Next Level Enters VOD Realm

Video-on-demand may be the new-service darling of cable operators these days, but there are signs that it's gaining steam among telco providers as well.

That's the reason behind telco video-equipment provider Next Level Communications Inc.'s new partnership program, which seeks to draw applications providers into the world of video over twisted copper.

Rohnert Park, Calif.-based Next Level, which specializes in very high-speed Digital Subscriber Line (VDSL) video-delivery gear, recently unveiled the program. It also signed four interactive TV applications providers out of the gate — Gemstar-TV Guide International Inc., iMagicTV Inc., Myrio Corp. and Orca Interactive.

With higher throughput but shorter distance limitations than sister asymmetric DSL technology, VDSL was at one time touted as a telco's best weapon against cable video service. But while the larger Baby Bells may have shelved their VDSL plans, Next Level has found more fertile ground among the independent telephone companies.

The company now counts 106 telco clients, and 41 have already deployed video service to some 100,000 subscribers. Next Level gear also supports about 40,000 data subscribers and 400,000 voice customers.

Up until now, Next Level has provided all of the pieces for its VDSL video platform. But as marketplace interest builds, Next Level decided it needed to widen its applications base — and that gave rise to the partnership program.

In the next few months, Next Level will work to port applications from its first four partners to its VDSL set-top boxes, and tie that in with its back-office video management system.

"This helps us in that we don't have to develop these applications ourselves and can get to market sooner," said director of marketing services Geoff Burke. "Also, the cost associated with that, we don't have to build back into our products, and we are actually really following the cable model that exists today, where third-party application vendors are riding on top of a dumb set-top box."

But Next Level still faces the perception that VDSL technology is too expensive to deploy. In the past year, the cost of VDSL deployment has dropped by more than half, down from more than $2,500 per subscriber to about $1,000.

While that may still be a significant capital expense, Burke says it may be worth the money for telcos, given that cable has made aggressive moves into the regional Bell operating companies' (RBOCs) core telephone-service business.

"You will see that cable now has 2 million subscribers in cable-telephony systems — they are very core markets," Burke said. "Cable is not rolling this out in the back woods. They are doing it in major cities, and that is exactly where it hurts these RBOCs the most."