It was one small technical step in a Florida apartment complex, but one fair-sized market leap for cable provider Ikusi Telecommunications.
Ikusi Telecommunications — a subsidiary of a Spanish electronics-systems provider — has a growing cable and satellite systems television business overseas. In a bid to enter the U.S. market, it recently set up shop in Upper Saddle River, N.J.
Its stateside beachhead is in Melbourne, Fla., where it was tapped by The Windover Health Club, a 236-unit apartment complex with a 20-year-old, one-way coaxial cable system. The complex's owners wanted to provide digital TV, plus 70 to 80 analog channels and high-speed data — but they didn't want to pay for a complete rebuild.
"Their target was to find devices they could enable them to just drop and replace, without needing to resplice and retrench or anything, and yet expand the capacity," Ikusi CEO Mor Allon said.
Ikusi used its TAL-880, a combination cable-TV line extender and distribution amplifier unit, to lift the system from one-way, 300 megahertz to a two-way, 862 MHz system over the existing coaxial cable.
Priced at about $400 apiece, the 10 TAL-880s used in the Windover project provided major cost savings, compared to the expense of a rebuild, Allon said.
For cable-modem service, Coresma provided the modems and ClickQuick1.net functioned as Internet-service provider.
Satellite Broadcasting Corp. is supplying Windover's cable service, offering local channels plus DirecTV Inc. digital programming.
EYEING SMALL MARKETS
Ikusi's U.S. market-entry strategy has focused on sectors in which the larger gear providers are not as active — the smaller, rural markets. It also fits with Ikusi's product line, with headend and distribution systems sized for lower-density cable operations.
Rural markets may not have the funding, but they face the same pressure to upgrade or lose customers to digital satellite providers. In aggregate, it is not a small-potatoes market — there are approximately 9,000 small to midsized cable operators in the U.S., representing about 9 million subscribers, Allon said.
"A lot of rural America is upgrading now from 220 MHz and 300 MHz plant," he said. "One of their goals is to minimize the upgrade costs, because they are not an AT&T or a Time Warner or et cetera. They do not have the deep pockets."
Ikusi also provides service and systems-management support, as most of these MSOs don't have the technical staff to support high-speed data.
"There are some very nice opportunities for our type of operation here," Allon said. "We are not trying to make $100 million dollars the first year. We are trying to make our first inroads into the industry, and for us it is a great opportunity."
If Ikusi can offer the kind of cost savings it promises, the rural market might be ripe, according to Michael Goodman, a senior analyst with The Yankee Group. The cable industry has spent more than $50 billion on system upgrades the past four years, making cable modems available in 60 percent of households, but that's primarily among the top 10 MSOs. By contrast, cable modems are only available in about 1 percent of rural systems, said Goodman.
MSOS: SHOW US MORE
"They don't have the kind of funds to do that in rural markets," Goodman said. Assuming Ikusi can do what it says for the price, " I think there are an awful lot of small MSOs out there that this could be a real boon to."