Anticipating a decline in its traditional telephone and access fee revenue, Vernon Telephone Cooperative, which serves 7500 access lines in eight small towns across southwestern Wisconsin, decided instead to be a pioneer in deploying IP video over ADSL2+.

The result has been the steady growth of a video subscriber base — now at 1000 homes after about 18 months of strictly word-of-mouth advertising — and a lot of lessons learned.

“It has been much more difficult than we imagined,” admitted Rod Olson, Vernon general manager.

The company made the decision back in 2001 to pursue video service to the eight small towns and connecting rural territories. In total, that meant covering a 550-square-mile region. Knowing it would lose traditional revenue to wireless replacement and emerging voice over IP — and expecting a steady decline in access revenue through the settlements process — Vernon joined with six other telcos in creating Midwest Telnet, a consortium that collectively built a cable TV headend using Minerva IP video equipment. Twelve companies now get their service from Midwest Telnet, Olson said.

“The biggest challenge at first was acquiring content,” he said. “A lot of the programmers didn't understand how telephone companies wanted to do this, running it over a copper telephone line and using IP. And then the other challenge really was waiting for technology to catch up. It was really about two years before we got comfortable using ADSL as transport.”

Today, Vernon is using ADSL2+ technology from its access vendor, Allied Telesyn, and is able to deliver up to four streams of video within 6000 feet or two streams of video up to about 12,000 feet, Olson said. The Allied Telesyn DSL access multiplexers are bolted inside the company's existing AFC carrier units, delivering ADSL to 85% of the company's customers.

“We started out trying to stretch things out as far as you could, like doing one video stream over 15,000 to 16,000 feet,” he recalled. “We learned that you don't want to do that. Instead, we had to firm up provisioning guidelines and stay with them.”

At issue, Olson said, was the reality that hooking up one customer affects another's service. Even once customers are up and running, if one user abuses their TV-watching privileges by turning on too many sets, other customers are affected — and Vernon hears about it.

“The biggest problem we've had is mostly with trouble [calls],” he said. “You have a telephone problem, and you may catch the problem before customers catch it. But when their TV goes out, they know right away, and they call us.”

Although as telcos gain experience in IP video, deployments become easier, most of the early services face technical challenges based on telco-specific issues, said Matt Cuson, director of product marketing for Minerva.

“Each telco's network is in a slightly different state, and the people involved in the network are doing it for the first time,” he said. “So we are always breaking new ground in some regard.”

Indeed, Vernon had to train its technicians to prepare them to handle data networking issues and to alert them to some fundamental changes, Olson said.

“They have to have a pretty broad knowledge of IP and data transmissions,” he said. “And they had to realize that they can't just jump on a cable pair to call back in because they might be knocking out someone's TV service.”

Recognizing the limitations of ADSL2+, Vernon also developed a very personalized and somewhat technical approach to adding customers.

“We take each customer on a one-by-one basis and engineer them out,” he said, determining loop length and the possible number of video streams Vernon can deliver.

The telco's technicians also typically rewire the customer's house with Category 5 wire to avoid problems with existing cabling.

“It's a better bet — those we rewire, we don't have trouble with,” Olson said. “We tried using HPNA on existing copper, but that didn't work. We can use the existing coax in the house, but our guys are used to running Cat 5 all day.”

The personal service doesn't stop there.

“We do a lot of customer education — we sit down with the customer, explain the service and how things work,” he said. “We get into the laws of physics with them. We explain that this is the size of the pipe to your house — if you ask for too much, it's going to cause problems. We spend probably an hour with the customer after an install.”

That pays off if customers with as many as four set-top boxes don't try to have them all on at the same time, he said.

“We are a cooperative, so they are our owners, and they're pretty good about understanding,” Olson said.

Thus far, Vernon has not conducted a marketing push for its service, in part because the company is getting “about all the installs we can handle” just from word-of-mouth.

Early on, the company probably got a boost from the fact that its primary cable competitor, Mediacom, wasn't terribly well regarded, Olson said. Since Vernon Telephone launched its service, however, the cable company has invested in its infrastructure, added to its local support team and is making a marketing push, offering free months of service and other deals, he said.

“They didn't lay down and die,” he said. “But our customers know they can call and talk to us or meet us on the street. That's a definite advantage.”