US West needs headends and boxes for a digital video trial.
They are building a system that can handle switched digital......
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MediaOne Tooling Up for a Major Digital TV Test
By Jim Barthold
MediaOne will launch a major digital TV trial later this year or in early 1998, according to Chuck Lillis, the president-CEO of U S West Media Group, which owns the 4.8-million-subscriber MSO that's in 19 states.
While he wouldn't identify the trial's location, he said it would be in one of the MSO's regional clusters. He also said MediaOne, which includes what used to be Continental Cablevision Inc., hasn't settled on an equipment vendor.
"It will be a market trial," Lillis said. "The technology for this stuff is not important here. There are things to work out, but I think we're way past whether it's the right technology. The issue here is [that] it's a marketing trial."
MediaOne also is mapping a fourth-quarter telephony trial in Atlanta, Lillis said: "We're going to call it a trial, offer it to 2,000, 3,000, 4,000 subscribers, and then go long-term."
Lillis' remarks came in an interview during the initial running of the MediaOne 200 stock car race at Michigan Speedway July 26.
The race and accompanying hoopla, including ESPN race coverage, are part of an overall marketing scheme that MediaOne hopes will better brand the company in consumers' minds.
Branding and properly marketing services, Lillis emphasized, outweigh technology: "There will be those kinds of [technology] things that we will test, but the question now is fundamentally a marketing issue, and that's why I say, in the next evolution of the industry, we're going to make ourselves a marketing company."
Lillis said MediaOne is committed to building 750-MHz, hybrid fiber-coax systems that will dedicate the top 200 MHz to high-speed data, telephony and, probably, digital television. He added that his company hopes that cable modems - perhaps embedded as part of next-generation computers - will be available for retail sale by late 1998.
"The biggest advantage we have in building to 750, as opposed to 550, is [that] we can offer any mix of analog or digital to any home or mixed in the home," Lillis said. "You can't do that if you don't have that much capacity. Or you can't do broadband Internet access or telco. You have to give up something.
"Our approach is to build the networks so [that] we can have as many digital [channels] as we need two-way and then, based on market demand, provide digital."
As evidence of that commitment, MediaOne recently opened a network operations facility in suburban Detroit that eventually will directly or though connections to hub sites serve 300,000 Michigan subscribers. The facility already is delivering MediaOne Express high-speed data services to several hundred Michigan homes and has room for the switched network equipment needed to deliver telephony service. Digital video
Digital video, again, is on a back burner, but the system has been built with the capacity to handle it, according to system engineers.
Discussing the Atlanta telephony trial, Lillis said MediaOne will bank on lessons it has learned in Australia, where the MSO has been rolling out telephony service along with cable and signing up between 500 and 800 residential telco customers a week, Lillis said.
"We have about 30% of the homes that we pass with HFC network that we could sell telco to that we get as customers," he said. "We haven't made a big deal of this. On average, our telco customers are heavier users, higher monthly bills, than the incumbent telephone company in Australia."
The Atlanta system, he said, has been operating internally for a while. While Lillis would've liked an earlier launch, he noted that he had trouble getting vendors to support the notion of fully interactive, two-way services.
"[Microsoft Corp. chairman] Bill Gates helped us out a lot by saying, 'Gee, I think they may be right,' " Lillis said with a chuckle, referring to Gates' $1-billion investment in Comcast Corp.
Lillis also said U S West will continue its video services trial in Omaha, where some valuable lessons have been learned. "I think in Omaha, we did not build - and we acknowledged it at the time - the kind of underlying network that we would have built or that we are building with HFC," he said. "It was called a 'passband,' and it was really two parallel networks: a telco network and a coax network. "You can't really operate that nearly as effectively from the cost standpoint as you can an HFC, because HFC you can integrate all the signals and all the controls in that one network."
On the competition front, Lillis said the trial in Omaha, where U S West has butted heads with Cox Communications Inc., has given MediaOne a feel for maneuvering in a crowded marketplace. In the Midwest, for example, it's stiffening for a video-delivery fight with Ameritech, which has snapped up more than 35 cable franchises.
"We compete with three cable companies and I think what we found was [that] if the cable company didn't upgrade their system and wasn't a good operator, we would really do well against them," he said. "And if they did have a good upgraded network and good customer service, it was not nearly as successful. I think Ameritech has found the same thing, incidentally, competing against us." High-speed data
Although MediaOne maintains a cool attitude toward digital TV, it's nothing short of steaming hot about high-speed data.
"We're not sitting back on data," Lillis said, pointing out that the race sponsorship in Detroit was aimed at tying together high-speed racing and high-speed data. MediaOne counts about 6,000 high-speed data customers and "no defections, zero churn," he noted. The high-speed data launches and improved networks, Lillis said, give MediaOne bundles of information about market segmentation and how best to attract customers with various services. About 15% of the company's high-speed customers, he noted, weren't previously cable subscribers.
"That's a huge new segment of the industry that actually has an average revenue as high as the cable revenue," Lillis said. "That's really the best you can do as marketers, you know."
That knowledge, and the evolving face of the industry, are changing the way MediaOne brands and markets its services, he noted.
"I tell our people that I want to be able to treat every individual customer as a segment, and however those services need to be packaged for that customer, and whichever services, that's what we should do," Lillis said. "One of the big payoffs for all the money that we've been throwing into this network is that this kind of network - if you have the right kind of support systems - allows you to segment at the individual customer level.
"If you were a marketer at any level you would say, 'I have arrived' if you could do that."
(August 4, 1997) |
