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@Home founding CEO on cable modem deployment delays
- To: email@example.com
- Subject: @Home founding CEO on cable modem deployment delays
- From: James Love <firstname.lastname@example.org>
- Date: Tue, 12 Mar 1996 00:21:32 -0500 (EST)
There is a pretty interesting story in the Multichannel News about cable
modems, giving some very gloomy predictions about deployment over the next
several years. While the article is copyrighted, permission to
disseminate is available, as long as the whole thing is sent. The article
I recommend is: * Hearst Frustrated With Cable Modem Pace In the article,
Will Hearst, the founding CEO of @Home says, "I think it'll take a couple
of years to get a significant percentage of the country connected."
CABLE REGULATION DIGEST
Summary of regulatory news from Multichannel News 3/11/1996. Vol.3, No.11
Copyright 1996 Multichannel News. Reproduction/distribution is permitted
so long as this document is left fully intact. NO CHANGES are to be made
to this document without the written consent of Multichannel News.
Listserver, Gopher, FTP info attached at bottom.
Refer questions to John Higgins (email@example.com or
For Multichannel News subscription information: 800-247-8080. A bargain
Multichannel e-mail contacts:
Marianne Paskowski, editor: Mpcable@aol.com
Andy Grossman, news editor firstname.lastname@example.org
John M. Higgins, finance editor: email@example.com
Kent Gibbons, new media editor: firstname.lastname@example.org
Leslie Ellis, technology editor: Ellis299@aol.com
* Fired Employees Sabatoge TKR
* TCI Imposing Big Rate Hikes
* Hearst Frustrated With Cable Modem Pace
* Omaha Digital Launch Yanked
* Adult Nets Win Delay on Cable Law
QUOTE OF THE WEEK
"This is not just an aggressive rate increase, this is a declaration
Pittsburgh cable bureau superintendent Deborah Miskovich, on
a 17 percent rate hike planned by TCI.
Fired Employees Sabatoge TKR
A caustic labor dispute at a newly acquired TKR Cable system exposed
the dark underbelly of the cable takeover game as sabotage cut service
to tens of thousands of subscribers in northern New Jersey.
The outages occurred after Sammons Communications Inc. laid off all
130 of its workers at its Dover, N.J., operation in preparation for
the system's sale to TKR Cable.
The new owners rehired some of the workers, but at the end of the
day, fewer than 40 Sammons workers had jobs at TKR, by the count of an
official at the union representing Sammons employees.
Around 8:15 p.m. on Feb. 29 -- just hours after ex-workers at
Sammons system received their final paychecks -- someone severed a
fiber feeder at the base of a pole between the system's satellite dish
downlink and the headend several blocks away. Police have no immediate
suspect for the vandalism, which cut delivery of cable networks to all
108,000 subscribers for the evening.
After splicing the feeder together, TKR discovered a second cut
elsewhere in the system. A vandal apparently leaned over the edge of a
railroad trestle to cut a fiber cable on a pole along a state highway,
darkening 36,000 subscribers. Service was fully restored at about 9
"There's no doubt in our minds that it was intentionally done," said
TKR marketing vice president Brian Hickey. He added, "I wouldn't even
want to insinuate who would have the information to do it," a posture
adopted by other TKR officials.
But police and ex-workers acknowledged that insiders most likely
caused the damage.
The initial outage temporarily buoyed a group of newly unemployed
Sammons workers that had gathered at a Dover bar to drown their
sorrows. They noticed the problem when the TV behind the bar went
dark. "When the cable went out, everybody cheered," said Eddie Ridner,
a 14-year Sammons veteran who is now looking for work.
But whatever pleasure some employees may be taking is temporary.
Workers are worried about their families and about the stability of
their spouses' jobs. They spent last week following up job leads,
hoping that Bell Atlantic Corp.'s construction unit needs more
installers, or that the state-run commuter train unit is hiring
"Nobody wants to sit down and cry about it," said Michael Loschiavo,
a Sammons installer for nine years who is chasing job openings and
worrying about his wife and two children. "But you feel cheated
[because] you didn't get a chance."
But the system continued to be plagued by other less-severe
vandalism, including service trucks whose gas tanks were filled with
water. TKR has stepped up security, but it wouldn't provide details.
