Video Over VDSL For CLECs

Next Level, the manufacturer of voice-enabled networking equipment, says its latest line cards enable ADSL+ and VDSL, that both cards can be used in the same chassis, and that they can deliver voice, video, and broadband.

by Alex Goldman ISP-Planet Associate Editor [April 11, 2003]

Next Level Communications (NLC), of Rohnert Park, Calif., has been in the news recently as Motorola made an unsolicited offer for the company.

Now, however, it's the company's technology that's the focus of attention. It claims that its latest line cards are a key part of its Next Level Full Service Access Platform, and can be swapped in as necessary.

The company says that its ADSL+ technology delivers 8 Mbps at about 10,000 feet and 10 Mbps at shorter distances. Its VDSL is designed to deliver 26 Mbps at 4,000 feet. At those speeds, the chassis itself requires serious backhaul, and must be in the CO or in a remote terminal served by the kind of bandwidth the OC-3 and OC-12 pipes can deliver.

Many of Next Level's customers are rural cooperatives or CLEC subsidiaries of small, local ILECs. Recently announced customers include MH Telecom (a CLEC subsidiary of local ILEC Mount Horeb Telecom) of Mount Horeb, Wi., and the Horry Telephone Cooperative (HTC) of Conway, S.C.

For these rural companies, video drives uptake of services, not data. While customers may not intuitively understand the benefits of 1.5 Mbps service, they enthuse about receiving 150 cable channels in an area that may have poor cable service or even none at all. The addition of voice and data services further differentiates these rural providers.

Notes Geoff Burke, Next Level director of marketing services, enthuses that bundled services are great for CLECs. "Not only is video a great driver for high speed Internet uptake—it's also great for very high margin services like long distance and caller ID. Some customers can get caller ID displayed on their TV screen. It's not the most technologically glamorous of the services we enable, but customers love it."

To deliver cable services, companies have to have a cable head-end, which they can build themselves for about $1 million, or they can band together to build a cable head-end. "In most states," says Burke, "customers are leveraging existing head-ends that already have access to statewide fiber rings."

Banding together allows small phone companies to share the costs of an expensive head-end. On November 25, 2002, Next Level announced that fourteen small ILEC customers in Minnesota had banded together to build a head-end. A Next Level press release noted, "The consortium, Broadband Visions LLC, shares the cost of a single, digital 'head-end' and negotiates as a unit for television content." Next Level concluded, "Broadband Visions LLC is the model for a growing trend among the country's nearly 1,000 smaller regional telephone companies, who derive great value from the reduced burden of building and maintaining their own video head-end."

"Most of our customers get cable content from the National Cable Television Cooperative," says Burke. The cooperative can provide an impressive list of programming to members. Companies can negotiate directly with content providers, but, unless they are large, nationwide providers, will probably not be able to get in the door to even begin negotiations.

Burke estimates that even after the costs of content and the head-end are included, companies could pay as low as $800 per customer (including a $400 gateway and a $100 install cost) to set up a customer, and about 1.5 times the ongoing costs of providing DSL alone. In return, he says they can get two or three times as much in revenues per customer—before factoring in that uptake rises significantly with the addition of video services.

For companies that built during the boom, the proposition can be especially attractive. Burke says, "If you've already spent a lot of money to overbuild a city, the extra revenue can make a huge difference."

Finally, he says that the bundle reduces churn. "If you have one service provider providing both entertainment and communications, that's a significant barrier to entry. If you're a CLEC, we've seen that video drives your differentiation from your local and ILEC competitors. You're no longer competing on price and service alone."

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