Competition in Houston is going to heat up quickly for incumbent cable TV company Time Warner Cable. Startup Optical Entertainment Networks (OEN) has built an all-IP, fiber-to-the-home network in Houston over which it expects to offer a wide variety of voice, video and data services to 1.6 million households by the first quarter of 2006.
Next week OEN plans to turn up 400 homes in the Cyprus Fairbank area of Houston as part of its beta trial.
In addition to providing services to residential customers, OEN is hawking its original and aggregated content and ad insertion technology to other telcos offering services of their own.
“We view the universe in a very simple way,” says Thomas C. Wendt, CEO and co-founder of OEN (www.4fiber.tv). “We believe the phone companies over the long haul are our friends – they’re our allies in this. We think our clear competitors are the cable companies.
“We’re going to be offering content to other fiber communities in the United States and eventually and Europe,” he adds, noting that all of OEN’s content agreements have IP rights in them and all its deals are done directly with the content owners. “One of our core competencies is development of content in our studios, OEN Studios, which is already revenue generating. And they do productions for NBC, ABC, America’s Most Wanted, E! Entertainment. They’re doing The Score, which a television program out of Canada. And we do that all in high def. And then we have a highly proficient software engineering group that develops television software for the set-top box middleware layer … to bring new applications to bear.”
OEN’s news comes shortly after the passage of new Texas law requiring just one state-level license for companies seeking to deliver TV services. Of course, Texas is the home state of SBC Communications Inc., and the Dallas area is the initial focus of Verizon’s TV rollout.
The startup CLEC disclosed its plans – which will bring 1gbps of capacity to each home served to deliver various uncompressed video services (including network-based PVR); VoIP or up to four lines of POTS; high-speed Internet access; network-based applications (application-supplier partners on this have not yet been disclosed); home security; and PC backup services – this week at the 2005 FTTH Conference & Expo in Las Vegas.
“Everybody who is doing fiber to the home has tried to retrofit the legacy architectures to fit fiber to the home,” Wendt says. “We’re the very first company that has built fiber to the home from the ground up, designed specifically for fiber to the home.”
OEN vendors for the Houston network include Alloptic, which is providing passive optical access gear; and PacketFront, which will deliver active optical components to serve high-usage homes and small businesses when its gear is ready next year. Other vendors of OEN include set-top box vendor Amino; Wi-Fi router vendor Cisco/Linksys; billing/back office supplier HighDeal; conditional access software supplier Irdeto; TV middleware provider Minerva; softswitch company Netcentrex; and fiber optic solutions provider Nexans.
OEN built its own headend. Wendt says that, excluding set-top box costs, the OEN’s network cost $700 to $800 per home for equipment and installation.
Consumer packages will range in price from $39.95 up to $249.95 or more. The typical bundle will sell for $99.95 and includes a lineup of 300 channels of TV, Internet access, phone service with unlimited long-distance, home security, PC backup, access to video on demand and subscription-based VoD, and access to online games, says Wendt.
He adds some lower-priced packages will include free, local advertiser-sponsored voice services, for which customers will have to listen to an ad at the onset of their calls.
OEN won’t compress the video, says Wendt, so it will be as high quality at the customer TV set as it is when pulled down at the headend. “Everybody from satellite to cable to everybody that’s trying to do a DSL play is using some form of compression,” he says. “And we don’t do any compression. We provide it in a pure fashion. So if we’re to compare our ESPN HD, as an example, against anyone’s, we’re going to look superior in almost every single situation – noticeable to the consumer. So you don’t have to be a video expert to figure out that the picture you’re getting is better than what you’re getting off of cable or satellite.”
Because the OEN network is based on a switched video architecture, Wendt continues, the number of programming channels it can offer is virtually limitless. At turn up OEN will offer 448 channels. “We’re doing a lot with ethnic programming too, so we have the largest Hispanic offering available,” he says.
The company will also offer programming targeting the Chinese, Russian and Vietnamese population. “Our goal is to attack these niche markets, which the cable companies can’t attack” because of lack of capacity.
OEN will run its services over a 40gbps core network, with 10gbps capacity into neighborhoods; and 1gbps to the home.
The one-year-old company was able to get its FTTH network up and running quickly due in part to its partnership with Phonoscope, says Wendt. Phonoscope, which is a public utility, existed prior to the creation of the Texas Public Utilities Commission, he says. “And they absolutely have one of the most unique public utility designations that I’ve seen,” he adds. “They’re considered a one-way and two-way video provider.”
Phonoscope has existing fiber optic facilities in the Houston and Galveston areas that it put in place to serve elementary schools and other customers. “So by having this network that already went into the neighborhoods, because that’s where your elementary schools are, this was the perfect jumping-off point,” says Wendt. “We’re doing just the drops. Most people that are doing fiber to the home, they have to lay out the entire city. They have to worry about going under highways and streets and bridges and overpasses, and Phonoscope has done that over the past 22 years.”
Wendt says 1.6 million households in the Houston area are within 100 to 500 meters of Phonoscope’s fiber, and there are 250,000 households where fiber already is in the easement. He adds that fiber technology from Nexans allows OEN to deploy fiber from those points to customer homes within hours instead of days. The Nexans solution includes “prefabbed” fiber solutions that are “premeasured, precut and prespliced,” he says.
OEN plans to market its services initially through door-to-door sales and free service promotions. Its goal is to win business from at least half of the customers reached by its network within five years. “We actually have had some pretty amazing results with going out and signing up beta customers,” he says. For those that have seen demos of the services and met with OEN’s sales people, the company is seeing a 90 percent take rate, he explains. “We’ve actually got a backlog of production customers too, who want it as soon as it comes online.”
