing wasn’t focused on our members, it’s a good lesson to never ever take anything from a customer-service perspective for granted, [to] ensure that we as cable operators are presenting the best cable customer service we can provide and demonstrating that value that we are a vital connection to the community.

There are four primary issues from a rulemaking perspective: The set-top box rulemaking; the rulemaking on business data services, otherwise known as special access; the broadband privacy rulemaking at the FCC; and then just the implementation of Title II. Each one of these is a specific regulatory effort — although [with] Title II, the FCC hasn’t said what it might do yet — each one of those areas are crucial because of the cost impact to comply with the regulation, man hours, paperwork hours, the diversion of resources from deployment of broadband service to what we see as needless regulatory compliance.

MCN:It seemed like all of the indications pointed to the FCC finally doing something on the retransmission-consent reform front. How will inaction affect the industry going forward?

MP: Based on even as late as late last week [July 15] meetings with the bureau and other commission staff indicated there was going to be an order. For [FCC chairman Tom Wheeler] to say, “Nah, I don’t think so,” we’re shocked by that. I think what it’s going to mean — this isn’t the year when most agreements come up, it’s next year — unless something changes at the FCC or at the Hill, we’re going to see the impact of basically an unfettered broadcast industry that has carte blanche to do whatever it wants. That’s not a result that anybody wants.

Related >It’s a Small World After All: A Q&A With the NCTC's Rick Fickle

MCN:This year is an election year. Does that mean even more change is in store for the industry?

MP: We’re looking ahead to what’s going to happen in 2017. Heavens knows what is going to happen in the presidential elections. We’re going to have to deal with a new administration, most likely an interim FCC chair and then a new FCC chair. There will be a new head of the Energy & Commerce committee in the House because of term limits there; it’s unknown whether the Senate is going to flip from Republican to Democratic and whether [Democratic] Sen. [Bill] Nelson from Florida will be the chairman or [Republican] Sen. [John] Thune from South Dakota will remain the chairman.

We’re telling our members regardless of all of this uncertainty in the political environment, we at ACA are well-positioned because we’ve done the homework, we’ve done the grassroots, we’ve done the groundwork, so regardless of these possible changes we can stay focused on our policy objective moving forward.

One of the big issues that remains is whether [FCC Democrat Jessica] Rosenworcel is renominated and how that could affect the commission, and whether chairman Wheeler, as is tradition, steps down. There could be some bills on the Hill passed during the lameduck session, like an enhanced transparency exemption extension bill.

The Senate not too long ago passed a small-business broadband bill that increased the number of subscribers that subscribe to an ISP from 100,000 to 250,000 to comply with the FCC enhanced transparency requirements. That bill is likely to get passed at year-end. The rest of the Hill agenda for this year is kind of cloudy.

MCN:Small operators have been very outspoken over the years on a lot of regulatory issues. Could consolidation change that?

MP: It remains to be seen what impact consolidation will have on our segment of the industry. I do see some strategic combinations of our members that help to provide maybe better operational control within a particular area. It really remains to be seen whether some of the large interests have any interest in acquiring our members.

The truth of it is, I don’t care who you are, Mediacom, Cable One, WideOpenWest, that’s still really small. Even if you combine some of the larger smaller ops, you’re still tiny compared to Charter and AT&T and Comcast. If there is any consolidation, I tend to think we’ll still be fighting for the same issues.

MCN:One issue that small operators have been especially vocal about over the years has been forced bundling by programmers. Now that larger operators have taken up the skinny-bundle mantle, do you think we’ll see some traction there soon?

MP: I do. We’ve always comically but also seriously at the ACA called ourselves the canary in the coal mine. What has happened is whether it is retransmission consent or problems of cable programming choice or lack thereof, or other issues, is that larger MVPDs have gravitated toward us as they have seen in their own companies with much greater scale the need for relief and reform.

