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To support large-scale video-on-demand (VoD) services, many transmission schemes such as data broadcasting and proxy caching have been developed to minimize the resources requirement and enhance the system scalability. However, most of the previous works mainly focused on providing the VoD services in a homogeneous environment. In this paper, we investigate a feasible solution for building an efficient hierarchical VoD system using proxy caching coupled with broadcasting and appropriate coding schemes in heterogeneous environment so as to minimize the system transmission cost. By developing a performance model in this paper, system designers can study how various techniques for VoD can be organized to maximize the efficiency of the system. From the results, it can be seen that the system performance can be greatly enhanced by efficiently coupling various techniques.