Shake-Up in the Tier2 TelcoTV market
Colin Dixon, Senior Partner, Advisory
June 30, 2009
Yesterday, Surewest Communications in Roseville, California announced that they would be switching their television platform to Microsoft's Mediaroom. Surewest operates as both an ILEC (Incumbent Local Exchange Carrier) and as a CLEC (Competitive Local Exchange Carrier) through its fiber network. Digital television services are provided on both these networks. They provide triple play services in central California and the Kansas City region.
One of the principle benefits of the Mediaroom platform is that it will allow Surewest to move immediately to an advanced codec like MPEG4 h.264 across its entire network - instead of just the Sacramento region. This considerably lowers the amount of bandwidth required to deliver HD (to the 5-8 mbps range) allowing Surewest to provide service to more people on their ADSL2+ network.
Several things jump out at me with this announcement. This is the first time Microsoft has announced a customer that was not a Tier 1 telco (like AT&T or BT). Surewest is a tier 2 telco with about 150,000 customers. This is clear signal that Microsoft is positioning the Mediaroom platform more broadly across the market. This is bad news for the smaller vendors in the market such as Minerva and Verimatrix.
Clearly the Mediaroom platform has matured considerably over the last year. They have added a number of features that will help their customers stand out against the competition, including:
- Whole Home Digital Home Recorder (DVR) with the ability to watch and record up to four SD channels at one time
- DVR remote scheduling and Caller ID on TV
- HD Video On Demand (VOD)
- Media-sharing to link photos and music from a PC to the TV
- The ability to offer TV applications with interactivity, web content
Interestingly, Surewest mentions cost as one of the reasons for switch. They seem to think that using Mediaroom “will allow us to offer a vastly superior TV service at a very low cost”, according to Steve Oldham, SureWest’s President and CEO. I’ve never heard price cited a reason to buy Mediaroom before!
All of this is very bad news for Surewest’s current solutions providers. Minerva provides middleware and TV applications such as the guide, Widevine provides conditional access and Kasenna (purchased by Espial last year) the video on demand servers. As part of this deal I’m sure all three will be shown the door. This comes as a double whammy for these companies. Not only have they lost a customer, this signals they have a new, big competitor moving in to their market.
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