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@Home founding CEO on cable modem deployment delays

  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." 
    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 (higgins@dorsai.dorsai.org or 
    For Multichannel News subscription information: 800-247-8080. A bargain 
  at $84/year.
    Multichannel e-mail contacts:
  Marianne Paskowski, editor: Mpcable@aol.com
  Andy Grossman, news editor andyg474@aol.com
  John M. Higgins, finance editor: higgins@dorsai.dorsai.org
  Kent Gibbons, new media editor: kentmg@aol.com
  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
  "This is not just an aggressive rate increase, this is a declaration 
  of war."
          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 
  activities there.
    "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 
  switching technology.
    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 
  28.8 kbps.
    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 
  year-long trial.
    "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 
  Playboy's motion.
    "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.
  -=-=-=-=-=-=-=-=-=-=-=-=-=-=...And Finally=-=-=-=-=-=-=-=-=-=-=-=-=-=-
    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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