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by Ken
Freed Galaxy
Cable in the central United States is funding its
digital upgrade with income from broadband services
to education and health customers. In
the move to digital cable, given the deep pockets
needed for upgrading plant and customer premise
equipment, how can a small to medium-sized cable
system afford to deploy advanced services?
For a viable solution,
consider the strategy of Galaxy Telecom in
Sikeston, Mo., a multiple system operator (MSO)
owning about 550 smaller cable systems in the rural
midwest and south. Galaxy has run about 2000 miles
of fiber, half in Nebraska alone, putting fiber
into nearly 60 rural communities from Omaha to
Grand Island. Galaxy also has upgraded systems in
Missouri, Kansas and Mississippi. How can they afford these
rebuilds? Galaxy offers hybrid
fiber-coax (HFC) broadband connections to local
schools and hospitals at fees far below local
telephone company rates for slower T1 services --
if available. Revenues from commercial customers
fund Galaxy's delivery of digital services to area
homes. A win/win for everybody. "Deploying digital
services is very difficult from an economic
standpoint," says Terry Cordova, sr vp for
engineering at Galaxy.
He's talking from a cellphone while driving south
of St. Louis. "It's tough to go out to rural
markets and upgrade the systems to launch the
advanced services like video-on-demand, cable
modems, and IP telephony. We cannot rely on basic
cable rates to fuel the growth of our
business." A tactic in Galaxy's
strategy is reducing the actual cost of deployment,
he explains. "Because there's a lot of commonalty
in headend equipment, such as ad insertion
equipment or file servers, we've cut costs by
consolidating the headends from 175 systems so
far." Neighboring plants that before had served at
most 500 subscribers each, Cordova says, are being
aggregated into regional headends serving from 2000
to 10,000 customers each. "Just like plants in the
urban areas," he says, "we're building a lot of
extra fiber capacity into our rural systems,
running six- or eight-count fibers into each node,
averaging one or two nodes per town and the
surrounding area. This gives us the bandwidth we
need to offer other services beside basic and
premium channels. "We've developed revenues
from niche markets," he says. "We're offering video
conferencing, wide area networking and high-speed
Internet access to needy customers, the schools and
hospitals in rural areas." Among the community
benefits, video conferencing allows a small town
high school without a calculus or French teacher to
present lectures from teachers elsewhere. Local
students also can collaborate with distant students
on special learning projects. Galaxy's network already
includes six Nebraska community colleges along with
Southern Missouri State University, which has
campuses in four towns. "Our mission in Missouri,"
he says, "is to establish broadband Internet
connections for every school district in the state,
and we now have 95 percent connected. Missouri
ranks third in the country for the integration of
technology into the classroom, making it a model
for other states." All these schools are tied
together through Galaxy's distance learning
network, he says. "They're sharing teacher
resources as well as educational media. This means
a rural cable system can distribute top-quality
college level courses to local high schools, and
local adults wishing to take a college-level class
do not need to drive for hours to the nearest city.
Instead, they can go to the local high school in
the evening for that same class delivered by
cable." Local distance learning
markets will continue to grow, he predicts. "Higher
education courses are now available through the
cable network into the workplace itself. For
example, we've sold local and regional hospitals on
the advantages of wide area networks and video
conferencing for telemedicine." Not only can hospital
staff stay current with the latest medical advances
for continuing education credits, he says, but
doctors can consult with distant specialists
whenever needed, such as the live video feed from
arthroscopic knee surgery going out to experts at a
top clinic a thousand miles away. "Doctors see some pretty
deep applications for broadband services," Cordova
says, "as do educators, so we're going to be
successful selling digital access to them. And part
of the reason is that both public and private
educational and health facilities in these small
towns have not had a choice until now." The only other option has
been the local telephone company, he says, and
affordable T1 phone lines at 1.5 kilobits for data
services cannot beat HFC cable speeds at 100
Megabits, and at least a D3 telco line is needed
for full-motion video transport. "Cable operators
can take advantage of the migration in loyalties to
win more telecom customers." Cost provides the
competitive advantage. "Hospitals and schools in
small towns cannot afford $10,000 to $15,000 a
month for D3 phonelines. On the other hand, we can
come in for just $1,500 a month and give them a
whole lot more functionality over an HFC cable, and
we can do it at a significant savings, close to the
price of a T1 line." Seeing this advantages, he
says, a few independent phone exchange carriers in
the rural midwest have approached Galaxy about
partnering on local point- of-presence (POP)
switches. Instead of buying this capacity from
USWest or BellSouth, local exchanges can pay Galaxy
for packet data switching at nodes designed with
voice in mind. Cordova identifies the
primary challenge and opportunity for cable
operators. "Programming rates are rising two to
four percent every year, but we risk losing
residential customers to direct broadcast if we
raise our rates, and we cannot afford to give any
services away. If we're keeping the same cash flow,
profitability depends on working the margins. To
take pressure off our basic subs, we can keep basic
rates the same yet offer more choices to expand
their buy, such as pay-per-view or IP
telephony. "All the services we sell
apart from basic cable help us pay down the costs
of deploying fiber in the first place, which
includes connecting local schools and hospitals.
And the rural customers paying for our upgrades, in
the end, benefit from having a brand new digital
cable system in place that can handle the same
traffic as the most sophisticated urban system.
That's a significant statement in our
industry." Visit
Galaxy
Cable
-- http://www.galaxycable.com For
More Information on Distance Learning: (c)
1998-2000
by
Ken
Freed.
From a 1998 Western Cable Show story
written for Extra
Extra,
the cable TV trade show daily. .
New
in the CASTING
THE NET OVER GLOBAL
LEARNING An
comprehensive overview of critical advances in k-12
and higher education along with corporate training
and lifelong learning.
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