As those companies bring their greater influence to bear, it complements what we at ACA have been doing for years quite well because we compare and contrast on the same track to say the market has changed; the regulations that were once needed aren’t needed anymore with the dynamic, changing marketplace; and that government should release the straps of regulation and let the market decide.

WideOpenWest chairman Jeffrey Marcus doesn’t think he has to build a better mousetrap to take the overbuilder to the next level in the ever-changing pay TV and broadband landscape. He believes he already has one.

Marcus, a cable pioneer who built Marcus Cable from scratch in the 1980s before selling it to Microsoft co-founder Paul Allen in 1998, re-entered the domestic pay TV space in a larger way in December after his Crestview Partners invested $125 million in WOW for a 35% interest in the overbuilder. As part of the investment, Marcus, who has been with Crestview since 2004 and helped manage its stakes in several cable operators over the years, agreed to become chairman.

MCN Independent Operators of the Year:WideOpenWest Covers Its Bases | Buckeye: Building on Broadband

Becoming WOW chairman — he replaced Colleen Abdoulah, who retired but remains on the company’s board — is Marcus’s highest-profile position in the cable business since he sold Marcus Cable to Allen (it later became part of Charter Communications). He hasn’t really been away, though.

Through Crestview, Marcus has helped in its investments in Insight Communications, sold to Time Warner Cable in 2012, and Charter: Crestview was at one point the third-largest Charter shareholder and cashed out of most of that investment when Liberty Media John Malone bought a 27% stake in the cable operator in 2013. Marcus also was part of Crestview’s 2005 acquisition of Adelphia Communications’s OneLink cable operation in San Juan, Puerto Rico, which it sold to Liberty Global in 2012.

SEASONED TEAM

Marcus was named chairman in January after Crestview made its investment. Topping the management team are CEO Steve Cochran, a 14-year veteran of WOW, and chief operating officer Cathy Kuo, another seasoned executive who formerly ran marketing for the overbuilder for nearly 15 years.

“They’ve got a very good track record and good operational experience,” MoffettNathanson principal and senior analyst Craig Moffett said. “The management roster has to give you some confidence that they will be able to execute a compelling strategy.”

Marcus said in an interview that WOW first came up on his radar screen in the late 1970s and early 1980s, when he and cable pioneer Rick Michaels were partners in cable broker Communications Equity Associates.

The company re-emerged during the sales process for Insight Communications. WOW operated in Illinois and competed in several markets there against Insight and at one point considered bidding on Insight. When WOW’s biggest shareholder, Avista Capital Partners, decided to monetize a portion of its stake in the overbuilder, Crestview jumped.

“The thing that impressed me about WOW was their customer service,” Marcus said in an interview related to WOW’s selection as a Multichannel News Independent Operator of the Year. “Their J.D. Power scores are among the highest in the industry for years on end. That’s how they are able to garner a significant subscriber base and loyalty among their subscribers. They provide something the incumbent cable operators don’t and that is really good cable service. They understood that in order to get traction in a competitive situation, they not only have to build a better mousetrap, they have to service it better.”

WOW still ranks high on the J.D. Power list for pay TV and Internet service. It was fourth in the 2015 survey of the North Central region of the country with a score of 721, behind AT&T’s U-verse TV, DirecTV and Dish Network but still well ahead cable competitors like Comcast (689) and Charter Communications (688).

That customer service edge is key to WOW’s growth, Marcus said.

While Moffett added that focusing on better service is a potential strategy for small operators, “the bigger question is, do they continue to measure themselves as video providers at all,” adding that Wave Broadband and Cable One have taken a “broadband-first” stance in their respective markets.

While data is important — high-speed Internet subscribers outnumber video customers — WOW still sees benefits in offering a TV product.

Revenue in the first quarter was down 3% to $302.1 million, cash flow rose 3% to $112.9 million and WOW also continued to reduce video customer declines. Video losses were about 10,000 in the first quarter, compared to a loss of 17,000 in the fourth quarter. It was the fifth consecutive quarter of reduced losses on the video side. High-speed Internet customers grew by about 10,000 to 722,200 subscribers in the period.

