Several years ago, during the time when Dave Large was still a telecommunications consultant, he was asked by several of his clients if it made economic sense to have more than one broadband supplier operating in a single community. Larges answer was always, hell no, because the business model of offering just cable TV as a competitor to the incumbent simply wasnt strong enough to support two competitors.

But the answer has changed as the suite of services has broadened over the years and encouraged competition. Last October, Large, along with former colleagues David Rozelle and Edward Liebst Jr., formed Altrio, a full-service broadband communications provider, and intend to build a voice, video and high-speed data network in Los Angeles.

Our conclusion was that there was room for more than one (competitive service provider), says Large, who is CTO of the company. Its certainly not a business that contemplates driving any incumbents out. I think that would be a dumb kind of business plan.

The Alt in the name stands for alternative; trio for the three types of services the company plans to provide. Its a generic kind of name that has a lot of implications and no real meaning, says Large. Its easy to pronounce, easy to spell and easy to remember.

Before founding the company, CEO Rozelle, CTO Large and CFO Liebst all worked together in exactly the same positions as partners of Media Connections Group, a boutique consulting company that specialized in broadband communications and all its aspects, but not exclusively cable television. Before that, they all worked as the operating team at InterMedia Partners, a cable operator that was eventually bought by Tele-Communications Inc. Collectively, they bring a total of 75 years of experience in the cable television industry. 

Altrio intends to build a hybrid fiber/coax network and will transport services such as high-speed data, video and local- and long-distance telephone.

Basically, if you looked at it from 1,000 feet away, youd say it looks like a compromise between the RCN Network and a Cox (Communications) architecture, says Large.

The network architecture consists of a redundantly routed fiber ring between a headend and regional hubs, says Large. Redundantly routed fiber rings are also included between the hubs and clusters of nodes. Comparing Altrios network to Coxs ring-in-ring architecture, Large says the difference is Altrio will be running more fibers to the node and paying more attention to the design of the nodes in an effort to build nodes that serve only a small cluster of homes. The actual number of homes passed by each node is yet to be determined, Large says.

 We start with 500-home clusters, but how many nodes that represents is a purely customer-driven number, says Large. Its what the bandwidth demand is. It evolves all the way down to something that looks like fiber-to-the-curb and ultimately evolves to fiber-to-the-home.

Large says the reason Altrio starts with a 500-home cluster is to control the way the network is powered. Were very concerned, as I know cities are, about street furniture as they call it, says Large. The problem with fiber-to-the-curb architecture that some people are building is making the phone ring when the power is out.

We dont feel that makes sense to backpower the network from peoples homes, he says. We dont want to have the responsibility for batteries that are going to wear out from maintaining thousands and thousands of power packs in peoples homes. Our cluster is governed by how we network power.

The 870 MHz network uses a combination of analog and digital technologies. Its an architecture where the company has pulled the signal processing equipment into the headend rather than pushing it out onto the edge of the network, says Large. This was done for maintainability of the network. (The network) is similar to the best thats being built in the cable industry today, says Large.

Altrios investor group collectively committed $125 million for the first phase of Altrios business plan. Frontenac Company and Bessemer Holdings lead the investor group. Other investors include Soros Private Equity Partners, SSB Capital Partners (the private equity arm of Royal Bank Financial Group), Bank of America Capital Investors, and Grove Street Advisors.

The equity commitment will be supported by senior debt in an amount up to $150 million to fully fund Altrios initial phase.

Large understands that as a new company, Altrio has some barriers to overcome before it will be welcomed with open arms into the Los Angeles community. Some of the companys competitors include Pacific Bell, Time Warner, Adelphia, Charter, AT&T and Cox. But, Large says, Altrio has several advantages over these incumbents, including:

Talent. Were bringing an MSO-level team to bear in a single market, says Large. We think its difficult finding the needed talent so weve chosen to bring the corporate level talent and plug it into a single market.

Experience. Were very experienced at this industry, Large says. We think we understand competitive marketing and we understand what makes customers choose one supplier over another. I dont think a lot of existing cable operators recognize what it takes to work in that day-to-day environment where every single one of your customers is only a phone call away from being a competitors customer.

