Q&A: David Wright, Cross Telephone

NAME: DAVID WRIGHT
TITLE: GENERAL MANAGER
COMPANY: CROSS TELEPHONE
PROJECT: LAUNCH VIDEO AS PART OF BUNDLED OFFERING

Plant stats: 10,000 access lines in Oklahoma

• 11 exchanges; 13 central offices; 50 DLCs; about 2800 square miles of service territory

Other vital information: Getting video content from its affiliate MBO, which owns a Sonet network spanning the four-state region of Oklahoma, Arkansas, Kansas and Missouri. Using Myrio middleware, Pannaway access equipment and Thomson set-tops.

Why did you make the move into IP video service? In the areas we serve, our goal was to migrate from TDM to a pure IP network. Two years ago, we started that with an ADSL initiative. We felt the Vonages of the world were always going to be there. We didn't do it out of fear, though, and we felt we needed to be able to provide the same type of services. We built a regional headend to use the fiber network, which made more sense from an economic standpoint. All three MBO companies have traditional cable networks. We serve a pretty rural customer base; about 10 customers per square mile is pretty typical so it made no sense for us to put it in our territory.

How are you marketing the service? We totally re-branded our broadband service offerings. We're branding the video as ZTV. We're offering the whole package [of triple play] for $105.

We don't feel like we need to be the cheapest offer in town. We actually look at this as moving beyond triple play and going to a five-way play with local, long-distance, broadband data, video and mobile. We also plan to sell local ads.

Give me the technology run down and what you want to see from vendors? First off, it's because of ADSL2+ that we've been able to do this at all. Right now we're not rate limiting it at all. That may change in the future, though. We theoretically can go up to 5000 feet with 24 kb/s. Right now, we're getting 15 Mb/s or so on average. We're hoping that HDTV comes really soon. I think we're over the power curve with the technology now. I feel that if MPEG-4 came out today, we think we could deliver HD right away.

How do the economics of triple play look from your perspective? We're a cost company. From today on forward, we don't want to be dependent on the high-cost fund. If you measure ROI on a cost-recovery mechanism, it's difficult. We were at around $2500 to $3000 per port on ATM. With Pannaway, we're at $800 per port. If I can recover my $800 per port with the high-cost fund, that's great, but I don't want to rely on it. After the first month of commercial service, we got 20% of the homes passed, and we've had what I'd say is an acceptable take rate.