Allo leverages business success to take IPTV leap

Allo Communications, a CLEC and overbuilder in Western Nebraska, took its first leap of faith in building a 50-mile fiber-to-the-business network in three communities -- Scotts Bluff, Gering and Alliance -- that had been served by Qwest Communications and Embarq. Leveraging the community presence that network established, Allo is now poised to take an even bigger leap of faith, adding a residential fiber-to-the-premises network, an IPTV headend and new services for residential customers, and expanding into three more communities.

This latest move has acknowledged risks, said Jeff Kuenne, one of three principal owners of Allo, because IPTV is far from proven as a profitable service for independent service providers.

“IPTV is a necessary ingredient of our network buildout, but we go in with some trepidation,” Kuenne said. “I believe the broadcast TV model is fundamentally flawed. I wish I had a future model I could deploy now, but we have to deploy what is available. We are creating a system that will let us move very quickly when new things develop.”

Allo began in 2003 as a reseller of Qwest lines but quickly moved to building out its own fiber network – its first leap of faith. “Once we saw the last-mile problems of our business customers, we realized that while we saw ourselves as a CLEC making money selling business services, what we really are is an asset to the community, from an economic development standpoint,” Kuenne said. “This is our mission.”

Communities like the ones Allo serves have to actively fight to survive, Kuenne said. “They are either shrinking, treading water or growing, and the ones that are growing have full-time employees working to promote the community,” he said. “The town’s investment correlates to its results. And when a company is looking at new facilities like a call center, for example, one big issue is the available infrastructure. We know that because we built our first [central office] in space in Alliance that had been vacated by a call center that left and took 50 jobs with it, because they couldn’t get a PRI from the incumbent.”

Allo used softswitch technology from MetaSwitch to deliver advanced business services over its fiber-optic network, including Ethernet local area network services and metro network services, hosted PBX offerings and more. That smart-build approach enabled the company to quickly ramp up – Allo already has 1000 hosted PBX subscribers on-net, today using Aastra IP phones.

Allo also is taking a smart-build approach to IPTV, partnering with Avail Media for its content. “My headend consists of a rack and a half of equipment, and we’ll have three satellite dishes compared to the normal nine, so our space, power and capital investment is less,” Kuenne said. Allo will be offering bundled packages of voice, data and video and developing on-demand content as well.

“I watched my kids with AppleTV, and I’m amazed,” he said. “They’re watching a movie via Apple TV, even though we already own that movie. It’s simply easier to do it on-demand. Those are the table stakes to delivering this experience. People are not going to live with a coffee table full of remotes. They want us to bring content to them on-demand in a way that is easy for them to use.”

Allo hopes to leverage its existing relationship with MetaSwitch and the ties between MetaSwitch and Allo’s middleware provider, Minerva, to provide integration of services. Kuenne believes the maturity of MPEG-4 works in favor of those deploying IPTV today, versus the pioneers of the 2003-2005 time frame.

But he admits there is still concern when it comes to picking set-top boxes, because the wrong choice can backfire.  While there are less expensive STBs available that aid the initial business case for IPTV, Kuenne doesn’t want Allo to get locked into STBs that don’t have the horsepower to be upgraded. “We have our eyes wide open to that issue, and we will be very direct to our vendors,” he said. “You have to be certain that you don’t get stuck. The question is, do you buy a cheap one knowing it will last a year, or buy a more expensive one, expecting it to have some runway. That’s something I have to work through.”