As the competitive marketplace intensifies for tier 1 and 2 cable operators, many are now looking for affordable digital headends, or some technical variation, to increase their channel capacity for HD, VOD and other must-have services.

Smaller, independent operators are also looking for cost-efficient digital headends, replete with encoding, multiplexing and modulators, conditional access (CA) and all the needed components necessary to deliver more HD channels, VOD and other services. They’re also preparing their systems for IPTV.

Domestic and global technology suppliers are taking notice of the growing demand for low-cost entry into the digital world. Among those companies is German-based Blankom USA, a provider of turnkey digital headend solutions for cable operators.

Blankom demonstrated its headends at this year’s Cable-Tec Expo. (See here.)

"There is lots of interest from the tier 2 and 3 cable operators, where capital is a major concern. Their financial motivation now is more revenue. So there is a need to expand bandwidth to sell more services like HD and VOD," said Gerhard Franz, president of Blankom USA, which recently signed on its first U.S. customer, NexHorizon Communications, a Denver-based MSO. (See here.)

For smaller, independent operators to compete, Franz noted, it will take a concerted effort to deliver an efficient, affordable digital headend.

"The key must be their partners and working closely through the business plan to become digital, then to effectively market to their customer base. And there is also a big emphasis on IP. That’s where I see us moving to more data-centric solutions. There’s lots of system engineering going on."

There’s been additional movement within the digital headend space, as evidenced by this announcement of a Conax/Evolution partnership, developed to give Evolution an open standard CA system that can benefit the tier 2 and 3 cable systems.

"What’s driving our business and model is the need for HD and bandwidth to compete with the dish. For smaller systems of 550 MHz, there’s no reason to rebuild. By simply collapsing analog channels you can free up 160 channels. We have a low-cost, all-in-one MPEG-4 headend with 50 HD channels and a migration to 100 in six months. It’s a HITS (Headend In The Sky) model, but with MPEG-4. We’re telling smaller operators they don’t need 860 MHz," said Chris Egan, principal and COO of Evolution Digital.

Maybe not, but migrating to a low-cost, all-digital platform will still require some hard decisions by smaller operators, maintains Steve Messino, vice president of sales and marketing for Blankom.

"It’s not an easy decision. There are technical decisions about IP, RF and the degree of each. And what vendors do they use? And do they take the risk with them? But if they don’t take action, their business will erode."

– Craig Kuhl

For more on small operator financial challenges, click here. For more on all-digital strategy, click here.

Read more news and analysis on Communications Technology‘s Web site at www.cable360.net/ct/news/.

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