Diane Smith is CEO of Auroras. Auroras is a start-up that is about to commercially launch its head-end-in-the-sky (HITS) after a trial with 3 Rivers Communications and others. A HITS is a satellite-based content distribution system for IPTV. IPTV content has been hard to come by. Smith talked to Telephony’s Tim McElligott about her company, how she got there and why the time is right for a company like Auroras, even if it is way out in Kalispell, Mont.

On her background

I moved to Whitefish Montana from D.C. about four years ago to retire. I am a lawyer by training and still sit on the board of a broadcasting subsidiary from George Mason University where I went to law school. So I get back to the big city quite a bit.

I spent 14 years at Alltel, so I know these independent companies well. I have a lot of regard for them. I like the way they run their businesses. In the early ‘80s I went to work for a small long-distance company and it grew into Sprint. Then in late ‘80s, I saw all the good telecom debate moving to the local telephone industry and I literally talked Alltel into hiring me. Then we had this weird time where we became a big wireless company while waiting for the telephone stuff to heat back up. I spent the ‘90s doing wireless. It was a cool run. When I started with Alltel it had $800 million in revenue, and when I left it had $8.5 billion. So I have a lot of regard for the people that run that company.

Did you get a portion of all that revenue?

I can’t complain. But I love the independents in general. They’re innovative, they’re customer oriented. They are tied to their communities, and they are great folks with great vision in a tough marketplace. And lord knows this is a tough marketplace and getting tougher.

On the regulatory environment

Generally speaking, public policy has been OK for the small telephone industry. Not particularly great, but it could have been worse. The big changes you see in telecom today are business driven and technology driven, and that is very different from what we saw from 1990 to 2000. A lot of success was very dependent on the right regulatory environment, and I still think the right regulatory environment helps, but now, success is really about your business strategy, your focus on the future as a business and not as a regulatory player.

On her business

The company has been around for about 2.5 years. We are the only 24X7 IPTV services company in the marketplace today. We aggregate content and encode it and encrypt it and do all the difficult and costly stuff as a master head end, which is in Atlanta, Ga. We use the satellite transport facilities of TeleSat, a Canadian satellite company, to deliver video content to telecom companies nationwide, which they, in turn, deliver to their customers via DSL, fiber or whatever broadband mechanism they want to use.

On the benefits to the telco

It gets them out of having to be serious video head end operators. And in a small town in rural America, there aren’t a lot of video satellite broadcasting engineers. Having that burden lifted from their shoulders and allowing them to deploy resources toward marketing and the network is a real cost effective thing to do. We sell them an IPTV gateway for about $300,000 including the satellite dish and all it takes to do a plug and play system. That replaces the expense of building a video headend themselves, which could be anywhere from $3 million to $7 million.

On the trial with 3 River Communications (also an investor)

We’re lucky to have a company like 3 Rivers help us with the business plan. They were able to tell us what capabilities they were looking for, and they really wanted to outsource and focus resources in marketing, customer service and network deployment. We might not have gotten the same [support] from a company that was all cable all the time.

Their investment is a real indicator of faith in our understanding of the marketplace and their desire to have a really good solution. They are on our board so certainly as board members they get input into the strategic direction of the company. But we have the kind of relationship where we seek their input. We are always happy to get the input of any of our customers to make this better.

On what brought her back from her brief retirement

I left the telephone industry because I looked ahead and didn’t see a great future. Access revenues were declining. USF was under attack. It didn’t look real good for the industry I loved. But as I got to know IPTV, it became clear that the telecom industry was about to have a real exciting next chapter and to be part of that in any way is a great opportunity for me. One of our co-founders said he heard from a mutual friend that I knew telecom.
I can’t find my car in the parking lot, but I know about telecom.