Howard Juul, vice president of network planning for Iowa Network Services, spends a fair amount of time commuting between his job in Des Moines, Iowa, and his home near Minneapolis. It's time in which he gets a chance to think about the challenges facing INS, which provides a variety of transport and other services to roughly 135 independents around the state.

On one of those recent drives, Juul started mulling over details of the company's growth plan for providing a centralized video headend for members' video implementations. And something just wasn't right.

“We had initially intended to introduce MPEG-4 on a phased basis,” he said. “During one of my weekend drives, I got to thinking that this plan of gradually phasing in MPEG-4 just isn't going to work. All the new companies that are coming along are going to want to cap their investment on MPEG-2.”

MPEG-2 video compression has been available for almost a decade and is used across the cable industry, making it relatively inexpensive to deploy. But for a number of reasons, telcos are pushing to move to MPEG-4 as fast as possible. So, like a small but increasing number of independents nationwide, INS has decided to bite the bullet and build a completely separate facility for MPEG-4. In a six-phase process, the company has started by reconfiguring its existing headend to mine some physical space for the MPEG-4 equipment. It has ordered Tut Systems' MPEG-4 headend gear and expects to have that in place and operational in the next few weeks.

“We just said, ‘Let's just go for broke,’” Juul said. “We'll maintain MPEG-2 and MPEG-4 simultaneously. We'll try to figure out a time when we can decommission the MPEG-2, but that's down the road.”

The move to MPEG-4 comes at a time when the entire video industry, and in particular the IPTV segment, is anxiously awaiting delivery of the first set-top boxes that will be compatible with the new compression. Set-top vendors have been promising MPEG-4 boxes that can run standard definition (SD) since the middle of last year. The current thinking among telcos is that MPEG-4 won't be sitting on consumers' TVs until well into the summer.

“We're hearing from the set-top box manufacturers themselves that SD and HD [high-definition] set-top boxes are going to be out first quarter or second quarter,” said Bill Shoemaker, planning engineer with INS. “Then you've got the testing. The HD boxes require a system-on-a-chip, and it looks like those are going to be later than originally planned, but they're still talking June or July.”

So why make the leap? In a word: bandwidth.

With MPEG-2, most SD MPEG-2 streams use up about 3 Mb/s (though there is wide variation depending on the content and requirements of the networks) while HD requires anywhere from 12 Mb/s all the way up to 29 Mb/s. Given that most independents are using ADSL 2 or ADSL 2+ for their final links into the home, total bandwidth budgets are somewhere around 24 Mb/s under very good conditions. MPEG-4, meanwhile, promises to radically reduce the bandwidth requirements. In initial implementations, several carriers say they're expecting to see SD video compressed to around 1.5 MB/s to 2 Mb/s and HD at between 7 MB/s to 10 Mb/s.

“The further that we can compress that down, the better off we'll be,” said Milton Alford, vice president at Cimarron Telephone. Mannford, Okla.-based Cimarron is providing video for both its own customers as well as wholesaling to other independents across a multi-state area using a fiber network owned by its parent company, MBO.

“Most homes have three TVs in them, and you're probably going to have one that is HD,” he added.

Like INS, Cimarron is taking its existing headend, which supplies both traditional cable operators as well as IPTV providers, and splitting it to offer both MPEG-2 and MPEG-4.

“At the moment we're doing MPEG-2, and we're providing that on a wholesale basis,” said Gene Baldwin, vice president of Cimarron Telephone. “Initially, when we provide the MPEG-4, we're going to split that, too. It all comes down to set-top box availability.”

When those boxes do become available, those that are moving to MPEG-4 expect there to be a much more significant move to HD offerings as well as giving users the ability to have four or five total video streams running at the same time.

That shift can't happen soon enough for Allendale Communications. The 7000-access line incumbent based in Allendale, Mich., initially launched IPTV service in an area heavily populated with Grand Valley State University students who live off campus (The Independent, March 2005). Students, as Allendale has found out, are massive consumers of video product and want every bit of bandwidth they can get their hands on.

“We have a lot of off-campus apartments where there's five video streams going in,” said Mike Osborne, Allendale general manager. “The extra bandwidth will really help there.”

In student apartments, it's not unusual to find one large-screen TV in the living room and moderately sized TVs in every bedroom. Currently the company is using MPEG-2, but it recently has placed an order for MPEG-4 gear in the hopes of gaining that additional bandwidth. The problem facing Allendale, which also will be faced by other independents that were early pioneers in copper-fed video, is the transition phase between the two compression schemes.

“We're going to be running different rings of MPEG-2 and MPEG-4,” Osborne said. “We've got probably 3000 set-top boxes of MPEG-2 out there so we've got a large investment that we can't just abandon. We're in no hurry because no one has the set-top boxes.”

It won't be long, though, before students start showing up with HD sets and demanding that service, he added.

“We're not getting a lot of requests for HD at this point, but we want to be prepared,” Osborne said. “We're mainly looking at our off airs [for the initial HD package]. That's where most of the HD is being broadcast because that's where the national sporting events are broadcast. Once you start getting more and more of that, you'll have to have an HD. There's no doubt sports and other big events are going to drive this.”

At the opposite end of the spectrum is Consolidated Communications, which may have the shortest transition phase between MPEG-2 and MPEG-4.

The independent, which has launched IPTV using MPEG-2 in its Illinois markets using Tut gear, plans to do the same in its Texas territories but with a quick turn-around plan, according to Tom White, vice president of engineering.

“We're installing an MPEG-2 that we're going to immediately convert to an MPEG-4 as soon as the set-top boxes are available,” he said.

Like other carriers, Consolidated wants the bandwidth savings. In its Illinois deployment, which is centered around its Matoon, Ill., headquarters, the company operates with a minimum bandwidth budget of 17 Mb/s per home.

“That's plenty for 3.2 Mb/s on three streams [of SD video] and gives us plenty of room for a DSL package and video-on-demand,” White said. “In Illinois there are 12 channels where we'll go to HD right away.”

That's not quite feasible, though, with the bandwidth available. One other option the company is exploring is converting its Illinois headend to MPEG-4 when the set-tops are out and then using that facility to supply its Texas markets.

“As we're doing some trials, we actually pumped three streams down to Texas, and there's no latency at all,” White said. “Realistically, if it was closer, we'd do it. We'd want to protect that, and the cost of a Gig E down to Texas is still quite high.”

Consolidated, the 19th-largest telco in the U.S., is perhaps the biggest in the group pushing the limits on MPEG-4. The top-level Tier 2 players such as CenturyTel, Cincinnati Bell, Citizens and TDS have slowed similar efforts in hopes that the Bell operating companies can help drive out the significant cost of the equipment, said Andy Lovit, vice president of worldwide field operations for SkyStream.

“We've been engaged with these guys for a long time,” Lovit said. “They want all the piece parts to come together. They're not going to roll out a service until HD pops up on their screen. Some of the other guys are forced to make a move from a competitive point of view. They're willing to bite the bullet and move forward, whether the set-top boxes are ready or not.