Marcus said that WOW will continue to gain scale both through organic growth, including an edge-out program to extend its network within its existing footprint, and by acquisition.

“WOW, in order to win, has to not only provide the best customer service, but also to have state-of-the-art services and have them delivered in a way that customers want to buy them, not forcing big packages on people,” Marcus said.

That means looking into ways to offer skinny bundles, the current rage in the distribution industry. While Marcus realizes that the ability to do that is limited to the terms of programming contracts, he believes that is the direction the industry is ultimately moving toward.

“That’s where the evolution is going,” Marcus said. “I think the content providers are going to have to figure out where they want to play, where their bread is buttered and how they want to provide their programming. I think that HBO Now and CBS and others that provide OTT programming are doing it in a way where they are putting their toe in the water, and it’s good for the cable operators to provide for their customers.”

BUYING JUST WHAT FITS

On the acquisition front, Marcus said the company will keep an eye on systems that come on the market as they fit into the WOW strategy. “We will be interested in other acquisitions as they come about and as they make sense for us geographically,” he said.

But he sees no burning need to gain scale quickly.

“It’s all opportunistic,” Marcus said. “When I started Marcus Cable with 18,000 subscribers, I had no idea that it would get to 1.3 million. One thing led to another and we took advantage of opportunities as they presented themselves. I think that’s what is going to happen here.“

Time Warner Inc. launched its standalone HBO service, HBO Now, last April, and premium channels Showtime and Starz followed with their own versions of a standalone product. While Custom TV, Verizon’s skinny-bundle experiment, looks different than it has in the past — it now includes sports channels in the basic bundle — Marcus said that WOW is looking for ways to meet customer needs.

“Ours is more of a video-agnostic approach,” Marcus said. “If somebody wants a skinnier bundle, we’ll put it together for them within the constraints of the contracts. If they want to use broadband for over-the-top, we’ll deliver a package or give them increased broadband speeds to do that. And we’ll tailor our product offerings to what people want.”

Over-the-top video, once considered an enemy of cable operators and other traditional pay TV players as their subscriber bases slowly eroded, has quickly become a key component of video strategies among MSOs both big and small.

This new form of thinking is clearly apparent at WideOpenWest, which is making OTT video services and applications an important centerpiece of its flagship, full-freight video offering, Ultra TV, as well as a SW!VEL, a slimmed-down pay TV package in the works that’s tailored to fit the needs of cord-cutters, cord-nevers and, more generally, younger millennial audiences.

Related:Marcus Helps Set WOW’s Winning Strategy

Instead of fighting the popularity of OTT options, WOW has opted to embrace these new services by integrating them into its pay TV platform. Consumers, after all, have shown a willingness to seek out those options with or without the help of the traditional pay TV provider.

“Overall, the strategy is to bring as much OTT content to the first-screen experience as we possibly can, because our customers, indirectly at least, are telling us that’s what they want,” Cash Hagen, WOW’s chief technology officer, told Multichannel News in an interview after Denver-based WOW was tapped as one of the magazine’s Independent Operators of the Year.

Hagen said that indirect desire is apparent in the way WOW customers use broadband — about 75% of all unicast Internet-protocol video streams delivered over the operator’s network originate from Netflix alone.

So instead of requiring customers to source that content from a smart TV, gaming console or Roku player, WOW is eager to keep those customers in its domain.

“We don’t want them to leave us,” Hagen said.

The initial phase of that strategy took form in WOW’s Ultra TV service, a whole-home DVR service based on Arris’s Moxi platform that delivers 200-plus channels, 15,000-plus hours of video-on-demand and a mix of OTT apps.

WOW is the first (and still only) Arris partner to integrate Netflix on the Moxi platform. WOW has deals in place to do the same with Hulu, YouTube and Pandora, the popular music-streaming service.

Meet MCN's Other 2016 Independent Operator of the Year:Buckeye: Building on Broadband

SW!VEL, Hagen said, is an extension of WOW’s overall strategy.

