While many rural telcos offering TV services rely on the National Cable Television Cooperative (NCTC) to get their programming, the long-term relationship between the NCTC and the rural telcos has come into question, given the larger numbers of telcos getting into TV services and the upcoming launch of a competing programming/video headend service from National Rural Telecommunications Cooperative (NRTC) in partnership with SES Americom.
Rick Vergin, CEO of Chibardun Telephone Cooperative Inc., a Wisconsin company with both rural ILEC and CLEC operations that offer TV services, said his company has been selling cable TV services since 1980 and goes through the NCTC to get its programming. Using the NCTC is beneficial to companies like Chibardun because NCTC can get lower programming prices by pooling the buying power of multiple small network operators; NCTC also negotiates with multiple programmers, so service providers don't have to commit the resources to those negotiations.
But Vergin, who sits on the board of directors of NRTC, told xchange this week there's been "some pushback" from the NCTC – a programming and hardware buying cooperative that represents more than 1,000 independent cable operators – in welcoming new telcos, which are now pursuing IPTV in larger numbers, into the fold. He said that is because the NCTC is made up of cablecos, which telco TV services are going head-to-head with in the marketplace.
Responding to that comment, Dan Mulvenon, vice president of public relations at NCTC told xchange, "Since Nov. 10, 2005, NCTC has had a moratorium in place on new memberships. We are in the process of reviewing our membership policies and will not be accepting any new members until the review is complete. There is no specific time frame as to when that review will be completed."
Meanwhile, NRTC, in cooperation with satellite transport service company SES Americom, is readying its programming service for rural telcos. The service, first announced in November, will enable rural telcos to receive and distribute hundreds of video channels in their service areas over existing facilities at what NRTC says will be greatly reduced capital costs. Content will be received at SES's Vernon Valley, N.J., operations center, encapsulated in IP, compressed in MPEG4 and uplinked to SES's AMC-9 satellite for delivery nationwide.
The NRTC/SES Americom service that includes both low-cost programming and a video headend – is slated for general availability toward the end of the second quarter, said Vergin. At the recent NTCA show in San Diego, the NRTC announced three beta telcos for the service: Planters Rural Telephone Cooperative of Newington, Ga.; Valley Telephone Cooperative of Raymondville, Texas; and West Kentucky Rural Telephone Cooperative of Mayfield, Ken. The beta tests are scheduled to begin in April.
Mark Tiedeman, vice president of marketing at headend vendor Tut Systems, said the NRTC is pitching rural telcos on its ability to save them millions because they won't need to invest in headends. But he said when rural telcos own their own headend they have more control of the content and the quality delivered to customers. He added that in the IOC arena, 40 percent of Tut's customers have existing cable or FTTH plant running MPEG2 video over it. If the NRTC service is exclusively MPEG4, he asked, how will it support those existing networks? "You'd need MPEG4/MPEG2 transcoders," he said, "and that equipment is not available."
Randy Houdek, general manager of Venture Communications, a rural telco based in South Dakota, and a board member of NRTC, said his company uses NCTC as its existing content source and will likely continue to use NCTC for its legacy TV services and NRTC for its future TV services. "But plans are fluid, and I have headend partners" to consider in any decision on that front, he said.
