ATLANTA--Transforming a company from a traditional telco into a modern converged communications and entertainment provider is no small task, but you don’t need to tell this to the CEOs who are already taking their companies through the revolution. Whether it’s a small, rural co-op or a CLEC credited with deploying the first end-to-end MPEG-4 solution, the path to IPTV is bound to be fraught with challenges.

Three telco CEOs making the jump to IPTV – Trevor Bonstetter, CEO of West Kentucky Rural Telephone, Brad Evans, Chairman and CEO of Cavalier, and Levoy Knowles, CEO of Ben Lomand Telephone – came together at TelcoTV to discuss their companies’ respective progress in IPTV. Despite having different company dynamics, all three shared a similar perspective on the industry and the obstacles to going all-IP.

In rolling out IPTV, every day brought with it a new technological challenge, said Bonstetter, whose company, WKRT, began the IPTV rollout on July 1 of this year. However, more trying than technological issues were the administrative ones, he said. For WKRT, it was a challenge to rally the company behind the deployment and collectively overcome the apprehension inherent in rolling out a new product.

Cavalier’s Evans outlined three major issues that his company faced in making the transition to IP. First was getting franchises. Second, challenges associated with programming and negotiating MPEG-4 distribution agreements were widespread. Like WKRT, the third challenge centered on the technology. He found the biggest disappoint to be working with set-top box and head-end vendors who did not deploy their equipment at promised times.

“With IP conversion, there’s a lot of moving parts,” Knowles said. “Vendors struggled with their own issues, and we, as the providers, had to put it all together.”

All three agreed that the process has been a big learning curve. Bonstetter said Cavalier had to rewire homes and faced added plant problems brought on by the 100-degree Kentucky weather. In the home, issues such as where customers would allow installations – not blocking the view of the television from the treadmill, he joked – were also impediments to the company’s progress.

Knowles differed, saying that plant issues were much more of a hindrance than any in-home obstacles they faced. “The plant is a must,” he said. “It must be in good shape and with a short loop.” Ben Lomand Telephone currently has 65 to 75 deployments complete and installs 80 to 90 customers per week

For Bonstetter, the plant itself was not the problem. “We have a good plant, it is just being used for a different purpose,” he said. “The transition is the problem…going from telephone to IP requires reworking the network.” He estimated that 85% to 90% of his customers are currently equipped with video.

“We started looking into technology four years ago,” Knowles said. “We decided to build our loop short enough to put video in it. We almost got ahead of the technology curve and made our loop too long and had to go back.” At the same time, Knowles said the company was pushing DSL and losing access lines and customers – over 1,500 in the past five years. He knew they would have to diversify into broadband, so the company pushed DSL, then moved into video.

For Evans, the move into video came not from a natural progression but more from a recognition of survival of the fittest. “We knew if we didn’t have triple play, our competitors would wipe us out,” Evans said. “We made the big investment, even knowing it would take a while to get a return on our investment.”

WKRT’s business plan is looking better than when Bonstetter first sat down to map it out, he said. Although competition in the area is stiff – there are five cable companies competing nearby – the company is expecting profitability by its third year.

“We went from digital to IP, and it’s still a long road to go,” Bonstetter said. “The big part is recognizing that you won’t be the telephony company you were in the years before.” His employees went through 10 extensive nights of IP training to learn about the transition. “It was an important thing for us to understand what we are and what we would become,” he said.

The CEOs agreed that their customers’ patience for entertainment is just not there like it is for telephony and Internet services. While a provider can get away with a blip on the Internet or phone, a higher degree of scrutiny has always applied to the TV set.

The level of scrutiny is even further heightened by the fact that customers do have other choices. Unlike WKRT, which is accustomed to stiff cable competition, Ben Lomand Telephone and Cavalier are more concerned about satellite competitors. Both CEOs said their companies are having some impact on their satellite competitors, but their presence is still felt in rural areas.

All three concluded that regardless of their motivation for deploying IPTV or their means to achieve it, they are in business to serve their local areas, in spite of the added stress and challenges it may bring.

Knowles would like to offer his customers a whole host of IP services to accommodate their desire for choice, but right now is just “fighting to get a foot in the door with a low-priced product.” Similarly, Bonstetter said that his goal is not to increase revenues and turn a profit. Rather, his business model is based on the idea that his company can provide services that would otherwise not be provided in his rural area. His goal is simply not to lose money at this point.

Even Evans, whose company is larger in size than the rural co-ops, is focused on delivering services as efficiently as he can. “We are building our network as cheaply as possible,” Evans said. “If we can’t make it, then I don’t see how anyone else can…We’re providing a service that most could otherwise not get and we’re doing it at the local level.”