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Utilities agency supplies video, voice and data to residents 7/04/2004 08:00:00 PM Eastern

It's usually the telephone or cable company that offers the triple play of voice, video and data services. But residents of New Smyrna Beach, Fla., have an unusual supplier: the local utilities commission.

"We'll be up and running with the service within a week for about 2,000 customers," says Ron Vaden, general manager, New Smyrna Beach Utilities Commission. "Then we'll get back to overbuilding the rest of the city."

The 2,000 customers live in a new residential community that promised homeowners a fiber-connected abode unique to the city: phone, high-speed Internet and cable-TV service beginning at $90 a month. Brighthouse Communications is the city's cable operator, but it can't deliver the goods. Therefore, Vaden and the Utilities Commission seized the opportunity.

"We'll be in the black within 12 months," Vaden predicts.

One reason he's so confident is that the company expects to grab more than 90% of the new development's available subscribers. Also, he thinks the utility will pull in more than $150 a month per subscriber, since residents will probably sign up for product offerings far more expensive than the basic package.

That will enable the utility to roll out the system more quickly. Vaden says it will take five years and about $3 million for the entire city to be wired for these services.

Most overbuilders run into the challenge of taking on an incumbent cable or phone company that can easily match or beat price points and service offerings. Vaden, however, doesn't believe that concern applies to the utility commission.

"We don't see ourselves at a disadvantage because we have the development up and running [with the utility services], and we have the poles and the crews that string the wire," he says. "We can do it all in-house."

The utility also enlisted the help of the developer. If the developer picked up the cost of installing the fiber conduit, the utility would absorb the cost of pulling the fiber. The developer said yes, and the utility's costs were cut even further.

"We have six more residential areas that are installing the conduits," says Vaden. "While they have some costs, they'll also be able to offer the homeowners access to our services."

The fiber runs and drivers were installed by Optical Solutions. Skystream's Mediaplex-20 and Myrio's IP Video Platform will be used at the headend of the fiber network to multiplex, encode and route the video content.

Jeff Houle, director of telco sales for SkyStream, sees continued growth in municipalities and overbuilders. "They now comprise about 25% of my sales pipeline," he says. "New Smyrna was much more progressive than others because it's installing an IP switched video network. They can have all kinds of two-way services, like VOD."

Vaden says another reason the utility chose IP was its ability to deliver more bandwidth-intensive services, like high-definition television. He expects HDTV channels to be offered within three months.

Systems based on fiber to the home can offer HDTV services today, Houle points out, as opposed to other approaches. DSL, for example, needs to wait for MPEG-4 to compress HD signals to 6 MHz. In 2005, he says, the technology will be available for DSLs to offer HDTV. For now, New Smyrna's capital costs are done; the utility is simply paying SkyStream and Myrio for additional subscriber licenses.

Says Vaden, "Once we're profitable on the first part of the installation, the rest of the rollout is gravy."

 

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