Serving the Unserved

Content and Technology for a Rural Audience

By Michael Hopkins

 

But the potential that’s presented by audiences in remote corners of the country is now hard to ignore.

Rural residents are becoming more affluent, and they are seeking out new technologies for surfing the Web or watching TV.  And these folks aren’t afraid to make big purchases, which makes the population a prime target not only for multiplatform companies looking to make a quick buck but for TV advertisers seeking out a specific audience.

Given the rural potential, companies like WildBlue have solutions for getting broadband into remote regions.  Small telcos are tapping the IPTV support platform from SES AMERICOM to deliver video.  And programmers like BlueHighways TV and RFD-TV are filling a void by offering content that’s embraced by rural constituents.

Content for a Rural Audience

 

When it comes to video content, including the development of new networks, rural television viewers and their interests are – at times – left out of the programming mix.  A handful of programmers are working to change that scenario.

“There are not a lot of people seeking this audience.  It’s an abandoned audience,” says Stan Hitchcock, chairman and CEO of BlueHighways TV.  The channel, founded by Hitchcock and described by the 40-year entertainment industry veteran as a “journey across America,” provides roots and traditional American music and lifestyles programming that’s attractive to rural audiences.

Patrick Gottsch, president and founder of RFD-TV, a Nebraska-based network that offers agriculture news and information, music and lifestyle entertainment also aimed at rural audiences, shares Hitchcock’s views.  “When a new network is planned, it’s always urban-based.  It seems programmers go after big cities first,” he says.

“It seems rural folks are after-thoughts most of the time.”

Case in point:  When Viacom took over TNN in 2000, the programmer scaled back the channel’s country music format.  Eventually, TNN became Spike, with programming focused at a young male audience.

While programmers may chase after the urban and suburban potential, the rural audience is hard to ignore.

According to statistics compiled by the National Association of Farm Broadcasters, there are a little more than 27 million households in rural areas.  That represents nearly 26 percent – about one in four – of all households in the United States.

An estimated 51.6 million adults live in rural areas, states the farm broadcaster group numbers.  (The survey figures are based on phone interviews of adults in households not living within the limits of a city, town, village or Census Data Place.  The work was done with direction from the Economic Research Service of the U.S. Department of Agriculture to determine an accurate number of households not within a specific city, town or place).

Rural audiences also are becoming more affluent.  Personal incomes in remote regions of the nation are on the rise.  In addition, nearly 95 percent of of all rural residents own their property, states the farm broadcaster survey.

“It’s hard to fight this image of the ‘country-bumpkin.’  But in reality, nothing could be farther than the truth on what the rural audience is and what it looks like,” says Hitchcock.  “The rural lifestyle is made up of a lot of well-to-do people.

“And it’s not just an agriculturally-based economy.  It’s made up of people very involved in their family, their communities and in the spiritual,” he adds.

Rural-oriented networks also provide advertisers with access to a key demographic.

RFD-TV, citing research it conducted on its audience, suggests viewers of the channel are big-time spenders, whether it’s a tractor or pick-up or animal health or feed products for a small farm or ranch.

“It’s a target-rich audience,” says Gottsch.  “With these viewers, a company is not going to waste 90 cents of every dollar they spend on TV advertising.”

The programmers also are getting deals completed with video distributors.

BlueHighways TV got its start by getting in front of cable audiences with video-on-demand.  “It’s a brand developer for us,” says Hitchcock of the company’s VOD effort.

Thanks to the on-demand successes, BlueHighways TV is now a linear network.  The standard channel will launch on Bresnan systems July 1.  The BlueHighways TV linear net also will debut on Charter systems in October and among Insight operations in early 2008.  BlueHighways TV also is available via C-Band.

Hitchcock says the programmer is in talks with other distributors, including Verizon FiOS TV and Mediacom.

RFD-TV also has key distribution deals.  The channel is available through DIRECTV and EchoStar’s DISH Network and is delivered by cable operators Charter, Bresnan and Suddenlink.  Gottsch says the company is close to finishing other deals, including possible carriage agreements with Comcast and Cox.

RFD-TV splits its content mix among several areas:  Agricultural shows and news, equestrian programming and content such as music and entertainment aimed at the small town environment and rural lifestyles.  The programmer also has tremendous success with – of all things – live coverage of livestock auctions, generating fees from auctioneers and gaining a committed audience for the ultimate shop-at-home experience for the typical rancher.

Given the popularity RFD-TV has achieved with its audience (which the company estimates at 6.9 million weekly), the programmer is launching a high def feed of its channel this summer.

“We cross over a lot of bridges,” says Gottsch.  “Every day we give a compelling reason for every rural home to tune in and watch us.”

BlueHighways TV offers a diverse mix of programming, featuring everything from roots and other traditional forms of music, western lifestyle programming including equestrian shows, and features on the people and places found across the country.  “Our programming … all I can say is that it’s a state of mind,” says Hitchcock.

