"It's the IOCs [independent operating companies] that are going into this market and going after it with gusto," says Ajit Pendse, executive vice president of marketing and business development at VideoTele.com, which has digital-headend solutions in commercial deployments with 50 carriers worldwide. Tut Systems in late October announced its plans to purchase VideoTele.com.
Many video solutions vendors also are charged up about the rural telco opportunity.
"100 percent of our marketing effort is targeted at the rural market," says Reed Majors, vice president of marketing and business development at Minerva Networks Inc., whose products will be used by 12 rural telcos in commercial deployments this year. Up until a year ago Minerva was primarily focused on RBOCs and carriers overseas, says Majors.
Hargray Communications, an integrated service provider in South Carolina; Midwest Telnet, a consortium of rural telephone and Internet service providers throughout southwestern Wisconsin; and Ringgold Telephone, a local exchange service provider in Georgia, are among Minerva's customers. Majors says Minerva believes that 800 independent telcos will be capable of offering video in the next five to seven years.
Minerva sells an end-to-end video solution, which includes signal encoding, middleware and all installation, that can run over ADSL, VDSL or fiber-to-the-home access networks. The system supports regular cable TV, video on demand, e-mail via TV and other applications. The company's rural telco customers this year plan to launch broadcast, pay per view, TV-based Web browsing and TV-based caller ID services; about a third of its rural customers also will offer video on demand and TV-based e-mail this year; and, by summer of 2003, all its rural customers expect to add video on demand and subscription VoD (for which the subscriber pays a fixed fee every month for on-demand access to premium programming from HBO, as one example), says Majors.
"Video is the killer application for DSL," says Minerva's Southeast regional sales manager Mike Carney. He says DSL penetration is between 4 percent and 8 percent, but that telcos can get up to 20 percent penetration with video services in the first year.
VideoTele.com's Pendse says his customers are seeing video take rates that are 41Ž2 times that of data services. "That's because cable TV is a known product," he says.
The Small Screen
To help rural carriers get into the video market with solutions that fit their needs, a variety of vendors have come out with new smaller and less expensive tools. Meanwhile, some vendors are delivering end-to-end solutions to enable rural telcos, which have fewer resources than large carriers, to more easily enter the video market.
For example, video-over-copper leader Next Level Communications has created the USAM-SSE, a hardened, self-contained, single-shelf enclosure weighing only 50 pounds that can be bolted to telcos' existing DSLAM and DLC equipment for lower cost deployment of new services like video.
Telcos including CL TEL in Iowa, Washington County Rural Telephone Cooperative in Indiana, West Carolina Rural Telephone Cooperative and PBT Inc. in South Carolina, and South Central Rural Telephone Cooperative in Kentucky are commercially trialing the USAM-SSE to offer customers a "triple-play" of services including digital TV, high-speed Internet access and telephone service. The USAM-SSE also gives telcos the ability to deliver video-on-demand, interactive programming guides, and, for those companies deploying VDSL, the bandwidth capacity for future high-definition TV.
Also new to the market is the ADSL MicroDSLAM from Net to Net Technologies that allows independent telcos to offer Ethernet-based DSL from remote terminals (RTs) without having to completely upgrade their RTs with next-generation technology. The 12-port product, now shipping, delivers downstream data rates of up to 10.5mbps. That big bandwidth and a DSLAM that can intelligently forward data streams like TV channels only to those ports requesting a particular channel makes the box ideally suited for IP video-over-copper applications, the company says. Carriers can offer a combination of video, voice and data services over the platform. Northeast Missouri Rural Telephone Co. of Green City, Mo., has ordered 45 of the boxes, which are list priced at $5,996, to deliver high-speed Internet access, with an eye toward adding video services in the future.
Meanwhile, VideoTele.com, which started business by focusing on video headends, now has OEM relationships that allow it to offer an end-to-end video solution that includes everything but the DSL access equipment, says Pendse. That lets carriers get to market more quickly, avoiding the large task of having to wade through the slew of different network element vendors to piece together a solution, he says. VideoTele.com also has a system integration-staging site in Chicago. In addition, the company helps carriers acquire content to run over the systems.
Minerva also is putting together a broader package of solutions for independent telcos, says Majors. The company is trying to create content packages for rural telcos so video-on-demand content is readily available to them, says Majors. Minerva also is filling out its infrastructure offering by partnering with vendors such as AFC, Calix and Net to Net in the access equipment space to demonstrate interoperability and do co-marketing, Majors adds. He notes Minerva recently did a road show with AFC and participated in the company's customer open house.
