While telco giants such as Verizon and AT&T are making noisy forays into video delivery, the deployment of such services isn't limited to those with deep pockets. Relatively tiny telco players—such as Phonoscope, SureWest and Polar Communications—are using their pipes to deliver the triple play of services that has primarily been the domain of larger telco and cable companies.
Next month, fiber-services provider Phonoscope tackles the largest market yet for fiber-based delivery of television. It's joining with Optical Entertainment Networks (OEN) to roll out video, voice and data services over 7,500 miles of fiber passing 1.6 million homes in greater Houston. The companies will initially focus on high-income households that are willing to pay a premium for a first-rate data experience.
HIGH-TECH SERVICES N RURAL AREAS
While they may never compete directly with Comcast or Time Warner, the small players are finding strength in numbers. The National Rural Telecommunications Cooperative (NRTC) and the National Telecommunications Cooperative Association (NTCA) are working together to promote Internet Protocol TV (IPTV) services in rural areas. The two organizations represent more than 1,700 telco and rural cable systems.
“With secured program-licensing agreements, volume discounts on equipment and an 80%-90% savings on associated infrastructure costs, the alliance will allow rural telephone companies to offer the highest-quality service without paying a high price,” says Bob Phillips, president and CEO of the NRTC.
OEN also exemplifies a trend: It and other third-party companies such as Kasenna Globecast and Minerva Systems are offering telcos and fiber systems a turnkey TV-delivery system that includes the technology, billing systems, and even the content deals that are often a stumbling block for telcos doing video.
“Phonoscope's original plan was to use its pipes for enterprise and business-to-business needs, but now we're looking to take on the [telco] big boys,” says Al Estrada, OEN chief marketing officer. “There are huge costs associated with building out a fiber network. We want to focus on content delivery and technology over existing fiber plants.”
The OEN/Phonoscope partnership will supply 1 gigabyte of bandwidth to each home—enough, says Estrada, to deliver more than 300 channels of digital video and audio services, 50-60 HDTV channels, and voice and data services with 10 megabits per second (Mbps) of data capacity in each direction.
Minerva Networks is providing the infrastructure for video, ViewNow (a division of Kasenna) handles video-on-demand (VOD), and Amino Technologies is building the set-top boxes. There are both standard- and high-definition boxes, as well as one with a DVR that can store up to 80 hours of video.
“Our service will be all digital; there is no analog-to-digital conversion in the field,” Estrada says. “The same quality signal we get from Discovery and other networks is what will be delivered to the viewer's TV set.”
Any discussion of the battle between telcos and cable operators eventually arrives at the price, but Estrada says OEN isn't interested in facing off in a pricing war. Instead, it wants to offer high-end services like providing enough data bandwidth to enable two-way video teleconferencing.
“One of the reasons we're doing 10 Mbps in both directions, is we think people will be willing to pay more for it,” Estrada says. “And we expect to have unique broadband applications like video conferencing and telemedicine.”
Of the latter, Estrada says doctors could check a patient's heart monitor or sugar levels over the fiber network. That will roll out next year, as part of the service's second phase.
HDTV ON THE WAY
Meanwhile, on the West Coast, telco SureWest is helping subscribers in Sacramento, Calif., tune into more than 220 digital video channels and 40-plus audio channels. The company passes 84,000 homes and has more than 13,000 subscribers to its video service. Next will be HDTV, with the help of network-infrastructure service provider BigBand Networks.
SureWest, like OEN, relies on Minerva and ViewNow technologies to handle regular program streams and VOD. BigBand's Multimedia Services Router has also been used to give video streams the right amount of bandwidth for quality viewing. Satellite feeds for the networks pass through the system and are given a data rate, then are repackaged alongside all the other channels to enable quick tuning from one channel to the next.
SureWest became involved with video following its purchase of WinFirst, a cable overbuilder, in 2002. The acquisition gave it 5,000 cable customers and a physical plant infrastructure in various stages of completion.
“As early as 2002, we looked at IPTV over fiber to the telephony service area, with copper used for the last mile,” says Bill DeMuth, SureWest VP/chief technology officer. Today, the plant is all fiber.
SureWest execs say the service is suited for markets where localism is paramount. Says DeMuth, “A lot of them are doing things like putting high school football games on the network, and it's my hope that, going forward, we'll have more interactive services.”
