![](\"http:\/\/www.viodi.com\/images\/80_Viodi_Vector_Logo_KS.jpg\"){kind=logo}
<\/b><\/p>\n<\/b><\/p>\n
Back<\/a><\/strong><\/p>\n November, 2002<\/b><\/p>\n \u00a0<\/p>\n TelcoTV’s Terrific Turn-out<\/b><\/p>\n by Ken Pyle<\/a><\/p>\n \u00a0 <\/p>\n It has been awhile since I have heard anyone in the telecom vendor community express positive feelings about the attendance at a conference.\u00a0 I repeatedly heard from many vendors, however, what a great turn-out for this first annual conference regarding telephone companies that are providing or are planning on providing video services.\u00a0 <\/p>\n As with video, the content of the conference was king.\u00a0 Again and again, the common complaint was frustration at not being able to attend all of the overlapping sessions.\u00a0 There just was not enough time to take in all of the sessions.\u00a0 All aspects of video services, from programming to technology to regulation were addressed by industry experts.\u00a0 <\/p>\n Some of the highlights from what I saw of this conference include:<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Paul Hansen with Alliant Telecom, a tel co serving the maritime provinces of Canada, encouraged all of the telcos to seriously look<\/b> at a bundled video<\/b> package.\u00a0 Alliant’s two years of experience with video over DSL taught them a number of important lessons, including; 1) the importance of pursuing standards for hardware and software platforms, 2) forming partnerships and alliances to leverage resources and 3) that television is not the platform for surfing the web.\u00a0 Alliant has subsequently decided to round out their bundled services package by using an affiliated company to provide video services via Direct Broadcast Satellite.<\/p>\n \u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 John Wilson<\/strong>, of Horizon Chillicothe Telecom<\/strong>, used his company’s success story to Regarding this last point, one of the important side benefits of adding video services is the positive affect on take rate<\/strong> for DSL Internet access services. Wilson suggested that more than 80% of their video customers are also DSL Internet customers. Horizon turned EBITA positive in less than two years and plans on being profitable within five years of launch.<\/p>\n When asked, “what is the telcos’ biggest obstacle to the widespread deployment of video services”, Wilson said that, “lenders need to loosen up. [Telcos] need time to get their money back; it can’t be an eighteen month timeframe.” This comment was made mostly in the context of larger telcos that are beholden to Wall Street and for achieving returns that are impossible on an infrastructure that is built for the long-term and depreciated over at least a five year period.<\/p>\n The other obstacle is the mind set that says that, “Telcos must stick to their knitting.” Wilson further stated, that, “[Telcos] have to take a risk<\/strong> and get back to what the telephone pioneers did.” <\/p>\n Programming and Marketing:\u00a0 <\/p>\n A number of tracks covered programming and marketing.\u00a0 Yours truly made the case for the formation of a nation-wide programming and marketing alliance of independent telcos VOD Alliance<\/b> specifically for the burgeoning on-demand business. \u00a0 <\/p>\n Maggie Malloy<\/b> of Federal Hill<\/b> discussed the challenges and pitfalls of acquiring content from studios and other sources.\u00a0 The trade-offs of engaging in direct or indirect relationships with cable television networks were given by Amy Shapiro<\/b> of Compo Digital Group<\/b>.\u00a0 <\/p>\n Gary Johnson<\/b> of Paul Bunyan Telephone<\/b> explained their marketing techniques for their video service success.\u00a0 Like Horizon Chillocothe Telecom, a majority of their video customers have upgraded to DSL internet services.\u00a0 Both Paul Bunyan Telephone and Horizon, as explained by Horizon\u0092s Karen McKee<\/b>, have emphasized their local connections and content<\/b> to build a strong and growing subscriber base.\u00a0 Paul Bunyan has actually created a channel for the local weather, which has proven to be a very popular application.\u00a0 <\/p>\n A strong case for the production of local content by a telephone company was made by Wayne Vick<\/b> of Northern Telephone Cooperative.<\/b>\u00a0 As he put it, \u0093local content is the hook\u0094.\u00a0 Although they are not providing video services to televisions, they are producing content for limited Internet streaming and closed circuit application.\u00a0 By far, this presentation was the most impressive<\/b> of any that I saw, in terms of mixing the technology and content that everyone was discussing.\u00a0 <\/p>\n Vick has literally drafted local people to gladly create content that has local appeal.\u00a0 They are inexpensively producing local content covering topics such as politics, education, history and their own annual meeting.\u00a0 And judging by the audience reaction to the production they did documenting one Montanans attempt at breaking the world record for worm eating<\/b>, this content might have even wider appeal.\u00a0\u00a0 <\/p>\n Regulation and the independent telco video service provider:\u00a0 <\/p>\n Howard Shapiro<\/b>, an attorney for Bennet and Bennet, PLLC<\/b>, gave several presentations that could have been titled, \u0093cable television regulation 101 for the independent telephone companies.\u0094 He presented some of the regulatory aspects of the programming side of the business.\u00a0 Particularly interesting was his discussion of the trade-offs between operating as a franchised cable operator versus an Open Video System.\u00a0 <\/p>\n While Shapiro gave everyone a good foundation of the rules governing these forms of doing business, Gary Johnson<\/b> of Paul Bunyan Telephone<\/b> gave their real-world experience in being an OVS provider.\u00a0 It was ironic that PBT quickly won over the surrounding communities, but had the most difficult time with the local governing body in their hometown.\u00a0 Johnson\u0092s presentation showed a little perseverance and goodwill from being the local telco can influence the most stubborn politicians and bureaucrats to negotiate reasonable franchise terms.\u00a0 \u00a0\u00a0\u00a0\u00a0<\/p>\n Technology:<\/p>\n There was a great deal of good technology at this conference and a number of presentations I would have loved to attend.\u00a0 My focus, however, was on the programming, marketing and regulatory, since these represent the biggest challenges these days for a telco getting into video services.\u00a0 This is a good sign, as it says that the technology, while still open to endless innovation, is mature enough for the widespread deployment of video services by telcos.\u00a0 <\/p>\n I did hear a couple of things of particular interest.\u00a0 Caller Identification<\/strong> on the television was mentioned several times as a feature that will help differentiate the telcos’ product from the competition.\u00a0 At various points during the conference, this feature was described as a \u0093killer application\u0094.<\/b>\u00a0 <\/p>\n Another point of interest is the advances in encoding quality.\u00a0 Encoding rates, which have typically been in the 5 to 6 Megabit per second range for live, action programming (e.g. basketball games) over VDSL networks, are being pushed down to 3.2 megabits with some predicting sub-3 megabit rates<\/b> next year.\u00a0 The challenge with these rates, of course, is to keep the programming and content folks happy with the quality (the definition of which varies from content provider to content provider). \u00a0\u00a0\u00a0\u00a0<\/p>\n
make a strong case for the deployment of video services by a telephone company. He stated that this is, “a defining moment<\/strong> in IOC [independent operating company] history.” For Horizon, the move into video services was precipitated by a number of factors, including the urging of their city government, the threat to their future revenue stream by the incumbent cable operator and an opportunity to grow their existing business.<\/p>\n