MPhaseTV, Alphastar Feed Digital to Telcos

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Alphastar International Inc. and mPhase Technologies Inc.'s mPhaseTV.net have teamed up to create a low-cost MPEG-2 digital-TV delivery solution that could appeal to smaller telcos.

The two Connecticut-based companies aim to offer telcos an affordable way to deliver TV services, high-speed Internet access and enhanced phone services over twisted-pair copper phone lines. This will enable small to mid-sized telcos in particular to compete effectively with cable TV and DBS companies.

One key component-a headend with an installed cost of under $100,000-is now seen as achievable, thanks in part to the creation of this 50-50 joint venture. The new entity, as yet unnamed, will use Greenwich, Conn.-based Alphastar's uplink facility in Oxford, Conn., to feed TV programming to headends at telcos' central offices.

"We want to put a simple digital headend outside the CO, downlinking a digital-satellite feed which originates at the Alphastar teleport," said Ron Durando, CEO of Norwalk, Conn.-based mPhase. "We intend to use ordinary MPEG-2 encoders and receivers."

In April, according to Durando, the mPhase Traverser Digital Video and Data Delivery System, or DVDDS, will start delivery of 32 video channels to about 12 households in Hartwell, Ga.

Until now, four test sites have been operating at the Hart Telephone Co. in Hartwell, where a prototype Traverser DVDDS has operated since early 1999. That prototype has a maximum signal-delivery distance of around 10,500 feet from the CO.

A 13,000-foot distance was tested with satisfactory results, Durando said, and updated versions of the DVDDS now in development at the Georgia Tech Research Institute in Atlanta are operating in the 15,000-foot range.

Ron Bohlander, the mPhase project manager at GTRI, said, "mPhase will reach people in a way which is more scalable and more economical than a VDSL solution, where you encounter requirements for denser nodes and the deployment of fiber optics."

The plan now is for the Alphastar uplink to cost effectively deliver MPEG-2 video directly to telcos. This would eliminate the need to encode the inbound TV signals locally, which is simply too expensive for smaller players.

At Hart Telephone, for example, there are about 8,800 customers and 10,000 lines. The companies are betting smaller telcos with as few as 3,000 lines will still find the new DVDDS Traverser-based DSL services to be a cost-effective option, according to Durando.

"We have a unit in preproduction which can handle 192 TV channels with an accompanying high-speed Internet service running at 2 Mbps using a 10BaseT Ethernet connection," Durando said.

In addition to raising $2 million to $5 million in capital for the start-up, mPhaseTV.net will lend the joint venture $1 million, Durando said.

An additional $50 million private-placement bond sale is underway, added Alphastar president Mahmoud A. Wahba. The venture will need about 220,000 subscribers to break even, he estimated.

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