Prospering in the Video Business

The WTA Spring 2008 Meeting featured a upbeat panel on the distribution of video by independent telcos. Gerald Duffy of Blooston, Mordkofsky, Dickens, Duffy & Prendergast moderated a panel that provided both the big and detailed picture of the video business. 

Ben Foster, VP of Sales and Marketing for Twin Valley Telephone, an early adopter of franchised IPTV explained how their system has achieved take-rates of 50 to 55% through bundling of local and long distance telephony, broadband and television.   Although they only make $3 to $4 per sub per month on their digital basic, this sets the foundation for additional margin features such as High Definition and PVRs. 

Foster explained that the in-home network, with its proliferation of noise-generating sources, such as furnaces and exercise machines, is as much of a challenge as the outside plant network. 

The Outside Plant Network is important as Catherine Button of Pannaway pointed out that the need for bandwidth is rapidly growing. She cited FTTH Council information that suggested that by 2010, the high-end capability of ADSL2+ will barely meet the lowest expected network bandwidths. As a result, Button suggested that FTTH is viable for not only greenfield (new infrastructure) deployments, but many brownfield (rebuilds) deployments as well.      

Shane Pierce of Falcon IP Complete explained the nuances of content acquisition and the various rights required from transport agreements (getting the content to the headend) and distribution agreements (right to distribute to consumers). He suggested that third-party aggregators streamline the process of obtaining distribution agreements to 60 to 90 days from what could take several years if negotiated directly with the content providers. 

Northeast Nebraska Telephone is one such company that is using an aggregator, NRTC, to offer IPTV. Northeast Nebraska Telephone has 14 analog cable systems that they found difficult to maintain and challenging to keep up to date in terms of providing competitive programming line-ups. They felt that a move to IPTV would help them spread the costs of their network over more services, while providing a better product to their customers. 

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