HSA May Nix One-Way Systems
By Jeff Baumgartner -- Multichannel News, 4/20/2001 7:00:00 AM
Citing escalating operational costs associated with providing cable-modem services to one-way systems, High Speed Access Corp. said it could begin shutting off cable-modem services to some of its affiliates as early as May 31.
HSA said it's giving cable affiliates that serve one-way systems an option to restructure their current turnkey contracts to more equitable network-services agreements, or to agree to service termination.
Because of the high costs associated with one-way systems, HSA said, it expects the majority of affiliates in that category to choose the termination option.
HSA's emphasis on the NSA model in two-way cable systems has 'greater potential for both profit and growth,' added president and CEO Dan O'Brien in a press release.
Tied to that decision, HSA said it will lay off roughly 10 percent of its full-time staff this month. HSA said it had 716 employees as of Dec. 31. Most of those cuts will affect corporate and field positions linked to HSA's turnkey model, a spokesman said.
The company made additional reductions earlier this year to bring staffing levels in line with current operating requirements, but it would not provide specific figures. Details on those cuts are expected to surface May 8, when HSA discloses its first-quarter earnings results.
The majority of cable-modem customers served by one-way systems represent less than 4 percent of HSA's customer base, which hit the 100,000 mark by the end of last year.
Overall, HSA's decision will impact between 20 and 25 affiliates representing approximately 50 systems. That process is already under way, HSA said.
HSA declined to disclose which systems or operators could be affected. A company spokesman added that Charter Communications Inc., HSA's largest affiliate, is not affected by Thursday's announcement.
HSA said 5.2 million of its 6.6 million homes under contract by the end of 2000 adhere to the new network-services model.
The move is also tied to HSA's strategy to shift from a turnkey model to one based on NSAs, which distribute costs more evenly between HSA and cable operators. The turnkey approach has proved to be extremely cost-prohibitive and led to the downfall of ISP Channel, a former SoftNet Systems Inc. subsidiary and HSA competitor.
Because one-way cable systems use telephone lines in the return paths for high-speed services, connectivity costs are nearly double those in two-way systems, HSA said. Those dual-connectivity costs are only magnified by extremely high T-1 costs in rural markets, which represent the majority of one-way systems that have contracts with HSA.
HSA officials said the company will give customers 60 days' notice before service is shut down, allowing them to seek other alternatives. The company will also credit those subscribers during the transition period.
The decision will not affect HSA's projections to end 2001 with 240,000 subscribers, the company said.
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