As Independents roll out IPTV services, they are finding that producing their own television programs can help them stand out from the competition

Video customers of smaller, more rural telcos such as Farmer’s Mutual Cooperative Telephone Co., diversiCOM/Melrose Telephone Co. and Ellijay Telephone Co. have something their big city brethren don’t — locally produced content covering local events, personalities, music and more. The shows often are produced on a shoestring budget, and the old adage about necessity being the mother of invention certainly applies.

Farmer’s Mutual, an Independent telco serving about 1000 video subscribers in rural Iowa, covers a lot of high school sports, often putting the video camera in the hands of an employee who has a child on the team. To add a professional touch, the company has a deal with a local radio station to use the station’s audio feed from the same game to accompany the video.

In rural Minnesota, diversiCOM/Melrose Telephone Co., an ILEC and CLEC that serves about 3000 subscribers, produces nine of its own programs, some shot on location and others in the company’s small studio. One of its most popular programs is a call-in show airing every Friday evening that began on a whim when two employees decided to go live.

Ellijay Telephone Co., also an ILEC and CLEC, serves 60,000 subscribers in northern Georgia, including more than 13,000 who take video service. The company, known as ETC, now produces 25 original programs — many out of its own studio, which has several sets so different looks can be created for all of its shows. A large wall panel that looks like barn siding and some hay bales set the stage for a bluegrass music show, while a camouflage backdrop and a couple of rifles and helmets create the mood for the company’s Those Who Served show featuring local veterans talking about their war experiences. ETC also gained minor fame when the host of its cooking show, Hans Rueffert, appeared as a finalist on the first season of The Next Food Network Star, which aired on the Food Network cable channel.

Local content creation typically isn’t a money-maker, but telcos say it can benefit the community, differentiate a telco from cable and satellite competitors, and inspire loyalty among existing customers. Without it, the telcos can end up competing on price alone, and that’s almost always a losing proposition.

While there are about 1000 Independent telcos in the U.S., only about 80 of them are producing local content today. But that number is growing rapidly, said Ken Pyle, president of Viodi, a company that helps small telcos develop video strategies.

In addition to providing consulting and education services, Viodi hosts a series of workshops that showcase innovative examples of local content. “I’m always amazed at the creativity these companies show,” Pyle said. “It can be a daunting task to go from being an organization that’s been a telephone company for a hundred years to suddenly becoming a TV studio — a mini media conglomerate — for their communities, but they’re doing it.”

In some cases, the telco also is the cable company, and the only competing provider is satellite. But in other cases telcos are rolling out IPTV as a way to compete with an incumbent cable operator. In both instances, local programming can serve as a unique differentiator.

“I’ve seen companies start off with a $6000 investment, maybe even less, and I’ve seen others invest half a million dollars,” Pyle said. “It’s possible to do quite a bit with very little investment.”

Farmer’s Mutual Cooperative Telephone Co., also known as FMCTC, has been providing local content, mostly sports coverage, for about three years. “We were a slow starter,” said Tom Conry, general manager of FMCTC. “We began with a very inexpensive camera and a staff member who liked to dabble in video.”

FMCTC’s initial investment was about $2000, which included a camera, a computer and some video-editing software. The company later added more cameras, including a high-definition (HD) camera, additional computers and software for editing, as well as better-quality tripods, so that it now has about $25,000 invested in its content business, Conry said. The company has one full-time employee devoted to local programming.

By contrast, ETC over the past eight years has built a sophisticated content business that supports four local channels. One channel is dedicated to new programming and three air archival footage — one focusing on sports, one on music and the other on the rest of the content stocked in the library. The company also operates two additional channels of local advertising, which some people actually watch. Overall, 25% of ETC customers watch some local content daily, and another 35% watch it weekly.

The company is the only cable provider in its region, so it had a distinct advantage starting out: It already owned ad-insertion equipment. That meant the company could begin producing ads immediately to offset the cost of developing its own content.

ETC’s content business grew out of its ad business after the telco built a TV studio so that it could produce commercial spots for local advertisers. The company now employs 16 full-time staff members dedicated to its content business, and that doesn’t include the shows’ hosts, who also are paid.

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