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Telcos Move to Next Level

The theme of this year's Western Cable show, Broadband Plus is a triple-play product offering of cable, telephone and broadband access, and it's changing the market by allowing telco companies to compete with cable operators for subscriber dollars.

Even more important, telco companies are beginning to find safety in numbers. With the cost of video headend deployments often well out of price range for a smaller telco, a number of consortiums are popping up across the country, allowing costs (and profits) to be shared. One example is Minnesota-based Broadband Visions LLC, a company formed by Hutchinson Telephone that now has 14 Minnesota telephone companies signed on. Nearly 14,000 subscribers (out of a potential 200,000) receive their TV services from Broadband Visions, a 42% jump from 2001.

"After making the commitment to put in a headend, we came up with the theory of selling off portions to other providers," says Walt Clay, chairman, president and CEO of Hutchinson Telephone and Hutchinson Telecommunications. "The thing that usually kills a video deployment is the cost of the headend." Thus, Broadband Visions was born.

Clay says telephone companies become involved with the consortium on one of two levels: as Class A members, which have voting rights and are entitled to profits, or as Class B companies, which only receive the signal.

"My goal in the future," says Clay, "is to return some of the companies' investments to the individual members."

Broadband Visions tapped Next Level for the technical side of the headend. Clay, who now serves on Next Level's board of directors, says that, when Broadband Visions was established about five years ago, Next Level offered the best solution on the market. More important, it wasn't in a test phase.

Since then, Next Level's system continues to evolve, but some issues still need to be fixed. One of them: the integration of a fiber port so stereo signals can be deployed. "We need to be able to do that to compete with digital satellite," says Clay.

There is some doubt as to whether telco operators can handle the complexity of video delivery, but Clay says the biggest challenge is making sure installations happen quickly.

"Telco installation people can install it, but they need some training," he says. "When we first deployed the system, we were backed up six and seven weeks. That wasn't acceptable."

The Next Level 2100 Gateway set-top box resides in the subscriber's home and is connected to the Next Level Full Service Access Platform, which comprises two systems: one for VDSL and one for ADSL. VDSL can reach customers up to 4,500 feet away from the node and provides up to 26-Mb/s throughput with full-service DLC, three concurrent streams of digital television, 7.0-Mb/s data rate and even HDTV capabilities. The ADSL system has up to 10,000-foot reach but only 10 Mb/s of throughput with full-service DLC. It can accommodate two concurrent streams of digital television and can pass 1.0 Mb/s of data.