Not so long ago, the heart of Hancock Telecom in the tiny town of Maxwell was a concrete bunker ticking with the solenoids of telephone switching equipment.
But about a year ago, the devices were moved to a corner to make room for rack after rack of satellite receivers-fed by a 32-foot dish big enough to cap a corn silo.
The product: 176 channels of network and local TV programming that leave headquarters in the form of pulsing light via fiber-optic cable, connected to 287 homes in nearby McCordsville.
Besides "Laverne & Shirley" reruns, that cable simultaneously carries broadband data and plain, old telephone service. Early last year, Hancock Telecom became the first telephone company in the metro area to offer the so-called triple play of video, voice and data via a single household connection.
Cable TV companies such as Comcast have been doing this for a few years now, through their does-it-all coaxial cable. But phone companies have struggled with both technology and regulatory hurdles.
Hancock Telecom, a 10,000-customer phone cooperative, offers a peek at what giant AT&T plans to offer this fall in Indianapolis, assuming the Indiana Legislature doesn't hang up on telecommunications reform currently under consideration. The other big phone company in the state, Verizon, is building a fiber-based network to deliver the triple play in northern Indiana.
With some variations, the basic platform used by the telcos is called Internet protocol television. IPTV is projected to grow to 3.4 million subscribers in the United States by 2010 from about 273,000 in 2004, according to Londonbased Informa Telecoms & Media. That estimate may be low.
At the small Hancock County phone company whose roots date to 19 years after Alexander Graham Bell invented the telephone, the ability to deliver video through fiber-optic lines was deemed essential to its survival.
"The handwriting was on the wall, strategically. If we remained a copper [line] company and all we offered was plain, old telephone service, instead of having 10,000 customers we'd have 5,000. ... We would be a shrinking company," said Michael R. Burrow, vice president and general counsel of Hancock Telecom.
By the end of this year, Hancock plans to double its so-called "fiber-to-thehome" deployment to 10 percent of its customers.
Within six years, it plans to be at 100-percent fiber, allowing it to serve customers in parts of Hancock, Henry, Madison and Marion counties. While big telcos such as AT&T want the Legislature to cut it a break by enacting a statewide video franchising requirement, little Hancock Telecom struck deals with the county and McCordsville with little hassle.
Availability of infrastructure hasn't been a monumental problem, either. Most of the neighborhoods served by video are relatively new and were wired with fiber early on. Once the fiber is installed up to a house, it is split into conventional copper phone wires already in the walls. Copper can carry vast amounts of data, but only for about 4,500 feet.
Wrung out by competitors
Hancock Telecom has faced competition on a number of fronts, including wireless.
"They lost a lot of customers to just plain cell phones," John Koppin, president of the Indiana Telecommunications Association, said of many of his telephone company members.
Lately, they have faced competition for basic phone service from voice over Internet protocol, or VOIP, from companies such as Vonage.
By 2010, the number of VOIP subscribers in the United States could grow to 20.4 million from 1.2 million in 2004, according to Darien, Conn.-based Jupiter Research.
Competition has been especially tough for rural phone companies, Koppin said, because infrastructure improvements are more costly when spread over a sparse population density.
"In rural areas, these companies are having to become more entrepreneurial. They have to find more market revenues. The triple play provides basically three sources of revenue to support the [fiber] line," Koppin added.
"We have to differentiate ourselves in the market," said Hancock Telecom's Burrow.
One differentiating factor that lured customer Brian Dowden was the ability to get video, voice and data on one bill and at a discounted price.
The McCordsville resident who was one of the first to sign up for Hancock's triple play pays about $100 a month for all three-vs. around $170 when he purchased the services from multiple firms.
"It's a lot cheaper bundling the services," Dowden said.
His only gripes are that, when he built his house, he had it wired with cable TV coaxial cable in key rooms, and that he wants the phone company to make available a digital video recorder.
Dowden said the phone company told him a recorder that can handle the signal will be available soon. Overall, "We're pretty happy with it," he said of Hancock's triple play.
Another way Hancock Telecom can differentiate itself is through local video programming and commercial applications.
It's been putting together programs, including one on a successful Knightstown coach. Local interest was strong enough to draw 10 new customers.
"I've become Larry King all of the sudden," said David Spencer, Hancock Telecom's sales and public relations manager and show host. The network known as "HTV" also landed a cooking show hosted by a former Purdue University extension service agent.
The phone company also has been chewing the fat with a local theater group and with Hancock Regional Hospital about producing shows.
Another idea being kicked around is mounting a Web cam in the McCordsville area to give customers a gander at rush hour traffic at the busy intersection of Mount Comfort Road and Pendleton Pike.
Competing with cable
While compelling programming and services will be key for telephone companies offering the triple play to steal market share from cable operators, so will pricing, according to Dallas-based market research firm Parks Associates.
In a recent report, Parks estimated that only 4.1 million subscribers are likely to select a telecom operator for a "basic triple play package" vs. 12.8 million heading to cable providers.
Nearly 33 percent of consumers Parks surveyed said they were willing to switch to a telecom operator for video services "if they are offered $20 or more in discounts."
Of course, consumers aren't the only potential customers-so are commercial users. Multimedia manager John Painter figures the Hancock system is capable of offering bandwidth of over 100 megabits per second. In residential uses, 20 to 40 mbps is standard now.
Bandwidth has become an economic development issue, Burrow said. Hancock County economic development officials have indicated that the county was in the running for at least one major project because of the ability to move big buckets of bandwidth.
The pipeline also has medical implications. A clinic in Knightstown uses the fiber network to trade not only data with Hancock Regional Hospital, but also video, allowing doctors at the hospital to see a wound in high detail.
The technology also has potential use in distance learning, such as allowing students in one cash-strapped school to receive instruction from a teacher in another school.
In the meantime, Hancock Telecom is trying to expand its reach to residential customers. It also plans to put high-definition TV signals over the system later this year once it gets a shipment of set-top decoder boxes.
The company is using its Maxwell video facility to feed TV signal to a half dozen other small phone companies around the state now or soon-to-be offering IPTV. Distribution is possible because the telcos belong to the Indiana Fiber Network, a 1,300-mile fiber backbone that weaves through the state.
"If they can't deploy broadband fast enough and they remain a plain, old telephone system, then you start the death spiral," Burrow said.