When it comes to digital video, Tele-Communications Inc. is out there on its own, boldly forging ahead with deployment, while nearly every other major MSO has taken a more cautious approach. Some even say the digital economic model is broken because new set-tops are wildly expensive, and there are so many analog receivers in existence.
Conversely, the brilliant Malone and TCI have figured out how to garner a third revenue stream by convincing merchants they need to be "anchor tenants" in those boxes. Throw that in with the fact that, in many cases, TCI is actually paying itself to deploy digital video services, and you've got a winning economic model.
This is a major step forward for a company that only a year ago essentially stopped spending money for new equipment and network upgrades. Since then, though, Hindery has been busy trimming the fat from his cable operations, trading systems to achieve greater clustering in key markets, and creating partnerships with affiliated companies to help cut costs.
Now, with the money spigot turned back on, TCI is poised to emerge from a planned three-year upgrade cycle as the country's dominant provider of digital video. By the end of 2000, when the upgrade cycle is predicted to be completed, TCI forecasts it will spend $1.8 billion to take 60 percent of its plant to 550 MHz or above, with the balance taken to 450 MHz. The proportion of two-way plant will balloon from three percent to 90 percent of homes passed during that same time frame.
In the meantime, the operations unit headed by COO Marvin Jones will have its hands full deploying digital video and the @Home high-speed data service while focusing other efforts on becoming more decentralized, achieving growth in subscriber counts and becoming more focused on customer service.
These are tall, tall orders. TCI wants to have up to 1 million digital customers by the end of this year. To get there, it'll have to trim the time it takes to make those installs, and launch a nationwide marketing effort to convince customers to take the additional service.
Other MSOs, especially those that border TCI in major markets, need to sit up and take notice, for there is danger if TCI successfully markets digital services — and those other MSOs aren't prepared to offer those services.
Contact Roger Via E-Mail At: RBrowner@aol.com