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Tiny ILECs See the Big Picture

Phil Harvey
1/16/2006
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Little by little, the nation's tiny incumbent carriers in the hinterlands are warming up to IPTV.

Today, in fact, Pannaway Networks announced its gear had been picked as the broadband service and IPTV delivery gear of choice for Arthur Mutual Telephone Company, a rural ILEC in northwest Ohio that has about 1,350 customers spread over 47 square miles. (See Arthur Deploys Pannaway.)

Arthur was founded in 1905 by a group of farmers, says the company's Website, which lists its mailing address as "Defiance, Ohio."

This isn't a huge deal in dollars or boxes deployed. But it's symbolic of a mindset that has changed. Smallish carriers are now buying into IPTV by name -- rather than just reselling satellite services or partnering with someone else to provide video services.

The change began late last year as the National Rural Telecommunications Cooperative (NRTC) and the National Telecommunications Cooperative Association (NTCA) -- two groups that are the voice of 1,700 rural phone companies and cable systems -- got together and started actively promoting IPTV to their members. (See NRTC, SES Take IPTV Rural.) More on that later.

The upshot is that some of the small carrier IPTV dollars that were frozen in 2005 may start to show up in a flurry of little deals during the next few months.

Arthur Mutual, part of Com Net, an Ohio-based consortium of 21 ILECs, says it picked Pannaway over comparable offerings from Occam Networks Inc. (Nasdaq: OCNW), Zhone Technologies Inc. (Nasdaq: ZHNE), Calix Inc. (NYSE: CALX), and TelStrat International . Though the willingness to deploy IPTV has finally kicked in, some technical hang-ups remain, according to general manager Janet Scholl.

The carrier hasn't, for instance, finalized what its channel line-up will be, or from where it will source its content. Also, it's still waiting on MPEG-4 capable set-top boxes, probably from Amino Technologies plc (London: AMO), to hit the market so it can deploy with the latest video compression available. "Since this is a whole new project for us, I really want to make sure I know what I'm doing," Scholl says.

This market momentum is good for smaller gear providers such as Pannaway, which has also won deals with other Com Net members, including Middlepoint Home Telephone Company, Ayersville Telephone Company, Fort Jennings Telephone Company, Vaughnsville Telephone Company, and Glandorf Telephone Company.

In addition to the deals that Pannaway and other gear providers will win here and there, the NRTC will soon begin to ramp up its IPTV marketing. The group is set to begin trialing its IPTV service, IP-PRIME, with member phone companies in four markets sometime this month.

The service is the result of a deal struck between the NRTC and SES Americom . A full commercial launch of that IPTV service will take place in the second quarter, though the specific carriers and markets haven't yet been announced.

— Phil Harvey, News Editor, Light Reading

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paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:08:57 AM
re: Tiny ILECs See the Big Picture

Actually Surewest is east of Sacramento. You belive that a cable system with the same specs would not take over 50% of the business? Given that they would be the incumbent? Get it now?

seven
paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:08:54 AM
re: Tiny ILECs See the Big Picture

Actually, all of those items are available in all major metro areas today on cable. For example, the major metro area near SureWest is San Franscisco. Comcast has all of those services including HDTV and VoD and DVR available today. So, today SureWest would NOT be competitive in San Francisco.

The point of this is that Surewest is not in a major metro area. They have actually a very small number of video customers and video is not available on their entire network. The fact that they are not in a major metro area means that they do not have the same level of competition. That was my entire point earlier, which for some reason you disputed. Thank you for having made my point for me.

seven
opticalwatcher
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opticalwatcher,
User Rank: Light Beer
12/5/2012 | 4:08:54 AM
re: Tiny ILECs See the Big Picture
"Actually Surewest is east of Sacramento. You belive that a cable system with the same specs would not take over 50% of the business? Given that they would be the incumbent? Get it now?"

Yeah, I get it. I'm talking about what Surewest is offering now, which greatly surpasses what is available on cable in most places today.

Talking about 'a cable system with the same specs' is playing the game of fantasy broadband.

Certainly cable will offer more in the future (I'm curious to see how DODSIS 3.0 will pan out). But like any competitive industry, it is a constant game of leapfrog.
opticalwatcher
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opticalwatcher,
User Rank: Light Beer
12/5/2012 | 4:08:53 AM
re: Tiny ILECs See the Big Picture
"Actually, all of those items are available in all major metro areas today on cable."

I'm in the SF area and I can assure you that cable does not offer 20Mb/sec and their price is higher than what Surewest is offering. That's why you see so many satellite dishes in the SF area.
paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:08:53 AM
re: Tiny ILECs See the Big Picture

You see sattelite because of Sunday ticket. And check the number of lines you can get 20Mb/s at Surewest (it is around 1,000 - their total video base is around 1500 or so). And those customers can not get 20M/bs when they are watching video.

Price is a separate factor and has nothing to do with technology. So, if SBC showed up with an IPTV offering at less than your satellite would you switch? They will be doing so theoretically in 6 months or so.

Again, where there is competition the 2nd provider gets a lot lower take rate. Satellite has between 15 - 20% of the video market. That's it and they have been at it for 10+ years.

seven
RTL Rules
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RTL Rules,
User Rank: Light Beer
12/5/2012 | 4:08:44 AM
re: Tiny ILECs See the Big Picture
Looks like more video customers are served by the Motorola (ex-NLC) system at MTS (50,000) than at Qwest (43,000).

http://www.motorola.com/mediac...

http://telephonyonline.com/mag...

RTL
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