Valley Telephone Cooperative (VTCI), a rural telco based in Raymondville, Texas, will become the first telco co-op to roll out IPTV service using a turnkey video offering provided by the National Rural Telecommunications Cooperative (NRTC).

The NRTC announced its IPTV program in October 2005, offering to apply its members’ combined purchasing power to defray video content and distribution costs. In partnership with SES Americom, the NRTC offers a package of programming, middleware and encryption to its members.

“Having it already prepackaged through NRTC makes it a whole lot easer,” said John Bradford, VTCI’s business development manager. They did a lot of the leg work for us, a lot of the technology selection. It’s pretty much cookie-cutter so far.”

VTCI has already begun deploying Pannaway Technologies’ IP access platform (based on ADSL2+ broadband loop carriers), and expects to launch video services with it in this year’s fourth quarter.

With satellite the only real competition for video service in VTCI’s rural territory, the company is expecting 50% to 60% penetration rates in its first year of offering the service, or about 2600 subscribers.

VTCI is also using MPEG4 compression, which some say is technologically immature. However, given VTCI’s deployment timetable and its long copper loops, the company felt it was best to wait for MPEG4 technology rather than deploy MPEG2 and then have to upgrade to MPEG4 later. Though MPEG4-enabled set-top boxes have been delayed by many vendors (boxes with high-definition television and personal video recorder capabilities are expected to ship this fall), VTCI said it can wait.

“Bandwidth is so valuable,” Bradford said. “We feel it’s work the risk.”

The NRTC package also includes national high-definition television content, though VTCI doesn’t expect much demand for that service in its rural South Texas market.

VTCI is one of a few telcos that have been beta testing the NRTC video package, which will be made available nationwide this fall.