“We wanted to come up with a solution that would allow us to continue to hold the Internet customer … while, at the same time, bring something to our customers that is along the lines of what they cannot get in an over-the-top fashion — and that is primarily linear broadcast networks that are still, to date, not available in an OTT kind of way,” Hagen said, stressing that SW!VEL is not intended to compete with its flagship Ultra TV offering.

And SW!VEL will rely on a completely different platform, leaning on the “eBOX,” a new hybrid (QAM/IP) device from Evolution Digital that is powered by TiVo’s software platform and user interface. By extension, SW!VEL will support many of the OTT apps that TiVo already supports on its platform, a list that includes Netflix, Hulu and Vudu, among others.

That platform isn’t intended to supply all of the advanced services offered on Ultra TV.

SW!VEL, for example, will pair OTT with WOW’s limited basic lineup (about 30 channels, including the major local TV broadcasters) that is “as skinny as we could possibly skinny it,” Hagen said.

Also on the roadmap for SW!VEL is an IP-VOD offering (using Evolution’s new eVUETV platform) that will feature fare from ABC, Fox, CBS and NBC.

WOW also intends to add a cloud DVR to SW!VEL’s product mix in the first half of 2017.

WOW hopes to launch SW!VEL sometime starting this fall, starting in its northern and midwest markets — Chicago; Cleveland and Columbus, Ohio; and Detroit — which represent about 75% of the operator’s customer base. The remaining markets, including systems in Florida, Alabama, Georgia and South Carolina, acquired from Knology in 2012, are expected to come online by the early second quarter of 2017.

“Technically, the platform is ready,” Hagen said.

WOW has not announced pricing for SW!VEL (part of it will be based on the number of eBOX devices used in the subscriber’s home), but customers on that service must also take WOW’s Internet service. WOW won’t mix video options (a subscriber will either be on Ultra TV or SW!VEL), but it hopes to eventually unify its OTT offerings for both.

“Over time, there will be a continual roadmap of OTT content being added as we get deals done and the integration work gets done,” he said.

WOW’s new approach is a further indication that there’s a video renaissance of sorts underway among independent operators that previously were looking to de-emphasize pay TV as programming costs continued to skyrocket and, instead, apply more focus on higher-margin broadband service.

Hagen said he agrees with that to a point, noting that “we are de-emphasizing linear video” and that the trend has moved beyond a “numbers game” that was all about channel tonnage. Adding OTT as an option also opens the door to new opportunities and service models.

“It allows me to make different decisions for the linear content that I’m having to pay for,” he said. “The renaissance is accepting and embracing alternative means of content delivery. Whereas a couple of years ago, Netflix was a threat; it’s not a threat at all. Customers are going to get it anyway. Why not make it easier and more intuitive for them to get it?”

Brent Smith, president and chief technology officer of Evolution Digital, said WOW and other operators like it are gravitating to these new platforms because it allows them to start to migrate to lower-cost, and more flexible IP platforms.

In Evolution’s case, its hybrid eBOX works with the TiVo platform alongside a new flavor of it underway that will use “eGUIDE,” and interface that uses Rovi’s Fan TV offering. Rovi and TiVo are in the process of merging, which Smith believes will help to accelerate the introduction of new video products into the Tier-2 and 3 cable operator market.

“[WOW is] taking a very aggressive approach in embracing OTT and taking full advantage of the fact that the box has an IP connection in it,” Smith said. “It’s a much more dynamic platform. There is a groundswell of interest in IP that’s kind of unprecedented.”

And this new approach should also help independent operators expand their device options. Evolution’s eVUE-TV platform runs on the vendor’s eBOX, but is also agnostic in the sense that it can also run on third-party, retail devices such as Roku players and the Amazon Fire TV.

“If we can give them an affordable solution to go IP, it opens this Pandora’s box of devices,” Smith said. “I think that’s what’s really captured their attention.”