A lot of the series on RFD-TV and BlueHighways TV are getting the attention of viewers outside of rural areas.  For example, the more traditional forms of music featured on the nets are winning over audiences in bigger cities.

“There is a wide appetite for our programming.  It can be for those in the backwoods, but it’s also gaining in popularity in New York and in LA,” says Hitchcock.  “The American audience has a very broad appetite for this content.”

Viewers tuned in to the two channels also give kudos for the family-friendly nature of the programming. Hilton Grand Vacations Suites on the Las Vegas Strip daily Deals

Rural’s Biggest Need? Broadband

 

While the programming and content bases for rural America are being covered, those in the various multiplatform businesses are working hard to get broadband technology into remote regions of the country.

According to data supplied by Jonathan Adelstein of the Federal Communications Commission, during testimony he gave before a House subcommittee, about 44 percent of urban households utilize broadband access.  In contrast, about 25 percent of rural households use broadband, says the FCC commissioner.

The rural broadband figure needs improvement, he adds.

“Broadband technologies have the potential to improve the quality of life in even some of most remote and economically challenged communities,” Adelstein told the House panel in May.   “Broadband communications can benefit rural America in many ways, perhaps most of all by restoring the sense of opportunity that first made Americans venture forth and settle the more remote areas of this country.”

To achieve part of that, Adelstein points to wireless technologies.  “The past several years have seen an explosion of new opportunities for consumers, like Wi-Fi, satellite-based technologies and more advanced mobile services,” he says.

While there are several wireless technologies in place or coming on board, Adelstein points to the upcoming auction of 700 MHz spectrum as a terrific way to “facilitate the emergence of a third broadband platform that will ensure consumers everywhere the benefits of a high-quality wireless broadband network.”

The FCC is finalizing its rules for the upcoming auction of 700 MHz spectrum.  No specific date has been set, but most observers believe an auction will take place before the end of the year, if not in early 2008.
Take bonus at pokerstars up to 100%.

Satellite a Winner in Remote Areas

 

Among the broadband solutions at work today in rural areas are satellite-based services from HughesNet and WildBlue.

The companies have achieved some successes with their respective dish-based products.  HughesNet says it was serving 346,000 customers at the end of the first quarter.  WildBlue won’t release the latest details of its customer count.  But CFO Mark Adolph says the company is doing just as well – if not better – as its satellite broadband competition in terms of enrolling customers.  In March, WildBlue said it had more than 130,000 customers.

WildBlue, which has the backing of Liberty Media, the National Rural Telecommunications Cooperative, Intelsat and others, expanded its service with a new satellite that went into operation this past March.  WildBlue-1 and Telesat’s Anik-F2 make up the space-based support platform for the satellite broadband offering.

Adolph claims the rural broadband potential is massive:  There are between 15 million and 20 million U.S. households that are classified as rural, unserved homes, he says.

“We do not go into areas served by (wired) competitors,” says the WildBlue executive.  “We focus just on the unserved areas.”

Given the millions of households without a wired broadband connection, the potential is enormous for a company like WildBlue.  And, better yet, these unserved areas could be without a wired broadband service for years.  That means customers enrolled by WildBlue are unlikely to churn since they have no other alternative, says Adolph.

“For areas that are not served by terrestrial services, the economics just don’t work (for the wired incumbent),” Adolph adds.  “Where there is service, just outside that service area there are farms and residences.  The economics of serving these customers by terrestrial services cannot justify the build.”

And there are economic benefits associated with the satellite platform.

“Satellite reaches an entire footprint,” says Adolph.  “With one capital investment, for about $300 million to build and launch a satellite, satellite broadband can have national coverage.”
car insurance quote

IPTV Ready to Deliver

 

Satellite infrastructure also is helping small, rural telco operators looking for a quick and cheap fix to get into the video distribution business.

Last week, SES AMERICOM launched IP-Prime, a platform from the satellite services company that comes with support of video, a choice of set-top boxes and multiple middleware options.  IP-Prime’s aim is to deliver high-quality video as well as save millions of dollars in capital and operational expenditures for mom-and-pop telcos considering a move into video.

“It’s very focused on flexibility,” says Bill Squadron, senior vice president of media partnerships at SES AMERICOM.  “Telephone companies need a video solution that doesn’t cost a lot and is easy to upgrade.  These companies are getting into an area of business they have not previously been involved with.  And with our decades of experience we can help deliver a video product.”

IP-Prime is the exclusive IPTV solution for members of the National Rural Telecommunications Cooperative.  A handful of NRTC member companies that have been beta testing IPTV are close to launching video services with the SES platform.

“The NRTC is a very important partner.  They are a very efficient partner,” says Squadron.  “They are getting us before small telecom providers across the country.  And we want to help their members become more competitive.”

