Farmers Telephone Cooperative of South Carolina will be the first telco in North America to deploy an MPEG4-AVD digital headend, according to Tut Systems, which announced the deployment today.

Based in Kingstree, S.C., Farmers will use Tut's Astria Digital TV platform to serve as the core video processing system for its headend. Tut also is providing systems integration services for the project, which is expected to culminate in a fourth quarter service launch.

FTC, the third largest telephone cooperative in the U.S., serves more than 60,000 customers and will add the video service to its existing local, long-distance, paging, wireless, high-speed Internet, business and data networking products.

The move to MPEG4 gives the company about a 40% bandwidth savings compared to traditional MPEG2 encoding, said Craig Bender, vice president of marketing and corporate development for Tut.

"You get the savings in the cost of transport," he said. "You can send signals further over DSL so you don't have to push fiber as deep."

At the same time, there's four to five times more processing power required in MPEG4-AVD versus MPEG2. Typically, signals coming off of satellite will be converted from MPEG2 to MPEG4 by the Astria platform. Off-air channels will be encoded from their analog format.

The deployment comes at a time when the telco TV industry is anxious to get the MPEG4 solutions out for testing. However, the entire chain of suppliers, from chip vendors to set-top box manufacturers, have been behind schedule, Bender said.

"We've got a couple [of set-tops] being trialed now," he said. "We had hoped to have a number of alternatives available right now, but it's going to take another three months to get all the bugs worked out."

At next week's Supercomm show, several set-top vendors are expected to have prototype MPEG4 boxes, but they won't be in their final version until later this summer. In Farmer's case, the telco is using a reference design for testing purposes.