BEYOND VIDEO

Though the introduction of new video products are core to WOW’s strategy, that’s not the only fresh item on its plate. It’s also looking to bulk up its broadband offerings and to stoke other business growth engines such as commercial services.

WOW’s current high-end residential broadband service offers 300 Megabits per second (in the downstream), but the operator expects to launch a 600 Mbps service in the next 30 to 45 days to about 85% of its footprint using DOCSIS 3.0 technology.

WOW, Hagen said, is also moving ahead with a DOCSIS 3.1 strategy that will pave the way for a new 1 Gbps residential service. He expects WOW, which uses Arris network gear and cable modems, to launch 1-Gig in four markets in its southeastern territory in late 2016.

The operator expects to launch its new 600-Mbps service for about $90 per month, and 1-Gig for “just north of $100.”

“The Internet strategy for us is speed, at a disruptive price point,” Hagen said.

Though 1-Gig is the new high-water mark for most ISPs, Hagen has a longer-term, crystal-ball view that he’ll be able to deliver up to 2.5 Gbps to the DOCSIS home. “It’s pretty realistic,” he said.

WOW also intends to pair that new speed option with an advanced wireless router that will employ a mesh architecture that aims to boost the home’s broadband coverage and provide subscribers with a user-friendly software platform that gives them (and the operator) visibility into home network performance.

“The consumer has gotten to the point where they don’t measure us as wired vs. wireless; we’re just the Internet provider,” he said, noting that in-home wireless coverage has become just as important as the speeds being delivered to the side of the home.

WOW is also exploring Internet-adjacent products. In addition to the enhanced whole-home WiFi platform, it’s also looking into home security and automation products.

While home security is the “lead horse” for entering the smart home arena, home automation — HVAC control, lighting, door lock control and home camera systems — are “more exciting to us,” Hagen said. “We want to be the enabler.”

WOW expects to conduct a market trial later this year and, if all goes well, follow with an initial launch in the first half of 2017.

Another key growth area for WOW is business services, a category that has been receiving the most attention in terms of capital investment.

WOW, like other cable operators, started off by supporting small- and midsized businesses with services delivered from its HFC network, but has also been bulking up on fiber-based solutions as it moves upmarket.

Also key is a growing cellular backhaul business. In Chicago, for example, WOW has a deal with Verizon Wireless for a build that includes macro tower sites as well as small cell deployments that concentrate capacity using smaller antennas at bus stops, light poles and other high-concentration areas.

In a world where consolidation is the norm and independence is increasingly rare and difficult to pull off, Buckeye Broadband is clearly bucking the trend.

After more than five decades as Buckeye CableSystem, the company ditched the “cable” moniker this summer, supplanting it with “broadband” to better reflect the company’s emphasis on high-speed Internet and its expansion of new products and services.

To be sure, Buckeye is still in the cable business. The company offers a robust lineup of local and satellite-delivered video channels at packages that start at less than $30 a month. It also offers phone services to round out the triple play.

But it’s broadband Internet service that executives believe will be Buckeye’s future — one that will make it the competitor to beat and one that will help keep the company remain independent.

“We’re not changing Buckeye, but we have to identify what it actually is now, which is different than what it was in the 1960s, the 1970s, the 1980s, 1990s, and even the last few years,” Allan Block, chairman of Block Communications, said in June when the company’s new name took effect.

FAMILY AFFAIR

Block Communications was founded in 1900 when Paul Block formed an ad rep firm for newspapers. The Block empire grew through the 1910s and ’20s, encompassing several newspapers on the East Coast. The Great Depression resulted in the loss of all but three of those properties: the ad rep firm, the Pittsburgh Post-Gazette and the Toledo Blade.

Block moved the company’s headquarters to Toledo in 1927. After Paul Block died in 1941, his sons took over. Allan Block, Paul Block’s grandson, serves as the company’s chairman today.

Eventually, the Blocks added TV stations to the company’s arsenal and, in 1965, they started Buckeye CableSystem. From the beginning, the Block family stuck to its roots, serving residents in Toledo and Sandusky, Ohio. They neither expanded nor considered selling out.

