There is finally a cable TV solution for small cable providers that does not require them to own and operate their own headend. In fact, this new solution doesn’t even require them to be a regulated cable company.

The solution is provided by Skitter TV. Skitter TV was started by Skitter Inc. based in Atlanta, Georgia and headed by Robert Saunders, one of the pioneers of IPTV. The company has developed proprietary cable hardware and software that is far less costly than other cable headends.

Skitter TV has been operating for a few years as a sort of a cooperative, and is owned by Skitter Inc. and a number of independent telephone companies. The company’s cable model for the last few years was to come to a small carrier that offers cable TV and to supplant the incumbent product with Skitter TV. Most small cable operators are losing money on their cable product. Skitter TV becomes the cable provider of record and then shares profits with the local provider, which guarantees a small profit on cable.

But Skitter TV just upped their game and has partnered with Iowa Network Services (INS) to bring Skitter TV to more carriers for a lower cost. INS is a consortium of independent telephone companies in Iowa and the company owns a substantial middle-mile fiber network as well as provides a number of services to members.

The latest move takes advantage of the INS fiber network and includes plans to interconnect to other telco-owned fiber networks throughout the country. This will allow companies with access to these other fiber networks to get their cable signal from the INS headend. The same economic model still holds and Skitter will offer a revenue share with local providers, who get to disconnect their existing losing cable business.

There are a few key issues to consider for a small provider looking at this opportunity. The primary one is the cost of transport needed to connect to Skitter and INS. It’s likely that companies that can get a connection to one of the other statewide networks can get this transport for a reasonable cost. But providers outside of those networks need to consider the transport costs in looking at the opportunity.

I’ve looked closely at Skitter TV and it’s a very interesting product offering. They don’t have as many standard network channels as the large urban cable systems, and this helps to hold down the costs of providing the service. But Skitter has made up for a smaller line-up by bringing a large number of non-traditional channels to their line-up. They also have created channels for many of the popular online services. Overall the Skitter lineup is probably an improvement in rural markets and might even be an interesting alternative in urban markets.

One interesting option that Skitter brings is the possibility of offering a cord cutter package that includes local network channels plus a wide array of non-traditional programming. The Skitter cord cutter programming looks to be one of the more robust non-traditional packages on the market.

Customers can connect to Skitter TV using a Roku box, which is cheaper than traditional settop boxes. But Skitter also can support most traditional IPTV settop boxes that providers already have deployed.

Any small cable provider who is losing money on cable TV ought to take a look at this alternative. Even if transport costs look to be a barrier, Skitter TV is often willing to bring their own headend into a market if the numbers look attractive to them.

I think that Skitter TV will do well in the telco and IPTV cable markets because it’s become nearly impossible for a small provider to be profitable on the cable product. It’s a lot more sensible for a provider to partner with Skitter and get a guaranteed small positive margin from cable customers than to continue to bleed cash on the business line. Other than having to provide settop boxes, the Skitter partnership gets companies out of the headend, hardware, and middleware business, taking a lot of pressure off capital budgets.