"We have certainly taken prudent measures to make sure people can
focus on operating the system, not whatever else is going on," said
TKR general manager James H. Helfgott.
TKR president Paul Freas expressed frustration over the dispute
after spending $267 million to buy the property. Freas said the
company worked to fit Sammons workers into its operation, offering
ever worker an interview for a TKR job. But many didn't bother.
"We went through the property; we saw what would make sense," Freas
said. "It did mean the elimination of a number of jobs."
TCI Imposing Big Rate Hikes
After holding off on rate hikes in many places for the past two
years, Tele-Communications Inc. is pushing through stiff double-digit
percentage rate hikes for many of its customers as it tries to catch
up on accumulated increases in programming and other expenses.
Last week the MSO began informing city officials regulating about
half of its systems that rates will rise June 1. Some subscribers will
find their bills going up marginally, just several percentage points.
But many customers in TCI's largest operations will see hikes larger
than most operators would dare take when rates were completely
unregulated four years ago.
TCI executives, however, said that the increases are permitted under
the rate formulas laid down by the Federal Communications Commission
under the 1992 Cable Act. The rules allow them to boost prices at the
rate of general inflation, recover costs associated with system
improvement, plus offset rapid escalation of license fees to cable
"In virtually all the cases, we've charged less than we might have,"
said TCI senior vice president Robert Thomson.
The increases have nothing to do with the recently passed
Telecommunications Act of 1996, which doesn't deregulate cable rates
for most systems for three years. But they come on the heels of a
similar wave of rate hikes by Time Warner Inc., which boosted prices
20 percent in Houston, for example, and 10 percent in Covington, Ky.
Most of the subscribers in parts of TCI's metro Denver operation
face bills jumping around 20 percent. In the city, for example, the
current $18.85 combined rate for broadcast basic and expanded basic is
jumping 21 percent to $22.85. Aurora, Colo., customers are seeing
their rates climb even higher, by 27 percent from $20.75 to $26.25,
but that's in part because the newly rebuilt system is adding new
Rates in TCI's Walnut Creek, Calif., operation are rising more
moderately, up 12 percent from $25.46 per month to $28.47. In San
Jose, basic rates will climb 16 percent from $29.40 to $34.19.
Other towns will see smaller hikes. In Tucson, Ariz., TCI's rates
are increasing just 6 percent from $23.15 to $24.95. TCI said that
prices in Bloomington Ill., Lexington, Ky., and Fort Dodge, Iowa, are
all rising less than 10 percent.
That didn't mollify officials in cities facing big hikes.
"This is not just an aggressive rate increase, this is a declaration
of war," said Deborah Miskovich, superintendent of the bureau of cable
communications for the City of Pittsburgh, where rates are increasing
17 percent from $24.23 to $28.23.
Hearst Frustrated With Cable Modem Pace
San Francisco -- Likening the pace of Internet development to "dog
years," Will Hearst, founding CEO of cable's high-speed data venture
@Home, last week emphasized the need for action in getting cable plant
ready for two-way services.
Speaking to about 3,000 content-developers at a Netscape
Communications Corp. conference here, Hearst said that since he
started at @Home last year, he feels like he's already gone through a
"couple [of] generations of change."
Hearst said @Home's Sunnyvale, Calif., deployment will fire up
"later this year" -- implying a shift from an earlier internal
deadline of April.
Vendor sources have said Tele-Communications Inc.'s Sunnyvale system
is experiencing more than inconsequential problems in getting reverse
plant activated in time for the launch. TCI is a partner in @Home,
which is designed to get high-speed Internet access into consumers'
Meanwhile, TCI executives have staunchly defended the deployment
"I think it'll take a couple of years to get a significant
percentage of the country connected," Hearst said. He predicted
sizable numbers of high-speed data customers within a five-year
timeframe, using an analogy that described the first cable modem as
late, but the millionth as early.
Hearst also used last week's forum to again float the $30 per month
price model that @Home is likely to follow.
"Yes, we see the phone companies talking about very low $10 and $20
per month pricing models -- but for dial-up speeds, they should
discount it," Hearst quipped.
