A headend or central office or satellite uplink facility for receiving upstream video-on-demand requests and MPEG transport streams containing video program data and packetizing said video data into TCP/IP or UDP/IP packets and LAN packets and routing them through a switch to one or more cherrypicker multiplexers. Each cherrypicker multiplexer receives LAN packets, depacketizes the MPEG data, partially or fully decompresses the data and recompresses the data to another smaller bandwidth, and repacketizes the data into MPEG packets or TCP/IP or UDP/IP packets. The repacketized TCP/IP or UDP/IP packets are transmitted directly to the customer as TCP/IP or UDP/IP packet data. MPEG packets generated by the cherrypicker multiplexer are, optionally, encapsulated in LAN packets addressed to an IP dewrapper circuit. There, they are depacketized back to MPEG packets and transmitted to the appropriate transmitter or modem for transmitting to a customer. Internet data and data from application servers, referred to as iData, can also be transmitted to customers through the cherrypicker multiplexers or a downstream modem, and upstream iData can be received through the modem.