Related:Buckeye's Hyper-Local Sports: A Winning Play

In 2014, Block saw an opportunity he couldn’t pass up. Harron Communications was selling its rural network of cable systems in Mississippi, and Block snapped them up. Operationally, the MaxxSouth properties are run separately from Buckeye, but the company adheres to the Block Communications vision and mission of customer first, according to MaxxSouth president and CEO Peter Kahelin.

“We service small, rural communities and we’re a big part of their lives,” Kahelin said. “Harron did a good job of taking 60 communities and connecting them to one network. We saw that as a big boon and took advantage of it when those properties came on the market.

“We’ve seen strong growth since we took over,” he added. “We created new packages. We’ve been going door to door and that has worked exceptionally well in these rural communities. We expect to see growth of between 8.5% and 10% by the end of the year.”

Keith Wilkowski, Buckeye’s vice president of business and legal affairs, spent weeks attending town council meetings in 45 jurisdictions served by MaxxSouth, and said he found the reception to be warm and welcoming. The residents were excited about receiving new services and the community leaders were pleased to hear about Buckeye’s commitment to the communities it serves, he said.

The Toledo, Sandusky and MaxxSouth systems count a combined 137,000 video customers and 160,300 broadband customers as of March 31. Block has about 800 Buckeye employees and another 2,300 corporate-wide. It has 5,800 miles of coaxial cable and another 3,200 miles of fiber as of Dec. 31, 2015.

To kick off the rebranding, Buckeye began this month increasing its 9 Megabits-per-second high-speed Internet service to 18 Mbps and its 26 Mbps service to 50 Mbps. The move coincides with the rollout of TiVo software and hardware that will enable customers to stream video from services such as Netflix and Hulu.

After nearly 20 years of offering broadband services to its customers, high-speed Internet is now the biggest part of the company’s business, and Block thinks broadband will be the product that keeps Buckeye in the bull’s-eye. It will be what differentiates the company going forward, he said.

Meet MCN's Other 2016 Independent Operator of the Year:WideOpenWest Covers Its Bases

VIDEO STILL MATTERS

Unlike some other operators that are beginning to trim back or eliminate linear offerings, Buckeye continues to add video channels that executives believe will enhance its product lineup without hurting the bottom line. Independent networks given berths on Buckeye in recent months include Poker Central, Pivot, One America News Network, Newsmax TV and MAV TV.

Another addition was Februrary’s multiyear deal with TiVo, which makes the company Buckeye’s primary provider of software, user experience and cloud services across its entire footprint. The deal, which went into effect June 1, includes TiVo DVR set-tops and its Web, mobile and tablet applications.

Buckeye will also use a new TiVo-based non-DVR hybrid set-top that will tie in the operator’s on demand offerings with over-the-top services including Hulu, Netflix and Amazon.

Block once worried that broadband service would become a commodity, but he said he’s no longer concerned about that. That’s because Buckeye has focused on having the most reliable network in its service territory and is offering services that will enable customers to fully enjoy the connection, he said.

And as Internet connections are integrated into household appliances like refrigerators, having a reliable and robust pipe to the house will be crucial for success, according to Block. “The Internet of things will change everything,” he predicted.

Still, Buckeye isn’t relying on new smart appliances to reach its customers and provide broadband service. It has created a pay-as-you-go broadband service called Nimble.

Not everyone can afford or needs the amount of broadband offered in the company’s packages, Block said. Some 10% to 12% of Buckeye’s homes passed are former customers with bad credit and who couldn’t pay their bills at some point.

Buckeye’s executive team didn’t want to totally prevent such consumers from accessing the Internet. The Nimble product gives folks the ability to connect with the outside world without it costing an arm and a leg. “Pay as you go with broadband gives people dignity and the ability to access the net when they want to or need to,” Block said.

In addition, Buckeye is committed to making sure every resident in its service territory has access to the Web via broadband. To that end, the company years ago wired up every school in its service territory, public and private.

