When Jon Pederson joined Midco as an intern 31 years ago, he did not imagine he'd one day be chief technology officer of the growing cable provider. Nor did he envision today's ultra-broadband world, Internet of Things and our reliance on smartphones.
Today, though, Pederson is part of the team that oversees the investments Midco is making to deliver high-speed services to its Midwest customers. The midsized MSO last year joined the DOCSIS 3.1 wave and has been transforming both its network and its physical facilities to support growing demand for ultra-broadband.
UBB2020 Editor Alison Diana spoke this week with Pederson to learn more about Midco's plans; its recent acquisition of the WOW! system in Lawrence, Kan.; and the challenges cable companies face today.
UBB2020: Could you briefly describe Midco's plans for high-speed broadband?
Speed has always been important as we provide Internet service, and anyone can see that usage continues to increase -- in our case about 45% every year. And so one of the things we like to do, if we can, is jump ahead of that usage and anticipate our customers' wants and needs. To that regard we're upgrading our systems to DOCSIS 3.1 and we plan to roll out gigabit service, ultimately, to all of our markets, except the very smallest ones. Our goal this year is to reach over 80% of our markets with that gigabit capability.
UBB2020: That's very ambitious. How will you attain that goal?
Yes, it is a challenge, that's for sure, because it requires a lot of infrastructure upgrades. The first step was to convert all our customers from a mix of analog and digital television to only digital. That freed up a bunch of space on our spectrum so we could deploy DOCSIS 3.1 and move to that spectrum to get those speeds. Of course it requires swapping out CMTSs [cable modem termination systems] and eventually cable modems for the higher tier service and having a very clean plant too.
UBB2020: What was the response of your residential and business customers?
On an individual basis, customers expect nothing less. They want to do business with a company that always has the future in mind. One of the things where we saw more intensely was the response from communities. Communities want to be a community with gigabit service and they want to be better than somebody in Pennsylvania or Nevada or some other state and that was a little more than we'd expected, so we got a really great response there.
UBB2020: Is that because ultra-bandwidth is seen as an economic driver, a productivity driver, a source of community pride...?
High-Speed Life Changer
Ultra-broadband enhances communities' residential and business opportunities, says Midco Chief Technology Officer Jon Pederson.
I think it's all of those. A lot of it, from what we've been told, is economic. If you're looking for a home or a new branch office and you have the choice between two cities and one has great Internet service and plans for the future and the other one doesn't, that affects your choice, right? And the same for the economics of that community. The other thing is we live in a rural area primarily and there's a little bit of a brain drain going on from the rural communities. If you're a 20-something person, you can't live without the Internet and good connectivity and that pulls you to the larger cities if that kind of service isn't available. If you can provide a nice, rural family-friendly environment with great connectivity, I think that's the Holy Grail for many people.
UBB2020: It's almost a year since Midco trialed Gigabit Internet with Cisco. Where does that project stand?
It's doing well. We've deployed upgraded CMTSs in most of our major markets and we are currently beta testing with customers. One of the challenges is the type of modem our customers like the best isn't the one with integrated wireless and those modems are a little slow coming off the assembly line. The ones we're deploying now are standard modems. We're preparing for an official launch.
UBB2020: When do you think vendors will catch up?
We believe in a couple of weeks we'll start getting shipments.
UBB2020: How does the WOW! acquisition fit into Midco?
We took a look at Lawrence, Kansas and it seemed like a good Midwestern fit for us, the kind of community we like, and it's not too far away from our network. It seemed like a good acquisition and they will be. Within the acquisition it takes some time to synchronize systems, but our goal is to bring them into the fold and get them on par with all the rest of our major systems within about two years' time, with incremental changes all along the way.
UBB2020: Do they have a lot of compatibilities with Midco?
The folks in Lawrence have a pretty nice plant. A lot of their technology was run from WOW! headquarters so in that regards it's a good basic platform for us to come in and continue the good work they've already been doing.
UBB2020: Midco has done a couple of acquisitions in its recent past: Is this one of your approaches to future growth?
I think if you go back far enough into the past, you can see we have acquired other systems -- US Cable was one such system and the more recent WOW! acquisition. That's not something we're really into. It has to be a good fit. It has to make financial sense. It has to make cultural sense for us.
UBB2020: What apparently made sense was Midco's extensive investment in construction last year. How does your 2017 construction plan compare?
It's going to be scaled back considerably and part of that is because our build-out of Fargo will be finishing. We don't have any plans on deck for any other major builds. We have some smaller stuff, but it should be dropping off considerably. If opportunities arise, you can bet we'll be all over those.
UBB2020: What are the biggest challenges facing cable companies in this ongoing journey to deliver ultra-broadband?
Probably one of the biggest ones is capital expenditure. To build out and improve systems and upgrade equipment requires a lot of capital. The other one we see is you need to have more sophisticated facilities. There's a lot more bits running through the systems, running through the buildings, and those bits need to be cooled and that cooling needs power so it takes a little more sophisticated-cabled facilities than it has in the past. And it's tough to put cable underground: You need permits, you need money, you need contractors. That's not for the faint of heart. Some very notable fiber companies have discovered that.
UBB2020: So how do you work around these hurdles?
It's a matter of making sure you have a reasonable payback. We only invest in things that really support the communities and are very desired. It's a matter of very carefully choosing your battles and choosing your investments.
UBB2020: How have you upgraded your facilities to support the more sophisticated equipment and manage power?
It's more space. It's more cooling. That typically triggers more power, sometimes running more power from the electrical company -- new service. And of course, power you have to back it up with UPSs and generators.
UBB2020: What are the biggest opportunities 5G will bring to Midco?
5G is one of the most currently fashionable things to talk about. I do think it's out quite a ways. We'll see. The idea is 5G will require much closer proximity to the customer -- talking about small cells -- and will ultimately rely on wired resources to feed those towers, of which there will be many. One could imagine that somebody's going to need connectivity to do that; we are in the connectivity business.
— Alison Diana, Editor, UBB2020
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