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DeMuth Not Leaving Telecom...Yet

Bill DeMuth may be retiring as CTO of SureWest Communications (Nasdaq: SURW), but he's most likely not retiring from telecom. (See Surewest CTO Bill DeMuth Departs.)

DeMuth said today in an interview that he will take some time to relax and enjoy his family but then expects to do something else in telecom, putting his 34 years of experience to use.

The decision to leave SureWest at this point was a matter of good timing for both parties, DeMuth says.

"I had been thinking about retiring," says DeMuth, who turns 61 next week. "With some of the restructuring going on here at SureWest, I got to thinking that we could make it a benefit to the company and me. We were able to work something out and the timing was good."

SureWest announced its restructuring initiative days before DeMuth's announcement, saying it was trimming 60 positions, or 7 percent of its workforce, to reduce costs and focus the company more tightly on its consumer and business broadband strategies. (See SureWest to Cut 7%.)

DeMuth was a key part of that broadband strategy, steering SureWest through its pioneering efforts at deploying local loop fiber in 1995, when the company, then known as Roseville Telephone, deployed fiber-to-the-curb to a new senior residential complex, as well as through its current IPTV deployment, which dates back to 2002, well ahead of larger players such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). (See SureWest Flexes IPTV Muscle.)

Both IPTV and FTTH were challenging efforts, DeMuth admits, but the former proved more frustrating, partly because of the market timing.

"With FTTH, I always felt there was a bit more reward," he says. "IPTV took more effort than I anticipated. We at the time decided we'd be our own integrators and we liked the flexibility that IP would provide us. I think that integration effort was more challenging and daunting than I anticipated."

Part of the problem was that smaller telcos such as SureWest were the first to move on IPTV, but when some Tier 1 operators expressed an interest in the technology, "it slowed down some development for some of smaller companies because everyone was waiting to see what the big guys would choose," DeMuth said. "It meant real frustration on time to market."

SureWest would ultimately move to the Microsoft Corp. (Nasdaq: MSFT) IPTV platform, leaving behind the Minerva middleware it initially deployed, but that didn't happen until 2009. (See SureWest Deploying Microsoft Mediaroom.)

For the most part, SureWest was not a company that waited. When it became obvious that the first generation of passive optical network technology, known as BPON, wasn't adequate for its fiber-to-the-home needs, SureWest went with an active Ethernet system, ignoring the naysayers who thought an all-IP infrastructure was too risky.

"We launched in January 2004 commercially with an all-IP, fiber-based network and a lot of people saying 'Are you sure about this?' because IP didn't have the reliability of Sonet, and so we had to take a little bit of a leap of faith," DeMuth says. "Sometimes it works out we are able to follow what larger players are doing and sometimes we have market demands and we have to lead, to get out in front of them."

In general, SureWest has been a great place for DeMuth because of the company's long-standing willingness to innovate, dating back to early deployment of digital switching in the early '80s, and the fact that the market area the company served was also growing, and was a place known for technology.

"Just based on customer demand, whether residential customers or business customers, we had opportunities to go after," he says. "We were in this growth mode."

One disappointing aspect of smaller company life was realizing that some markets require scale for success, including wireless services, DeMuth says. SureWest ultimately sold off its wireless franchises.

"Just operating in the retail space and not having the availability of handsets as some other players had was a disappointment," DeMuth says. "It's one of those things that illustrates that in some services, you do have to have scale."

DeMuth doesn't think telcos are going away anytime soon, but believes they need to do a better job of focusing on consumer needs."

"What I see is the real opportunity for service providers is trying to understand what that customer demand is, what their pain points are, and [what it takes] for us to truly live up to the role of the service provider and address those needs," DeMuth says. "Some of the complexities in the home and variety of devices people have, those are prime opportunities for service providers to step in and help consumer through some of those complex decisions."

DeMuth compares what telcos can do in the home to what Apple did with the iPod in making digital music something easy for consumers to understand, use and buy.

"Even around Smart Grid initiatives and energy-saving things, I think there is a great opportunity for us as service providers to help the utilities communicate with whatever devices, but that also goes back to the consumer and if we can help them reduce energy consumption, we can all benefit," he says.

The question may be whether service providers can invest today in technology that may not pay off for some time, something SureWest has consistently done and for which the company has been criticized.

"If you look at the amount of capital we spend per revenue, we still have a huge untapped potential," DeMuth says. "Some of the investments we make are longer term and some of the investment community may struggle with that."

Recently, however, SureWest was able to use the fiber backbone it deployed more than a decade ago to link more than 200 cell sites for two wireless operators, providing backhaul services. "That fiber investment is starting to pay off in ways we knew would be coming, but we couldn't explain back then," DeMuth says.

— Carol Wilson, Chief Editor, Events, Light Reading

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