Buckeye is also currently working with public housing authorities in its territories to provide free universal broadband access to qualifying low-income residents. It’s a limited service but allows folks to use email or surf the Web, president and GM Jeff Abbas said.

Low-income residents who don’t qualify can still buy a lifeline broadband service for as little as $5 a month. “This enables people to get on the grid,” Abbas said.

About 150 people have signed up for the free broadband access to date, Abbas said. Some customers who signed up for the free service has since upgraded to a pay package or the Nimble service because they realize they want more access.

“We need to hear what our customers are telling us,” Geoff Shook, executive vice president of customer experience, said. “We hear what they want and then we figure out how to fulfill those needs. We heard they wanted a lifeline service and a pre-pay service so we created them.”

Customer experience is everything at Buckeye. When a customer calls, they are immediately connected to a real person. New software allows the agent to greet the customer by name and on-screeen information gives the agent the customer’s history and service levels.

That’s not unusual. But what really differentiates Buckeye from its competition is the fact that all agents are local, Shook said. If a customer calls Buckeye, chances are they might know the person on the other side. Being local allows agents to better understand and discern the situations, locations and issues that affect that customer, he said.

When the cable industry developed uniform customer-service benchmarks in the 1980s — after being vilified for bad customer service — longtime Buckeye employees recall laughing at the notion. That’s because Buckeye was already surpassing those standards by leaps and bounds, said MSO veteran Bonnie Ash, who had served as vice president of business operations before retiring a few years ago. Ash eventually returned to Buckeye as director of community affairs, working closely with Wilkowski.

TECH SUPPORT ‘BRANIACS’

“Our goal at Buckeye is to touch everyone in the community in some way or another,” she said. Ash and and another staffer plan and execute hundreds of community events every year, often handling multiple events in one day.

Ash counts on company employees to pitch in and help and most are happy to do so. Buckeye has a charitable program that gives ever employee $100 they can use to donate to any charity of their choice. They just have to donate two hours of their own time to be eligible. Buckeye also launched its own version of Best Buy’s “Geek Squad” tech support service, called “Braniacs.” The tech team is available to all help all customers to connect their various devices and services, Wilkowski said. Braniacs also visit local senior centers, recreation centers and other venues to educate residents — Buckeye customers or not — free of charge.

“We take a consultant approach to customer service and sales,” Shook said. “We drive home the fact that every customer could be your neighbor and you want to treat them like your neighbor. People connect with the notion of being local because it’s the exception rather the rule these days.”

That’s always been the Buckeye way, according to chairman Block.

“I have never agreed with the notion that the big MSOs can do a better job or have better service than an independent operator. I’m proud of our customer-centric attitude and our philosophy of treating people the way you want to be treated.

“Are we perfect? Of course not. But our commitment is constant and consistent. We are customer-service diehards,” he said. “As long as we can do business better than our competitors, there’s no reason we shouldn’t keep doing that.”

SIDEBAR: Hyper-Local Sports: A Winning Play

Like many larger MSOs, Buckeye Broadband is in the regional sports business. But it’s not the sort of costly, pro-sports-focused RSN operated by big MSOs such as Comcast or Charter Communications.

BCSN, the RSN launched by Buckeye in 2004, is a hyper-local channel focusing on smaller-scale events like minor-league hockey games, local college and high-school contests and even little league games.

The model was so successful in the Toledo and Sandusky, Ohio, systems that Buckeye launched a similar, hyper-local sports channel in the MaxxSouth systems it acquired from Harron Communications in 2014. MaxxSouth, operated separately from Buckeye Broadband, serves about 50,000 customers in 60 rural Mississippi communities.

BCSN and MaxxSouth Sports do more than just cover games. The Ohio network has partnered with WTVG-TV in Toledo to produce a half-hour nightly sports show that goes beyond game recaps.