Officials insist that the @Home operative is on track in its quest
to build ATMbased links, initially at 45 megabits per second and
migrating to 155 mbps, between national Internet sites and a series of
regional data centers. ATM stands for asynchronous transfer mode, a
Those centers will connect with cable headends at speeds of 45 mbps,
and from headends to homes at 27 mbps downstream and 128 kilobits per
second upstream -- meaning that from an end-to-end perspective,
potential bandwidth bottlenecks upward from the headend are
substantially reduced, said Hearst.
The standard dial-up speed today is 14.4 kbps; state-of-the-art is
Omaha Digital Launch Yanked
U S West Communications Inc. scrapped plans for a digital rollout of
its video dialtone test in Omaha, Neb., last week, citing
technological uncertainties and high costs for forcing an end to its
"With the current state of technology, we feel it's not quite ready
for primetime," said Nancy Sullivan, executive director for broadband
and multimedia services for U S West Communications.
The surprise end to the much-ballyhooed trial -- which was expected
to offer interactive games and video-on-demand services -- comes a
week after U S West Media Group Inc.'s proposed $10.8 billion purchase
of Continental Cablevision Inc. Yet U S West executives assert that
the deal, which allows Continental to unload $5.5 billion in debt on
the telco, did not factor into the decision.
U S West tested its digital format to about 125 "friendly" users in
the Omaha market. The company is also offering a more extensive analog
VDT service, complete with 88 channels, including 11 of pay-per-view.
Sullivan said the test was too expensive and unreliable to implement
throughout the market. Sullivan would not reveal cost figures nor go
into detail on any technical snafus.
"We have completed the technological trial and, based on the state
of the technology and input from the market, we've decided not to
continue," she said.
"We felt that the quality of service has to be reliable without a
shadow of a doubt, and we couldn't guarantee that," she said.
Despite ending the trial, Sullivan said subscribers reacted
positively to the VOD part of the test, although she would not give
specific numbers. U S West tested several VCR functions during the
test, including a pause feature.
But in the end, Sullivan said the technology wasn't reliable enough
to justify its expansion. "We will continue to watch the development
and economics of the technology, but we believe the potential is
there," she said.
Adult Nets Win Delay on Cable Law
Washington -- A federal judge in Delaware last week blocked a law
that limits adult programming to late-night hours if such programming
is not fully scrambled in the homes of nonsubscribers.
U.S. District Court Judge Joseph J. Farnan issued a temporary
restraining order on March 7, just two days before the law and related
Federal Communications Commission rules were set to go into effect.
The decision was a victory for Playboy Entertainment Group Inc., which
began the suit, and Graff Pay-Per-View Inc., which joined Playboy.
While the industry now has a little breathing room, cable operators
are still exploring scrambling options in case the restraining order
is overturned in the next few weeks. Playboy and Graff will now seek a
permanent injunction from the court.
Farnan barred enforcement of Section 505 of the Telecommunications
Act of 1996, saying Playboy would be irreparably harmed without court
protection and would likely succeed on the merits in a later hearing.
His ruling means that the networks will continue to be available
throughout the day and night until a three-judge panel has ruled on
"This is a victory for sanity in government," Playboy chairman and
CEO Christie Hefner said in a statement.
Graff, which joined the case last week as a co-plaintiff, also was
covered by Farnan's two-page order. Graff owns adult networks Spice
and the Adam & Eve Channel.
The new AlphaStar DBS service hyped its March 31 launch last week at
the SBCA show in Vegas with a release saying "effective immediately,"
AlphaStar will be taking "consumer orders ... directly on the
company's toll-free customer action center number." So the Wire
called. Asked what the AlphaStar dish would cost, a CSR replied that
she didn't know. Asked what she did know, she related the names of the
company's three distributors. Asked how to contact them, she said,
"Try the Yellow Pages." Despite what the press release stated, an
AlphaStar spokesman said that number was designed for "dealer
requests," and that customer info would be ready closer to launch.
Nothing like a few days in Silicon Valley to enrich the digital
lexicon with all kinds of silly new buzzwords ... like "Netch-A-
Sketch" to describe Oracle Corp.'s widely bantered $500 Internet
device, and "Screenager" to describe young people who cruise the Web.
But perhaps the clearest proof that all is still geeky-hip in the
Valley: Intel Corp. employees, whose matching denim shirts sported
both Intel's corporate logo AND its web address. Yeegads.
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