Design. We have the advantage a new network operator has in that we can design a network that is optimized for today, Large says. In almost every case, the incumbent cable operator is going to have upgraded a network from something else. There are compromises involved with that. You dont end up with a network that is optimized to scale.

Large doesnt see Altrios lack of name recognition as a disadvantage.

Thats always a challenge for any new operator, Large says. But name recognition is both a positive and a negative even with very good cable operators. Just bringing in competition and not being named the same thing as your competitor is worth something. Will it take us awhile to build a name? Certainly it will.Angela Langowski, Associate Editor

When William Morrow worked for Knology and Utilicom, he dreamt about starting his own broadband communications company. That dream became a reality when he founded Grande Communications in 1999.

Morrow, CEO of Grande, has several years of experience in working for broadband service providers. He was one of the early partners in Franklin, Mass.-based Utilicom, a company that is now building networks in Indiana and Ohio. He was also chairman/CEO of Georgia-based Knology. While at Knology, he helped create and sits on the board of ClearSource, an Austin, Texas-based broadband communications company that is building an HFC network in Waco, Odessa and Corpus Christi, Texas.

We were broadband before broadband was cool, Morrow says.

Morrow

Grande is working with Knology and ClearSource to build an HFC network in the Central Texas corridor, including Austin, San Marcos, New Braunfels, San Antonio and surrounding communities. Grande already provides telephone service to ClearSources customers.

Besides building a bundled voice, video and data network from the ground up, Grande has a wholesale strategy as well. This past summer it acquired a CLEC, picking up the account of another telephony business. Grande has a wholesale division serving the communications needs of other service providers and carriers by selling network products, services and professional support staff for carriers, ISPs, CLECs, etc. Grandes revenues include hundreds of millions of dollars a month from telephony, and it bills for hundreds of millions of minutes on the data side, Morrow says.

The company then leverages that volume and those pipes for its retail business, giving it a very dramatic cost structure that improves its margins in the residential and small business sectors from its telephony and data offerings.

Unlike most of the other broadband companies that have spun up this last year, weve actually started construction in Austin, San Marcos and San Antonio, Morrow says. The company has the switch, headend and telephony services in position and was expected to go live with test customers in November. It expected to start its commercial launch by the beginning of this year.

Morrow decided to build the network in central Texas because he and the members of his management team grew up in the area. Therefore, he and his managers know the markets well and are well connected to them.

Grandes management team includes Jerry James, president, who has 32 years of telecommunications experience; and Robert Hughes, chairman, who founded Prime Cable in 1979.

Grande plans to offer local- and long-distance telephone service, analog and digital cable service with more than 200 channels, and high-speed Internet service over its 860 MHz network.

Were actually taking fiber closer to the home than any other networks that are being deployed in the nation today, Morrow says. Grande will be using Marconi equipment in the network, which will drive fiber down to nodes that serve just 24 homes. At the node, the network will be passive, which means we have no points of failure past that fiber optic node, Morrow says, putting emphasis on network reliability.

Despite all that, Grandes data offering is one of the most exciting aspects of the network, Morrow says. By having our fiber so deep into the community, we have (more) bandwidth closer to the home than an RBOC does or the incumbent cable operator by many times, Morrow says.

A typical cable operator will have 10 Mbps as its ceiling of capacity shared, at best, across 500 homes, Morrow says. Our floor is 10 Mbps shared across 24 homes, he says. So right there we have a 20 times better capacity position. Thats where we see the upside. Those incumbent networks are going to continue to falter, whereas our network is uniquely positioned for that hockey stick of growth.

The Marconi network allows Grande to offer a choice of either DOCSIS or Ethernet modems. The company will also be using Motorola set-top boxes for video services.

Morrow decided to build the Grande network in the central Texas corridor because of his long background and history in Texas. Another competitor, WINfirst, which is also based in Colorado, has received approval to build a network in Dallas, Houston, Austin and San Antonio.

Since Grande has already started building its network and has more than 340 employees in the company, Morrow doesnt see WINfirsts plans as a threat to his network. We dont think its now made sense for two new people to build, so we really believe the people that get in and get entrenched and get their network deployed go a long way towards securing those markets, Morrow says.

The franchises Grande has received will give the company the right to build past 1.6 million homes.

