Video: Challenge and opportunity - Beyond the voice call

For the independent ILEC, video is diverse as the geographic landscape they serve. Getting into the video business brings not only a change in new technology but a new set of customer expectations in that like POTS service, they expect the TV to always work. Seeing an opportunity to expand their revenue base beyond traditional voice, many independent ILECs are either biting the bullet and building out an IPTV service or they run a cable TV business.

Some independents such as Middleburgh Telephone and ETC built their own cable network from scratch. Others such as Ritter bought their way into the business when they saw an opportunity to enhance their top line revenue growth with another service set.

After missing the opportunity purchase a local Cablevision franchise, Middleburgh provider decided to overbuild 50 percent of its ILEC territory with HFC. While not completely ruling out IPTV, Middleburgh felt that the more immediate practical route when considering FTTH strategy was to leverage the RF overlay model that worked well for large telcos such as Verizon and FiOS. Instead, Middleburg decided to upgrade their HFC head ends to 256 QAM.

"When we started to analyze whether or to go with IPTV or go digital QAM, the business model for IPTV did not prove out because the integration between set tops and middleware was not there," Becker said. "At the time, we said we made such a big investment in QAM and knew that BPON and GPON were on the horizon and the migration to an RF overlay network would allow us to maintain our digital and analog video offerings."

On a slightly different note, Ritter's video path began when it bought out a local 12,000-subscriber cable company in 2005. These properties resided not only its ILEC territory but also its surrounding Jonesboro, AK market. But Ritter's move into cable TV was anything but easy. In addition to having to practically rebuild the cable networks it bought from scratch, Ritter had an even bigger challenge of integrating the culture of a cable company with the reliability of the ILEC operation.

"We immediately became big or as bigger in cable TV as we had been in local telephone service," Waits said. "That was a real culture shock to our system. It was a culture shock enough building a competitive CLEC, but when we integrated cable TV on top of our smaller ILEC operations that was a big cultural transformation."

Waits added that while it was hard to achieve this cultural transformation, "we have tried to take the best of both worlds by molding together the traditional ILEC's penchant for reliability, but sprinkling in the frugality of rural cable TV."
From a technical perspective, Ritter decided that the best path to rebuild many cable franchises was one that used a fiber deep zero+node network.

Currently offering DOCSIS 2.0-based services, zero+node network implementation does not require Ritter to deploy traditional amplifier cascade that exists in typical cable networks. By bringing the HFC element down to only 800 feet near each home, the zezo+ node network enables, it gains the efficiencies of FTTP without having to take fiber to every home.

Going forward, Waits says that the long-terms strategy would enable it to expand more broadband and video services in areas where AT&T won't likely bring its U-Verse service.

Other incumbents may be still wary about going to IPTV, but Canby Telcom decided to bite the bullet. Of course, the company's IPTV ambitions have come with its own series of headaches.

Echoing similar concerns of fellow independent ILEC Middleburgh with compatibility between network elements, Canby is continuing to roll out IPTV, but a major obstacle has been lack of vendor compatibility. In particular, middleware has been Canby's biggest IPTV headache.

"One of the things we're not happy with is our TV product because our middleware vendor is not delivering a quality product and we're in the throes of looking at a new middleware vendor," Galitz said.

Video: Challenge and opportunity - Beyond the voice call