BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.
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B7+(B%$1':,'7+B+$:.B Resurgence of the PCO? A decade after the private cable operator model failed, new technologies and financial models may be bringing it back to life. There's fiber backhaul for satellite-fed MDUs, new sources of capital and revenue, and many new players. Broadband Communities is here to help. By Steven S. Ross ■ Broadband Communities I t may not be your father's idea of a private cable operator (PCO), and old-line PCO owners may not recog- nize it, but the PCO is making a come- back. Fiber technology and the need for satellite operators to compete and grow may have become game chang- ers. Oddly enough, the large telcos have shown what is possible – and necessary. Te fiber-to-the-home revolution and changes in FCC rules that once re- quired large telcos and cable companies to share their networks left PCOs little room to maneuver until a few years ago. Tat's a shame. PCOs offer prop- erty owners a way to provide residents with unique programming. In a build- ing where many Croatian immigrants live, a PCO can offer Croatian content. In a building where sports program- ming isn't needed, a PCO can tailor a lineup that will cut residents' cable TV bills. PCOs also had (and have) a reputa- tion for reacting quickly to fast-shifting needs and for offering better service than franchise cable operators. PCOs can charge less for video, too, because they are not subject to munici- pal franchise fees unless their systems cross public rights-of-way. However, the PCO model wilted in the face of increased competition from MSOs and telcos, the reluctance of the FCC to loosen regulations on long-term contracts and other matters, tightened access to capital, the persistence of the recession and increases in the costs of wiring buildings and turning up service. Te expense and difficulty of supple- menting satellite-borne video with terres- trial phone and data services didn't help. A NEW BEGINNING? Many long-established PCOs survive, but new builds are rare. Now the PCO model could be coming back, with some important differences. Michael Render, president of the market research firm RVA LLC, notes that 400,000 U.S. households with FTTH connections are in multiple-dwelling-unit (MDU) properties and planned-unit develop- ments that are served by amenity pro- viders, real estate developers, competi- tive local exchange carriers (CLECs) or small incumbent local exchange carriers (ILECs) operating outside their foot- prints as CLECs. In addition, some major telcos have developed what amounts to nimble, flexible "PCO divisions." Most notable are Verizon Enhanced Communities and AT&T; Connected Communities. Many telcos and cable companies part- ner with third parties to serve markets the majors don't like. Students, for in- stance, make up an inherently high- churn, low-credit-rating market that craves broadband and premium video content. But Time Warner Cable part- ners with operators such as Korcett to serve that market. Most encouraging for PCOs and for consumers, the major satellite providers (DISH Network and DIRECTV) have refined their strategies over the past year to involve PCOs in agreements in which the satellite companies provide video About the Author Contact the Hawk at steve@bbcmag.com. 6 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | MAY/JUNE 2012 and maybe some financial backing for local PCOs to wire customer buildings. DIRECTV in particular has been dili- gently and quietly building a fiber net- work that passes thousands (and maybe tens of thousands) of urban MDUs. Almost none of those passings are rep- resented in Render's twice-yearly report on FTTH (his latest findings are in this issue). Tat helps PCOs solve the problem of providing data and landline phone service. At the same time, satellite pro- viders' interest in financing even a small portion of an MDU build could unlock local bank financing as well. Tis spring, Broadband Commu- funded the first major, public nities marketing study of MDU operators' attitudes about FTTH. Render, who was contracted to perform the study, presented it at the Broadband Com- munities Summit in April. A far more complete report will appear in the July issue of this magazine. One find- ing: Most MDU operators don't even know what FTTH is. Operators in- terested in PCO financing can check out my Financial Tool #2 at www. FTTHAnalyzer.com. We're looking forward to educat- ing a new generation of MDU owners and operators. After all, this magazine started as a publication exclusively for PCO operators. Now FTTH may help bring them back to robust life. Y