In February 2000, Grande set a Texas initial equity fundraising record of $233 million. The funding, which was led by J. H. Whitney and The Centennial Funds, included Texas-based Austin Ventures, Prime New Ventures and Hoak Communications. Other investors include HarbourVest; AltaComm; Weiss, Peck & Greer; CIBC; Trinity Ventures; BancBoston; Toronto Dominion; Kinetic; South Atlantic and Convergent.

The press Grande has received in Texas has helped it overcome the name recognition factor, Morrow says. We were the largest cash for equity deal in Texas, he says. Weve been doing some unique deals. Our franchises got us a lot of press. People know what were doing here in central Texas.

The companys competition in-cludes Southwestern Bell and Time Warner, which Morrow agrees, have strong brand names. However, we believe with the image were creating and a friendly Grande person knocking on your door that well get our market niche, Morrow says. While we were funded about the same time as the other broadband groups, were one of the few, if not the only one, that is actually actively building networks already.

Most of the other (BSP companies) are still focused on kind of a (2001) type of strategy, Morrow says. We believe weve differentiated ourselves from that perspective.AL

Utilicom Networks of Franklin, Mass. is offering up telecommunications competition in Indiana and Ohio, but with a twist. By partnering with electric and gas utilities to build and operate broadband networks, Utilicom hopes to leverage existing rights-of-way and, in some cases, existing fiber, to offer a rich feature set of services to consumers and businesses alike.

The company is focusing on second- and third-tier markets and is serving business and residential customers.

Founded in late 1995 by Chuck Cadle, an entrepreneur with a finance and telecom background, and Don Loftis, who came from Scientific-Atlanta, the company came up with the idea of working with utilities to help it develop telecommunications companies. This means Utilicom helps utilities design telecom networks, hire the staff and help run the new operations.

In Evansville, Ind., Utilicom formed a joint venture with SIGECO (Southern Indiana Gas and Electric Co.) to form SIGECOM, which is the multiservice telecommunications carrier that services customers in Evansville, and, soon, Indianapolis. Through the ownership of Utilicom, SIGECOM is building a 900-mile fiber optic network that will pass about 88,000 businesses and homes in Evansville and Newburgh, Ind.

In 1999, SIGECO merged with Indiana Energy to form a company called Vectren Corp. Vectren also recently acquired Dayton Power and Light. The company provides natural gas to more than 1 million customers in Indiana and Ohio.

Hanssel

Each time we build a new network in one of these new markets, we form a new joint venture, Hanssel says. We kind of originated the idea of the joint venture concept.

The company began offering video services in Evansville in March 1999, and a couple of months later, started offering high-speed Internet, digital cable and then voice.

Hanssel says the companys residential penetration rate in Indiana is 30 percent and that its business penetration rate is more than 20 percent.

The full suite of services that Utilicom is offering includes bundled local voice plus applications, Internet access, long-distance, video and teleconferencing and analog and digital cable.

Utilicom is using Sonet (synchronous optical network) and IDOC (interactive data over cable) architecture to build an 860 MHz, fiber-rich optical network. The IDOC concept was invented four years ago by Utilicom technicians, Hanssel says. The IDOC has a single node where the fiber meets the IDOC network, making the network more robust because there is only a single point of failure, Hanssel says. Because its Sonet-based, the network should be highly reliable. It is uncommon in the residential space to build a redundant circuit, Hanssel says. Were offering a much higher reliability for all our services as a result of that.

The company is in the process of rolling out interactive TV, Internet and e-mail access over the television. It expects to eventually offer VOD.

Utilicom got a new CEO/president in May 1999 named E. Craig Sanders. Previously, he was the president and CEO of Peoples Telephone Company and held a senior management position at Sprint. Cadle, the company founder, remains on the board.

In February 2000, Utilicom received a $100 million investment from affiliates of Blackstone Capital Partners III to fund the companys build out and operations.

Utilicoms advantages over its incumbents include its focus on small business owners from the get-go. What distinguishes us from the new builders is their focus is exclusively residential with a little SOHO thrown in, Hanssel says. We do a complete SOHO/enterprise medium as a customer offering on the voice and data side. Any data service that a customer can buy from a large ISP or datacom provider like AT&T or WorldCom, we sell those as well.

