MediaOne Gears for Minnesota Onslaught

By JOE ESTRELLA -- Multichannel News, 8/21/2000

With competition looming, AT & T Broadband's MediaOne Group Inc. system expects to complete most of its upgrade in Minnesota's Twin Cities before challengers get into the market.

Minneapolis-based MediaOne executives last week confirmed that the MSO will have about 85 percent of its upgrade completed, if not activated, by year's end.

Currently, one-fifth of the 600,000 homes passed by Media-One plant in St. Paul and 88 adjacent communities can receive its digital phone service. Approximately one-half, or 300,000 homes, can subscribe to its high-speed Road Runner Internet service.

MediaOne is counting on the upgrade to maintain its competitive advantage in the Twin Cities area, where it currently has more than 300,000 subscribers.

Competition is considered a forgone conclusion, given that nine suburban communities are preparing to negotiate cable franchises with WideOpenWest LLC, Everest Connections Corp. and Seren Innovations Inc.

"We fully expect some cable franchises to be granted this fall," said Brian Dietz, Media-One's director of communications for the Twin Cities. "That's why we've been working hard on our upgrade. We'll be ready to start offering broadband services before [competitors] are even digging in the ground."

Although it won't reveal how many local residents have signed up for its telephone service, AT & T Broadband, which recently acquired MediaOne, was willing to say that it had 210,000 local phone customers scattered throughout 17 markets at the end of the second quarter. Take rates are averaging about 5 percent in those markets. Another 690,000 households have signed up for Road Runner service.

In the Minneapolis area,the "buzz" about MediaOne telephone service is attracting consumers, Dietz said.

"There's a great deal of interest in our phone service because this is the first time residents have had a competitor in the market," he added. "So our phones have been lighting up as we introduce the service in each market."

With only about one-fifth of the upgrade completed, MediaOne is marketing its telephone service accordingly, using direct mailings, door hangers and ads in small area newspapers.

"It would be inefficient to use big television and radio ads," Dietz said. "So instead we're using some of the more traditional guerrilla-marketing tactics."

For the more available Road Runner service, it has expanded its marketing to include billboards and advertising in the larger metro-area papers.

But WOW officials said their plans for an 860-megahertz system, compared with a 750-MHz upgrade for MediaOne, will make all of the difference. "Right there is an advantage for us because of the quality of service and speeds we'll be able to deliver," WOW spokesman Mike Steinkirchner said.

WOW is talking to some 40 communities in the area about cable franchises, including Minneapolis and St. Paul.