IP-Prime also counts the National Telecommunications Cooperative Association as a partner.

IP-Prime can be used solely as a transport service, with SES and its IPTV Broadcast Center in Vernon Valley, N.J., delivering video signals to telco companies.  The center acts like a “super headend,” encrypting programming and handling other key functions such as conditional access. The structure allows video distributors to avoid having to purchase expensive equipment for a traditional headend.

The more extensive IP-Prime turnkey solution has partners such as Myrio/Siemens and NDS for middleware, NDS’ conditional access technology and set-top boxes from Amino and Cisco/Scientific Atlanta.  Operators can pick and choose the parts of the IP-Prime platform they need for their video offering.

IP-Prime comes with existing transport agreements for more 275 video networks and more than 100 digital music channels.  The lineup includes more than 20 HDTV channels, as well as pay-per-view programming and the ability to offer video-on-demand.

While the product could be a godsend for small rural telco video providers, Squadron says SES AMERICOM will offer IP-Prime to large operators as well.

“Over time, the entire video industry will move to IPTV.  And we want to be there to facilitate the shift,” he says.

And IP-Prime won’t limit itself exclusively to traditional video platforms.  The service will distribute video content for any technology, including mobile applications, says Squadron.•

Three Research Nuggets on Satellite Broadband

 

• Northern Sky Research estimates that service revenue for satellite broadband will exceed $4.6 billion in 2011.  That represents an increase at an average annual rate of more than 11 percent for the next five years.  The fastest sector of growth is expected to be consumer satellite broadband services such as WildBlue and HughesNet, says the firm.

• Customer premise equipment (CPE) sales and revenue are forecast to remain in the $400 million to $500 million range each year through 2011, says Northern Sky.  "At first glance, flat CPE revenues may appear to be a poor indicator," says Senior Analyst Patrick French, "but the reality is this is positive because it illustrates that declining CPE cost will be one of the key factors in driving up subscriber uptake for single site satellite broadband internet access services and will push growth in the enterprise and SME broadband VSAT networking segment as well."

• By avoiding areas already connected to high-speed internet services, broadband satellite providers may earn $20 per month more than fixed WiMax providers, says FreeSky Research.  "Broadband satellite consumers generate nearly twice as much access revenue per month as fixed WiMax subscribers, largely because they do not have any other alternatives to dial," says FreeSky's David Gross.•

RUS: Getting Broadband into Remote Areas

Yet Controversy Surrounds Government Program Fostering Rural Deployment

By Michael Hopkins

 

Getting new technology and services into rural areas may be the easy part.  Forking out the money for the nifty stuff is a challenge.

That's why the Rural Utilities Service, a branch of the U.S. Department of Agriculture, has in place a loan program that helps fund the advancement of technology and communications in remote areas.  The $1.2 billion effort provides grants, loans and loan guarantees to expand critical utilities into rural areas, including broadband and telecommunications services.

And, as with any government program, the RUS effort has a long list of critics.  Cable operators are among the detractors.

Cable companies, especially MSOs serving rural areas, criticize the loan program as a subsidy for their competitors.

“Providing broadband service in high cost rural areas is economically risky at best,” said Tom Simmons, senior vice president of public policy for Midcontinent Communications, during testimony before the House Subcommittee for Rural Development in May.

“Midcontinent and other cable operators in rural communities all across America have taken, and continue to take, that risk.  However, that risk could become unbearable if we are faced with a competitor subsidized by the government,” added Simmons.

Simmons said Midcontinent, which provides service to customers in the Midwest, has invested more than $100 million “in private risk capital to bring advanced services to our customers in rural America without the assistance of public funds.”

Among the critics' complaints:  RUS loans are used to subsidize broadband deployment in areas already served by companies that deployed broadband without a government subsidy; some of the areas benefiting from the RUS program are in urban regions or are part of an affluent neighborhood already with service; and rules governing the program make it difficult to assess the accuracy of claims made by an applicant regarding existing broadband service for an area the entity proposes to serve.

Nonetheless, supporters of the RUS endeavor said that without it, areas of the country would be without advanced communications services.  “Programs like the Broadband Loan and Grant are key components of most companies' business plan if they intend to serve rural America,” Kevin Felty, general manager of Plains Cooperative Telephone in Colorado, told the House panel.

“Traditional capital sources do not understand the costs associated with serving these sparsely populated areas and they do not like the slim margins associated with this product line.  Furthermore most large companies simply don't play where we chose to live,” Felty said.  “That leaves the deployment of advanced service up to companies that understand this type of business model.”

Congress created the rural broadband program in 2002.  So far, 69 loans have been approved to finance broadband infrastructure projects in 40 states.•

Where the Unserved Homes Are

 

Satellite Penetration