Hanssel knows his competitors are going to be the incumbents he competes with now. These competitors include Ameritech, Insight Communications and Adelphia in Evansville; Time Warner and Comcast in Indianapolis; Ameritech and Time Warner in Dayton; and BellSouth in Louisville. But he also knows what it takes to compete: killer customer service.

In any situation where you come in as the new kid on the block, you can help with that by providing a higher level of customer care, Hanssel says. We offer a complete bundle of services along with very aggressive discounts. People want choice. Historically, they havent had choice in local phone and on the broadband side, which is what were offering.AL

A lot has happened in Michael Brodys office since last spring (see CED May 2000, page 108). At that time, the chief technical officer for competitive service provider WideOpenWest was mulling over his options to surpass the DOCSIS (Data-Over-Cable Service Interface Specification) cable modem platform with a technology that could deliver more bandwidth to the consumer. He has now come up with a plan for data delivery to the companys subscribers.

The plan revolves around a strategic alliance WOW signed with Orem, Utah-based SwitchPoint Networks Inc. in mid-November. SwitchPoint (formerly AirSwitch Corp.) says it has developed a technology to unclog the last mile bottleneck, which will enable broadband Internet access at speeds up to 100 Mbps. The companys Ethernet-based technology has thus far been deployed in test sites in Utah; WideOpenWest will first deploy the technology in a technical market trial in its Lakewood, Colo. system, in about 160 miles of plant, passing some 20,000 to 25,000 homes, according to WOW CTO Brody.

In essence, WideOpenWests ap-proach is dual: a hybrid fiber/coax network for analog video, digital video and video-on-demand delivery, and an Ethernet architecture for data communications services delivery.

As WOW will configure it, the SwitchPoint technology is optical from the headend to an optical node, which is, in reality, an Ethernet node. That Ethernet node will be co-located with a standard HFC nodetogether, the two would serve a maximum of 200 homes. Coming out of the node, and reflecting the duality of the architecture, are two wires: standard 0.625 coax plant, alongside a CAT 5 wirethe Ethernet cable. While the coax portion of the plant would feature standard amplifiers, taps, etc., the Ethernet side has a Layer 2 switch/repeater.

At the drop, the company will deliver the digital RF services over RG-6 quad shielded Siamese cable, while it will deliver the Ethernet service over CAT 5 wiring. This eliminates the cable modem, explains Brody. The connection will be between the switch in the pedestal or on the pole right to the NIC (network interface card) in the PC.

For now, WOW is using a DWDM (dense wavelength division multiplexing) approach for the HFC architecture, and a pure two fibers to the node for the Ethernet architecture. But eventually, possibly as early as mid-2001, Brody expects that he will be able to shrink that configuration down to a single wavelength carrying the Ethernet traffic (as opposed to a separate fiber), with multiple wavelengths carrying the analog and digital video services.

Why did Brody pick this architecture? Its 100 megabits symmetrical... The second thing is, the node will be scalable to a gigabit...And, we found that we could do this at about the same price that you could deploy DOCSIS today at 3 megabits. Now, no one does that today, so its hard to say how it (really) compares cost-wise. But this can do 100 meg symmetricalDOCSIS could never do that, he explains.

WOW has already begun construction of the dual architecture in its Lakewood system and tentatively predicts that it will be ready to serve customers the first week of March.

WideOpenWest has also made progress on the telephony front. This past September, WOW signed a three-year agreement with PhoneFree.com, a company which provides a gateway to the public switched telephone network. WOW will use voice-over-IP to offer second-line service to the residential market, by installing a network interface device (NID) on the side of the home thats powered via AC house power.

Headquartered in Littleton, Colo. (a Denver suburb), WOW is first focusing on system construction in its own backyard. The company started underground plant construction in its Lakewood, Colo. township systems (another Denver suburb) this past November, while predicting that its area headend would be operational by the end of 2000.

Our goal is to have our fiber buildout occur in the January/February timeframe, to the point where we can activate customers, actually have customers on by the first or second week in March, at the latest, says Brody. I expect to have some trial customers on as early as February.

The companys other Colorado systems, meanwhile, are still in the engineering/design phase. Brody notes that until the new dual architecture is deployed and fully proven in one system, WOW cant go full speed in other markets with the technology. .DM