Through WTGV, BCSN also delivers a weekly four-hour football program covering all the local high-school action, as well as a three-hour high-school basketball recap during hoops season. Ohio law forbids live high-school football telecasts, but BCSN’s four roving studio trucks visit each game and gather news, tidbits and features on what’s happening, BCSN general manager Marc Jaromin said.

BCSN’s four production trucks often cover multiple events in a single day. “We are efficient,” Jaromin said. “We can roll in an hour-and-a-half before an event and break down within a half hour after an event.

“Recently, we covered the same event as ESPN. They had 33 people doing the same job at the same level of performance as we did with seven people.”

BCSN recently covered and sponsored a charity boxing event to fight Parkinson’s disease in Toledo. The network didn’t just cover the seven fights on the card — it also produced a half-hour pre-show spotlighting athletes affected by Parkinson’s, and taped local health officials talking about the disease for use in interstitials.

“Anyone can offer up a box score,” Jaromin said. “But telling the news behind the score is what makes BCSN different and relevant with viewers. Bottom line, we want to deliver to the community what the community wants to see.”

Buckeye also plans to launch a new arts channel along the lines of BCSN. BCSN Arts, located next to BCSN on the dial on a former local-origination channel, will soft-launch this fall and formally kick of in January, Jaromin said.

BCSN Arts will televise content developed by local high school students and help them with their projects as well. And it will televise shows featuring students preparing for school plays, choir concerts, dance recitals and band performances.

“This is just another way for us to connect to our customers and our community,” Jaromin said. “I think it will be very successful and as popular as BCSN.”

Like many larger MSOs, Buckeye Broadband is in the regional sports business. But it’s not the sort of costly, pro-sports-focused RSN operated by big MSOs such as Comcast or Charter Communications.

BCSN, the RSN launched by Buckeye in 2004, is a hyper-local channel focusing on smaller-scale events like minor-league hockey games, local college and high-school contests and even little league games.

The model was so successful in the Toledo and Sandusky, Ohio, systems that Buckeye launched a similar, hyper-local sports channel in the MaxxSouth systems it acquired from Harron Communications in 2014. MaxxSouth, operated separately from Buckeye Broadband, serves about 50,000 customers in 60 rural Mississippi communities.

MCN Independent Operators of the Year:Buckeye: Building on Broadband | WideOpenWest Covers Its Bases

BCSN and MaxxSouth Sports do more than just cover games. The Ohio network has partnered with WTVG-TV in Toledo to produce a half-hour nightly sports show that goes beyond game recaps.

Through WTGV, BCSN also delivers a weekly four-hour football program covering all the local high-school action, as well as a three-hour high-school basketball recap during hoops season. Ohio law forbids live high-school football telecasts, but BCSN’s four roving studio trucks visit each game and gather news, tidbits and features on what’s happening, BCSN general manager Marc Jaromin said.

BCSN’s four production trucks often cover multiple events in a single day. “We are efficient,” Jaromin said. “We can roll in an hour-and-a-half before an event and break down within a half hour after an event.

“Recently, we covered the same event as ESPN. They had 33 people doing the same job at the same level of performance as we did with seven people.”

BCSN recently covered and sponsored a charity boxing event to fight Parkinson’s disease in Toledo. The network didn’t just cover the seven fights on the card — it also produced a half-hour pre-show spotlighting athletes affected by Parkinson’s, and taped local health officials talking about the disease for use in interstitials.

“Anyone can offer up a box score,” Jaromin said. “But telling the news behind the score is what makes BCSN different and relevant with viewers. Bottom line, we want to deliver to the community what the community wants to see.”

Buckeye also plans to launch a new arts channel along the lines of BCSN. BCSN Arts, located next to BCSN on the dial on a former local-origination channel, will soft-launch this fall and formally kick of in January, Jaromin said.

BCSN Arts will televise content developed by local high school students and help them with their projects as well. And it will televise shows featuring students preparing for school plays, choir concerts, dance recitals and band performances.

“This is just another way for us to connect to our customers and our community,” Jaromin said. “I think it will be very successful and as popular as BCSN.”