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Last week, FierceIPTV related the experiences of four telephone company executives involved in launching IPTV operations. Today, the conversation turns to obstacles, frustrations and goals:
"When someone's phone service doesn't work, you'll hear about it. If their TV sets aren't working, you've got a problem," said Phil Erli, executive vice president of Ringgold Telephone Co. of Ringgold, Ga. "The other thing, is what it does … our company has evolved more in the last four years than in any other time."
Bill DeMuth is chief technology officer of Surewest in Sacramento, Calif., the biggest of the four telcos. DeMuth credited competition for driving the deployment. "We're fortunate we have giants to compete with. It's been good for us years ahead to get into that competitive mode. It brings out completely different talents."
Some of those different talents had to be developed for program negotiations. Networks considered crucial to a basic multichannel pay package don't come cheap, and even broadcasters are starting to seek cash for carriage. It's one thing for Comcast, with something like 21 million subscribers, to negotiate with program executives like the fabled Lindsay Gardner, formerly of Fox. It's a whole different ball of wax for operations with 1,000 TV subscribers.
"We're hitting all our numbers, except we're missing our programming numbers, which have been skyrocketing," said Keith Galitz, president of Canby Telecom, in Canby, Ore. "Their idea of good-faith negotiations is different than what I do."
Erli said indie telcos need to negotiate as a group, which is in part what of IP-Prime provides. "I have a real concern about the availability and affordability of content," he said. "Looking at HD content with local affiliates, it's like getting guns stuck to your ribs."
West Kentucky Rural Telephone south of St. Louis is among the first telcos to deploy IP-Prime, a cooperative effort of two telco lobbies and SES Americom, the media satellite firm in Princeton, N.J. Trevor Bonstetter, CEO of West Kentucky, said collective bargaining was one of the advantages of the service. "The independent company's way of survival is to join forces and use it's buying power like it's never done before. That's how it's going to take place," he said. "Until we can get to the point where the content is more affordable, it's going to be tough."
Getting programming is one thing. Getting it to people's television is another. IPTV technology is relatively new and untried. DeMuth said AT&T's entry into IPTV helped boost MPEG-2/4 set-top development. Galitz has made no secret of Canby's problems with Myrio middleware. "It's taken over a year to get to their current release," he said. "We had a moratorium on set-tops where we couldn't sell for six months. None of us feel we've got a solid middleware solution out there."
MPEG-2 IPTV platforms launched just three or four years ago are at a disadvantage because they don't do HD, and most of these executives consider HD necessary to compete. "The biggest challenge we all face is trying to match what cable offers," Erli said. "We're offering MPEG-2 over copper. For the higher end consumer who wants HD, I'm not even considered. The only thing we have to compete with is price, and most of us aren't able to compete with these big companies on price. Even with the bundle, consumers are expecting a discount."
"I agree," Galitz said. "I wish I had Bill's company, where I already had the fiber in the ground. We're trying to find balance with fiber and investment. … When we launched in October '05, we thought we'd have five years before HD was a must. Now, you walk into a Wal-Mart or a Costco, and all there is are HDTVs."
All agreed HD capability is the next step in their IPTV development. "We're in a very competitive marketplace," Erli said. "But I'm not finding any phone companies out there that are growing their wireline business. As tough as IPTV's been, you don't have a lot of choice." --Deborah